Greater push for extractives to lift veil of secrecy as corruption bites

Friday January 29 2021
Oil rig.

Heavy equipment at an open cast mine at Industries Chimiques du Senegal rock phosphate mine in Taiba, Senegal, part of the largest producer of phosphate fertiliser products in sub-Saharan Africa. PHOTO | AFP


This, 2021, is the year of transparency in the extractive sectors, according to the United Nations, with an eye on reducing secrecy and corruption.

On the Global Anti-Corruption Day, December 9, 2020, the UN General Assembly voted 2021 as an important year for fighting corruption in general and in the extractive industries in particular as an opportunity for countries rich in natural resources to recover from the shocks of Covid-19 pandemic.

So far, only 55 out of the 193 UN member states have committed themselves to the Extractive Industry Transparency Initiative (EITI) Standards.

In eastern Africa, only Ethiopia and Tanzania have committed themselves to EITI standards. Uganda joined EITI in August 2020 and is required to publish an EITI report by February 2022.

Neighbouring countries subscribing to EITI include DRC, Republic of the Congo, Malawi and Zambia.

The EITI is the global standard for the good governance of oil, gas and mineral resources. When implemented by a country, the EITI ensures transparency and accountability about how a country’s natural resources are governed.


This ranges from how the rights are issued, to how the resources are monetised, to how they benefit the citizens and the economy.

In Africa — with a huge amount of natural resource deposits — the extractive industry has remained in the hands of a few politically-connected elites with the contracts and the income largely opaque.

Helen Clark, the board chair of the EITI, while speaking at the UN Assembly said data transparency is a tool that can contribute to better-informed and more inclusive decision making in resource-rich countries.

“Extractive sector transparency is essential in the recovery from the pandemic, especially for countries that depend on resource revenues,” said Ms Clark.

Sector transparency

Countries implementing the EITI standards must disclose timely production data, including production volumes and values by commodity, and timely export data, including export volumes and the value by commodity.

The EITI standard also requires public officials — also known as politically exposed persons (PEPs) — to be transparent about their ownership in oil, gas and mining companies.

According to Mark Robinson, the EITI executive director, the 55 countries implementing the EITI have reported over $2.71 trillion of total government revenue from the sector.

“Yet revenues from oil and gas are much reduced. And corruption risks remain present, especially with diminished economic opportunities,” he said.

In the Great Lakes Region, the illegal exploitation of natural resources has been recognised as one of the main underlying causes and effects of conflict.

In the eastern Democratic Republic of the Congo (DRC), for example, the illegal exploitation of gold and coltan has fuelled conflict for more than 20 years, involving a wide variety of national, regional, and international state and non-state actors such as militia groups.

In Africa, 26 countries (Ghana, Sierra Leone, Mozambique, Burkina Faso, Guinea, Cameroon, Chad, Nigeria, Cote d’Ivoire, Togo, Niger, Madagascar, Republic of the Congo, and Liberia) have committed themselves to EITI Standards.

But Nigerian laws do not require companies to disclose beneficial ownership information. However, beneficial ownership disclosure in Nigeria provides information on the ownership structure of Nigerian's common patrimony in the extractive industry.

In September 2020, the Republic of Congo published data for the first time on its national oil company. Information now entering the public domain includes oil sales by the state and international oil companies and the management of oil revenues not transferred to the Treasury.

A follow-up EITI report noted significant improvements in transparency of state-owned enterprises, oil sales and license information the country’s first validation in 2018.

Though the EITI Permanent Secretary Michel Okoko, the Republic of Congo said that oil sector reforms since 2018 have led to unprecedented transparency in the governance of the country’s extractive industries.

Ms Clark noted that Republic of Congo’s efforts to expand extractive industry disclosures beyond minimum requirements to areas of high public interest, including oil sales, production costs and the national oil company’s financial statements, was welcome.

“But the challenge is for all stakeholders to sustain progress and ensure that the EITI is contributing to evidence-based public debate,” she said.

Flurry of reform

In the neighbouring DRC, President Felix Tshisekedi has initiated reforms in the extractive sector to regularise the sector and has been holding meetings with mining companies.

The DRC government has also created a new structure, The Regulatory and Control Authority for the markets of strategic mineral substances.

To end the illegal exploitation of mines, the new laws require artisanal miners to register in mining co-operatives in order to have the right to mine.

But still, the country faces the challenge of more than 100 armed groups, especially in eastern DRC, who continue to exploit mineral resources with the connivance of foreign players, mainly from Europe and America.

President Tshisekedi has been under pressure to review the Mining Code that was put in place in 2018 by his predecessor, Joseph Kabila.

Under the code, the government declared certain minerals as strategic and thus attracting a 10 percent royalty fee.

In South Sudan — a country rich in natural resources — President Salva Kiir announced four months after independence in December 2011 that the country would implement the EITI Standards.

He said that implementing the EITI standard would ensure that all payments from oil and mining operations in South Sudan will be published in an annual EITI report for all South Sudanese citizens to see what they are receiving from their natural resources.

However, the oil sector remains riddled with corruption and opaque operations, while the mining sector is yet to be fully developed despite significant deposits of gold, iron, copper, diamond, and bauxite, among other minerals.