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Category: Research Reports
Location: Lusaka
Year: 2016

Review

Executive  Summary

The Extractive Industry Transparency Initiative (EITI) is one of the six tools of the ICGLR Regional Initiative on the fight against the illegal exploitation of natural resources in the Great Lakes region adopted in December 2010 by ICGLR Special Summit of Heads of State and Government held in Lusaka, Zambia. The ICGLR was mandated to foster EITI implementation in its Member States through the promotion of peer-learning. The EITI is an international standard that promotes worldwide revenue transparency in the extractive industries (mining, oil and gas). The EITI is also a process through which stakeholders, through periodic reports put together by independent administrators, avails to populations the declarations on state revenues and contextual information coming from natural resource exploitation such as taxes, signature bonus, production bonus, royalties, dividend and other taxes. Out of the twelve ICGLR Member States, five - Democratic Republic of Congo, Central African Republic, Republic of Congo, Tanzania and Zambia - have joined and are implementing the EITI. Central African Republic has since 2013 been suspended from the initiative following political instability in the country. The remaining seven - Angola, Burundi, Kenya, Rwanda, Uganda, South Sudan and Sudan are yet to join, but some (Uganda, Burundi and South Sudan) have expressed strong interest. The EITI reports published by the five countries show the traceability of these revenues and their immediate consequences are the increase of state profits and the adoption by governments of accountability principles.

This operational research shows that all five implementing countries joined the EITI before the ICGLR Lusaka 2010 Heads of State Special Summit. No country so far has embarked on the implementation of the EITI as a result of the decisions taken by the Heads of State in Lusaka. The reasons for the seven countries not implementing the EITI are many but show some similarities. These include lack of significant industrial minerals sector in the country, lack of political will, weak advocacy from civil society, and most notably, poor understanding of the benefits of the EITI. However, the discussions held with the different stakeholders suggest that these hindrances can be resolved.

This report is a situation analysis and needs assessment of the EITI in the region1. It identifies good practices and highlights challenges for the consolidation of the EITI in implementing countries. It also identifies obstacles that prevent countries from joining. It provides a country-by-country portrait and recommendations based on peer-learning. Judging from a number of benefits such as full publication of revenues, publication of mining contracts, the drafting of the law on transparency and fiscal responsibility as well as the enhanced missions of the Court of Audits and General Secretariats of Finances, it is clear that the EITI if properly implemented, can improve resource governance in compliant countries. This research has established that for most implementing countries the principle of transparency is no longer voluntary but it is becoming a compulsory norm for the country and its industrial partners. The EITI is therefore an important governance tool for countries with mineral and energy resources, especially those that are experiencing poor governance and those whose extractive sector is still in its early stage. The EITI imposes a culture of accountability, fights corruption, improves government revenue collection, and builds trust among key agents of change—governments, companies and civil society. The progress made by implementing countries in the area of natural resource governance as well as identification of challenges and obstacles faced by other ICGLR Member States gave opportunity to identify policy options which should be used both to strengthen EITI in the implementing countries and to encourage others to become part of the process.

Key learning points emerging from this study include:

  • In the CAR, the creation of 16 EITI regional sub-committees has helped to decentralise the issue of revenue transparency to local levels. The EITI has also created space for parliament to get involved in overseeing extractive industries revenue. The EITI has triggered the creation of a special line in the national budget just for the extractive industries. The National Council for EITI is chaired by the Prime Minister and the Central Bank, and parliament is represented as well. Civil society is widely represented, including labour, religious denominations, the public and private press, the human rights observatory and lawyers.
  • In the DRC, the EITI has facilitated the integration of transparency principles into the new draft mining code as well as in other laws that govern the natural resources sector. It has also helped improve relations between the three key groups— government, civil society and companies. The composition of the multi-stakeholder group has become a model used in other public reform processes, such as the process of reviewing the mining code and the drafting of the hydrocarbon code. The publication of contracts involving natural resources has become compulsory.
  • In the Republic of Congo, the government has produced a draft law on fiscal transparency and accountability. The country publishes all the information related to extractive industries, including contracts. Maybe the greatest impact has been parliament consulting the figures in the EITI report before the adoption of the national budget. The participation of all government services responsible for collecting taxes and royalties in EITI-related activities is a demonstration of the positive impact that the EITI has had on improving revenue governance.
  • In Tanzania, the country's initial approach of consulting stakeholders before taking the decision to join the EITI is a useful learning point for other countries that are considering joining. The approach contributed to the rapid and smooth implementation of the EITI, and helped to increase a sense of ownership. Even if challenges are still there, both in terms of setting up legislation and effective implementation, Tanzania has shown that with sufficient political will the EITI can be a useful tool to advance transparency and increase government revenues.
  • In Zambia, the EITI has improved access to information for many key stakeholders and increased the level of debate on the extractive industries. Zambia’s effort to expand the EITI to forestry is a demonstration of governments' increasing confidence in the initiative. Zambia has made progress in its efforts to legislate the EITI, and draft legislation is ready to be signed into law.

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