Mozambicans should soon know much more about their secretive - and highly lucrative - gas and coal industries after the country was declared to be compliant with the Extractive Industry Transparency Initiative (EITI) standards.
The decision was taken by the EITI Board at the organisation's global meeting in Zambia and marks an important milestone in the campaign for greater information about the revenues from Mozambique's booming natural resource sector. Although extractive industries contributed just 1% of GDP in 2010, investments in the sector, particularly in offshore gas and in the massive coalfields around Tete, have increased exponentially and there are indications that in the next few years this will easily exceed US$ 10 billion.
"Mozambique is facing a crossroads with extractive revenues set to dwarf incomes from other sources," said Clare Short, EITI Chair. "EITI compliance means that Mozambicans have committed to be transparent about how the country manages these new resources. This will help to ensure that these resources are well managed for the benefit of the people. I congratulate the Mozambique on this excellent achievement."
Mozambique's willingness to work within the parameters of the EITI is critically important given the serious criticisms that have been voiced about its extractives industry in general and its fledgling coal industry in particular. An OSISA-funded research report by the Southern Africa Resource Watch (SARW) - Coal versus Communities: Exposing poor practices by VALE and Rio Tinto in Mozambique - highlighted a host of serious concerns about the coal boom around Tete - from violations of human rights to a total lack of information about the contracts, revenues and taxes related to the industry.
"Mozambique's massive coal reserves could drive genuine socio-economic development and help to alleviate poverty across the country but only if the industry is transparent," said Dr Claude Kabemba, Director of SARW and a co-author of the report. "Becoming EITI compliant is a really important step and should help to ensure that Mozambique's natural resources benefit everyone in the country, not just a well-connected political and business elite."
There are now 16 countries that are 'EITI Compliant'. EITI compliance means that the country has an effective process for annual disclosure and reconciliation of all revenues from its extractive sector. This allows citizens to see how much their country receives from oil, gas and mining companies.
The EITI is a coalition of governments, companies, civil society groups, investors and international organisations.