The Natural Resource Governance Institute (NRGI) has released its latest resource governance index (RGI), assessing the governance of the extractive sector in 81 resource-rich countries.
Commenting on the index, Eddie Rich, Deputy Head of the EITI said:
“The Resource Governance Index is an important tool for assessing how well the sector is governed in each country. It complements and will strengthen the work of the EITI in the 52 countries now implementing the Standard. The EITI standard addresses a number of the recommendations highlighted in NRGI’s RGI report, including project level reporting and beneficial ownership disclosure.”
The RGI on EITI countries
EITI countries have fared relatively well in the latest index. Norway and the United Kingdom are both in the top “good” performance category. Notable EITI highlights amongst middle income countries include Colombia, Indonesia, Ghana, Mongolia and Peru, achieving “satisfactory” in their overall rating. Burkina Faso is the highest placed country among the low-income countries studied, with its mining sector ranked 20th overall. Ghana, Mongolia and Peru have all also recently been through the EITI’s Validation process which assesses in more detail some of the issues highlighted in the RGI. Norway and Burkina Faso are currently being assessed.
The index measures the extent and quality of disclosures across all of the main policy aspects of extractive resource management. Three types of disclosures are identified as being of particular importance:
- Revenue - payments made to governments;
- Ownership - the identities of individuals who personally benefit from companies with which the government does business;
- Contracts - the deals governments and companies strike.
This information is crucial for citizens, journalists and parliamentarians to know if their country is getting a good deal from its resources.
The index found that revenue disclosures were generally good in EITI countries. It concludes that the “EITI has led the way internationally on company payment transparency – but countries still have work to do to advance project-level transparency”. The EITI reaffirmed its commitment to project-level reporting earlier this year and several countries, including Indonesia, are already publishing project-level data.
The index highlights the importance of ownership transparency and measures two such disclosures: reporting of government officials’ financial assets in companies and disclosures of the identities of “beneficial owners” of companies. Only 11 of the index’s 89 assessments show that officials publish this information comprehensively and publicly. However, most countries “often due to the EITI’s ground-breaking beneficial ownership requirements” plan to require public disclosure of ownership.
Citizens should know the terms on which extraction occurs in their country; these terms are documented in contract and licence agreements. The EITI requires countries to publish their policy on contract transparency and encourages the publication of mining, oil and gas contracts. The index results show that contract disclosure rules are most common in sub-Saharan Africa and least common in Eurasia, Western Europe and North America. NRGI recently published report ‘Past the tipping point? Contract disclosure within the EITI’ which found that 29 EITI countries have disclosed at least some contracts and agreements.
Recommendations: strengthening global norms and institutions
The index results point to a number of common challenges and lists six recommendations. All are relevant to the EITI’s mission, but number five – to strengthen global norms and institutions - speaks directly to the EITI. Parts of the EITI Standard have helped to establish global norms, such as revenue transparency. Other areas, such as contract transparency, are increasingly an expectation through the EITI dialogue, requirements and practice.
The full report contains rich information at the country level on various aspects of progress in resource rich countries which can complement the EITI reports, validations and other analytical frameworks.
See also: blog on Transparency International’s Corruption Perception Index, for a discussion on how indexes, for all their faults, are powerful communication tools for highlighting issues and kick-starting policy discussions.