World Bank says much work needed to fight corruption in extractive industry


Almost a decade after the Extractive Industries Review (EIR), the consensus among some CSOs and World Bank Group officials is that while some progress has been made in implementing the recommendations, on fighting corruption in extractive industries (EI), for example, there is still much more to do.

A recent seminar, Extractive Industries Review + 10: Looking Ahead, co-hosted by the World Bank and International Finance Corporation, and the Bank Information Center, explored key themes of the EIR through three panels, respectively on extractives in fragile and conflict-affected states, on protecting the rights of affected communities and ensuring that they benefit from EI, and on opportunities and challenges for women in EI development.

Overall, panelists agreed that while conditions had improved on all three fronts from a decade ago, and that many of the EIR recommendations had been acted upon, there was also widespread consensus that much remains to be done.

In his opening remarks, Vijay Iyer, Director of the Bank’s Sustainable Energy Department, noted the progress made by the Extractive Industries Transparency Initiative (EITI), which was launched as the EIR was being prepared in 2003. A year later, an EITI multidonor trust fund was set up to help countries align their systems with with the requirements of EITI. Iyer—whose department manages the EITI trust fund—noted that 35 countries are now implementing EITI, of which 11 have completed the first cycle and are fully compliant with EITI rules.

“We see increasing demand in Africa and elsewhere for EITI implementation,” he said. “That shows that people want accountability. It is a good sign.”

Still, Iyer noted that the so-called ‘resource curse’ endures in many settings, and cited the mounting hostilities between Sudan and South Sudan as an example of persisting conflict around oil resources.

Clive Armstrong, Lead Economist in IFC’s Global Infrastructure and Natural Resources Department, recalled that the EIR had called on the Bank Group to withdraw from all coal and oil projects, and not invest directly in EI, while increasing its renewable energy portfolio.

He noted that much of this has taken place in practice. For example, over 70% of IFC’s power sector portfolio is now in renewable energy, while prior and informed consent of indigenous people is required before the Bank Group participates in an EI project.

But corruption endures in many EI operations, panelists said, and illegal capture of resource rents often provokes conflict, or prevents development and distribution of potential gains from EI to local communities. To forestall such capture, several panelists emphasized the need for capacity-building to enable government officials in resource-rich developing countries to negotiate effectively with extractive companies.

The final panel, devoted to gender issues in EI, highlighted the need to overcome cultural barriers to women’s participation in community oversight of mining and oil extraction operations. The Bank manages a Gender and EI program.

While some were skeptical that any mining venture would benefit local women, others such as Lesley Bennett of Papua New Guinea’s Chamber of Mines and Petroleum said these industries can offer jobs to women, a point confirmed by Rio Tinto’s Chris Anderson, who noted that female employees at mining sites are usually more reliable, and adopt safer practices, than men. Properly managed, they agreed, mining operations can bring benefits to communities.

“It’s important to have this discussion now as the Bank undergoes its Safeguards review,” said Chad Dobson, Executive Director of the Bank Information Center. “Safeguards need to be considered seriously when it comes to extractive processes. Currently the IFC has a much more progressive stance on a number of issues than the Bank does, but we expect the Bank to catch up.”

“Over the past 10 years the World Bank has facilitated the extractive industries’ contribution to poverty alleviation and economic growth through the promotion of good governance and sustainable development,” said Paulo de Sa, manager of the Oil, Gas and Mining unit. “We are conscious that there is much work to do, and the role of governments, industry, and civil society is crucial to achieve these goals.”

Source: World Bank

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