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Emma Wilson and James Van Alstine

The demand for raw materials from emerging economies such as China and India fueled a global commodity boom from the late 1990s until 2010, while in the past decade more countries in sub-Saharan Africa have developed their oil, gas and mineral resources. Although the commodities super-cycle may now be over, increased foreign direct investment may now offer these resource-rich but poor economies a major opportunity to accelerate their development. However, countries that are dependent on natural resources often suffer from the so-called ‘resource curse’, characterized by poor economic growth, unregulated government spending, a decline in other sectors, increased corruption and political authoritarianism. The Extractive Industries Transparency Initiative (EITI) was set up in 2002 in response to this challenge. Transparency has been rising up the political agenda – it was a key theme of the June 2013 G8 summit and is now being legislated in the US and Europe. A huge increase in extractive industries data is expected in the coming years. Yet a decade since EITI was established, the question remains whether transparency can in fact mitigate the resource curse. In this chapter we consider to what extent transparency initiatives to date have served to institutionalize better resource governance practices and the extent to which this has enhanced development potential in our case-study countries. The case-study countries include two lower middle-income countries (Ghana and Nigeria) that are EITI-compliant, and a lower-income country that is considering EITI participation (Uganda). There is evidence that institutional reform can generate potential for broad-based changes in culture and mind-set, especially when introduced in the early stages of oil industry development, as can be seen in the new oil producer Ghana and to some extent Uganda, which seeks to become an oil producer by 2020. As the case of Nigeria demonstrates, institutionalization is not a guarantee of positive socio-economic and political change, especially in countries where elite bargaining, corruption and criminality have become deeply entrenched in the way the sector operates. Sub-national implementation of transparency initiatives and more direct engagement of local communities are important in enabling people to use extractive industries data effectively to hold industry and decision-makers to account, and help to achieve better development outcomes. Key words: extractive industries, transparency, resource curse, Africa, EITI

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James Van Alstine and Eric Neumayer

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James Van Alstine and Laura Smith

This chapter outlines the evolution of transparency in resource governance, focusing particularly on the Extractive Industries Transparency Initiative (EITI) and its unique form of voluntary governance. We discuss how the EITI has provided the space for private forms of authority to influence public and private sector tax governance, especially within the areas of changing regulatory/fiscal regimes, country-by-country reporting and beneficial ownership registers. Starting with the context of pressing governance issues such as the political-institutional challenge of the resource curse in developing countries, this chapter provides an overview of the development of the EITI, its functions and its design, and also offers some critiques. This analysis underpins an argument about EITI’s role as a precedent in broader regulatory and governance regimes targeting corporate social responsibility and tax avoidance issues both in the extractives sector and beyond.

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Laura Smith, Anne Tallontire and James Van Alstine

This chapter explores the private sector-development nexus, with a particular focus on the extractive industries. Extractives-led development strategies, promoted by development agents such as International Finance Institutions, are predicated upon the benefits that extractive firms (such as oil, gas and mining MNCs) provide to host countries and communities. However, the tools with which the private sector engages in development in extractive contexts are the subject of intense criticism and scrutiny. We use the case of oil exploration in Uganda to illustrate both the issues around the tools used to address community development, and also how the wider political economic context in which the companies operate serves to limit the effectiveness of corporate-community development initiatives. This chapter highlights the importance of continued debate about corporate accountability and the role of government, community and civil society actors in fostering broad-based development benefits from private sector activities.