Awareness Creation on the Ethiopian
Extractive Industries Transparency
Initiative (EEITI)
Vision, Mission and Aim of EEITI
Vision
To ensure that the natural resource wealth becomes an engine for sustainable
development and poverty eradication in Ethiopia through transparent, accountable
and effective management of resources generated, controlled and utilized for the
benefit and satisfaction of Ethiopia
Mission
To ensure that corruption-prevented and better revenue managed environment
through arising extractive companies and government organizations understanding of
EITI principles and benefits, incorporating EITI process to their daily operations,
improving awareness of EITI benefits and principles to strengthen and encourage
public monitoring and participation
Goal
To increase transparency, accountability and good governance in financial
transactions between Ethiopian government and companies within the extractive
Introduction
Extractive Industries Transparency Initiative (EITI) is a coalition of governments,
companies, civil society groups, investors and international organizations that aim to
strengthen governance by improving transparency and accountability in the
management of revenue generated in the extractive industries sector.
The initiative was first announced by the then British Prime Minister Tony Blair at the
World Summit for Sustainable Development in Johannesburg in October 2002.
Since 2002, a number of countries have embraced the initiative which has caused a
difference in the governance of the sector. Data from the EITI secretariat indicates that
3.5 billion people live in countries rich in oil, gas and minerals. With good governance
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the exploitation of these resources can generate large revenues to foster growth and
reduce poverty. However when governance is weak, it may result in poverty,
corruption, and conflict some of the African countries that have already started
implementing the EITI include, Cameroon, Nigeria, Gabon, Ghana, Guinea, Mali,
Liberia, Mauritania, Niger , Nigeria and Ethiopia
Similarly, the Ethiopian Extractive Industry Transparency Initiative (EEITI) is a
stakeholder initiative comprising Government, Company and Civil Society in
accordance with global EITI principles and rules to fully implementing the initiative at
a country level.
Accordingly, the Government of Ethiopia is strongly committed to work with Civil
Society Organizations and Mining Companies to ensure their engagement in the
Ethiopian Extractive Industry Transparency Initiative working to apply global EITI rule
in the country since the EEITI launching conference of 2009.
Work done so far to implement EITI in Ethiopia
The Ethiopian Extractive Industries Transparency Initiative, EEITI is part of the global
initiative working to strengthen good governance by promoting transparency and
accountability for payments and revenues generated from the development of oil, gas
and mineral resources in Ethiopia.
The fundamental principle of EEITI is that it is implemented using a participatory
multi-stakeholder approach. EEITI involves a process by which the payments made by
companies and revenues received by governments are published in independently
verified reports. The process is overseen and governed by a multi-stakeholders
working group represented from government, civil society organizations and extractive
companies.
As we know, countries rich in natural resources such as oil, gas, and mining have
tended to under-perform economically, have a higher incidence of conflict, and suffer
from poor governance. These effects are not inevitable and it is hoped that by
encouraging greater transparency in countries rich in these resources, some of the
potential negative impacts can be mitigated.
Implementing EEITI will help the country efficiently to collect the revenue generated
from the extractive industry, supports anti-corruption and good governance agendas
and establish citizen trust in public institutions and extractive companies.
Citizens would be able to hold government accountable in the use of revenues
collected from the extractive companies. A transparent and accountable system will
bring conducive investment climate and attract more international investment for a
country.
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The Government of Federal Democratic Republic Ethiopia announced the public
statement to the Ethiopian Radio, Television and Newspaper its commitment to
implement the Extractive Industries Transparency Initiative in the country
introducing about EITI including how it works, the principles and criteria’s, the
benefits of implementing EITI, the role of stakeholders, and the status of
Ethiopia in joining the initiative.
Ethiopia’s intension and commitment to join and implement EITI was also
officially announced on the stakeholder’s forum held in Doha, Qatar, in 2009.
Ministry of Mines was delegated by the former Prime Minister of Ethiopia (Ato
Meles Zenawi ) to be the leading government body for the implementation of
EEITI in Ethiopia and the minister to be the leader/champion.
The launching conference for the implementation of EITI in Ethiopia was held
from July 28-29, 2009 in Adama town, Ethiopia. The conference was attended
by more than 80 participants from Civil Society Organizations, Extractive
Companies, Government Organizations and the World Bank. The conference
has resulted in the establishment of National Steering Committee (NSC)
representing stakeholders that governs the implementation of EITI in Ethiopia
The participant’s have also discussed and agreed on the draft implementation
strategy and a two years work plan. The work plan for continued
implementation should cover capacity building of government, industry and
local NGOS, steps to help reconciliation of payment and revenues, and
measurement of achievement against targets for each actor with agreed costs
and timelines.
A memorandum of understanding consisting 12 governing points was signed by
the National Steering Committee members, NSC.
The NSC signed a memorandum of understanding with reconciler/ auditor
An implementation secretariat comprising five staff members was hosted in the
Ministry of Mines.
After completing the five sign up processes, the Ministry of Mines applied to the
International EITI Board to be accepted as an EITI candidate country.
Civil Society Organizations express their intension to the EITI Board through
formal letter to take part in the EEITI implementation in accordance to EITI
rules and principles.
Communications have been done with International EITI Board for candidacy
status cooperatively with Ethics and Anti-corruption Commission, Ethiopian
Embassy to Germany, etc…
Representatives of mining extractive companies and staff member of
implementation secretariat participated in introductory seminar held in Dares
Salaam, Tanzania.
Different training programs, Workshops and awareness creation seminars for
stakeholders were conducted cooperation with the World Bank.
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Implementation strategy and work plan was prepared and presented to donors
to
get
technical
assistance
and financial
support.
Furthermore,
communications with the World Bank and African Development Bank were
made and supported EEITI $150,000 and $50,000 USD respectively.
By conducting intensive orientation to the Extractive Companies about the aim
and benefits of EITI, 35 Mining Companies joined EEITI and confirmed their
willingness by official letters to implement EITI according to its principles and
criteria.
Different documents (capacity building training manuals, Terms of Reference
for ENSC and Reconcilers…) were prepared by implementation secretariat
The launching conference for the first EEITI pilot reconciliation report
dissemination press release was held on March 17, 2014 in Addis Ababa,
Ethiopia. The conference was attended by more than 50 participants from Civil
Society Organizations, Extractive Companies, Government Organizations, local
and International media institution, and the World Bank.
Up on these all efforts, still the government of Ethiopia is continuing to extend its
effort for further success and we request the global EITI guardians to be with us.
Hence, due to the above efforts, the international EITI Board accepted Ethiopia`s
application for EITI candidature when it met in Oslo, Norway 19 March, 2014.
Therefore, “The EEITI National Steering Committee would like to thank the EITI
international Board for accepting Ethiopia as a candidate country for EITI. This is a
major step forward in our effort to improve transparency and accountability in the
extractive industries in our country. Also, this is in line with our Government social
contract with our people to promote good governance in order to fight corruption and
to reduce poverty in our country Ethiopia."
So, by implementing the EITI principles, criteria and requirements, the mining
companies and Civil Society Organizations would be benefited, as transparency brings
stakeholder together to share lessons learned and build good image of the country and
creates national consensus among stakeholders, and within the citizens at large.
Therefore, the Government entities, Civil Society Organizations, Mining Companies
and every citizen of the country should know, what is EI? What is EITI? , what are the
benefits from EITI? What is the aim of EEITI? What are EITI principles, criteria and
requirements?
What are the Extractive Industries (EI)?
Extractive Industries is the industry that involves mining and other valuable natural
resources that found in the ground. Essentially extractive industry concerned with the
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physical extraction of metals, oil and natural gas. However, these differ in what, how
and what they extract.
Mining can be defined as extraction of metals and the extraction can take place in
either an underground mine or above ground mine which know as surface mine or
open pit. Oil extraction can be defined as the extraction of liquid fossil fuel while gas
extraction can be defined as the extraction of gaseous fossil fuel.
What is the EITI?
The Extractive Industries Transparency Initiative (EITI) is a global coalition of
governments, companies and civil society working together to improve openness and
accountable management of revenues from natural resources.
Why do we need the EITI?
Natural resources, such as oil, gas, metals and minerals, belong to a country’s
citizens. Extraction of these resources can lead to economic growth and social
development. However, when poorly managed it has too often to led to corruption and
even conflict. More openness around how a country manages its natural resource
wealth is necessary to ensure that these resources can benefit all citizens.
To establish transparency and accountability in the management of mineral resources
including oil and gas and to foresee the minerals development of Ethiopia play a major
role on the socio economic development of the country for the benefit of Ethiopians
Benefits from implementing EITI
Countries rich in natural resources such as oil, gas, and mining have tended to underperform economically, have a higher incidence of conflict, and suffer from poor
governance. These effects are not inevitable and it is hoped that by encouraging
greater transparency in countries rich in these resources, some of the potential
negative impacts can be mitigated.
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Benefits for implementing countries include an improved investment climate
by providing a clear signal to investors and international financial institutions
that the government is committed to greater transparency EITI also assists in
strengthening accountability and good governance, as well as promoting
greater economic and political stability. This, in turn, can contribute to the
prevention of conflict based around the oil, mining and gas sectors.
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Benefits to companies and investors centre on mitigating political and
reputational risks. Political instability caused by opaque governance is a clear
threat to investments. In extractive industries, where investments are capital
intensive and dependent on long-term stability to generate returns, reducing
such instability is beneficial for business. Transparency of payments made to a
government can also help to demonstrate the contribution that their investment
makes to a country.
Benefits to civil society come from increasing the amount of information in
the public domain about those revenues that governments manage on behalf of
citizens, thereby making governments more accountable.
What is the aim of EEITI?
The Ethiopia Extractive Industry Transparency Initiative (EEITI) aims to increase
Transparency, Accountability and Good governance in financial transactions
between Ethiopian government and companies within the extractive industries. EEITI
involves in the full publication and verification of company payments made to the
government and of government revenues received from mining, natural gas and oil
activities. The extractive industry is responsible for providing the raw materials that
make it possible for you to survive and enjoy your everyday lives! “From the Ground
Up! Helping our Resources Wealth Work for all Ethiopia” that’s our Slogan.
Transparency can only lead to accountability if there is understanding of what the
figures mean and public debate about how the country’s resource wealth should be
managed. Therefore, the EITI Standard requires that EITI Reports are comprehensible,
actively promoted and contribute to public debate.
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Accountability:-The obligation of an individual or organization to account for
its activities, to accept responsibility for them, and to disclose the results in a
transparent manner.
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Transparency:-Openness and public disclosure of activities.
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Good governance:-In international development literature this describes how
public institutions conduct public affairs and manage public resources in
sound ways.
A) WHAT ARE THE EITI PRINCIPLES?
A diverse group of countries, companies and civil society organizations attended the
Lancaster House Conference in London (2003) hosted by the UK Government. They
agreed a Statement of Principles to increase transparency over payments and revenues
in the extractives sector. These became known as the EITI Principles and are the
cornerstone of the standard.
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THE EITI PRINCIPLES
The EITI Principles provide the cornerstone of the initiative. They are:
1.
We share a belief that the prudent use of natural resource wealth should be an
important engine for sustainable economic growth that contributes to
sustainable development and poverty reduction, but if not managed properly,
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can create negative economic and social impacts.
We affirm that management of natural resource wealth for the benefit of a
country’s citizens is in the domain of sovereign governments to be exercised in
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the interests of their national development.
We recognize that the benefits of resource extraction occur as revenue streams
over many years and can be highly price dependent.
We recognize that a public understanding of government revenues and
expenditure over time could help public debate and inform choice of
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appropriate and realistic options for sustainable development.
We underline the importance of transparency by governments and companies in
the extractive industries and the need to enhance public financial management
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and accountability.
We recognize that achievement of greater transparency must be set in the
context of respect for contracts and laws.
We recognize the enhanced environment for domestic and foreign direct
investment that financial transparency may bring.
We believe in the principle and practice of accountability by government to all
citizens for the stewardship of revenue streams and public expenditure.
We are committed to encouraging high standards of transparency and
accountability in public life, government operations and in business,
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We believe that a broadly consistent and workable approach to the disclosure of
payments and revenues is required, which is simple to undertake and to use.
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We believe that payments’ disclosure in a given country should involve all
extractive industry companies operating in that country.
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In seeking solutions, we believe that all stakeholders have important and
relevant contributions to make – including governments and their agencies,
extractive industry companies, service companies, multilateral organizations,
financial organizations, investors, and non-governmental organizations.
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B)
WHAT ARE THE EITI CRITERIA?
After the EITI Lancaster House Conference, the EITI continued to gather support at
the international level from governments, major multinational companies, institutional
investors, non-governmental organizations and international institutions. A number of
countries began to interpret and implement the Principles thus playing a pivotal role
in shaping the EITI. This was an important pilot phase for the EITI. Working with the
Principles, implementing countries placed the EITI within the context of other
domestic initiatives, formed work plans and put in place procedures towards a
country-owned process.
During this phase the diversity of experiences in implementing the EITI has added to
the richness of the standard. It also contributed to a wider debate regarding the need
for clear guidance for implementation which still respects the voluntary nature of the
standard and country-specific implementation. Moving beyond the pilot phase and
widening the EITI to include other resource rich countries, there was a need for a
mutually agreed set of EITI Criteria for all countries wishing to implement the EITI.
At the EITI London Conference (2005) participants in the EITI endorsed the criteria
but also encouraged countries to go beyond these minimum requirements where
possible. They recognized value in capturing lessons learnt during the pilot phase to
help implementing countries and supporting companies. They welcomed the guidance
on best practice set out in the IMF Code of Good Practices on Fiscal Transparency and
the Manual on Fiscal Transparency. Participants also welcomed the EITI Source Book
as an additional, illustrative guide to implementation
THE EITI CRITERIA
The EITI Principles provide the cornerstone of the initiative. They are
1. Regular
publication of all material oil, gas and mining payments by companies
to governments (“payments”) and all material revenues received by governments
from oil, gas and mining companies (“revenues”) to a wide audience in a
publicly accessible, comprehensive and comprehensible manner.
2. Where such audits do not already exist, payments and revenues are the subject
of a credible, independent audit, applying international auditing standards.
3. Payments
and revenues are reconciled by a credible, independent
administrator, applying international auditing standards and with publication
of the administrator’s opinion regarding that reconciliation including
discrepancies, should any be identified.
4. This approach is extended to all companies including state-owned enterprises.
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5. Civil
societies are actively engaged as a participant in the design, monitoring
and evaluation of this process and contribute towards public debate.
6. A public, financially sustainable work plan for all the above is developed by the
host Government, with assistance from the international financial institutions
where required, including measurable targets, a timetable for implementation,
and an assessment of potential capacity constraint
C)
WHAT ARE EITI REQUIREMENTS FOR EITI IMLEMENTING COUNTRIES?
The aim of EITI implementation is for countries to become EITI Compliant. This
new chapter sets out the requirements that countries need to meet when
implementing the EITI in order to become EITI Compliant. It also contains
guidance on how to best ensure that these requirements are met. The guidance is
limited given that the EITI is a robust, but flexible standard, and national
stakeholders are to adapt it to local needs and context. The requirements set out
here are minimum requirements and countries are encouraged to go beyond them
where stakeholders agree that this is appropriate. Stakeholders are encouraged to
consult additional guidance materials such as implementing the EITI and the EITI
Good Practice Notes.
The requirements for EITI implementing countries are summarized below.
Countries that meet the four sign-up Requirements are admitted as EITI
Candidates. EITI Candidate status is a temporary state which is intended to lead,
in a timely fashion, to EITI Compliant status. To achieve EITI Compliance,
implementing countries must complete the Validation process, an evaluation that
independently verifies that all of the requirements have been met.
Compliant countries must maintain adherence to all of the requirements in order
to retain compliant status. Where valid concerns exist that a compliant country’s
implementation of the EITI has subsequently fallen below the standard required for
compliance, the Board reserves the right to require the country to undergo a new
Validation or face delisting from the EITI.
Sign-up steps
1. The
government is required to issue an unequivocal public statement of its
intention to implement the EITI.
2. The
government is required to appoint a senior individual to lead on the
implementation of the EITI.
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3. The government is required to commit to work with civil society and companies,
and establish a multi-stakeholder group to oversee the implementation of the
EITI.
4. The
multi-stakeholder group is required to maintain a current work plan, fully
costed and aligned with the reporting and Validation deadlines established by
the EITI Board.
EITI Requirements
The EITI requires:
1. Effective oversight by the multi-stakeholder group.
2. Timely publication of EITI Reports.
3. EITI Reports that include contextual information about the extractive
industries.
4. The production of comprehensive EITI Reports that include full government
disclosure of extractive industry revenues, and disclosure of all material
payment to government by oil, gas and mining companies.
5. A credible assurance process applying international standards.
6. EITI Reports that are comprehensible, actively promoted, publicly accessible,
and contribute to public debate.
7. The multi-stakeholder group to take steps to act on lessons learned and review
the outcomes and impact of EITI implementation.
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