From Deals to Development – Open Contracting in Extractives | World Bank Institute (WBI)

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STORY HIGHLIGHTS

  • Developing country governments don’t always have the technical expertise, production facilities or capacity to extract their natural resources and thus contract with private corporations to assist them.
  • Improving the transparency of extractive industries management is crucial for long-term growth in these countries.
  • To help make this a reality the World Bank Institute (WBI) and the World Bank’s Africa Region (AFR) created a contract monitoring initiative to help make the different groups work together to oversee the awarding and implementation of contracts.
     
(c) World Bank.

August 29, 2012― Oil rigs tower over the deep blue horizon, as residents of an African fishing village look at them in awe. Their immediate surroundings are far humbler with thatched roofs, makeshift hospitals with meager supplies and one school room that caters to all grades from 1 to12. The students barely have any furniture to sit on and a lone textbook is shared among 10 students.

They wonder if the fruits of this drilling will ever reach them. One in four Africans lives in a country rich in oil or mineral resources that can generate wealth and help lead its citizens out of poverty. However, due to mismanaged exploitation of the resources, corruption and such factors as a lack of clarity on the agreement between extractives companies and the government too often these resources do not translate into benefits for citizens.

Developing country governments don’t always have the technical expertise, production facilities or capacity to extract their natural resources. Most contract with private corporations to assist them. These contracts are quite often veiled from the public leading to misconceptions among citizens. In many of these countries, these contracts remain opaque despite pressure from the media, parliaments and civil society. Sometimes the government awards the contracts without adequate legislation in place on how the reserves will be managed, profits disbursed or taxes collected. 

Potential to Transform

Oil, gas and mining projects are shaping livelihoods, communities, and the environment around the globe. Extractive industries are the crux of many developing countries economies. For example, in South Sudan, 98% of the national budget came from oil revenues upon independence. Improving the transparency of extractive industries management is crucial for long-term growth in these countries. When these processes are not transparent, revenues can disappear and result in schools or hospitals not being built and citizens lacking access to clean water or basic services.

Opening Contracts

The World Bank Institute (WBI) and the World Bank’s Africa Region (AFR) facilitated the creation of a contract monitoring initiative to bring the different groups together to strengthen oversight of the award and implementation of contracts. The initiative’s first effort was to bring together the actors involved in the extractive industries sector in Ghana, Liberia and Sierra Leone, which quickly expanded to East African resource rich countries. Individuals from the private sector, government, civil society and journalists began to form coalitions that promote access to contract information, foster common understanding of the agreements and help ensure the terms of the deals are met in practice.  

“The private sector is a participant, we are a part of the system…and we think we are partly responsible in causing the problem and therefore we think we should be part of the solution,” said Ali-Dausy Massally, President, Business Action Against Corruption in Sierra Leone.

More groups are monitoring extractives contracts in their countries. Five francophone countries, Burkina Faso, Cameroon, the Democratic Republic of Congo, Guinea and Niger are doing trainings and creating action plans to help the various stakeholders improve their monitoring of extractives contracts.

open-quotesThe private sector is a participant, we are a part of the system…and we think we are partly responsible in causing the problem and therefore we think we should be part of the solution.close-quotesAli-Dausy Massally, President, Business Action Against Corruption in Sierra Leone.Civil society groups are coming together and building their capacity to monitor contracts. “We take them through the stages of a contract and help prioritize what’s most important to monitor in their countries,” said Michael Jarvis, program leader of  WBI’s Open Contracting work.
Last year the Government of Ghana released seven petroleum contracts to the public. Having information accessible to better monitor contracts created greater transparency and accountability.  The capacity need of stakeholders to know how to read contracts and knowing not only what they mean but understanding the financial model has been crucial.  
Active Coalitions

In Ghana the coalitions are also using an ICT project to develop ‘apps’ for citizens to monitor oil fields using their mobile phones. The coalitions in Uganda are monitoring recent oil contracts. In Liberia the groups are now monitoring the construction of roads and its extractives work is focused on preparedness of oil for Liberia. They have developed recommendations on how the government should be more participatory in awarding of its contracts.

The coalitions are moving beyond Africa to other regions of the world and to other sectors - part of an emerging Open Contracting movement. WBI is now working with groups in Mongolia to help them map their extractives information, including one of the largest mining projects in the world - Oyu Tolgoi. Journalists are also being trained to help them understand the issues better and strengthen their coverage of the project. Data rich maps help the stakeholders better understand the scale and impact of the industry.

Leveraging a Community

The WBI team also supports an online community of practice for professionals involved in monitoring extractives industries. Diverse stakeholders from different countries, backgrounds, and initiatives exchange views, get advice, gather data, and also find jobs on GOXI. It is not only limited to an online platform, but also includes offline meetings and workshops for further engagement. 
Join the conversation at www.goxi.org.
 

 

Comments (1)

Establishing Open Contracting NGO in Lesotho

I got particularly impressed by what I have just read regarding monitoring extractives contracts and believe it can be of benefit to my country if an NGO with that mandate and objective was to be established. More often,African populations are in the dark as to what contracts their governments/countries have entered into....but even when they are aware, they are in the majority of cases unable to access information regarding those contracts or are unable to read and understand them.It is my conviction that if an attempt is made to fill that gap,atleast one serious step will have been taken to combart corruption and lack of transparency.

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