Transcript Extractive Industries Transparency Initiative

Extractive Industries Transparency Initiative (EITI)
GBS Annual Review
Key Issue 4 – Challenges in Combating Corruption
Dar Es Salaam
November 26, 2008
Implementing EITI in Tanzania:
The Pathway Ahead and Key Challenges
(including role of EITI Multi-donor Trust Fund)
Presentation by Vedasto Rwechungura
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Overview of Presentation - EITI in Tanzania

Recap of the purpose of this presentation
 To inform participants in the Annual Review exercise what
the EITI concept is, its status in Tanzania, the process of
assisting Tanzania to adopt and implement EITI principles
and the role of the World Bank and other interested DPs in
the process.

Why EITI? The EITI architecture globally

EITI process and criteria – and benefits to countries

Emerging results from EITI in other countries

Over the medium-term: “Beyond EITI …….”
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Underlying issue that EITI seeks to address:
“managing natural resources sustainably”
Although Tanzania is not yet mineral-dependent, given the global
experience of resource-rich countries, it is important to lay the
foundation early for transparency and good governance in the sector
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Transparency and good sector governance in the
context of Tanzania policy goals

Good governance can help mitigate the “resource curse” ….

Good governance has multiple features:
 Clear and stable laws and regulations
 Rule of law
 High level of capacity and skills in government
 Fiscal monetary and budget discipline
 Even and consistent application of laws and fiscal regimes to all
 Open dialogue between government and civil society
 Public sector/private sector balance
 Transparency
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EITI – a global standard locally implemented
to meet national goals and requirements
The Government
Civil Society
Companies
The Multi-Stakeholder
EITI Streering Group/Committee
National EITI Secretariat
(to manage day-to-day EITI work)
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EITI Global Structure – EITI Board
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The EITI Process ..... in a nutshell
(EITI partners’ goal is to help an EITI country to implement the EITI cycle)
Sign up
Disclosure
Preparation
Dissemination
Country undertakes
external validation
 Validation is the end-objective for an EITI country
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The EITI Process - part of a bigger picture
Companies
Disclose
Payments
Government
Discloses Receipt
of Payments
Government Spending
Award of
licenses
&
contracts
Regulatio
n
&
monitorin
g of
operation
s
Independent
Verification of
Tax & Royalty
Payments
Revenue
Distributio
n
&
Manageme
nt
Implement
ation of
Sustainabl
e
Developm
ent
Policies
Oversight by a MultiStakeholder Group
 The EITI provides a forum for dialogue and a platform for broader reforms
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Essence of EITI is disclosure – based on decisions of
EITI scope taken by national EITI stakeholder groups
Data from
Data from
Reconciler / Auditor
Companies
All EI companies
complete
individual data
reporting templates
(and provide
information as required
to Audit firm)
-- investigates / gets
more data to reconcile
any discrepancies
-- produces EITI Report
for Stakeholder Group
National Stakeholder
Group (Government,
Companies, Civil Society)
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Govt agencies
Govt agencies
provide data
(and information
as required)
EITI
Report to
public
EITI has achieved strong momentum at national level
…. At country level:

EITI Board has approved 23 countries as “EITI candidate” – 16 in Africa
Of these, 10 have published one or more EITI Reports to date (Sept 2008)
(Azerbaijan, Cameroon, Gabon, Ghana, Guinea, Mauritania, Mongolia,
Nigeria, Kazakhstan, Kyrgyz Republic)
Norway is first among developed countries to announce EITI adoption

Countries are able to align national goals with global EITI standard

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…… Globally:
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Now established as the standard on transparency in resource areas with
consensus on EITI principles, objectives, criteria
International EITI architecture fully in place (EITI Secretariat, Oslo)
Range of supporting companies; civil society; agencies like World Bank,
African Development Bank, etc.
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What the EITI International Secretariat does

Overall oversight of EITI and policies globally
 candidacy process
 validation process (EITI compliance

Provide guidance on methodology

Provide advice on best practice

Link up an implementing country with other
implementing countries and organisations
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What World Bank and EITI Multi-donor Trust Fund
(MDTF) does to support EITI implementation

At country level, World Bank managed MDTF (and all partners) help to:
 build 3-way consensus for EITI - at start of process and throughout
 build multi-stakeholder structures to design and manage EITI
 provide technical and financial support for EITI implementation
 ensure EITI process lead to EITI “compliant” status (validation)
 At global level, World Bank managed MDTF activities designed to:
 support global EITI movement
 proactive knowledge dissemination and best practice sharing
 proactive support for sub-regional EITI collaboration and training
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Benefits of adopting EITI as seen by countries

Clear signal to all stakeholders and investors on national
commitment to transparency

Membership of a well-known global standard … while also

Building collaboration and trust among government
companies and civil society on mining / oil issues in Tanzania.

Brings together data on mining/oil financial flows in one place

Possibility for improving sovereign and corporate ratings, and
hence foreign and domestic investment through lower risks
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Benefits of adopting EITI as seen by countries

In some cases, EITI has yielded additional revenues from
extractive industry (from revisiting past corporate tax payments)

Possibility to expand to anti-corruption focus in oil gas and
mining (although EITI is not a direct anti-corruption instrument)

Diagnostic for assessing effectiveness of EI revenue collection

Platform for moving to wider governance reforms beyond EITI
 BUT … EITI is not cost-free to governments. Needs:
 clear and sustained political commitment at senior level
 assigned staff to the EITI effort – with the needed resources
 budget funding for EITI process – especially EITI validation
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“Beyond EITI”: EITI Criteria is about a minimum
standard - which does not aim to cover everything
EITI CRITERIA
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BUT - WHAT ABOUT:
Independent reconciliation /
audit of payments made and
revenues received.
Publication and widespread
dissemination of results.
Comprehensive coverage, i.e.
all companies including stateowned and local companies.
Full engagement of civil society
in the process.
Public, financially sustainable,
time-bound plan of
implementation.
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Transparency of licensing?
Were “fair” terms and
conditions negotiated?
Are long-term revenue and
benefits for country optimal?
What companies pay vs. what
they should pay?
Revenue allocation e.g. to subnational level and communities
Environment / social linkages?
… and the whole of the
“expenditure side” (not in EITI)
“Beyond EITI”: EITI is narrowly-focused yet provides
platform for further reforms and good EI governance
Licenci
ng and
Awardi
ng
of
Contrac
ts
Monitor
ing
of
Operati
ons –
complia
nce
Collecti
on
of
Taxes
and
Royalti
es
Distribu
tion
of
Revenu
es
(and
spendin
g
side)
Utilizati
on in
Sustain
able
Project
s–
social
and
environ
.
EITI process
• EITI is a key goal in itself – but is also a first step towards a broader
extractive industry (EI) governance reform and sound EI management
• Beyond EITI, countries are seeking support on governance over the
entire resource cycle (the “++” agenda) -- this is distinct from EITI
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Extractive Industries Transparency Initiative
Thank you!
For information on EITI globally visit the website:
www.eitransparency.org
World Bank contact:
Vedasto Rwechungura
World Bank Dar Es Salaam Office
[email protected]
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