Thursday 23 May 2013

Africa’s natural resources could dramatically improve the lives of millions

While natural resources may have fuelled a decade of rapid economic growth, most Africans have still not seen the benefits, report says

CAPE TOWN, South Africa, May 10 – Africa is standing on the edge of enormous opportunity, this year’s Africa Progress Report finds, and African policy makers have critical choices to make. They can either invest their natural resource revenue in people to generate jobs and opportunities for millions in present and future generations. Or they can squander this opportunity, allowing jobless growth and inequality to take root.
In many African countries, natural resource revenues are widening the gap between rich and poor. Although much has been achieved, a decade of highly impressive growth has not brought comparable improvements in health, education and nutrition.

The Africa Progress Panel is convinced that Africa can better manage its vast natural resource wealth to improve the lives of the region’s people by setting out bold national agendas for strengthening transparency and accountability. 

However, international tax avoidance and evasion, corruption, and weak governance represent major challenges.  The report therefore welcomes the commitment from the current G8 presidency, the United Kingdom, and other governments to put tax and transparency at the heart of this year’s dialogue. It urges all OECD countries to recognize the cost of inaction in this vital area. Africa loses twice as much in illicit financial outflows as it receives in international aid. The Africa Progress Panel finds it unconscionable that some companies, often supported by dishonest officials, are using unethical tax avoidance, transfer pricing and anonymous company ownership to maximize their profits, while millions of Africans go without adequate nutrition, health and education.

The report details five deals between 2010 and 2012, which cost the Democratic Republic of the Congo over US$1.3 billion in revenues through the undervaluation of assets and sale to foreign investors. This sum represents twice the annual health and education budgets of a country with one of the worst child mortality rates in the world and seven million pupils out of school.

Kofi Annan, former Secretary-General of the United Nations and Chair of the Africa Progress Panel, says: “Tax avoidance and evasion are global issues that affect us all. The impact for G8 governments is a loss of revenue. But in Africa, it has direct impact on the lives of mothers and children. Throughout the world, millions of citizens now need their leaders to step up to the mark and lead. Fortunately, momentum for change appears to be accelerating.”

Different partners have similar goals and their interests overlap, the report finds. Building trust is harder than changing policies – yet it is the ultimate condition for successful policy reform. This year’s report identifies a shared agenda for change:
  • African governments must improve their governance and strengthen national capacity to manage extractive industries as part of a broader economic and developmental strategy
  • African governments should put transparency and accountability at the heart of natural resource policies, secure a fair share of natural resource revenue for their citizens, and spread the benefits of this revenue via equitable public spending;
  • The international community should build on the US Dodd-Frank Act and comparable EU legislation to develop a global standard for transparency and disclosure, develop a credible and effective multilateral response to tax evasion and avoidance, and tackle money laundering and anonymous shell companies;
  • International business should follow best practices on transparency, help build national capacity, procure more products and services locally, and raise standards in all areas of corporate accountability and responsibility;
  • Civil society should build capacity and continue to hold governments and companies to account.
Graça Machel, President of the Foundation for Community Development and Founder of the Graça Machel Trust and member of the Africa Progress Panel, says: “This report makes a critical contribution to debates on Africa’s natural resource wealth. If its recommendations are taken, Africa will accelerate progress towards the Millennium Development Goals. More kids will go to school, fewer women will die in child birth, more children will survive their childhood.”

Strive Masiyiwa, Chairman and Founder of Econet Wireless and member of the Africa Progress Panel says: “While some major companies show outstanding leadership on transparency, others show a disregard for ethics and human lives. By cheating the system, they make work harder for honest business.”

Linah Mohohlo, Governor of Botswana’s Central Bank and a member of the Africa Progress Panel, says: “Botswana’s key lesson has been that Africa’s natural resources belong to the people. In this way, diamonds became the country’s relative economic success.”
*     *     *     *     *
Chaired by Kofi Annan, former Secretary-General of the United Nations, the ten-member Africa Progress Panel advocates at the highest levels for equitable and sustainable development in Africa. The Panel releases its flagship publication, the Africa Progress Report, every year in May.

For further information, please contact:
(mobile) +44 795 890 9078 and (direct line) +44 207 822 1721
(mobile) +44 795 142 1247 and (direct line) +44 207 842 0147

Contact for media at WEF Africa:
(mobile) +44 7984 433 486

@africaprogress and #APR2013

Source: Africa Progress Panel

Transparency Standard Raises the Bar, Requires 39 Countries to Release Data on Individual Oil, Gas and Mining Licenses

                                            
US, UK and France Joining Those Subject to New Rules

May 22, 2013, Sydney—The Extractive Industries Transparency Initiative (EITI) has approved a revised standard of performance requiring its 39 implementing countries to release wide-ranging new information about their oil, gas and mining industries.

Rather than merely disclosing revenue data, countries will now need to release information about production volumes, the companies holding licenses, license allocations, state-owned companies, corporate social responsibility payments and transfers from central to local governments to be considered in line with the EITI Standard.

“The EITI has finally recognized that, when it comes to complex industries, merely disclosing payments is not enough,” said Daniel Kaufmann, President of the Revenue Watch Institute.  “By including contracts and licenses, beneficial ownership, state-owned companies and production information, the new Standard could make EITI more effective in addressing the vast governance challenges facing resource-rich countries.”

Created in 2003, EITI previously required governments and companies to disclose payments deriving from oil, gas and mining activities. A body that includes government, company and civil society members must oversee the reporting process. To date, 39 governments have volunteered to participate in EITI, and 23 have achieved “EITI compliant” status. The United Kingdom and France announced today their intention to implement EITI, joining the United States, which made a commitment in 2011.

The new EITI Standard announced today results from over a year of negotiations between the governments, companies and non-governmental groups on the initiative’s International Board.
EITI countries will now have to provide detailed information about each oil, gas and mining license. First, they will need to maintain a public register that lists the company name, location and duration of each license, information currently missing in major producers like Kazakhstan and emerging producers like Mozambique. EITI reports will contain an explanation of how licenses were awarded or transferred during the year covered, and details on applicants and criteria used in any license auctions.


EITI now requires reporting of revenue data by each project, bringing EITI in line with this spreading international standard. The U.S. Securities and Exchange Commission requires project-level reporting by all U.S.-listed oil, gas and mining companies, and the European Union has committed to the same. By changing its rules, EITI keeps pace with this important development.

The new Standard asks for considerably more information from state-owned companies, including major industry players in nations like Azerbaijan, Iraq, Nigeria and the Democratic Republic of Congo.  When selling the state’s share of production, national oil companies will have to disclose the volumes sold and revenues received—an opaque area in many countries. Reporting on quasi-fiscal expenditures, the sale of state-owned assets and financial transfers with the state is also required.

EITI will now also include production data. EITI Reports will have to disclose total production volumes and the value of production by commodity, including by state and region when relevant, as well as total export volumes and the value of exports by commodity.

Finally, the new Standard encourages countries to act in two additional areas of transparency–the disclosure of contracts and beneficial ownership information. In the coming months, the multi-stakeholder group that oversees EITI country implementation will have to determine whether to include this information in their EITI process. Contracts determine the benefits the public receives for their sub-soil assets, and beneficial ownership disclosure reveals when licenses are allocated to politically  connected persons.

“The new Standard has opened the door for EITI to become much more relevant to meaningful policy reforms to improve resource governance,” said Erica Westenberg, EITI Policy Officer at Revenue Watch. “The challenge now is for the 39 countries to implement the Standard in a timely and thorough way.”

Source: Revenue Watch Institute

Revenue Watch promotes the transparent and accountable management of oil, gas and mineral resources for the public good. www.revenuewatch.org | @revenuewatch | www.facebook/revwatch

Contact: Carolyn Bielfeldt, Communications
646.236.5844 / 212.547.6961 / cbielfeldt@revenuewatch.org

Thursday 9 May 2013

Africa Progress Panel launches report on oil and gas, mining

Source: Africa Progress Panel [africaprogresspanel.org]
The Africa Progress Panel will tomorrow May 10 launch its report titled Equity in Extractives: Stewarding Africa's natural resources for all. The 2013 Africa Progress Report will be launched by Mr. Kofi Annan, former UN Secretary-General at the World Economic Forum on Africa, Cape Town, South Africa.

Follow updates on this report here.