Section 7.5 of Mongolia's initial assessment (see Validation documentation)
The EITI process in Mongolia has had some impact, even if stakeholders agree it has been limited to awareness raising and focused on the reporting process. As part of the International Secretariat’s assessment of the impact of the EITI in Mongolia in its ten years of implementation, all stakeholders were asked why Mongolia was implementing the EITI. One government stakeholder noted that Mongolia had decided to implement the EITI in 2005 when the extractive industries were opaque and at a time when the government was seeking to attract foreign investment in the mining sector. The EITI was thus seen as a tool to attract investment. One of CSO representative noted that the end-goal of implementing EITI was to reduce poverty in Mongolia.
Several CSOs noted that before the EITI (pre-2006), no communities knew how much money the government was getting from the sector. People now have access to this information and the level of national and subnational debate over the governance of the extractive industries has grown, even if this was seen as due to the mining boom since 2009. Now that local communities had access to information on how much money their local governments were receiving from extractives companies, they were now eager to know more on issues of licenses (including their allocation), employment, environmental issues, etc. The number of NGOs focused on transparency has also grown, and transparency is now a regular topic of discussions among parliamentarians, students and government officials. CSOs also noted the government used Mongolia’s compliance status as a sign of prestige, even if they were concerned over the lack of meaningful support for the process and disclosures required under the EITI Standard. Civil society also considered their campaigning for a mining legislation and on specific deals, like the Erdenes Tavan Tolgoi deal halted in early 2015, as a concrete outcome of the EITI in the sense that CSOs could now refer to the government’s commitment to its EITI compliance status in their lobbying and as a means to ensure public oversight of mining deals. While government representatives noted that EITI compliance status reflected their commitment to transparency and securing a social license to operate for companies, industry did not highlight a significant impact of implementation.
Several government, industry and CSO representatives noted that the most significant evidence of the impact of the EITI was the formation of subnational councils, which had brought much closer ties between government agencies like MRAM, companies and local communities and local governments and was starting to build trust amongst stakeholders. However it was noted that the main interaction was at specific events and follow-up contact was entirely conducted through the EITIM Secretariat. A few CSOs noted that the EITI could yield more benefits to citizens by, in particular, disclosing more information on beneficial ownership, which could reduce the risk of conflict of interest and corruption, and publishing contracts, to enable citizens to judge the “fairness” of deals.
The May 2016 study on corruption risk assessment in Mongolia’s mining sector, produced by the UN Development Programme together with the Ministry of Mining and IRIM Mongolia, highlights the limited impact of EITI implementation on corruption in the mining sector. However the report’s description of the impact of EITI implementation focused only on the reduction in discrepancies during the EITI reconciliation rather than a broader focus on disclosures of information related to the extractive industries value chain required under the EITI Standard. The report only notes that “no action was taken and no one was held accountable when required disclosures (…) were missing.”
Sustainability: The EITI process also faces significant risks to its sustainability, both financially and in terms of consistency of engagement. A draft Law on Mineral Resource Sector Transparency (the “EITI Law”) has been in preparation for almost three years now.
The financial sustainability of the EITI process also poses a risk. The EITIM has had to operate without funds for several months at a time on an annual basis in recent years, due to delays in accessing World Bank grant funding. While disbursement of MDTF grants covered expenses retroactively, the transition to the Extractive Industries Global Programmatic Support (EGPS) fund from January 2016 led to a six-month gap in funding for the EITIM Secretariat.
At the political level, the sustainability of the EITI process faces some risks given the potential impact of June 2016 parliamentary elections on government representation and chairing of MSWG meetings, given experience of the lack of National Council meetings in 2014 as a result of political changes.