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Abstract
This article critically examines the challenges that come with implementing the Extractive Industries Transparency Initiative (EITI)—a policy mechanism marketed by donors and Western governments as a key to facilitating economic improvement in resource-rich developing countries—in sub-Saharan Africa. The forces behind the EITI contest that impoverished institutions, the embezzlement of petroleum and/or mineral revenues, and a lack of transparency are the chief reasons why resource-rich sub-Saharan Africa is underperforming economically, and that implementation of the EITI, with its foundation of “good governance,” will help address these problems. The position here, however, is that the task is by no means straightforward: that the EITI is not necessarily a blueprint for facilitating good governance in the region's resource-rich countries. It is concluded that the EITI is a policy mechanism that could prove to be effective with significant institutional change in host African countries but, on its own, it is incapable of reducing corruption and mobilizing citizens to hold government officials accountable for hoarding profits from extractive industry operations.
Notes
1Countries that are most dependent upon exports of oil/minerals for their GDP.
2Heavily Indebted Poor Countries (HIPC) are nations recognized by the World Bank and IMF with the highest levels of poverty, and which qualify for international debt relief subject to governments meeting a range of performance targets. Of the 38 countries which qualify for HIPC debt relief, 32 are located in sub-Saharan Africa.
3Launched by the billionaire philanthropist George Soros, The Publish What You Pay campaign comprises a coalition of over 300 NGOs which calls for the disclosure of payments made by multinational oil, gas and mining companies to host governments. As is explained on its website (www.publishwhatyoupay.org), it aims to help citizens of resource-rich developing countries hold their governments accountable for the management of revenues from the oil, gas and mining industries.
4“Investors Managing $3 Trillion Back Blair's Extractive Industries Transparency Initiative” http://www.socialfunds.com/news/article.cgi/1150.html (accessed November 11 2007).
5At the time of writing this paper, no country was formally validated against EITI criteria. In mid-October 2007, however, there were 15 “candidate countries,” including nine in sub-Saharan Africa (Cameroon, Gabon, Ghana, Guinea, Liberia, Mauritania, Mali, Niger and Nigeria). On 16 October 2007, it was announced that the governments of nine countries, which included seven from sub-Saharan Africa (Chad, Democratic Republic of Congo, Equatorial Guinea, Madagascar, Republic of Congo, Sao Tome and Principe and Sierra Leone) were asked to supply additional information by the end of 2007 before a decision about their candidature could be made.
6The tendency that a significant proportion of the revenues accrued from a resource “boom” – in this case from petroleum or minerals – is typically spent on non-tradable goods, a move which stimulates an appreciation of the real exchange rate, in turn, drawing resources (namely labour and capital) from other potentially-productive sectors of the economy, is referred to as “Dutch Disease”. The term surfaced in the late-1970s to describe the decline of the manufacturing sector in the Netherlands following the discovery of natural gas in the 1960s.
7Elbadawi and Sambani (2000) maintain that ethnic divisions do not cause civil violence in resource-rich countries.
8http://www.eitransparency.org/section/abouteiti (Accessed June 28, 2007).
From Pegg (Citation2003).
IDA – International Development Association, IBRD – International Bank for Reconstruction and Development.
9See http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTOGMC/0,,contentMDK:20217151 ∼ menuPK:463163 ∼ pagePK:148956 ∼ piPK:216618 ∼ theSitePK:336930,00.html (Accessed 13 July 2007).
10See http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTOGMC/0,,contentMDK:20216997 ∼ menuPK:463l63 ∼ pagePK:148956 ∼ piPK:216618 ∼ theSitePK:336930,00.html (Accessed 14 July 2007).
Note: The Transparency International Corruption Perceptions Index ranks countries according to the level at which corruption is perceived to exist among public officials and politicians. It draws upon data collected from polls, and independent expert and business surveys.
*—most corrupt country; + —candidate country.
From http://www.transparency.org/policy_research/surveys_indices/cpi (Accessed 16 July 2007), Transparency International Website.
The scale ranges from 1 to 10, with 10 being the least corrupt.
11During the period 1989–1993 when Loik le Floch-Prigent was the CEO of Elf, the former French State Oil Company, an estimated £200 million in company funds were siphoned to buy political favours both in Gabon and France, and to fund extravagant lifestyles for both company executives and selected Gabonese elite. Payments in not only Gabon but also in Congo-Brazzaville and Angola were primarily aimed at ensuring that Elf, and not US or British competition, extracted oil, and ensuring African leaders' guaranteeing allegiance to France. In addition to securing jail terms totalling 60 years for 37 defendants, including Mr le Flotch-Prigent, the public prosecution sought €34.5 million in fines (Henley Citation2003). The biggest fraud inquiry in Europe since World War II, the ‘Elf Scandal’ put into perspective how corrupt Africa's oil sector is, and has raised questions of whether similar deals have been forged in other African petro economies.
12“Nigeria: $1.5 m NNPC Bribe Scandal-Willbros Official Pleads Guilty” http://allafrica.com/stories/200609190387.html (accessed 11 November 2007).
13“NNPC GMD In $7 Billion Contract Controversy” http://www.ocnus.net/cgi-bin/exec/view.cgi?archive = 109&num = 28228 (accessed 14 November 2007).
14“Nigeria scraps state-oil company” http://news.bbc.co.uk/2/hi/africa/6970395.stm (accessed 19 November 2007).
15“US unfreezes Equatorial Guinea corruption funds” http://www.afrol.com/articles/17407 (accessed 16 November 2007) and ‘Equatorial Guinea promises to improve transparency’ http://www.afrol.com/articles/15400 (accessed 17 November 2007).
16http://www.eitransparency.org/UserFiles/File/sierraleone/sierraleonne_keynote address_shekou_sesav.pdf
17http://www.eitransparency.org/UserFiles/File/sierraleone/sierraleonne_keynote address_shekou_sesay.pdf
18Davies (Citation2006, p. 178) explains that the combination of requirements to pay an exporter's licence fee of US$30,000 per year, the export tax of 3 percent, and the additional payments which must be made through bribes, have all contributed to discouraging legal production.
19http://www.mbendi.co.za/indy/ming/af/gu/p0005.htm (Accessed 10 July 2007).
20The only significant developments being made on the alumina production front are RUSAL's plans to increase the production capacity of its Friguia refinery from 780,000 tons/year to 1.4 million tons/year by 2009, and negotiations between Alcan, Alcoa and the government to develop the Kamsar refinery, with a planned production capacity of 1.5 million tons/year (Bermudez-Lugo, 2007).
21http:/sol;www.nationsencyclopedia.com/Africa/Tanzania-MINING.html (Accessed 13 November 2007).
22http://www.ippmedia.com/ipp/observer/2007/03/11/86083.html (Accessed 12 November 2007).
23http://metalsplace.com/news/?a = 3396 (Accessed 12 October 2007).
24EITI (2006, p. 3).
