From Reporting to Reform: Eleven Opportunities for Increasing EITI Impacts

Under the EITI Standard, implementing countries are required to produce far more comprehensive reports than before; these go beyond revenue payments to include disclosures across the entire extractive industries decision chain. However, the objective of the Standard is not merely to generate more data, but rather that stakeholders will use the information to impact the governance of the sector. This EITI briefing note explores how countries are faring at meeting the EITI’s more ambitious requirements and what implementing countries can do to begin moving “from reporting to reform.”

This briefing note is based on a review of the first 22 reports produced under the Standard; the review assesses both the quality of reporting, as well as the content. We found that in many respects countries have risen to the challenge and become more ambitious and comprehensive in their reporting. This has included highlighting critical deficiencies in license allocation processes, revealing politically affiliated owners of companies, and identifying significant local revenues that were never disbursed. However, a number of significant gaps remain and these are holding countries back from seeing meaningful impacts from their EITI processes. For instance, these reports have missed opportunities to inform major tax code revisions, ignored hotly debated issues of sector employment, and left stakeholders in the dark about individual extractive projects.

The findings of this briefing note are highly relevant not only to the 22 countries we reviewed but crucially also to those countries which are about to embark upon the process of preparing their first reports in line with the Standard. By the end of this year, another 11 countries should have published reports following the Standard, and by the end of next year another 20 countries will have done so.

This briefing note provides a concrete set of recommendations which can guide EITI multi-stakeholder groups (MSGs) as they make decisions relating to the 11 areas identified in our review as vital in moving from reporting to reform. These recommendations are accompanied by specific examples drawn from the countries we reviewed, which highlight some of the challenges that were encountered but also the successes.

NRGI will also shortly expand our assessment tool which allows users to review the quality of EITI reporting and identify opportunities for impactful implementation.

Major recommendations:

Quality

Content

1. Relevance. Most EITI work plans fail to identify objectives that are linked to national policy priorities. Many new reports contained information on only one top headline-making issue. Going forward, multi-stakeholder groups (MSGs) should target issues that matter.

2. Timeliness. On average, the new reports contained information that was two years old. MSGs generally waited 14 months after the end of the fiscal year to start procuring the EITI report, which then took roughly ten months to produce. To increase impacts, MSGs should tackle today’s challenges with today’s information.

3. Openness. Of the 48 EITI-implementing countries, only nine countries publish information in a machine-readable format such as Excel. The general lack of machine readability significantly limits the usefulness of EITI data. MSGs can boost impacts by opening data.

4. Analysis. Only a handful of countries produce analysis based on EITI reports. MSGs should more consistently ask what the data in reports means.

5. Action. Only around half of countries’ annual activity reports (which review the impact of EITI implementation for the year) considered whether EITI processes had impacted sector governance. In EITI reports, only a few countries included recommendations on substantive policy improvements that went beyond simply improving EITI reporting. MSGs should ensure that EITI processes facilitate improved governance.

1. Contracts. Of the 22 new reports, 41 percent fail to include the government policy on contract disclosure. While only six reports provide direct access to contracts themselves, 64 percent of the new reports indicate that contracts must be disclosed in implementing countries, or recommend that they should be. MSGs should consider the exponential potential of contract disclosure to enhance the overall impact of EITI implementation.

2. Beneficial ownership. The EITI beneficial ownership pilot has revealed that disclosing beneficial ownership information is feasible and useful. While a fair amount of legal ownership information has been dislcosed in pilot countries, a relatively small number of beneficial owners have been disclosed. MSGs should identify the people with whom countries do business.

3. Production. The majority of countries are struggling to assign a monetary value to the resources produced in a given year. MSGs should determine what extracted resources are worth.

4. Projects. The new reports are generally not reporting on a project-by-project basis. MSGs should avoid aggregation that hides crucial information.

5. Subnational revenues. A large number of countries are struggling to include disclosures on subnational resource revenue transfers in their reports. MSGs should make reporting useful for the communities where extraction happens.

6. State-owned enterprises (SOEs). Although reports include disclosures on SOE payments and receipts, most are disclosing only limited information on SOEs’ quasi-fiscal expenditures. MSGs should tackle the complexities of SOE activities.