The New EITI Standard and the role of civil society

Photo © EITI
Speakers at a plenary at this year's EITI conference, 23-24 May 2013.

The recent global conference of the Extractive Industries Transparency Initiative (EITI), convened in Sydney from 23-24 May 2013, provided an opportunity for the EITI board to adopt and launch the EITI Standard, a new set of membership criteria and reporting standards aimed at strengthening the contribution of the EITI to improved governance of extractive industries.

Now in its tenth year of existence, the EITI has nearly forty members, twenty-three of which have achieved full compliance with the initiative’s standards. Membership has grown steadily among both developing and developed countries – the governments of the United Kingdom and France announced at the conference that they will be implementing the EITI, the host Australian government is currently reviewing a pilot phase implementation of the standard, and the United States government has formed a multi-stakeholder group to further president Obama’s 2011 commitment to joining the EITI. On the occasion of the global conference, a host of other countries have also joined or expressed an interest in implementing the EITI, including Philippines, Ukraine and Honduras.

The EITI traces its origins to a civil society campaign called Publish What You Pay (PWYP), which picked up momentum in the early 2000s. It is a voluntary initiative that aims to address the so-called “resource curse” by increasing transparency, specifically of companies’ payments to host governments. In essence, the initiative involves companies declaring what they pay to governments and governments in turn declaring what they receive from companies. These payments are independently verified and reconciled in a process overseen by a multi-stakeholder group (MSG) consisting of government, companies and civil society.

Civil society organisations have played an important lobbying role in the creation and ongoing evolution of the EITI, and continue to do so by urging more countries and companies to sign up. In addition, civil society provides an oversight function, exemplified by their representation in the MSG.  In many cases, the MSG has proven to be a path-breaking development in countries where civil society had long been excluded from engaging with government or industry in the extractive industries.

The EITI, like other multi-stakeholder initiatives, has sought to strike a balance between responding to calls for broadening and strengthening its scope and the need to maintain effectiveness and encourage the buy-in of current and prospective members. In announcing the new EITI Standard, the board emphasised that in most cases the new requirements were drawn from best practices by EITI implementing countries that had gone beyond the initiative’s original reporting standards. A key aspect of the new Standard is that companies will be required to report revenues disaggregated on a project-by-project basis; a practice that had already been instituted by EITI member countries such as Zambia, Mali and Indonesia. All EITI members will also be required to follow Norway’s example of reporting on payments to government by state-owned enterprises. EITI member countries are further required to provide a clearer context for the data so that reports are easier to understand, outline the process for granting mining and oil/gas licenses and specify current license holders, as well as report on payments to sub-national governments.

The new standard has been recognised as a significant improvement on earlier reporting requirements, but the EITI continues to face criticism.

Civil society actors have long emphasised that transparency is a necessary though not sufficient condition for good governance: EITI compliant countries such as Mali and Nigeria continue to face significant governance challenges.  An evaluation report commissioned by the EITI board and published in 2011 notes that the initiative has struggled to achieve an impact at societal level, which is ascribed to a lack of links with larger public sector reform processes and institutions. Civil society organisations will continue to play a critical role in engaging with national EITI processes as well as continuing to advocate for the strengthening of the EITI standards. A recent policy briefing published by SAIIA, for example, argues that the EITI does not sufficiently address the specific challenges faced in the Mozambican extractive sector and provides a set of recommendations for the reform of the Mozambican chapter (MEITI).

Civil society also has an important role to play in encouraging governments to join the EITI and fostering the political will for implementation where this is lacking. An analysis of civil society’s potential galvanising role, such as in the case of South Africa’s reluctance to sign up to the EITI, can be found in a recent SAIIA Occasional Paper. The author examines the claim by the South African government that it does not perceive value or any added advantage in signing up to  the EITI because its existing budgeting and regulatory frameworks and policies are sufficient. In addition, the paper also considers political and ideological resistance, including the claim that the EITI is a “northern” initiative being imposed on the “south”, but finds that these arguments holds less water as the US, Australia and other developed nations have joined or are planning to join the initiative.

In the longer term, the EITI’s success will depend in large part on the ability of local civil society organisations to use the more detailed contextual data generated as a result of the New EITI Standard to ensure effective monitoring and accountability. Added to this, an instructive lesson from the EITI’s experience of the last 10 years must be heeded: the framework will remain relevant to evolving transparency challenges only if it continues on its present evolutionary path. This includes offering a platform for experience sharing among its members, as proposed by another recent SAIIA piece looking at the EITI’s potential relevance to the South African context.