Published Date: 
October, 2011

Board Paper 18-10, Strategy Working Group Discussion Paper

Board Paper 18-10, Strategy Working Group (SWG): Discussion Paper. As part of the EITI strategy review 2011-2013, the Board tasked the Secretariat with compiling a paper identifying various strategic options ahead of the Board's meeting in Jakarta in October 2011. The terms of reference for the SWG can be found in the Annex.

Executive Summary

While documenting significant successes, the recent evaluation of the EITI1 questioned whether the EITI is adequately delivering against its Principles. In response, the EITI Board invited stakeholders to comment on the evaluation2 and on the strategic direction of the EITI for the next 3-5 years.3 Several stakeholders have submitted proposals, published online.4 The EITI Strategy Working Group formed in Amsterdam in June tasked the Secretariat with preparing this paper, outlining options for consideration by the Board in Jakarta.

Some stakeholders have emphasized the need for consolidation by improving the quality of EITI Reports and the extent to which they can be used to engage a wide range of audiences in the governance of the extractive industries. Others have offered proposals that would fundamentally alter the objectives and scope of the EITI.

The submissions from Publish What You Pay (International, Australia and Tanzania) and the Revenue Watch Institute call for fundamental change. They advocate, amongst other things, a firmer legal basis for the EITI, contract transparency, disaggregated EITI reporting, and coverage of licensing, in-kind payments, and transit revenues. One of the proposals from the World Bank is that the EITI Criteria are expanded so that EITI reports go beyond reconciliation to verify that the payments and revenues are what they should be. The World Bank has also suggested new EITI Criteria that would require Compliant implementing countries to “develop and implement a strategy of concretely linking and mainstreaming EITI into overarching national processes and related initiatives”. The EITI’s relationship with other links in the value chain was a common theme in several submissions.

The Secretariat foresees considerable resistance to making these ideas mandatory for all implementing countries. First: not all EITI stakeholders are convinced that these reforms are desirable or feasible. Second: a significant number of implementing countries are currently facing challenges in achieving compliance with the existing requirements, which were only recently modified. At the same time, there appears to be broad-based support for encouraging implementing countries to go beyond compliance by undertaking additional work to improve transparency, accountability and stakeholder collaboration. There also appears to be broad-based support for more definitively incentivizing countries to undertake complementary actions agreed by the MSG to realise the broader EITI Principles. Where countries take such steps, these should be recognised.

Accordingly, the Secretariat suggests in section 7.2 that the Board considers whether a scoring system can be introduced, to a greater extent recognising and incentivizing good performance by implementing countries. The majority of the current requirements would remain unchanged. The goalposts would remain where they are. The quality assurance requirements would be modified. Validation would be replaced by continuous (annual) assessment. This assessment would examine whether the minimum requirements (currently requirements 1-18) have been met, and score performance beyond the meeting of these requirements. The assessment would be carried out by the Secretariat, drawing on EITI reports, annual reports from MSGs, and a quality assurance process that could incorporate elements of peer review. As today, decisions regarding a country’s status (and score) would be taken by the Board. The costing and resource implications would need to be further investigated, but it is unlikely that this approach would require a major increase in the Secretariat’s budget. This would overall be compensated for with implementing countries having no expenses for validation.

In addition, it is suggested that the Board, in partnership with supporting organisations, consider the technical assistance required. This could include support for efforts going beyond the core requirements, for example, piloting EITI reporting that verifies that the payments and revenues are what they should be.

The Secretariat also notes that there has been little input to this strategic review from implementing country governments, and that engaging implementing country governments and MSGs is a priority as the merits of these proposals are debated further.