4. Transparency and Accountability

Transparency, by promoting accountability, minimizing waste and corruption, fostering democratic debate, guiding macroeconomic management, and enhancing access to finance is fundamental to good governance in the EI sectors.

There is growing international consensus on the importance of transparency in promoting accountability and good governance, particularly in relation  to the EI sector in light of the large sums of money involved with EI sector activities, transparency safeguards against many of the powerful incentives for corruption, including high entry costs, multiplicity of actors involved, technological complexity of resource development, complex revenue accounting and tradition of sector secrecy. Transparency and accountability are critical for the efficient management of natural resource revenues throughout the activities considered in Section III of the Source Book. Transparency can limit the opportunities for misuse of power and corruption, while accountability can ensure that those entrusted with the management of public resources are held accountable for their actions or inactions.

It must be clear that transparency is not an aim in itself but must be combined with effective stakeholder dialogue in order to achieve accountability. As will be discussed below, improving transparency and accountabilty require multiple measures, both voluntary (multi-stakeholder) and mandatory (regulatory). For several years now, global norms and standards have been emerging but wide differences exist in the weight given to them by particular players and in their manner of implementatino. Voluntary initiatives led primariy by civil society or international agencies have forged ahead of mandatory measures for many reasons. In the case of both types of measures, questions that arise in the shaping of global norms and standards include the following: (1) what is an appropriate level of contract disclosure; (2) how can host state and investor state transparency requirements be balanced; and (3) what is the best way to engage citizens more directly in monitoring processes and outcomes?[*]

Transparency and accountability are cross-cutting topics because they apply to all segments of the EI value chain. Across the EI value chain, these issues are addressed through: (1)  transparency around the decision to extract; (2) transparent and competitive procedures for issuing licenses and allocating mineral or hydrocarbon exploration or production rights in the design of legal, contractual and policy frameworks; (3) competent and non-corrupt institutions with clear and non-overlapping mandates in the regulation and  monitoring of operations; (4) publically reported, equitable and progressive fiscal regimes that avoid non-published special deals and minimize tax avoidance and evasion in the collection of taxes; (5) transparent revenue management; and (6) transparent and participatory budgeting based on development priorities with effective sustainable development outcomes in revenue management and allocation (the EI value chain is discussed in detail in Chapters 5, 6, 7, 8 and 9 of the Source Book).
 
If there is a lack of transparency at any one point in the EI value chain, a spread of misinformation may result, with growing mistrust in the management of the resources. In turn, this can lead to instability and ultimately to conflict. These topics are therefore dealt with in the individual chapters on the EI value chain as well as in the paragraphs below.

Additional Reading:

 


Within This Chapter

Africa

Latin America

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Comments
  • Brian Moore: Is there too much focus on this issue amongst universities and the do gooding public sector in general? Not to mention NGOs. Instead, would not a better focus be on helping countries to make more money from their extractive industries, as opposed… read more