Johannesburg - South Africa’s continued refusal to sign up to the Extractive Industries Transparency Initiative (EITI) “seems regrettable”, Claire Short, a former secretary of state for international development in the Tony Blair government told delegates at the Investing in African Mining Indaba yesterday.
Short, who chairs the EITI, said that there had been much effort to persuade South Africa to join the initiative “but South Africa was still not there… there is a resistance, it is regrettable as it would be useful in terms of encouraging other African countries”.
Short added that Angola was also notably absent from the EITI, as was Kenya.
EITI is aimed at increasing the level of transparency in the global mining industry. It requires its member governments to disclose how much they receive from extractive companies that operate in their countries. In addition, firms operating in these countries are required to disclose how much they pay to governments.
Liane Lohde of the International Finance Corporation said it was unfortunate that South Africa believed there was a “neo-imperialist” dimension to EITI. The government seemed to believe EITI represented an attempt by developed countries to impose restraint on developing countries and for this reason would not participate.
Short and Lohde pointed out that since it was initially established about 10 years ago, membership of EITI had extended significantly beyond Africa and now included not only non-African developing countries but also Organisation for Economic Co-operation and Development countries such as the UK, France, Germany and Italy.
EITI was set up to ensure that a country’s natural resources realise the transformative potential that they can have on local development.
If not managed correctly the revenues from these resources can result in corruption and conflict.
According to its website, “EITI brings transparency to the revenue payment process in an effort to track revenues and see that they end up where they are intended.”
The initial proposal, which was limited to disclosure of revenue at country level, has been adjusted to generate greater and more reliable detail. Short said that the new EITI standard represented “a major improvement… and sought to embrace the entire value chain”.
Lohde said that over the past 10 years it had become evident that what initially looked difficult, namely persuading companies and countries to provide information, had become easier with growing acceptance.
An increasing focus of EITI’s new standard is ensuring that the information generated is useful and is made available to members of communities that are directly affected by extractive industries.
John Capel, the executive director of Bench Marks Foundation, believes that EITI is a move in the right direction but contends that a “more rigid mechanism” is needed to monitor the activities of mining companies.
Capel, who is involved in the Alternative Mining Indaba, which began in Cape Town yesterday, told Business Report that there was so much tax avoidance and manipulation of financial information that the only way to ensure reliable information was “to monitor what is coming out of the ground”. - Business Report