The EITI not a seal of approval, but sign of change

EITI Chair Clare Short reflects on the meaning of compliance.

As we prepare for our Board meeting in the Democratic Republic of Congo (DRC) and the Republic of Congo (the Congo), it is perhaps worth reflecting on what membership of EITI means. Membership of the EITI not a seal of approval, but should be a sign of a commitment to more informed public debate which should in turn lead to reform.

Although EITI has been operational for nearly ten years and has nearly 50 countries in membership, corruption in the oil, gas and mining sectors remains an enormous challenge. It affects global politics and security. The current situation in the Middle East and in Russia/Ukraine is a reflection of the problem. There are millions of people who continue to live in unacceptable poverty in resource-rich, and often EITI member, countries. Corruption and mismanagement of these resources affects rights and freedoms. Many resource-rich countries, and again EITI members, remain closed and oppressive. And much of the money that should contribute towards developing and improving societies ends up through transfer pricing and corrupt elites stashed away in foreign places to avoid fair taxation.

Like with so many major global challenges, there are no quick fixes. It takes multiple efforts, better public financial management and improved enforcement both in rich consuming countries and poor producing ones. It takes greater openness and collaboration. EITI can help but is not an instant cure.

It may be stating the obvious, but implementing the EITI is not a measure that all is well. Because there is great enthusiasm when a new country joins as a candidate or becomes compliant with EITI reporting requirements, we must remind ourselves that EITI compliance does not mean that a country is free of corruption or exhibits full openness or respect for civil liberties. Just because Nigeria is compliant with the EITI Requirements, does not mean that USD 20 billion has not gone missing through the subsidy system arranged by their national oil company. Following the EITI Standard does mean that government together with business and civil society has agreed a format for increased transparency of the money flows from the oil, gas and mining sectors. It is often a reflection of a political commitment to reform. The EITI is a system based on the conviction that lasting change will only be achieved if it comes from within. Outsiders cannot force reform. All development experience shows that it is when the reform agenda is locally owned and supported that long lasting reform takes place.

In April the Board is being hosted by the governments of the Congo and the DRC. The Congo has made significant strides in implementing the EITI. It reports quarterly on the significant flows of money that result when the national oil company SNPC sells oil. In the DRC, the EITI Report lists the natural persons who own or control of 40 privately held companies, information on some controversial barter deals between international companies and the state owned companies, and increasing information on artisanal mining and smuggling. These are important achievements but both countries still face significant challenges. Meeting in these countries is important so that we can learn, understand and encourage better EITI and further reform.

The next EITI Global Conference will take place early in 2016 in Lima, Peru. Soon, we will have had two years with the EITI Standard. The first batch of EITI Reports under the Standard were published in December and already show how reports are becoming easier to use and are starting to provide more meaning. The Standard however has some flaws. On my recent visits to Indonesia, Timor-Leste and Trinidad and Tobago, I have been reminded of the urgent need to continue our efforts to make it a better instrument for those wishing to use it for reforming their countries. We must do more to integrate the EITI into government systems; make reporting more timely and useful; present the data in more accessible forms; and make validation a smarter quality assurance mechanism. I look forward to working with our stakeholders during the coming year to continue to refine the EITI so it contributes more to significant reform and better helps to tackle the curse of corruption and ensure that natural resources are better managed for the benefit of their people.