The utilization of oil, gas, and mineral resources – can be a lever for sustained and equitable development in resource-rich, low income countries. The EITI ++ seeks to support committed governments, notably in Africa, in implementing good policy and practice along the entire natural resources value chain, i.e. the entire natural resources development process.
The EITI++ is being launched against the backdrop of high commodity prices, new discoveries, strong private sector interest and government commitment where many resource rich countries are increasingly aware of the need to take a comprehensive approach to harnessing opportunities from the current boom. The entire chain of managing extractive industry resources is important—from how access to those resources is granted, to monitoring operations, to collecting taxes, to sound macroeconomic management and distribution of revenues, and to spending resources effectively for sustainable growth and poverty reduction.
EITI++ seeks to work with all developing countries, even as the initial focus is on Sub-Saharan Africa.
Why is EITI++ important for sustainable development in Sub-Saharan Africa?
Nearly half of Sub-Saharan Africa’s population lives in countries that are rich in oil, gas or hard mineral resources. These countries together account for some 70 percent of Africa’s gross domestic product (GDP), and receive the overwhelming bulk of foreign direct investment (FDI) into the continent. Commodity prices have risen about 75 percent in real terms since 2000. The current boom in commodity prices presents a unique opportunity for governments across Sub-Saharan Africa to mobilize home-generated wealth from natural resources for sustainable development.
How will EITI++ help developing countries to improve management of the natural resources sector?
Record high prices of commodities present a challenge and an opportunity for all developing countries, particularly in Sub-Saharan Africa. Development impact from extractive industries will require focus on the entire natural resources development process. EITI++ seeks to build on the initial Extractive Industries Transparency Initiative (EITI, www.eitransparency.org) effort which was launched to improve governance in resource rich countries by calling for the full publication and verification of company payments and government revenues from oil, gas, and mining. Today, EITI has evolved into an international coalition of governments, the World Bank Group, oil, gas and mining companies, industry bodies, investors, and civil society organizations such as Transparency International, Oxfam, and Global Witness. Of the 22 countries that are currently implementing EITI, 15 countries are in Africa.
The EITI++ will go beyond that initial effort, and provide countries with technical assistance – financial and policy-related – throughout the entire value chain of extractive industries, and help them to improve management of resource-related wealth.
No, the EITI is an independent entity in Norway that continues to play its strong and useful role in supporting the move to greater transparency in the flows of revenues from oil, gas and mining industries. It is a key partner in promoting the EITI++.
Two mineral-endowed countries, Guinea and Mauritania, have already requested support in implementing the EITI++. Other resource-rich, low-income countries in Sub-Saharan Africa have also indicated interest in EITI ++. While the initial focus is on Sub-Saharan Africa, EITI++ will seek to work with all developing countries.
Private companies are a critical part of the EITI++ value chain as it is most often private companies that extract natural resources and pay revenues to governments. The work contemplated by EITI++ would improve the conditions for the private sector to invest in resource rich countries, thus allowing IFC to support extractive industry projects more effectively. Companies need to be open and transparent about the payments they make to governments and participate in sustainable business practices that generate tangible benefits for the communities and countries in which they operate.
The EITI++ will be financed by establishing a multi-donor trust fund that can respond quickly to country needs for capacity development and analysis across the value chain. As we develop the trust fund, the Bank will work with regional and bilateral partners including in Africa with the African Development Bank. We envision that this fund would support capacity development across the entire value chain. Early requests for assistance could focus on such areas as granting of concessions and contract negotiations.
No. The Bank is playing a facilitating role. EITI++ will involve working with a range of partners to provide support to countries as they confront the challenges of sustainable management of wealth derived from natural resources.
As Mr. Robert Zoellick, World Bank Group President, said: “We are seeking the strongest possible partnerships in developing these ideas with out clients, because ‘national ownership’ of the EITI++ approach is critical to its success. The EITI++ can advance inclusive and sustainable globalization by broadening the beneficiaries of resource development.”
If mechanisms to deploy oil wealth for development have failed in Chad, why would EITI++? fare better under the World Bank?
The mechanism set up in Chad was implemented in the specific context of the Chad-Cameroon pipeline project in an attempt to channel revenues for development purposes,. The approach of EITI ++ is different. The EITI ++ approach recognizes that leadership and country commitment are key. Specifically, EITI ++ seeks to provide support to countries that request it, and wish to transform the commodity boom into positive development outcomes and sustainable poverty reduction for their citizens. Our sense is that Africa has now an increasing number of such leaders, starting with Guinea and Mauritania who have requested EITI++ support, including for best practices on different elements of process of natural resource utilization, from award of concessions to public finance management, to investments. These are the needs for technical assistance that EITI ++ seeks to service.
Is EITI++ a way for the World Bank to introduce new conditionality for countries?
No. The EITI++ approach responds to country demands for support. The Bank will be one player among many providing that support. As mentioned before, the Bank recognizes that for the EITI++ approach to succeed, country leadership and commitment will be vital.
What is the World Bank’s view of China’s activities in Africa?
The Bank welcomes China’s increasing efforts to cooperate with international institutions including the World Bank Group on African development issues. We aim to work alongside China in support of Africa’s development with the full ownership and leadership of African countries.