Extractive Industries Transparency Initiative (EITI)
EITI is a global standard for transparency and good governance in the extractive sector.
In countries participating in the EITI, companies are required to publish what they pay to governments and governments are required to publish what they receive from companies. These figures are then reconciled by an independent administrator.
A multi-stakeholder group (MSG) that includes representatives from the government, private sector and civil society organizations oversees the EITI process in each country. Representatives on the MSG are responsible for liaising with their constituencies and acting as their spokesperson within the MSG.
The EITI International Board, which oversees the initiative, is comprised of representatives from EITI implementing and supporting country governments, extractive companies and investors, and local and international civil society groups.
The EITI International Secretariat - based in Oslo, Norway - is responsible for turning the policy decisions of the International Board into action and coordinating worldwide efforts to support EITI implementation
Importance of EITI
In the effort to translate natural resource wealth into better development for the local population, the EITI sits in the center of the value-chain, focusing on revenue transparency. In resource rich economies, oil, gas and mining companies make payments directly to governments. Normal channels of public accountability are often missing in resource-dependent countries because the government has an autonomous source of revenue not dependent on taxing its citizens. Government reliance on extractive revenues can result in lower public service delivery, increased opportunities for corruption and higher dependency on the extractive sector. The EITI aims to address this problem by increasing public information, empowering the public to more effectively hold government accountable for resource revenues. Some other benefits of increased revenue transparency include:
- Improving revenue collection and management processes
- Creating a more attractive investment climate
- Building trust between governments, companies and citizens
- Providing a forum to discuss broader extractive industry governance issues such as physical and process audits, contracts transparency and sub-national revenues
Although the EITI is a national process that varies from country to country, the EITI International Board has established a set of rules outlining the basic criteria and guiding countries through the three stages of implementation: sign-up, candidacy and compliance. …………………………………………………………………………………………………….
A. Countries voluntarily commit to the EITI by signing up to the initiative –yet they are not recognized as implementing EITI at this stage.
B. in order for a country to become an EITI Candidate, it must first complete the four sign-up requirements and submit a proposal to the EITI International Board.
C. If the Board is satisfied that these indicators have been fulfilled, the country will be officially recognized as a Candidate country. ………..
EITI Candidate countries must undergo the EITI Validation process, which determines whether or not a country has achieved compliant status, may have its Candidate status extended beyond two years, or loses its Candidate status. The Validation is carried out by an independent validator selected by the MSG who must follow the methodology outlined in the EITI Rules. Validation will only result in the granting of EITI Compliant status if the EITI International Board deems that a country has met all the indicators in the Validation Grid.
Afghanistan announced its intent to implement the EITI in March 2009, and became an EITI Candidate country on 10 February 2010.
On 16 March 2009 the Government of Islamic Republic of Afghanistan (GOIRA) announced its endorsement of the principles of EITI, after which all remaining EITI sign-up indicators were entirely implemented to become EITI candidate country that was officially endorsed by the International EITI Board at its meeting in Oslo in February 2010. GOIRA has requested that the donor community provides immediate technical and financial support to develop good governance and accountability mechanisms in Extractive Industries Sector via effective EITI implementation process in Afghanistan.
In Afghanistan, the extractive (mining, oil & gas) sector is expected to contribute a significant and growing proportion of Government revenues for country’s development. In light of this, GOIRA has fully committed to EITI implementation to ensure that all payments and receipts in the extractive industry are made in an effective and transparent manner. To ensure that the long-term objective is achieved, GOIRA started with producing EITI reports that required the services of an independent audit firm to collect and reconcile all material payments made by relevant extractive companies and revenues received by the Government in accordance with the AEITI Reporting Template.
In following the EITI standard, GOIRA commits to publish all payments of taxes, royalties and fees it has received from its extractive sector. Equally, extractive companies operating in Afghanistan should publish what they have paid to GOIRA. Overseen by a multi-stakeholder group with representatives from the Government, companies and civil society, these figures are then reconciled and published in the AEITI Report.
The AEITI National Secretariat acts as a coordinating body and carries out the day-to-day activities of the MSG and is there to facilitate required administrative, logistical and other technical support for the smooth running of project activities throughout the process.