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Liberia makes progress in reporting stakes despite Ebola, Mali also improving

EDDIE RICH Liberia’s pioneering implementation of the EITI has had a direct impact on the development of the EITI standard

Photo by EITI

MALI COMMENDED The EITI’s board also recently concluded that Mali had made “meaningful progress” in implementing the EITI standard

Photo by Endeavour Mining

14th July 2017

By: Ilan Solomons

Creamer Media Staff Writer

     

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Liberia has undergone its first Extractive Industries Transparency Initiative (EITI) validation in terms of the EITI standard and has demonstrated “meaningful progress” despite a disruption bought about by the Ebola epidemic.

The EITI is a global reporting standard aimed at promoting open and accountable management by countries of the revenue generated from the extraction of natural resources. Validation is the EITI’s independent quality assurance mechanism and includes an extensive consultation of industry stakeholders.

EITI deputy head Eddie Rich points out that Liberia was one of the first countries to begin implementing the EITI in 2005. He says that Liberia’s recent validation was concluded by the EITI board, which noted the “pioneering” efforts of the country and the role it has played in the development of the standard over time.

According to the documentation backing the assessment, Liberia’s pioneering implementation of the EITI has had a direct impact on the development of the EITI standard and has been an “inspiration” to other implementing countries operating in particularly difficult environments.

Rich notes that the initial findings of this validation exercise suggest that the Liberia EITI has taken advantage of the political commitment that arose after the country’s two “devastating civil wars” to build a platform that has generated real change.

Liberia was the second country worldwide and the first in Africa to have demonstrated compliance with the EITI rules back in 2009. Rich points out that Liberia played an important part in shaping the subsequent and much more comprehensive EITI standard by continuously going beyond some of the basic requirements.

The initial assessment notes that even before the introduction of the EITI standard, Liberia’s EITI reporting extended beyond EITI reporting to the publication of postaward process audits of licences and permits, beneficial ownership reporting and simplified contracts.

“It is fair to say that Liberia has had a direct impact on the development of the EITI standard by providing proof of concept for a number of requirements.”

EITI chairperson Fredrik Reinfeldt remarks that political will led Liberia to pioneer a number of the requirements in the current EITI standard, and political will is what will be needed to ensure that Liberia remains at the forefront of implementation.
“The board’s corrective actions should help Liberian stakeholders direct their efforts in order to continue implementing the standard in a way that leads to better governance of the extractive sector,” he states.

The board identified 16 corrective actions that Liberia will need ‘to take’ ahead of the next validation in 18 months. These concern areas in the standard where validation showed that Liberia had not made satisfactory progress to date and included challenges along all stages of the extractive industry value chain, from licences and contracts to monitoring production, revenue collection and allocation, and socioeconomic contribution.

Meanwhile, Rich remarks that the validation under the EITI standard creates a framework for resource-rich countries to consider how to improve their management of the extractive sector.

“Liberia will look at the corrective actions and recommendations from the validation to see how best to apply them for their particular circumstances,” he comments.

Further, as part of the team that provides support for the Liberia EITI from the international secretariat, EITI regional director Pablo Valverde adds that it is “exciting” to see how Liberia is already taking some of the early lessons from the validation and using them to inform its next report.

“Liberia has always shown leadership in implementing the EITI and we are looking forward to seeing how this validation will spark new discussions among stakeholders [on how] to keep improving,” he says.

Meanwhile, the EITI board also recently concluded that Mali had made “meaningful progress” in implementing the EITI standard. The board reached this decision following a validation process.

The EITI notes that Mali has been producing gold since the fourth century. However, a military coup that toppled the democratically elected government in 2012 and multiple terrorist attacks in recent years since order was partially restored have posed “significant threats” to economic activities in the country. Rich points out that mining activities are concentrated in the south of the country and have remained for the most part out of reach of the multiple armed groups that occupied the northern part of Mali in the aftermath of the coup.

He highlights that Mali remains Africa’s third-largest gold producer behind South Africa and Ghana, with significant artisanal mining activities. About 10% of the country’s gold output is produced by more than one-million artisanal miners.

Rich says that the rest of the country’s gold is produced by seven mines using industrial methods. Somilo, a subsidiary of Randgold Resources, is the country’s largest gold producer. This company is followed by the Syama mine, owned by Australia’s Resolute Mining, the Tabakoto mine and the Kalana mine, which are owned by government and a Canada- based company, Avnel Gold Mining.

Reinfeldt enthuses that the EITI board welcomes stakeholders’ dedication to implementing the EITI standard in Mali, despite the “multiple challenges” they have faced. “It is encouraging to see that their efforts are beginning to yield some tangible results.”

He points out that, during the validation process, stakeholders explained that the EITI had improved transparency and was building a culture of trust. Reported revenues by the government have doubled from $221-million in 2006 to $449-million in 2013.

Moreover, Reinfeldt notes that the most recent EITI report includes taxes and other revenues paid by subcontractors operating in Mali’s mining industry. He says that, building on this innovation, future EITI reports aim to collect revenue information from purchasing houses, which are intermediaries between small and artisanal-scale miners and the international markets.

He highlights that Mali’s government has also initiated a range of reforms in public financial management, tax administration and tax policy. He adds that, with support from the German development agency, Deutsche Gesellschaft für Internationale Zusammenarbeit, the Mali Ministry of Mining has modernised its mining cadastre and improved transparency in issuing mining licences.

Further, Reinfeldt notes that Mali’s new mining code includes several innovations and adjustments. He explains that these changes aim to protect the interests of the Malian population and ensure that they continue to benefit from the development of the mining sector.

Reinfeldt says that, despite these achievements, EITI reporting continues to be affected by major technical issues; one such concern is the lack of a computerised record keeping system at the Treasury.

He comments that the current practice of manually recording each transaction in a daily register makes it difficult to monitor where the revenues have gone.

Further, Reinfeldt remarks that fiscal identification numbers are not systematically generated when a company is established, which results in inconsistencies in tax records and, subsequently, EITI reporting.

He adds that a lack of timely publication of audit reports by the country’s supreme audit institution has also hindered the reliability of revenue data.

“The validation also highlighted some areas for improving participation and governance of the national multistake- holder group that leads EITI implemen- tation in the country,” Reinfeldt concludes.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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