Ethiopia is to acquire a full membership of the Extractive Industries Transparency Initiative (EITI) for open and accountable management of the mining sector after it had obtained its candidate membership in March 2014.
EITI is an international organisation first initiated in 2002 by the former Prime Minister of the United Kingdom, Tony Blair at the World Summit on Sustainable Development in Johannesburg. The international organisation currently has 48 member countries. It was established to maintain the disclosure of taxes and other payments made by oil and mining companies to the government through annual reports and meeting the international organisation’s criteria.
Ethiopia has not yet joined the organisation because it has needed time to fulfill the international criteria for membership, said Merga Kena, director of the EITI implementation office at the MoM.
A national steering committee was established soon after the country obtained its candidature for membership, with 15 members, five from each of the three mandated stakeholder sectors, namely, government, companies and civil society.
The mining sector is a highly corrupted sector globally and this can lead to conflict and the establishment of liberation Fronts, if it is not managed well, Anteneh Abrham, member of the National Steering Committee of EITI said at the Initiative’s conference held on April 28, 2015 at Hilton Hotel. More openness and transparency in the sector is necessary to ensure that citizens benefit from the sector’s resources, he continued.
Previously the revenues obtained from the mining sector were not disclosed to the public and extractive companies passed through corrupted administrations due to lack of a platform to entertain compliance, Anteneh said.
After the country obtains full membership in the Initiative, similar reports will be disclosed to the public every year which will be beneficial in attracting investment and preventing corruption in the sector through creating a platform of discussion for the stakeholders, he added.
Once Ethiopia becomes a full member of the international organisation the country will have a duty to report the revenues and taxes obtained from the mining sector in addition to creating a knowledge exchange platform. The financial and technical support for the studies and reports will be provided by the World Bank and other organisations, Merga said.
The steering committee is currently drafting a Bill for EITI standards implementation in an 18-month timeframe. Its annual activity report will be published in June 2015, he added.
While the government and the companies are maintaining their representatives in the committee, the civil society organisations (CSOs) have identified five categories of CSOs from which the new representatives will come. These categories are mass-based, rights-based, advocacy, professional associations and resident CSOs.
Five CSOs with these mandates will each nominate one person to represent them in the national steering committee as EITI membership requires that the Initiative works in partnership with government, companies and CSOs in each member country.
The companies’ representatives are Afar Salt, Mugher Cement, MIDROC Gold, Alana Potash and National Mining, whereas from the government are the Ministry of Finance & Economic Development (MoFED), Ethiopian Revenues & Customs Authority (ERCA), the General Auditor’s office, Ministry of Mines (MoM) and National Bank of Ethiopia (NBE).
Some of the criteria for full membership of EITI are publication of an annual report on the mining sector, a comprehensive annual activity report of the stakeholders’ work plans, reconciliation of the revenues and taxes of the mining sector by an independent reconciler and creation of a platform for the engagement of the three stakeholders so that all will know the details of the activities of the mining sector.
Both the companies’ and the government’s reports, the royalties paid and revenues received, will be independently reconciled for accuracy in the financial reporting and will be published in 2016. But a similarly comprehensive report will be issued and sent to the EITI before the end of this fiscal year as part of the criteria for membership.
The country’s membership in the international organisation is beneficial to the government in ensuring the transparency of the revenues and costs resulting from the sector and creating confidence among investors and the people, State Minister of MoM, Alemu Sime said.
Low capacity of recording data both by the government and the companies, absence of simplified data systems, inadequate promotion of the economic value of the sector and lack of community awareness were raised as the major challenges in the transparency of the sector.
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