The new challenge for EITI: becoming a tool for improving the living conditions of poor populations

Source: PWYP DRC
Date: 4 Dec 2021

You can also read this report in PDF

By Jean Claude KATENDE, Member of the EITI Board.

The Extractive Industries Transparency Initiative (EITI) is an international transparency standard. It brings public institutions, extractive industries and civil society to the same table as a multi-stakeholder group. The task of this group is to supply information, in an accessible and comprehensible form, to the general public regarding all payments made by extractive industries, and all revenues received by governments.

By supplying the aforesaid information, EITI increases transparency. The initiative shatters the impenetrability that previously characterized the extractive industries for so long. As such, it contributes to strengthening the obligations on the governments of member countries to be accountable to their citizens for the management of revenues arising from the extractive industries.

By instituting formal dialogue between governments, the extractive industries and civil society, EITI has become a highly innovative undertaking for our age.

1. EITI: an initiative that gave rise to many hopes.

In 2002, the launch of EITI gave rise to many hopes, especially among civil society organizations. This was because the initiative enabled them to have access to a significant body of data, and to take part in the debate on managing revenues arising from the extractive industries.

Many resource-rich countries rushed to sign up. Some of them did so because they were keen to improve their governance of the extractive industries. Meanwhile others merely wanted to use EITI as a outward sign to give the impression that they had become more transparent.

The aforementioned countries were at pains to implement the EITI principles, criteria and requirements in order to gain the status of compliant country. However, they did so without embarking on the reforms necessary to bring about transparency. They forgot that a country may achieve compliance without achieving transparency or without becoming transparent.

During the first decade of its existence, 2002-2012, EITI saw 37 member countries signing up, 21 of them in Africa. Several developed countries, such as the United States and Australia, have already expressed their intention to sign up. Around the world, over 700 businesses are supporting, or participating in, EITI implementation.

As a result of EITI, over 30 countries have produced at least 100 data reconciliation reports.

These reports contain information of quite exceptional quality. Nevertheless, they have not led to the changes expected by poor populations, i.e. an improvement in their living conditions.

In many EITI implementing countries, populations’ living conditions have remained as they were before the launch of EITI.

This status quo is due to the fact that the reports are based on very old figures for payments and revenues. In addition, parliamentarians and civil society make limited use of them. This in turn limits the obligation to be accountable on the part of governments. Lacking any sense of being held to account by the people or by parliamentarians, some leaders continue to mismanage the revenues arising from the extractive industries. It is as if EITI had never existed.

On the subject of EITI Reports being based on data two or three years out of date, the 2007 EITI Report of the Democratic Republic of Congo was distributed in 2010. On that occasion, a woman told us: “Your EITI is no use. It’s like the doctor who arrives after the patient has died. What good is it?”. Even if EITI undertakes to work on concerning itself with very recent data, that woman’s question expresses the deep need of all poor populations to see EITI having some effect on their daily lives.

During the distribution of the EITI Report covering the financial years 2008 and 2009 in Kinshasa, a civil society actor addressed this comment to me: “Mr Katende, give your figures a human face as well. I mean, try to discover what impact the figures of your report have had on the lives of the Congolese populations. Otherwise, the situation of the populations before EITI is no different from that after EITI.”

All of these comments and remarks helped me to understand that poor populations will only take ownership of EITI when it has an impact on their lives. They can only fight for EITI if they see the positive effect of the initiative on their lives. That was when I understood that the future of EITI is at stake here. Without direct impact on the lives of the poor, EITI has no future, at least in the long term.

Here, it is appropriate to recall the message sent by Ms Clare Short, Chair of the EITI Board, to members of Publish What You Pay (PWYP) meeting in Amsterdam to mark the network’s tenth anniversary.

She said: “I congratulate everyone that has been involved in Publish What You Pay. You have put the spotlight on one of the greatest development challenges. You have also contributed to change, through the EITI as well as your other efforts. But there is a long way to go before natural resource riches bring benefits and development to all, especially the poor.”

The road that remains to be travelled, both for EITI and for PWYP, is the one that sees poor populations benefiting from their natural resources.

2. Impact and future of EITI

In order to fulfil the hopes that it raised, EITI should consider its future. Above all, thought must be given to the question of its direct impact on the lives of poor populations. EITI should become a tool that contributes to improving the living conditions of local populations in resource-rich countries.

In order to guarantee a lasting future, EITI must work on two important priorities.

Validation of the process in implementing countries

The validation process makes it possible to check, and ensure, that a country’s implementation of EITI principles, criteria and requirements is of the highest quality. This has the advantage of preventing each country from creating its own version of EITI.

However, whatever the advantages of validation, it is not concerned with discovering what impact EITI might have had on the lives of populations in the implementing country.

The Validator may be an individual or an organization. Their role, as stated in the Validation Guide, is to assess compliance with the EITI principles and criteria in line with the 20 requirements. As the aforementioned requirements do not address the question of the impact of EITI on the lives of populations, the Validator does not consider it either.

That is why there is a need to implement some other mechanism. This would serve to evaluate the contribution of EITI in improving the living conditions of local communities.

Evaluating the impact of EITI on the lives of poor populations

This mechanism would serve to evaluate the various changes brought about in a country on account of EITI implementation. Such changes may be positioned at various levels.

- At legal framework level (legislation)

Here, it is a question of seeing what changes are generated by EITI implementation in a country. Recent experience shows that, in some countries, EITI has led to changes in framework legislation, i.e. in their Constitution. These changes include incorporating the obligation to publish all mining, gas and oil contracts, as well as revenues received from extractive industries.

In this field, Niger provides model. Article 150 of its Constitution stipulates that:

“Contracts for the prospection and exploitation of natural and underground resources,
as well as revenues paid to the State, disaggregated by company, are published in full in the Official Gazette of the Republic of Niger”. [Unofficial translation]

Addressing participants in the deliberations of the 66th session of the United Nations General Assembly, President Issoufou Mahamadou said: “Previously a source of affliction, the exploitation of these resources shall henceforth be solely for the benefit of the people of Niger. In signing up to EITI, we affirm our willingness to invest the revenues exclusively for the benefit of the people of Niger.” This statement by the President of Niger creates a direct link between EITI and improving citizens’ living conditions.

Thanks to EITI, the Constitution of Niger has experienced a genuine revolution by actually enshrining transparency in contracts. This is a question that remains the subject of much debate in many countries.

In other countries, EITI has led to the implementation of transparency laws. The content of these is not limited exclusively to questions of publishing revenues. Rather, they also deal with other questions such as the fight against corruption and access to public information. This is the case with the EITI laws in Nigeria and Liberia.

Conversely, in other countries, EITI has not produced material changes at legislative level. Regulatory measures have been taken by the President of the Republic or Prime Minister to manage and ensure the functioning of EITI. However, apart from these, there are no specific laws on transparency inspired by EITI. This is the case in the Democratic Republic of Congo.

It would be worth evaluating and quantifying this kind of impact of EITI on the legal framework of a country.

- At the level of taxation

This will be a matter of seeing whether EITI implementation in a country leads to the following in particular:

• Establishment of a taxation database at national/federal level, especially in countries that have a federal or decentralized system;

• The maximization of revenues received by the financial authorities or State agencies. Have the revenues received by the State increased since EITI implementation?

• The highest standard of documentation of payments received from extractive industries by State agencies.

- At national budget level

Here, evaluation would consist of seeing whether the increase in revenues arising from extractive industries has led the Government to invest those revenues in priority sectors for local populations. These would include building roads, schools and hospitals, with free provision of primary care and free provision of ARV for people with HIV, as well as access to clean water and electricity.

It is enough to compare the budgets (budget lines) of a country before and after EITI implementation in order to see what changes have taken place.

The greater the increase in revenues arising from extractive industries, the more the government must invest in priority sectors. Such investments, associated with the participatory strategy, must necessarily have a genuine impact on local populations.

It should be said that other data on national life could also be taken into account in order to understand the impact of EITI on the lives of local populations. It may also be a question of seeing how the presence of EITI in a country has contributed to reducing corruption and fraud in the mining and gas sectors.

Such an evaluation could be initiated by the EITI Board, under the supervision of the International Secretariat. The evaluation could be conducted by a group including experts from civil society, universities and international figures whose reputations and probity are universally recognized. The ongoing discussions of the EITI Board on this matter are highly commendable and are heading in the right direction.

Those experts appointed by the EITI Board would work under the supervision of the International Secretariat. They would travel to the countries in question in order to carry out their work of evaluating the impact of EITI.

Subsequently, they would be required to send their report to the Board for distribution. The Board would be required to make such reports public so that they could serve as examples to other countries.

In conclusion, it must be said that EITI has already made huge progress in establishing itself as an internationally recognized standard in the field of revenue transparency. The task remains for it to become a tool for improving the living conditions of populations in resource-rich countries. This is what is required for people to be able to make EITI their “own business”.

The direct impact of EITI on the lives of populations could make this standard into a genuine tool for change and guarantee them a better future.

This initiative has raised so many hopes. If the question of the impact of EITI on the lives of poor populations is not added to its agenda, its days are numbered. At the very least, the enthusiasm that it has excited is at risk of gradually disappearing.

Jean Claude KATENDE, email: [email protected], Telephone: + 243 81 17 29 908, Kinshasa,
D.R. Congo