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Uganda in tough test on oil money

Families work together mining gold in Sodoku, Kaabong District in northeastern Uganda. Artisanal mining is a key source of income for many local communities around Uganda. COURTESY PHOTO

Reducing corruption

Launched in 2002, the EITI seeks to reduce corruption in oil, gas and mining by asking governments to release publicly details of money coming in and how it is spent. The initiative grew out of a‘Publish What You Pay’ campaign, which is a global network of civil society organisations campaigning for transparency in the extractive industries.

This transparency on both sides of the business relationship is expected to deter corruption and, therefore, increase the likelihood of money being earned and spent in ways that contribute to social and economic well-being.

In becoming an EITI candidate, Uganda has agreed to meet five sign-up requirements. In addition to saying publicly that it intends to implement EITI, the government has also committed to work with civil society and companies on the implementation process, appoint a senior individual to lead the EITI implementation, and establish a multi-stakeholder group to oversee the implementation.

The multi-stakeholder group should include—but is not limited to—the private sector, civil society (not only NGOs but also the media and legislators). The group in consultation with key EITI stakeholders should agree and publish a fully costed work plan, containing measurable targets, a timetable for implementation, and an assessment of capacity constraints.

The country should detail how it has met these criteria when it formally applies to become an EITI member. Countries can hold candidate status for a maximum of two and half years, during which time they undergo a validation process.

This involves meeting a further 15 criteria, which prepares the government and relevant companies to be able to disclose payments based on accounts audited to international standards and to be able to disseminate their reports and encourage public debate.

Many in the civil society are hoping Uganda’s joining the EITI, will bring an end to the secrecy that has tended to shroud deals in Uganda’s extractives industry. Some believe the endless disputes between the government and oil companies such as Tullow over Capital Gains Tax are partly due to contracts being done in secret and kept in secret.

For over a decade, civil society had pushed the government to join the EITI. Interestingly, in 2008, during the formulation of the national oil and gas policy, the government put joining the EITI as one of its key objectives.

However, in the years that followed, the idea did not look appealing. President Yoweri Museveni at one time sounded dismissive of the initiative saying he would prefer a continental mechanism.

But, suddenly, on Jan. 29, last year, the government announced that it was joining the EITI. Onesmus Mugyenyi, the deputy executive director of the Advocates Coalition on Development and Environment (ACODE) told The Independent then that Uganda’s joining of the EITI meant that Uganda had finally agreed to subject its management of oil, gas and mining revenues to scrutiny beyond the internal government mechanisms.

An August  2013 Global Witness paper titled, “The benefits for Uganda joining the emerging global transparency standard for extractives industry revenues,” noted that the introduction of initiatives like the EITI were intended to bring about a new global transparency standard for oil, gas and mining revenues into being.

Advocates of the EITI say the mechanism can provide communities that live near extraction sites with details of the financial contributions that the industry makes and enable citizens, legislators, and civil society groups including the media to hold governments to account for how the revenues are spent.

On the other hand, project-by-project reporting under the EITI, experts say, is beneficial to the companies too because it strengthens companies’ “social licence” to operate by showing host populations the financial contributions they make to public revenues which in turn reduce the likelihood of resentment and conflict.

According to Global Witness, a London-based non-profit that advocates for transparency in the extractives sector around the world, over 50 countries are now implementing the EITI and 80 of the world’s largest oil, gas and mining firms also actively participate in the initiative.

The EITI has also won the support of over 80 global investment institutions that collectively manage assets worth about US$ 19 trillion. Global Witness also noted that since its inception in 2002, companies have disclosed over US$ 1bn in revenue payments through EITI reports.

Going forward, Uganda’s initial disclosures in terms of the 2019 EITI standard will need to be made within the next 18 months. As part of the EITI sign-up process, Uganda formed a multi-stakeholder group in March 2019, composed of the government, industry and civil society representatives.

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