Last week, the board of the Extractives Industries Transparency Initiative (EITI) decided to remove Equatorial Guinea – still merely a candidate for full membership – from the group for failing to meet the deadline to have audits of their industries independently verified. The EITI, launched in 2003, is a joint effort by companies, governments and civil society to instill transparency and promote good governance in the extractive industries sector. The concept is simple: EITI sets a global standard in reporting how revenue flows from natural resource extraction are managed – companies make their payments to governments public, and, in turn, governments disclose exactly what they receive. This dual system of accountability and transparency allows governments to be certified “EITI compliant”. EITI compliance translates into a greater ability for developing nations to attract foreign investors, and is a way for the industry to improve its public image. This is of course a tall order, and EITI doesn’t guarantee that mismanagement of revenues from natural resources doesn’t occur. However, EITI enjoys a wide acceptance by multinational firms, governments, international organizations and and civily society, and its “global standard” in reporting a is a critical step towards addressing the root causes of the “resource curse”.
Equatorial Guinea is a poster child for the resource curse. Last summer, Human Rights Watch released a report framing the human rights situation in Equatorial Guinea in no uncertain terms. While the country’s GDP had increased by 5,000 percent since oil was discovered in the early 90s - its GDP per capita puts it right between Belgium and Denmark – grinding poverty persists. The president of Equatorial Guinea, Mr. Obiang Nguema Mbasogo, who has been in power since 1979, has been described as a “predator of press freedom” by Reporters without Borders. Over the years, reports of human rights abuses, political imprisonment and torture have emerged, and the people of Equatorial Guinea, in spite of the wealth beneath their feet, continue to be the victims of their leadership.
EITI’s decision to revoke Equatorial Guinea’s candidacy is an important one. Indeed, while advocacy organizations have criticized the body for setting a “very low bar for countries’ performance” and for barely “scraping through the credibility test“, I think this signals the body’s willingness to apply their own rules strictly. Given EITI’s potential as a pre-eminent tool to address poor management of natural resources, we should be encouraged by their board’s decision.
Now, it will be interesting to keep an eye on the progress of the other 16 countries who were granted extensions on their deadline, most of which are nations dealing with serious governance issues. Let’s hope that the EITI continues on its current path – the last thing we need is a rubber stamp for the continued mismanagement of natural resource wealth.
Image: flickr EITI