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Extractive Industries Transparency Initiative (EITI). GBS Annual Review Key Issue 4 – Challenges in Combating Corruption Dar Es Salaam November 26, 2008 Implementing EITI in Tanzania: The Pathway Ahead and Key Challenges (including role of EITI Multi-donor Trust Fund)

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Extractive industries transparency initiative eiti
Extractive Industries Transparency Initiative (EITI)

GBS Annual Review

Key Issue 4 – Challenges in Combating Corruption

Dar Es Salaam

November 26, 2008

Implementing EITI in Tanzania:

The Pathway Ahead and Key Challenges

(including role of EITI Multi-donor Trust Fund)

Presentation by Vedasto Rwechungura


Overview of presentation eiti in tanzania
Overview of Presentation - EITI in Tanzania

  • Recap of the purpose of this presentation

    • To inform participants in the Annual Review exercise what the EITI concept is, its status in Tanzania, the process of assisting Tanzania to adopt and implement EITI principles and the role of the World Bank and other interested DPs in the process.

  • Why EITI? The EITI architecture globally

  • EITI process and criteria – and benefits to countries

  • Emerging results from EITI in other countries

  • Over the medium-term: “Beyond EITI …….”


Underlying issue that EITI seeks to address: “managing natural resources sustainably”

Although Tanzania is not yet mineral-dependent, given the global experience of resource-rich countries, it is important to lay the foundation early for transparency and good governance in the sector


Transparency and good sector governance in the context of Tanzania policy goals

  • Good governance can help mitigate the “resource curse” ….

  • Good governance has multiple features:

    • Clear and stable laws and regulations

    • Rule of law

    • High level of capacity and skills in government

    • Fiscal monetary and budget discipline

    • Even and consistent application of laws and fiscal regimes to all

    • Open dialogue between government and civil society

    • Public sector/private sector balance

    • Transparency


EITI – a global standard locally implemented to meet Tanzania policy goalsnational goals and requirements

The Multi-Stakeholder

EITI Streering Group/Committee

The Government

Civil Society

Companies

National EITISecretariat

(to manage day-to-day EITI work)



The eiti process in a nutshell
The EITI Process ..... in a nutshell Tanzania policy goals

(EITI partners’ goal is to help an EITI country to implement the EITI cycle)

Sign up

Disclosure

Preparation

  • Dissemination

Country undertakes external validation

Validation is the end-objective for an EITI country


Companies Disclose Payments Tanzania policy goals

Government Discloses Receipt of Payments

Government Spending

Independent Verification of Tax & Royalty Payments

Award of licenses

&

contracts

Regulation

&

monitoring of operations

Revenue

Distribution

& Management

Implementation of Sustainable Development Policies

Oversight by a Multi-Stakeholder Group

The EITI Process - part of a bigger picture

 The EITI provides a forum for dialogue and a platform for broader reforms


Essence of EITI is Tanzania policy goalsdisclosure – based on decisions of EITI scope taken by national EITI stakeholder groups

Data from

Data from

Reconciler / Auditor

Govt agencies

Companies

All EI companies complete

individual data

reporting templates

(and provide information as required to Audit firm)

-- investigates / gets

more data to reconcile

any discrepancies

Govt agencies

provide data

(and information

as required)

-- produces EITI Report for Stakeholder Group

EITI

Report to

public

National Stakeholder

Group (Government,

Companies, Civil Society)


Eiti has achieved strong momentum at national level
EITI has achieved strong momentum at national level Tanzania policy goals

…. At country level:

  • EITI Board has approved 23 countries as “EITI candidate” – 16 in Africa

  • Of these, 10 have published one or more EITI Reports to date (Sept 2008)

    (Azerbaijan, Cameroon, Gabon, Ghana, Guinea, Mauritania, Mongolia, Nigeria, Kazakhstan, Kyrgyz Republic)

  • Norway is first among developed countries to announce EITI adoption

  • Countries are able to align national goals with global EITI standard

    …… Globally:

  • Now established as the standard on transparency in resource areas with consensus on EITI principles, objectives, criteria

  • International EITI architecture fully in place (EITI Secretariat, Oslo)

  • Range of supporting companies; civil society; agencies like World Bank, African Development Bank, etc.


What the eiti international secretariat does
What the EITI International Secretariat does Tanzania policy goals

  • Overall oversight of EITI and policies globally

    • candidacy process

    • validation process (EITI compliance

  • Provide guidance on methodology

  • Provide adviceon best practice

  • Link up an implementing country with other implementing countries and organisations


What world bank and eiti multi donor trust fund mdtf does to support eiti implementation
What World Bank and EITI Multi-donor Trust Fund (MDTF) does to support EITI implementation

  • At country level, World Bank managed MDTF (and all partners) help to:

    • build 3-way consensus for EITI - at start of process and throughout

    • build multi-stakeholder structures to design and manage EITI

    • provide technical and financial support for EITI implementation

    • ensure EITI process lead to EITI “compliant” status (validation)

       At global level, World Bank managed MDTF activities designed to:

    • support global EITI movement

    • proactive knowledge dissemination and best practice sharing

    • proactive support for sub-regional EITI collaboration and training


Benefits of adopting eiti as seen by countries
Benefits of adopting EITI as seen by countries to support EITI implementation

  • Clear signal to all stakeholders and investors on national commitment to transparency

  • Membership of a well-known global standard … while also

  • Building collaboration and trustamong government companies and civil society on mining / oil issues in Tanzania.

  • Brings together data on mining/oil financial flows in one place

  • Possibility for improving sovereign and corporate ratings, and hence foreign and domestic investment through lower risks


Benefits of adopting eiti as seen by countries1
Benefits of adopting EITI as seen by countries to support EITI implementation

  • In some cases, EITI has yielded additional revenuesfrom extractive industry (from revisiting past corporate tax payments)

  • Possibility to expand to anti-corruptionfocus in oil gas and mining (although EITI is not a direct anti-corruption instrument)

  • Diagnostic for assessing effectivenessof EI revenue collection

  • Platform for moving to wider governance reformsbeyond EITI

     BUT … EITI is not cost-free to governments. Needs:

    • clear and sustained political commitment at senior level

    • assigned staff to the EITI effort – with the needed resources

    • budget funding for EITI process – especially EITI validation


Beyond eiti eiti criteria is about a minimum standard which does not aim to cover everything

EITI CRITERIA to support EITI implementation

Independent reconciliation / audit of payments made and revenues received.

Publication and widespread dissemination of results.

Comprehensive coverage, i.e. all companies including state-owned and local companies.

Full engagement of civil society in the process.

Public, financially sustainable, time-bound plan of implementation.

BUT - WHAT ABOUT:

Transparency of licensing?

Were “fair” terms and conditions negotiated?

Are long-term revenue and benefits for country optimal?

What companies pay vs. what they should pay?

Revenue allocation e.g. to sub-national level and communities

Environment / social linkages?

… and the whole of the “expenditure side” (not in EITI)

“Beyond EITI”: EITI Criteria is about a minimum standard - which does not aim to cover everything


Licencing and Awarding to support EITI implementation

of

Contracts

Monitoring

of

Operations – compliance

Collection

of Taxes

- and Royalties

Distribution

of

Revenues

(and

spending

side)

Utilization in

Sustainable

Projects – social

and environ.

EITI process

“Beyond EITI”: EITI is narrowly-focused yet provides platform for further reforms and good EI governance

  • EITI is a key goal in itself – but is also a first steptowards a broader extractive industry (EI) governance reform and sound EI management

  • Beyond EITI, countries are seeking support on governance over the entire resource cycle (the “++” agenda) -- this is distinct from EITI


Extractive industries transparency initiative
Extractive Industries Transparency Initiative to support EITI implementation

Thank you!

For information on EITI globally visit the website:

www.eitransparency.org

World Bank contact:

Vedasto Rwechungura

World Bank Dar Es Salaam Office [email protected]


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