The EITI has reached a crossroads,” wrote The Economist on 24 October, continuing: “…it must now choose either to push ahead with bold disclosure requirements first floated in 2013, or back away under pressure from those who argue that revealing the true (“beneficial”) owners of companies involved in extractive deals with the state is tricky.” The Economist was not well briefed on this question.
No one doubts the importance of transparency about who owns extractive companies and this was clear in the Board discussion in Berne. It is particularly important that progress is made related to the ownership of national companies. Everyone in the EITI wants to make progress on all the requirements of the Standard but on Beneficial Ownership our pilot showed that some countries had real difficulty in finding the human owner. This is hardly surprising given that the OECD countries are having similar problems. The issue for the EITI is whether we should make something compulsory and set up many countries to fail or whether we should continue to encourage all countries to make progress on this issue.
We need to be intelligent and fair in testing the progress countries are making. The EITI’s future success could lie in getting this balance right.
However, it is true that EITI is at a very different crossroads. The real issue is how the EITI should build on the work so far to encourage continuing progress towards the EITI Principles in all countries. There must be clear requirements for reporting that countries must reach but having made our requirements much more difficult and significant for long term reform in 2013, we need to be intelligent and fair in testing the progress countries are making. The EITI’s future success could lie in getting this balance right.
The challenge is how to make the existing EITI quality assurance system – ‘Validation’ – adjust to the much more demanding requirements of the 2013 Standard. The Standard is more comprehensive, both in what it requires of our 49 countries and what it encourages of them. It is unsurprisingly proving harder for our countries to meet all requirements. Now the question is how to acknowledge and incentivise reform and assure continuing progress. The Board is piloting a potentially better system in five countries and plans to come to Lima with proposals for a refined validation system.
More broadly the Board is seeking ways to encourage countries to embed disclosure into their country systems rather than requiring more and more elaborate EITI reports. Various approaches are being piloted with the aim to bring some good examples to Lima.
Corruption and mismanagement remains commonplace in too many EITI countries...the EITI is not the whole answer to these challenges, but it is part of the solution.
I end by referring to another media article, in the Nigerian Business News of 11 November. The headline was “Ongoing reforms in NNPC anchored on NEITI Audit Reports”. It was published on the same day the Executive Director of NEITI Zainab Ahmed was appointed as State Minister for Budget and National Planning. We congratulate her and are proud of her. We must all learn from the work NEITI has done. Corruption and mismanagement remains commonplace in too many EITI countries. In Nigeria as elsewhere, the EITI is not the whole answer to these challenges, but it is part of the solution.