Politics Are Holding Back Implementation of Extractive Sector Transparency Rules

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extractive sector
An open pit mine in the town of Prestea, where Oxfam parter organization in Ghana, WACAM has been supporting the Concerned Citizens Association of Prestea in its efforts to negotiate with a mining company around issues related to air and water pollution, and the proposed expansion of mining operations.

This post also appeared on the CCSI blog.

“Our country has good rules, it’s the implementation that fails.” This is a common refrain we hear from partners working on natural resource governance, ranging from civil society actors pushing for contract transparency in the Democratic Republic of Congo (DRC) to those advocating for improved state-owned enterprise (SOE) governance in Mongolia.

We know good laws and regulations aren’t enough to achieve good governance; the ability and willingness to follow through with them is key. So why do so many resource-rich countries fail to adequately implement their “good rules”?

Two decades of experience from the transparency, participation and accountability (TPA) field has led to a growing appreciation of the need to better integrate politics. As detailed in a recent discussion paper for the Executive Session on the Politics of Extractive Industries, this applies throughout the extractives “transparency lifecycle.” This resonates with our experience that political considerations can make or break the implementation of extractive sector transparency commitments.

At the Natural Resource Governance Institute (NRGI) we’re increasingly considering the “implementation gap.” We define this gap as the difference between adopted rules and their implementation in practice. The 2017 Resource Governance Index (RGI) started measuring this gap, finding that the worse a country’s overall sector governance, the wider its implementation gap. The gap was also a focus of a subsequent sub-Saharan Africa analysis. That report found that of 22 countries that had revised their sector laws between 2000 and 2016, all but two exhibited an implementation gap, keeping them from realizing benefits from the investment in legal reforms.

Identifying and measuring implementation gaps remains central to the RGI, with early findings from the 2021 edition showing both progress in addressing gaps (e.g., in Guinea) and areas where gaps are particularly pronounced (e.g., around local impacts in Peru).

So, what are the political causes of—and potential responses to—implementation gaps? Here we draw on NRGI’s country experience to answer these questions and consider the implications for NRGI and others committed to sector policy reform.

Political causes of implementation gaps

Our experience and a review of relevant literature points to two broad interrelated categories of causes for gaps: (i) political factors, and (ii) administrative constraints and shortcomings in rulemaking processes. Even for the second category, the underlying causes may be primarily political. For example, choices by parliament or ministers or competition between ministries and SOEs can result in a lack of resources or capacity within institutions tasked with implementation or oversight, or insufficient coordination between policymakers and implementers.

Within the political factors category, we have identified a few specific causes behind implementation gaps. A common cause is resistance by different governmental actors, to protect political or economic interests (including potentially private or individual interests), often through parallel governance structures. In many countries, there are unclear or overlapping governance structures both horizontally—between parallel agencies such as ministries and SOEs —and vertically—between national and local agencies. In these situations, even if the law assigns implementation responsibility to a specific agency, this may not always correspond to political realities and power dynamics, with other actors potentially blocking implementation.

In the extractive sector, powerful SOEs can play an important role in this dynamic. For example, in the DRC, implementation of the country’s contract transparency rules has been particularly challenging for contracts agreed by SOEs. The DRC’s mining SOEs play a critical de facto role in licensing, and international actors have investigated transactions to which they are party, potentially contributing to an aversion to transparency among SOE decisionmakers. While the law charges a technical unit of the Ministry of Mines with implementing contract disclosure, in practice this unit has at times struggled to access documents from SOEs, which answer to a different ministry.

Another common political factor behind implementation gaps is a decline in prominence on the political agenda of an issue, which disincentivizes political leaders (and the individuals and institutions who answer to them) from implementing related rules. Once a law is passed, momentum behind reforms often fades, as political gains in many instances derive from the passage of laws rather than implementation. This aligns with a broader dynamic identified in the discussion paper: where political leaders’ chief motivation for adopting a policy is reputational gain, preparing for elections or responding to scandal or political pressure, implementation can be weak or fleeting. Such dynamics have led to countries signing up to transparency commitments such as the Extractive Industries Transparency Initiative (EITI) for optics reasons, but then demonstrating limited appetite to significantly implement the commitments.

This echoes what we have heard from civil society activists and journalists in Tanzania, namely that, under the previous government, the ruling party promised during elections to advance transparency to appease citizen pressure and to respond to international transparency norms. While this led to passage of the Tanzania Extractive Industries (Transparency and Accountability) Act in 2015, endorsing several transparency requirements, the government viewed transparency as an agenda driven by the opposition, clashing with its focus on infrastructure development and industrialization. After the 2015 elections, authorities showed little interest in implementing the law.

Competing sources of norms also contribute to implementation gaps. International transparency norms, generally championed by international and national civil society organizations, sometimes fail to connect with the approaches and priorities of community-based organizations, which tend to prioritize more direct impacts (e.g., jobs, environmental damage, use of land) or of regional bodies (e.g., African Union), which tend to focus on industrialization and structural transformation.

These disconnects can weaken support for and oversight of implementation. For example, in Tanzania, national civil society actors felt that the officials in the former government portrayed international transparency norms as externally driven, costly and not a high national priority. These dynamics may be partly why some donors’ approaches are shifting to focus on prioritizing local work, and ensuring that that work informs global norms instead of working from the global to the local level.

Mind (or better yet close) the gap

What does this mean for an organization like NRGI and others working on extractive sector governance? We set out below some initial guiding thoughts:

Consider implementation early and often. As a first step we must factor implementation—and the risk of gaps and their political causes—into various parts of our work, including when selecting where and how we work, who we work with, and the content of our analysis and recommendations.

Ultimately, governments are responsible for implementation, but other actors such as international development agencies, donors, technical advisors, regional bodies, and civil society organizations can play a role in avoiding implementation gaps in the first place as well. This includes by identifying (and pushing for rectification of) shortcomings in policy and legal designs that can hinder implementation. The same actors can also look to support potential responses to implementation blockages, including by strengthening oversight and demand for implementation.

International development agencies, donors, technical advisors, regional bodies, and civil society organizations play a key part in shaping laws aimed at realizing extractive sector transparency. But too often these actors are driven by—and rewarded for—securing the establishment and formal adoption of norms. Civil society organizations must take care to not declare victory when a law is passed and not move on too quickly to campaigning for the next norm. Similarly, development agencies, donors, and governments should ensure that when linking reforms to incentives (e.g., financing), they prioritize effective implementation and continued compliance, and not just initial commitment.

Development partners and civil society organizations should embed implementation considerations in their technical assistance and advocacy, in both a political and a technical sense. On the technical side, they should push for legislation that clearly specifies the actor responsible for implementation, includes a budget and timeframe for implementation, and avoids conflict between various laws or excessive fragmentation between different implementing actors. More broadly, both national NGOs and international norm setters should advocate for practical and context-appropriate rules, sensitive to the trade-off between “best practice” and “implementability.”

Understanding the incentives for and against implementation. International development actors, including NRGI, should consult political agendas and key constituencies such as implementing agencies early on to gauge their incentives for (or disincentives against) implementation. Actors should also look to align their advocacy with existing and upcoming official technical assistance programs endorsed by the government where possible. In Mongolia for example, advocacy by NRGI and Mongolian civil society actors for implementing the greater SOE transparency set out in the Glass Accounts Law was supported by oversight actors such as auditors and the political agendas of certain social movements and political parties. Coordinating this advocacy with official technical assistance to SOEs by the Asian Development Bank further helped to address the implementation gap.

Boost demand for implementation. As with the Mongolia example, oversight actors demanding implementation play an important role, especially where government incentives for implementation are weak. The influential 2012 Global Integrity and CIPE report on implementation gaps put it well; the “implementation gap will be eradicated only when the supply of sound laws is met by corresponding demand on the ground to implement them.” NRGI aims to complement our legal reform and advocacy work by partnering with organizations that actively monitor implementation after laws are passed. In the DRC, we partnered with local CSOs to produce lists of non-disclosed contracts and submit them to government and international partners. In Ghana, NRGI followed its technical assistance and advocacy around the country’s petroleum law with the convening of a civil society group to monitor the country’s first oil bid round, with a focus on implementation of transparency rules. Civic space is vital to such efforts. Without freedom of speech, citizens are reluctant to speak out against lack of implementation. Hence the importance of initiatives to preserve this space, such as that of EITI.

Different actors have different roles to play around the implementation gap. Larger international institutions can contribute technical and financial resources in more politically informed ways to promote implementation, while national actors are better placed to influence underlying political incentives. At NRGI we aim both to lead on closing the implementation gap in natural resource governance and to further sensitize other actors, including our partners in civil society and government, to this critical issue.

Amir Shafaie is the legal and economic programs director at the Natural Resource Governance Institute (NRGI). Moses Kulaba is the East Africa manager at NRGI. Kaisa Toroskainen is a former Africa program officer at NRGI.

Authors:
Amir ShafaieMoses KulabaKaisa Toroskainen

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