Sector Programme
    Extractives and Development
    Engineers at an open pit mine in Peru

    Good Governance Extractive Industries Transparency Initiative (EITI)

    The extractive sector holds great potential for resource-rich countries to mobilize domestic resources. Yet, countries are prone to losing considerable state revenues due to secret agreements, corruption and weak institutions.

    Promoting transparency along the supply chains in the extractive sector is a key objective of German development cooperation. Accordingly, Germany supports the Extractive Industries Transparency Initiative (EITI) for greater financial transparency and accountability in public revenues from the extractive sector.

    The Initiative

    The aim of the global initiative is to tackle the resource-curse through financial transparency and accountability, to set clear expectations for extractive companies and enhance participation for civil society. The EITI, based in Oslo, was founded in 2002 and is supported by the voluntary commitment of currently 55 governments. The German lawyer Peter Eigen, founder of Transparency International, played a key role in shaping the first years of the initiative as one of its initiators and first chair of the EITI Board. The EITI standard is implemented by state and civil society actors in joint efforts with private companies and investors through a multi-stakeholder process.

    As part of this process, implementing countries annually disclose information on tax revenues, licenses, production figures und other important data related to the extraction of oil, gas and mineral resources. The aim is to prevent revenues from taxes or royalties from being lost due to corruption. With access to information on how much taxes and royalties mining companies have paid and what public revenues the state has collected from the sector, citizens are provided with an instrument to effectively hold companies and governments accountable.

    Sector Programme Commitment

    The German development cooperation has been supporting EITI politically, financially and technically since 2003. This includes technical assistance to national EITI processes in partner countries through bilateral and regional programmes and contributing to the international EITI secretariat and the EITI multi-donor trust fund administered by the World Bank. With a total funding volume of 30 million EUR, German development cooperation is among the leading supporters of the EITI worldwide.

    The Sector Programme “Extractives and Development” supports the Federal Ministry for Economic Cooperation and Development (BMZ) in asserting its interests as supporting country in the International EITI Board and in promoting and developing the initiative further. Moreover, the sector programme develops new approaches and concepts to contribute to the strategic priorities of the initiative including anti-corruption and impact measurement.

    Germany is strongly committed to working towards an efficient and impactful design of the initiative. In 2016, the sector programme evaluated the effectiveness and impacts of EITI in the study Assessing the Effectiveness and Impact of the Extractive Industries Transparency Initiative (EITI). Based on this study, and as part of broader technical assistance package for national EITI-processes, the sector programme developed the Monitoring and Evaluation (M&E) of EITI Implementation guideline, which is available in three languages.

    Additionally, the Sector Programme conducts trainings for national EITI stakeholders on EITI implementation issues. A specific emphasis is placed on new requirements such as gender or environmental reporting or new methods of EITI reporting. German development cooperation supports the national implementation of the EITI process in 17 partner countries.

    Good Governance
    Gold

    Illicit Financial Flows

    Combating illicit financial flows is an important concern of German development cooperation. The adoption of the EU Conflict Minerals Regulation will give new impetus to the issue of illicit financial flows in the extractive sector.

    Good Governance
    PLANTA DE FUNDICION DODE RUN - Kopie

    Tax Compliance in the Extractive Sector

    An effective tax framework – strengthened through tax policy reforms and rigorous tax audits – is a critical prerequisite for exploiting the full tax potential of a country. In order to enhance domestic resource mobilization in partner countries, Germany supports the capacity building of tax authorities to identify tax risks and to investigate suspected cases of aggressive tax avoidance and tax evasion.

    Responsible Supply Chains
    ASM-Arbeiter in Sierra Leone

    Artisanal and Small-Scale Mining

    It is estimated that more than 100 million people are dependent on artisanal and small-scale mining. This makes ASM a major economic sector and an important source of income. At the same time, ASM is associated with various social and environmental risks.

    Good Governance
    Mining vehicles

    Anti-Corruption

    Corruption risks extend along entire mineral value chains in the extractive sector, from bribery in the acquisition of licences to the misappropriation of public funds. Corruption distorts competition, reduces government revenues and undermines development-oriented budget allocation. Get more information on the topic of anti-corruption here.