Beyond Transparency: Enhanced EITI standard set to raise the bar

2013 marks ten years of the Extractive Industry Transparency Initiative (EITI).  At the sixth conference in Sydney from 23th to 24th May a revised standard was agreed and launched. The key questions are will the revisions to the Standard keep it sufficiently fresh and relevant and how to make the jump from transparency of payment data to accountability?

CAFOD has been involved from the early development of the EITI multi-stakeholder initiative.  The newly revised standard does show significant improvements, drawing on the experience of EITI implementing countries over the last decade.  The requirement for EITI reports to include disaggregated data broken down by each company for instance is welcome and long overdue. This will end the situation which Timor-Leste experienced where some companies already reporting on a disaggregated basis under EITI Nigeria wasted a long time arguing against a similar level of disclosure for Timor-Leste’s reports.   

Additional elements which enhance the standard include:

• Reports have to provide a clearer context for the data so that they are easier to understand. For example, they should set out the contribution of extractive industries to the overall economy, production volumes and values, employment etc.
• State-owned enterprises are also covered as are payments to sub-national governments
• As well as reporting payment information, EITI countries will have to report on the process for granting mineral and oil/gas licences and who holds them.
• Reporting on beneficial ownership – i.e. who actually owns and controls an extractive company is recommended and will become a requirement from 2016

• Although not yet a requirement, countries are encouraged to publish contracts as well as payment information.

All these measures will help with the next step of EITI’s development – moving beyond transparency to accountability so the technical data in the reports actually influences public debate about how natural resources are being used and who is benefiting.

Enhanced EITI does look more useful in that respect. CAFOD partners in Colombia and the Democratic Republic of Congo have stressed the importance of being able to access mining contracts in order to get a fuller understanding of projects with a direct impact on their lives and communities.

The theme of the Sydney conference is Beyond Transparency. Perhaps another equally important theme for this year is Beyond EITI.  The helpful revisions to the EITI Standard need to be placed in the context of significant developments in the introduction of mandatory reporting requirements for oil, gas and mining companies. 

In the early days EITI hindered rather than helped when it came to Publish What You Pay’s campaign to change the law.  But after a few years, when there was more evidence of both the possibilities and limitations of this multi-stakeholder approach, law-makers realised that EITI on its own would not be enough to deliver transparency. The US Dodd-Frank law and the revised EU Accounting Directive requiring extractive companies to report on their payments for each country and project will reach beyond the EITI’s 39 implementing countries and provide more timely and reliable data on payments.

A strong message in Sydney from governments, civil society and companies was that transparency is not an end in itself but needs to support accountability and wise management of natural resources.  EITI alone will not be able to deliver that goal.  But now the initiative is in better shape to play its part. 

Looking ahead we can expect more readable reports and EITI discussions at country level getting into contracts and ownership questions. Add in legal reporting requirements for the majority of oil, gas and mining companies and it is clear that there has been a significant change in what we expect from the industry. 

Now it’s time to link access to data to a broader range of governance issues and rights such as free, prior and informed consent, freedom of speech and freedom of association.  The next ten years will be all about impacts and whether the citizens in resource-rich countries around the world are able to turn transparency into accountability.

Open Working Group on SDGs is ‘getting down to business’

Young people in Brazil also getting down to business (growing towards peace project)

The Kenyan Co-chair, Mr. Kamau, opened the recent session of the Open Working Group (OWG) on SDGs taking place in New York from 17-19 April urging delegates to ‘get serious and get on with the business’. This is great news since the OWG has been a long time coming. Initially expected in September 2012, it only came into being at the beginning of this year. The delay was caused by tough negotiations on modalities that resulted in 70 countries sitting in 30 seats.

While Member States were still busy refining the modalities during the first session in March, the second session in April addressed a couple of central issues head on: What do universality and differentiated targets for country context look like in practice? How should poverty eradication be addressed in the framework – as overarching target or as a goal (or both)?

Poverty eradication as top priority?

I presume the fact that poverty is on the top of the agenda is a sign that it is a top priority, or even outcome number one. In that case there is a risk that this focus on poverty eradication might be lost further down the line during the sessions scheduled over the next ten months, which cover a wide range of topics related to human development, inclusive growth and environmental sustainability. After all, the purpose of the framework should be keeping poverty eradication on the international agenda, focusing on the poorest and most marginalized, while ensuring that all countries take action to keep development within our planet’s natural thresholds.

Inputting to a black hole: what will the HLP report deliver?

I’ve developed a tendency to sit on the edge of my seat. Maybe it’s the tension building as the High Level Panel report gets closer. In under month, on 31 May, the first major input into the post-2015 discussion will be delivered. At the moment, it feels as if there’s a lot riding on it. If it does its job and creates a new vision of development based on solidarity, equity and participation, then it will open up the space for the conversations that will follow.

A day in the life of an advocacy accompanier

As an Advocacy Accompanier, I probably have one of the strangest named, but most interesting jobs in CAFOD. I support CAFOD’s partners to do advocacy on issues like children’s rights, economic justice, land grabs, extra-judicial killings and climate change and in the last year I’ve worked in six different countries. But how can you be an expert on so many different places and issues, my friends often ask me? The short answer is that I’m not. And nor do I need to be. The local organisations on the ground have a wealth of knowledge gained from the work that they do every day that is different from mine. My role is to support them think through the how of advocacy and together we grapple with questions such as: How can you make sure that your land grabs report lands you in the Minister’s office and not in jail? How can make the public buzz about budgets? Why would a sceptical politician choose to attend Stakeholder Dialogue meeting at your community centre and not steak barbecue lunch at the 5* hotel corporate lobbying fest ? I ask these questions because effective advocacy always requires a strategy: it’s not enough to be passionate about a cause, to publish a lengthy report or spend your time convincing those who already agree with you.

The kind of support I give varies: workshop facilitator, mentor, critical friend, sounding board, or researcher – everyone has different needs so there is no one size fits all approach to this job! Perhaps it would be a lot less work and cheaper to run a generic advocacy course in order to disseminate a CAFOD approach to advocacy. However, I suspect that this would be ineffective, out of touch with local reality and risky in the long-run.

So, why this word accompaniment in my job title?

Are Small Businesses getting a Bigger Profile at the World Bank?

The importance of small businesses has been getting more profile at the World Bank (and beyond), if this week in Washington is a good indicator.

CAFOD is pleased to see that this realisation seems to be catching on. At a meeting of a right-wing think tank on the World Bank’s controversial Doing Business project, former World Bank President, Paul Wolfowitz suggested that the project’s flagship report should be renamed “The Small Business Report”.

At a meeting with civil society, Russia’s G20 Sherpa said that she “could not agree more” with CAFOD that small businesses should be central to the efforts of the Development Working Group’s future work plan.

But it is too soon for the Economic Justice team at CAFOD to relax and take a break – even if we think we’ve earned one! We still have our work cut out to turn this emerging consensus into a real benefits for poor entrepreneurs in developing countries.

Take, for example, the Doing Business project. The four top priorities that we often hear from small businesses are: access to credit, corruption, property rights and the need for better education and health services (most poor businesses rely on labour of one or two individuals – so their health and skill set are important to success). Examining how Doing Business rates in helping them to overcome these constraints indicates some important directions for reforms.

Starting with corruption – Doing Business does not tackle the issue, despite its importance to the ability to operate and the success of poor entrepreneurs. The Doing Business team have started to pay attention to the results of enterprise surveys to more closely align their topics with the priorities of firms – but clearly more needs to be done.

Credit, on the other hand, is tackled by Doing Business, but highlights another short-coming of the project. Zambia ranks very highly on the indicator, yet over 90% of firms still cite access to credit as a main barrier to success. This suggests that Doing Business does not, by itself, do a good job of guiding government reforms. The Zambian government, guided solely by Doing Business might think it has done a great job. However, a discussion with local businesses would soon put them straight. This is why we are recommending Doing Business should only be used in combination with such dialogues and other more specific and detailed diagnostic tools and we must be sure to use Doing Business cautiously and appropriately in the policy reform process.

Doing Business also falls down with respect to property rights. This time the failing is that Doing Business is biased towards one-size-fits-all and is not well-designed to support context-specific solutions. For example, Doing Business promotes one kind of property rights and does not recognise the importance of community, collective rights or rights of use and access on which many poor people’s livelihoods depend.

Finally, it is right that Doing Business does not directly address health and education issues in its indicators – it is a specific, limited tool, not a panacea to all problems. There are some things better left to other tools However, Doing Business does promote low overall rates of corporate taxation, which undermines the ability of governments to provide this broader support to their working populations. Examining the impact of specific indicators and revising them according to their impact on poor enterpreneurs also needs to be on the to-do list of the World Bank review process currently underway.

The World Bank needs to take these next steps to support small business if it is to achieve the vision of new World Bank President, Jim Yong Kim, presented at these Spring meetings. This vision, to underpin a new strategy to guide the Bank’s work, has at its core goals to achieve shared prosperity and poverty eradication and recognition of the importance of the private sector in achieving these ambitions. Although it does not explicitly mention small businesses, they will be central to this endeavour.

Using Public-Private Partnerships (PPPs) to channel UK aid

The use of public-private partnerships (PPPs) to deliver UK aid has been multiplying and looks set to increase in the coming years. All of these PPPs have some kind of arrangement between the public and private sector for the private sector to deliver some or all of the goods or services which traditionally fell under public sector responsibility, such as health care provision or building a road.

The one term PPP can refer to a wide range of different initiatives, some of which can have quite complex structures. For example, PPPs in international development have both a donor government such as the UK and a host government receiving UK aid as the public sector partners, but often the donor governments often channel their money indirectly to PPPs, via the World Bank, the Private Infrastructure Development Group and various other channels. There has also been a recent increase in sales of PPP equity, with over 75% of these transactions now being made through offshore infrastructure funds.

And when it comes to the private sector partner(s), they could be various different business sizes, structures or sectors; ranging from small-scale farmers, artisans or local entrepreneurs to UK companies and transnational corporations.

Given this diversity of the public sector, private sector and PPP structures, it is not possible to make any general assumptions about what the development impacts will be for all PPPs. This means that assumptions must be tested at the assessment, monitoring and evaluation stages for each PPP by all of the actors involved.

CAFOD’s new discussion paper picks out some of the key arguments that we have identified from the international debate about the advantages and disadvantages of using PPPs to deliver UK aid and then raises questions which we think will help the policy debate to better understand:

• The nature of the value that PPPs add to the delivery of the environmental and poverty reduction objectives of UK aid
• the ways in which the learning from the impact of these PPPs is informing policy and practice

The paper is the first in a series looking at the use of PPPs to deliver UK aid. CAFOD would like to hear your opinion about these questions. Are they the right questions to ask? Are there questions missing? What do you think are the added benefits of using PPPs to deliver aid? What has been your experience of applying the learning from implementation to new UK aid funded PPPs?

All comments are welcomed and can be sent to:

Beck Wallace, Lead Analyst on Extractive Industries & Corruption bwallace@cafod.org.uk

Publish What You Pay celebrates as Europe takes the lead on transparency

Today activists from more than fifty countries will be celebrating a deal agreed in Brussels last night. Excited emails popping up in my inbox from countries like Timor, Australia, Ghana and the US show that this is by no means just a European affair.

Yesterday evening following a series of protracted negotiations, the European Council and the European Parliament reached a deal on changes to the Accounting and Transparency directives which will require oil, gas, mining and forestry companies listed on European stock exchanges (and the very largest non-listed European extractive companies) to publish what they pay to governments.

Timorese villagers discuss income from natural gas industry

Readers of previous CAFOD blogs will know that some extractive companies were lobbying to create exemptions within the law and set a ridiculously high reporting threshold which would have meant that payments below a million Euros remained secret. There has also been massive resistance by industry groups against project-level reporting, despite the fact that the United States introduced this level of detail in its transparency requirements for extractive companies under 2010 Dodd-Frank Act.

But the arguments of those promoting transparency-lite haven’t stood up to close scrutiny. In fact a robust approach from the European Parliament and growing recognition by EU Member State governments that this opportunity was simply too important to waste means that the final deal is worth the wait.

Project level reporting will be a key part of the transparency reforms as well as country level reporting. The threshold for triggering payment transparency is going to be 100 000 Euros – a much more relevant figure for citizens in some of the poorest countries in the world such as the Democratic Republic of Congo than the million Euros business had proposed.

What does it mean in practice? With last night’s deal, Europe has taken up the baton from the United States. These reporting requirements mean that local organisations in Cambodia, Angola, Zambia, Colombia, the Philippines and many other countries in the developing world will be able to access reliable information about extractive projects in their own countries. And let’s not forget how dangerous life can be for activists asking questions about mining deals in some of the more remote corners of the world. It means that officials responsible for negotiating key natural resource contracts will know that information on how much multinational companies actually pay is going to end up in the public domain. This is a crucial step in making sure that income from natural resources is used to support lasting development not conflict or corruption.

Explaining what had happened last night to two friends who are not part of the Publish What You Pay coalition and who work in completely different fields, their response was slightly underwhelmed. Surely this was common sense – why shouldn’t citizens of resource-rich countries know who is paying what for their natural resources?

It may have taken ten years but the agreement in Brussels last night showed that European MEPs and EU Member States have recognised that this is indeed common sense.

As the momentum grows for transparent ways of working which mean that businesses and governments are accountable to citizens, it’s over to you G8 – show us how you will build on this valuable work.

Changing indicators to change the world: evidence from the ground.

Why the way we measure progress on education matters.

The building of a school next to an IDP camp in the Teso sub-region. Research participants said they have the physical walls but not the teachers and teaching materials needed to provide their children with quality education.

A widely acknowledged success of the current MDG framework is the creation of strong incentives for the governments of developing countries to achieve progress on the agreed goals. Governments want to receive international praise and increased AID flows associated with the implementation of good pro-poor policies. Government performance is assessed on the achievement of the MDGs targets associated to the goals. If we take the example of the second goal “Achieve universal primary education”, the target is to “Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling”. The key indicator used is the Net enrolment rate in primary education, complemented by the number of pupils enrolled in grade 1 who reaches grade 5, and literacy rates. This post examines the implications of the incentives generated by the current MDGs indicators. It does so by considering the critical views of those living in poverty collected through the COMPASS 2015 research.

CAFOD’s new paper: ‘Building from the ground up’

How the foundations of a post-2015 framework should translate into change for people in poverty

CAFOD has published a new paper on the post-2015 agenda. ‘Building from the ground up’ looks at the value-add of a global development framework, contributing to the discussion to define the post-2015 agenda. It looks in detail at the values CAFOD believes the framework should be built on to take us towards a shared vision for global development. The paper shows how this can be practically done by suggesting example goals which embody those values, including empowering governance, equitable economies, and resilient livelihoods.

Finally, it makes a suggestion on the framework architecture, and how indicators can link across goals to ensure that no goal can be left behind while the others make progress.

As ever, your comments, thoughts and feedback are welcomed – we’ll be developing our thinking further throughout the year as the findings from the participatory research from COMPASS 2015 emerge.

A call for more equitable economies and some ideas on how to get them

I am increasingly optimistic that lessons from the economic crisis might not only have been learned but may even be acted on. It’s not just positive-thinking arriving with Spring, there are real green shoots of change in economic policy circles.

It might seem self-evident that economies that marginalise a significant majority and disproportionately benefit an increasingly small number are not a good idea. But it is really only since institutions such as the IMF and World Bank started to question the contribution of inequality to instability and poor economic performance that it has become politically palatable to raise the issue. (And conversely, the benefits to be had from unlocking the potential of those currently excluded from economic life.)