Working politically: The EITI and the politics of natural resource governance

Sustained improvements in natural resource governance are the product of high-level political commitment, technical capacity and civil society advocacy.

Why politics matter

Natural resource governance is inherently political. Decisions on who can extract resources, on what terms and how revenues are allocated are all sensitive political matters. Mineral wealth can be used to garner political support, promote patronage or – at worst – wielded to foster conflict.

Politics therefore matter for organisations such as the EITI, which promote the improved management of natural resources. This is well understood by practitioners, even when the political implications of their work are not made explicit.

Almost two decades of experience of EITI implementation show that political factors influence its success in at least three ways. They shape government commitment, influence the pace and depth of implementation, and drive access to information to foster public debate.

Political commitment

The decision for a country to apply for EITI membership is taken at the highest political level and is shaped by a range of considerations. Politicians recognise the potential of the EITI as a vehicle to address problems of corruption, improve the investment climate and increase domestic resource mobilisation.

Yet the process for joining the EITI can be challenging. Reformers seeking political profile by championing transparency may encounter opposition from actors wary of scrutiny. Sometimes political resistance is trumped by the lure of private investment or IMF loan conditionality. Civil society can also play an important role in advocating for membership.

Many of these factors are currently in play in Zimbabwe, a mineral-rich country facing multiple economic challenges. In recent speeches, the Finance Minister has expressed interest in joining the EITI. A leading civil society group, the Zimbabwe Environmental Law Association, has convened public meetings pressing for EITI membership. Investors are keen for the government to commit to the EITI as part of promised mining reforms. Yet there is still reticence in some quarters, where the potential benefits of joining the EITI are weighed against the prospect of reduced power and influence by politicians with a direct stake in the sector.

The politics of implementation

The EITI addresses its goals through a multi-stakeholder approach, bringing together governments, companies and civil society organisations to tackle corruption and improve revenue collection. National EITI bodies exercise technical oversight, but politics underpin successful implementation.

Moreover, some EITI reporting requirements are political in nature. Beneficial ownership transparency shines a light on the real owners of extractive industries, some of whom may occupy high profile government positions. Similarly, the new EITI requirement on contract transparency puts all new contracts between governments and companies into the public domain, reducing scope for political favouritism and the risk of conflicts of interest.

Politics also shape the pace of EITI implementation. Slow progress in implementation can result from uneven political commitment, low capacity and limited civil society space. EITI implementation is vulnerable to changes in government and frequent ministerial rotation. In Latin America, such changes are especially frequent. The outgoing presidential term in Peru, for example, saw ten Ministers of Energy and Mines. Under these circumstances, continuous political engagement by the EITI and international partners is required to maintain focus on the value of EITI membership.

From time to time, conflict and violent changes of government can disrupt EITI implementation. In some cases, the EITI Board must make decisions on how best to respond to political events, without damaging prospects for future EITI engagement.

The EITI Standard guides these discussions, as it did in the recent case of Myanmar. Following the military coup in February, Myanmar was suspended from the EITI. Prior to these events, Myanmar’s civilian government had made significant progress with EITI provisions on beneficial ownership transparency and the closure of secret accounts from oil and gas revenues. These gains are now under threat from a military regime that does not favour public scrutiny of off-budget spending or the activities of state-owned extractive companies controlled by the army. Civil society members of Myanmar’s Multi-Stakeholder Group are in hiding, fearing persecution. The situation is being closely monitored by the EITI Board.

Access to information

Accountability is core to the purpose of the EITI. It is fostered when media, civil society and anti-corruption groups draw attention to the actions of government and companies by sharing EITI information and promoting public debate. Yet this activity can pose a threat to public figures who stand to lose from improved public scrutiny. Parliamentarians welcome such information to hold the executive to account, but they are not always privy to EITI data and reports.  

Promoting the availability of EITI data can be especially powerful in countries that have revenue sharing agreements between central and local governments. Armed with EITI data, citizens can challenge the intended use of revenues. This can be especially significant in EITI countries like Ghana, Colombia and Indonesia, which have strong constitutional provisions for decentralisation. Revenue shares can represent a major source of income for communities to fund critical services and development needs.

Decentralisation of revenue flows can be a source of political tension, especially when local government politicians are from opposition parties. The COVID-19 crisis has bought this into sharp relief. Extractive revenues are under strain in countries with significant oil and gas reserves. In response, some national governments have exerted greater control over subnational revenues, with the risk of eroding local autonomy and curbing local resource flows.

Political dividends  

While EITI implementation is premised on building technical capacity at the national level, the success of the EITI often depends on political factors. EITI stakeholders understand that the provision of information alone cannot address natural resource governance problems of a political nature.

Getting information to citizens can improve transparency and stimulate public debate. EITI multi-stakeholder groups offer opportunities for inclusive participation and civil society engagement with governments and companies. The long-term success of EITI implementation is premised on the recognition that membership can yield political dividends when extractive revenues are used to enhance the wellbeing of a country’s citizens. 

This blog was originally published by the Columbia Center on Sustainable Investment as part of their series, "The Politics of Transparency and Accountability".