Category Archives: Local Reporting

Bulgan Batdorj, MASc candidate in Mining Engineering // March 23, 2015

Sub-national reporting is demanded by NGOs, activists and companies despite great difficulties to get there. Since the announcement of the sub-national reporting concept, many countries were excited about the idea and planned to embrace it. But until now there is not a common model which can be applied or adopted by countries. Many countries are having difficulties implementing the sub-national reporting due to many challenges, such as tax governance, politics, lack of public awareness, local government’s capacity and many more.  Yet, the local NGOs’ argue that EITI sub-national reporting is the only necessary dialogue to amend the broken trust between local citizen, corporation and the local government.

According to the study carried out by the Goldman Sachs in 2008, the single largest category which caused the industry slow down and significant increase in the cost was the stakeholder – related risks. Among those the local protest is claimed to be one of the biggest reasons that mine projects are being jeopardized. The extractive industry is starting to recognize the costs of conflicts with local communities and more than ever the emphasis is given to building positive relationship with the local community and aboriginal community.  The cost of conflict is not bared by the company only. The community is as much affected as the corporations if the conflict is not resolved.  Depending on the level of the conflict and the size of the project, the potential to damage to the regional or national economy will materialize.  This is why, it is rather important for the stakeholders to find platform to have a meaningful dialogue to prevent or resolve the conflicts.

In conclusion, the sub-national reporting is not making all the senses to all the stakeholders and there are suspicions that this is just another “condition” from the World Bank to developing countries.  But according to the local activists and civil societies that local reporting and local transparency will enable the informed local participation in the decision making. But many recognize that EITI grants the people the lens to look through but accountability has to go parallel to make changes in corruption and poverty.

Harry Li, MAAPPS // March 20, 2015

In my last blogpost, the group debated on what our next steps should be. A division pursuing publication and policy recommendations was consented upon. Half of the group, including myself, formed a policy-oriented group exploring the feasible recommendations to promote local engagement with EITI. The other half of the group focuses on drafting a document, incorporating the previous findings and recommendations from the policy group.

The policy group discussed on the best options in promoting proliferating education about EITI reporting at both the national and sub-national level.  After careful feasibility researches, we have narrowed down to seven possible places where EITI reporting can be educated to the public: banks, schools, libraries, healthcare facilities, gas stations, citizens’ hall and sum centers. We decided to focus more on the rural population rather than citizens in Ulaanbaatar because rural citizens are more affected regionally from the mining activities.

In terms of method, we have quite a few feasible ideas. We find the use of cartoon extremely effective. EITI Guatemala and EITI Peru have created a short cartoon series explaining the significance and role of EITI in their countries’ mining industries. We find that simple and easy to understand. Not all rural citizens have the time or interest to read a 10-page report with heavy data charts, thus a cartoon with/or a catchy slogan may be more effective in this case.

My research focus is on the Mongolian Citizens’ Hall. On December 2009, the President of Mongolia, Elbegdorj Tsakhia, formally opened the Citizens’ Hall. With the German embassy, TAF and OSI providing technical assistance, it is a public hearing forum is located in the capital and is designed to encourage civil participation in the planning and decision-making process. Although the citizens does not have law-making power here, but Citizens’ Hall seek, consider and incorporate reactions of citizens to already drafted legislations. The goal is to establish a tradition of citizen engagement in Mongolia, thus strengthening the governmental transparency and implementation of policy through consensus. Creating the Citizens’ Hall was part of a concerted effort on behalf of the governing party to ‘consolidate its young democracy’. The Citizens’ Hall uses all types of social media (website, Facebook, twitter) and broadcasts major debates.  Events are usually attended by parliament members, government officials and experts.  By January 2012, 15 out of 21 provinces, 5 out of 9 districts of the capital city established Citizens’ Hall.

Since more provinces promoting legislature engagement with Citizens’ Hall, perhaps, it is possible to put up posters of cartoons and infographics about EITI in these centers. Also, we should also make copies of our detailed report (written by the publication group) available in those centers.

Jon Brasnett, MAAPPS // Mar 8, 2015

After researching the case of the Islamic Republic of Mauritania and its own implementation of the Extractive Industry Transparency Initiative (EITI) standards, I felt discouraged about the legitimacy of this initiative and its ability to bring transparency. Mauritania is a semi-presidential republic governed by a military leader who was “democratically” re-elected after initially coming to power through a coup d’état. It is a country characterized by poverty and inequality, where 40% of citizens live in conditions of extreme poverty (UN HDR) and approximately 10-20% of citizens live under conditions of slavery (CNN). Thus, I came to doubt the capacity of EITI reports to mobilize an educated civil society to lobby government institutions or extractive industries for increased transparency or efficient redistribution of resource wealth to the communities from where the resources were extracted. Instead, I got the impression that achieving compliant status in EITI was a way for the Mauritanian government to legitimize its rule by demonstrating a desire to be more transparent, for the extractive industries to show that they are making and recording their payments, and for the international EITI community to perceive Mauritania as a country that complies with international norms and encourages citizens to voice their opinions and interests. In a country where such large percentages of the citizenry live in poverty and suffer from repression, it is difficult to believe that EITI reports mobilize any civil society opposition to or regulation of the resource extraction industry.

On the other hand, upon looking into the case of Mongolia, my optimism has been restored with regards to the importance of EITI implementation. As a newly established democracy, it is important to publish all natural resource revenue information so that the citizenry (particularly civil society organizations) can hold the government accountable if this revenue happens to disappear and is never invested into the provision of social services. Mining makes up approximately 20% of Mongolia’s Gross Domestic Product (GDP), a number which continues to grow year after year. As a result, poverty levels are rapidly decreasing, down more than 11% just between 2010 and 2012 (European Commission MIP for Mongolia, 2014-2020). Even though EITI did not mention Mongolia as one of the countries in which subnational reporting might be relevant, it is difficult to ignore the fact that Mongolia would be a perfect pilot for such a project. This is owing to the fact that Mongolia has a literacy rate of 100%, a growing number of civil society organizations and NGOs, as well as an increasingly democratic identity among its citizenry. Considering the fact that many provinces (aimags) and far more districts (sums) have been transformed due to the resource extraction taking place there, these aimags and sums deserve the opportunity to see exactly how much wealth is being extracted from their land and in turn, to demand greater provision of important social services (like schools, hospitals, transit, etc.) to increase their quality of life and level of development. I strongly believe that Mongolia has the potential to lead the way in the implementation of subnational reporting in the EITI, and that this might truly benefit its citizens.

Bérangère Maïa N. Parizeau, MAAPPS // Mar 6, 2015

The information in this blog entry is synthesized from the article “Implementing EITI at the Subnational Level,” published by the World Bank in October 2011. This comprehensive report analyzes subnational resource-revenue reporting for extractive industries in Ghana, Indonesia, Mongolia, Nigeria, the Democratic Republic of Congo and Peru. The emerging understanding of the report is that subnational level EITI resource-revenues reporting will need an appropriate operational framework to function properly and provide benefits to the Mongolian population. In this report, I will focus on key information about subnational reporting in Mongolia synthesized from this report.

The Mongolian public believes that EITI subnational reporting may help control the country’s rampant corruption. Civil society activism and Civil Society Organizations focusing on mining activities in Mongolia are mushrooming. This is very exciting for a more dynamic social accountability process. The government of Mongolia passed Resolution No. 272 in 2006, which legally binds companies in Mongolia to report directly to subnational government agencies. Subnational resource-revenue reporting in Mongolia is funded by multi-donor trust fund (MDTF ). In Yemen, local training for subnational resource-revenue reporting was also done by MDTF, and more specifically by the World Bank funds.

“According to an International Monetary Fund report (IMF 2007), there appears to be a trend toward stepping up the use of SNG revenue sharing.”1 pp.7

The issues of tracking and managing mining company off record donations to intergovernmental tiers in Mongolia is complex. It is an important aspect of the recent discrepancies in subnational resource-revenue reporting. These donations are the main source of revenue for producing areas in Mongolia. In-kind donations are not recorded through the banking system, and therefore not included in official subnational EITI reports. There is a problem with the EITI subnational regulatory frameworks which does not create incentives to report the total amount of donation due to a possible reduction in statutory transfers from the central government tax pool to subnational governments. This is an administrative problem that has the potential of being addressed effectively.

Donations may take the form of the construction of infrastructure projects, like hospitals and schools for example. Although donations are key sources of revenue for EI producing localities in Mongolia, these donations have no legal basis, they are voluntary. Another important dimension of resource-revenue reporting at the subnational level in Mongolia is monetary flow from exploitation licences. Furthermore, in Mongolia, large distances between mining localities and the lack of internet access facilities in remote regions slows down the process of subnational reporting which has to be done by post.

The subnational reporting of mineral royalties varies from country to country because each country operates under different conditions, a unique geopolitical landscape, legal system, and revenue-sharing formula. In Ghana and the Cajamarca region of Peru, subnational reporting of extractive activities is accompanied with governmental expenditures. In my opinion, subnational reporting should not only include governmental expenditure, but should also include the socio-economic and environmental impacts of the mining industry on the local population and the environment. Reporting in a transparent way on environmental concerns and issues of human rights appears to be dialectical considering the threats associated with climate change.

[1]https://eiti.org/files/ Implementing%20EITI%20at% 20subnational%20level.pdf