Eye on Malawi’s EITI: Who is benefitting from our resources – Mining & Trade Review (February 2016)

The piece “Eye on Malawi’s EITI: Who is benefitting from our resources?” featured below was initially published in Malawi’s Mining & Trade Review Issue Number 34 that is circulating this February 2016.

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

2015-11 Mining and Trade Review Eye on Malawi's EITI Rachel Etter-Phoya

Who is benefitting from our resources?

Rachel Etter-Phoya

The question of who should and does benefit from natural resources is a challenging one and measuring benefits is even more difficult. Depending on whom you speak to, the government, investors, communities, workers, suppliers and customers should all benefit from the extraction of resources. The Extractive Industries Transparency Initiative (EITI) seeks to understand particularly the financial benefits of exploiting natural resources such as oil, gas, minerals and forests. This is why Malawi signed up – to improve knowledge and information about what benefits are being derived in the sector, especially in terms of revenue.

In light of asking who benefits, Malawi’s Multi-Stakeholder Group took a bold step last year when it decided to include a voluntary requirement on beneficial ownership for EITI reporting. The Group, which is required to maintain a fully-costed work plan, decided to include public disclosure of beneficial owners of companies in Malawi’s extractive sector. Since the development of the work plan, the EITI International Board decided in December 2015 to make beneficial transparency requirements obligatory.

Responding to this decision, Global Witness, a leading international investigatory organisation that campaigns for transparency, declared,

This is an important step forward towards shining a light on who owns and controls companies so that they can no longer be used anonymously against the public good.

Global Witness argues that anonymous companies are used to facilitate corruption in natural resources and

Citizens own these resources and have a right to know who controls the companies that extract them and who benefits from the revenues raised.

In 2015, Global Witness reported that Angola, Nigeria, the Republic of Congo and the Democratic Republic of Congo awarded oil and mining licences worth USD 4 billion to companies with hidden owners. Companies were often registered in offshore locations making it hard for the countries to find out further information. In some cases, politically exposed persons, individuals who are entrusted with a prominent function with access to state funds and exercise state, were thought to be connected to these companies, presenting a high corruption risk.

The EITI Board’s decision will mean that companies operating in Malawi, bidding for licences or investing in mining and oil and gas assets will have to report their beneficial owners including details such as names, nationality and country of residence as well as politically exposed persons. The beneficial owner are the people who actually benefit from the licence or right to the natural resource while, in contrast, the legal owner is the company or people who hold the right to the licence on paper or the people recorded in business register records. It is often hard for countries to find out information beyond the legal owners when companies are registered in secrecy jurisdictions or set up with a series of shell companies. If companies do not comply with this EITI requirement, the companies will have to be named Malawi’s EITI reporting.

This month of February is a busy month for the Extractive Industries Transparency Initiative (EITI) family. Malawi will be joining 48 other EITI countries in Lima, Peru, at the end of February for the EITI Global Conference. Some civil society activists will travel a couple of days earlier to Lima to attend the Publish What You Pay Global Assembly. These take place only every two or three years. More about that next month!

 

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One response to “Eye on Malawi’s EITI: Who is benefitting from our resources – Mining & Trade Review (February 2016)

  1. Pingback: Link Roundup for Extractive Industries in Malawi: February 2016 | Mining in Malawi·

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