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Ingredients for Extractives Sector Reform

Ingredientes para la reforma del sector extractivo

Mia Katan|

Over the last decade, OGP members have made 159 commitments to make the governance of gas, oil, and mineral extraction more open to the public. Extractive sector reforms are notoriously politically and financially fraught. Yet these commitments achieve stronger early results than the global average in OGP. So what factors and incentives have led to progress in natural resource governance transparency? To find out, let’s take a closer look at the ingredients that aided OGP champions in extractive sector transparency.

Windows of political opportunity at the highest-level can kick-start extractive sector transparency reforms. The election of new administrations in the Philippines in 2010 and Mongolia in 2014 created an opportunity to address long standing corruption and social tension in mining. Kenya’s 2010 constitution and the discovery of new oil reserves instigated an overhaul of Kenya’s resource governance laws. In Ukraine, the government doubled down on its aim to meet Extractives Industry Transparency Initiative (EITI) standards following the 2015 Maidan Revolution. All four countries translated this momentum into concrete commitments in their OGP action plans.

A coalition of domestic and international partners can reinforce government technical and resource capacity to implement reforms. In Mongolia, civil society organizations advocated for the government to keep open extractive governance on the agenda and in OGP action plans. International partners supported their efforts through financial and technical assistance. This collaboration resulted in greater environmental, public procurement, and beneficial ownership information available to citizens. Meanwhile, Filipino reformers are strategically leveraging EITI and OGP processes by using OGP action plans to address areas for reform identified in EITI reports. Kenyan civil society champions have sustained pressure for the government to address corruption in extractives sector procurement, revenue management, and environmental protection. International partners have reinforced their efforts by garnering political support. In Ukraine, a broad coalition comprising civil society, business, multilateral organizations, ministers, and members of parliament collaborated to draft and pass an extractives industry transparency law in 2018.

Designated multistakeholder spaces for civil society, government, and the private sector facilitate ongoing dialogue and increasingly ambitious reforms. Ukraine’s EITI multi-stakeholder group was one of the first to achieve genuine collaboration between civil society organizations, experts, and government representatives. The Philippines’ EITI multi-stakeholder working group helped to rebuild trust among key stakeholders. Mongolia’s EITI working group kept resource governance on the agenda through OGP commitments despite political upheavals and the COVID-19 pandemic. Kenya’s open contracting working group has enabled government agencies and civil society to collaboratively navigate challenges as they arise across action plans.

Mongolia, Kenya, Ukraine and the Philippines’ experiences underscore the importance of these three key ingredients for ambitious open government reforms in the extractives sector. In Ukraine, aggregated and verified information on the oil, gas, and mining sectors was published and nongovernment organizations were trained to make use of the data. In Mongolia, civil society organizations and the Ministry of Mines and Heavy Industries published mining contracts and agreements. Independently, civil society published beneficial ownership information in the mining sector. It is worth noting that reforms have largely been limited to the release of information and have yet to significantly increase avenues for public participation and accountability in resource governance. Moreover, momentum has slowed as elections, the COVID-19 pandemic, war, and economic stress divert attention.

Yet these converging crises underscore the necessity of responsible management and revenue spending in the extractives sector. In particular, lessons from the last decade can inform how open government champions contribute to a just transition towards renewable energy. Energy sources may change, but the value of government transparency, civic participation, and public accountability in the sector do not.

What ingredients have helped or harmed opening up the extractives sector in your country? How might this approach need to adapt in response to global challenges such as climate change and conflict? Tell us in the comments below.

Comments (3)

Cesar Cruz Reply

I think these contributions and findings are very interesting and worth reviewing in light of the experience of other regions of the world.
In the specific case of Latin America, it would be very relevant to give and update over this experiences, and its similarities and differences in terms of results and impacts, in order to determine best practices and pending challenges or bottlenecks that facilitate the proper implementation of ambitious reforms in the extractive sector worldwide.

Charles Young Reply

I would like to know how many country OGP action plans mention commitments for extractive contract transparency compared to how many countries actually disclose contracts. The gap between declarations and actual commitment and implementation.

Mia Katan Reply

Hi Charles,
Thanks for the good question! From our data, OGP countries that have made a commitment related to extractive contract transparency include Costa Rica, Ghana, Indonesia, Kenya, Liberia, Malawi, Mexico, Mongolia, Nigeria, Philippines, Sierra Leone, and Tunisia.
In regard to implementation of these commitments, our 2019 Seeking Synergy report is the last comprehensive review of this topic:
However, you can get more up-to-date information by visiting these countries’ OGP webpages and searching for ‘natural resources’ or ‘public procurement’ in the commitment search bar. This will allow you to see the latest information at the commitment level. EITI may have also published more recent information for each of these reforms.

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