The Reporter (Addis Ababa)

22 March 2014

Ethiopia: Mining Transparency Accepts Ethiopian Application for Candidacy

The international mining transparency body, Extractive Industries Transparency Initiative (EITI), on Tuesday accepted Ethiopia's application for candidacy.

EITI is a prominent international natural resource transparency group based in Oslo, Norway. The board of EITI, which met on Tuesday in Oslo, approved Ethiopia's application for candidacy with reservations. Ethiopia first applied for candidacy in 2010 but the board rejected the application on the ground that the government introduced a controversial civil society law dubbed Charities and Societies Proclamation.

EITI was launched by former UK Prime Minister Tony Blair in 2003. Ethiopia accepted the principles of EITI in 2008 and began implementing the initiative in the following year by establishing the Ethiopian Extractive Industries Transparency Initiative (EEITI) chaired by the minister of mines. Recently, Ethiopia re-applied for membership. After evaluating Ethiopia's application the board of EITI approved the request with differences. The board of EITI said candidature is not recognition of a country's levels of transparency or accountability. As a candidate, the country has three years to achieve compliance with the EITI Standard.

Chairman of the board of EITI Clare Short said: "I am pleased that the Board has decided to accept Ethiopia as an EITI Candidate country. Some opposed this decision, but it should be remembered that becoming a candidate does not mean that any country has met the EITI Standard. In the case of Ethiopia, the decision shows that the Board was convinced by the government's commitment to the EITI's principles. Membership of the EITI will mean that all stakeholders, including civil society, will have a better platform to hold the government and the companies to account and ensure the better management of the burgeoning sector."

In its discussions, the EITI Board stressed the importance of ensuring civil society engagement in Ethiopia's efforts to comply with the EITI Standard. Some members of the Board argued that Ethiopia's candidature application should not be accepted, and requested that their reservations be noted.

Tolossa Shagi Moti, Ethiopian Minister of Mines, wrote to the Board to assure them that "the Ethiopian Government is highly committed to work with civil societies to ensure their engagement in the Ethiopian EITI".

Tolossa told The Reporter that he is very happy with the board's decision. "It is a big victory. Some members of the board have a misperception about the civil society law. We have clarified the proclamation and assured them that we will be closely working with the civil society," Tolossa said. According to him, the decision motivates EEITI to work hard to meet the requirements of EITI for full membership. He hopes to secure technical and financial assistance from EITI. The World Bank applauded Ethiopia's move. "The World Bank applauds the step Ethiopia has taken to engage on transparency issues," said Paulo de Sa, Manager of the Gas, Oil, Mining Unit of the Sustainable Energy Department of the World Bank.

Over the past three years, the World Bank has worked closely with the Ethiopian government through an EITI Multi-Donor Trust Fund project that facilitated preparation for EITI candidacy. The focus of preparation was not only on the basics of revenue transparency, but also on capacity building and learning from experiences of other EITI implementing countries like Liberia and Tanzania.

The international human rights activist group, Human Rights Watch, which was calling upon the EITI board to reject Ethiopia's application for membership denounced the board's decision.

A statement issued by Human Rights read: "A prominent international natural resource transparency group has damaged its credibility by approving membership for Ethiopia. On March 19, 2014, the governing board of the Extractive Industries Transparency Initiative (EITI), which promotes openness over oil, gas, and mining revenues, admitted Ethiopia as a candidate country despite harsh government repression that has crushed Ethiopia's once vibrant independent organizations and its independent media."

"The EITI's decision to admit Ethiopia without insisting on reforms is an affront to the local activists who've been jailed or exiled for calling for a more transparent, accountable government," Lisa Misol, senior business and human rights researcher at Human Rights Watch, said. "With this decision, EITI has thrown its principles to the wind and damaged its reputation as a leading good governance group."

The decision divided members of the EITI board, which includes representatives of governments, companies, and civil society organizations. Human Rights Watch said the decision reversed a 2010 decision by the board to defer membership until a draconian 2009 law, still in effect, that sharply limits the activities of independent groups, "is no longer in place."

Tolossa undermines the group's campaign against Ethiopia. "Now we are used to Human Rights Watch's destructive propaganda. They have their own hidden agenda on Ethiopia. We were very patient with their negative campaign," the minister said. The minister is optimistic about EEITI's future activities. "We will be transparent to the public. We will publish every information about the ongoing mining activity in this country." In a related development, EEITI on Monday released the first country report. The report depicts the minerals and petroleum exploration activities being undertaken by companies in Ethiopia. The report comprises the payments made by mining companies to the government.

Twenty-one mining companies operating in the country are included in the report. At the launch of the report held at Desalegn Hotel, Tolossa said the EEITI was working on awareness creation, adding that more companies will join the initiative. The government collected more than 549 million birr in the 2009-2010 fiscal year. The companies claimed that they paid more than 584 million birr to the government in the reported period. "There could be some discrepancies in the reported payments by the government and the companies. It is not surprising. It may be ways of reporting. But we will check the reports," Tolosaa told a press conference.

The report covering the 2009-2010 fiscal year is prepared by a UK based independent audit firm, Hart Group. At the end of the report the auditor said that gathering information was a challenging task. The auditor said the country's tax law lacks clarity. The report does not include the money flow coming from the oil and gas sector. The auditor recommended that the oil and gas sector should be included in the next country report.

Tolosa was asked why the oil and gas sector was not included in the report. He was also asked why the report lags four years behind. "We did not include the oil and gas sector because we have not yet started production. There are six companies engaged in oil and gas exploration. We are only getting land lease payments and signature bonus payments and we are ready to disclose these information any time to any concerned body. We pay the auditor based on the issues covered in the report and we did not have enough funding to include the oil and gas sector," he noted. Tolosa said that it took them prolonged time to prepare the report because of lack of experience and dearth of financial resource. He assured the journalists that EETI will produce more up to date report in the time to come. "It is not only about being a member of EITI but our government has made it clear that transparency is an important tool in fighting corruption and poverty," Tolossa concluded.

Ethiopia is making significant progress in the mining sector. Minerals exports are now the second biggest foreign currency earner next to coffee. The Ministry of Mines managed to bring in major international mining and oil companies including Vale and Tullow Oil among others.

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