Beneficial ownership transparency is clearly becoming increasingly relevant to the debate about generating wealth in countries with significant extractive resources. Many government officials represented at the conference agreed that hidden ownership contributed to losing hundreds of millions of dollars every year in Africa.
Civil society, strongly supporting the topic, highlighted that hidden ownership in the extractive industries is a red flag for organisations looking to investigate corruption.
This conference came 12 months since the EITI Opening up Ownership Jakarta conference and 14 months before the EITI’s beneficial ownership requirements comes into force on 1 January 2020. Some EITI countries have come a long way since Jakarta, passing legislation to enable beneficial ownership transparency – implementing these laws and evaluating their impact is the next step.
Others are still drafting legislation and need to catch up. The conference was a great forum for countries to discuss best practice and how these can be grounded in the context specific to each country. Overall there was recognition that ownership transparency is here to stay – it is now a global norm.
The importance of ownership data as a key piece of the puzzle for increasing tax collection, curbing illicit financial flows and identifying corruption in the oil, gas and mining sector was continuously mentioned.
Know who extracts your resources
One of the corruption risks, when it comes to the company ownership, remains at the licensing level. This stage is critical to influence whether countries will truly benefit from their extractive sector and should ensure that the country attracts ‘the right players’ and responsible companies.
Licensing authorities need reliable and up-to-date beneficial ownership information for their due diligence checks in licensing, to avoid that licenses or contracts are awarded to companies that are unqualified and to prevent any conflicts of interest.
Countries, such as Cameroon, Ghana, Liberia, Sierra Leone and Zambia, have already started exploring how to use beneficial ownership data in licensing. One of the conference sessions focused on how beneficial ownership data increased its role in the allocation of rights. Governments and their citizens become more aware of the issue and want to know who extracts their resources. In Sierra Leone, for instance, the licensing authority requests beneficial ownership information from large-scale mining and diamond export companies.
Opening up through public registers
More than twenty of EITI implementing countries have announced their aim to establish public ownership registers, including Ghana and Nigeria. The afternoon sessions explored how to establish a beneficial ownership register and how to ensure submission of accurate data.
There are different models of existing beneficial ownership registers, both at the national and global level. For instance, UK holds a corporate register with over two million company files and two billion searches per year. Ukraine is a similar example, where beneficial ownership data are also incorporated into a company register.
In the meantime, the Kyrgyz Government aims at creating the world’s first beneficial ownership register for extractive companies. Nigeria and Ghana have a robust framework to establish their registers in 2019. One of the most important pillars to establish a register is to secure political commitment. Another crucial aspect is to think about the use before countries start collecting the data and tailor the disclosure to the local need.
There were other sessions on the practical use of data and moving from policies to practice sketched out the next steps for countries. One key message from the sessions was that global efforts to build technical capacity in carrying out beneficial ownership reforms should intensify, particularly on data use and linking these reforms with national priorities.
Transparency leads to trust
Transforming governance system cannot be achieved overnight and so establishing a beneficial ownership disclosure system, such as a register, could realistically take three to five years. Still, once information is open and accessible, it helps the government raise trust among business partners, investors and citizens. This echoes well with the opening speech of HE Julius Maada Bio, President of Sierra Leone, who said the following:
‘For my government in Sierra Leone, promoting transparency and accountability in the extractive industries is not only about promoting good governance, it is about doing good business. Beneficial ownership transparency can help us encourage the right investment and the right investor types in our extractive industries. We believe that full disclosures of beneficial ownership boosts investor confidence in investing in our extractives sector’.
The conference also included a technical drop-in session which gave conference participants a chance to do a one-on-one consultation on technical issues that were discussed in the previous days. This became a case of experience sharing in both directions between experts and participants.
Concrete cases were discussed to allow participants to brainstorm practical solutions to specific challenges in creating BO registers, addressing confidentiality issues, ensuring data reliability and mitigating corruption risks.
Beneficial ownership transparency is increasingly the norm for the extractives sector in Africa. This was the key message at the closing plenary of the EITI Beneficial Ownership Conference in Africa from the panel of speakers which included Modeste Bahati Lukwebo, Minister of Plan, Democratic Republic of Congo, Frances Piagie Alghali, Minister of State, Vice Presidency of Sierra Leone and Assatou Sophie Gladima, Minister of Mine Senegal.
The speakers emphasised that transparency is an idea that has come of age and there is now an urgent need to make rapid progress in the lead up to 2020. A key learning from the previous days of the conference was that countries differ in their approaches to beneficial ownership reforms, and while there is no single best practice, countries are encouraged to find the best fit considering their local context.
As the EITI prepares for its upcoming Global Conference and a series of deadlines in 2019-20 on beneficial ownership transparency, project-level reporting and systematic disclosure, 2019 looks set to be as eventful than 2018.
Culled from eiti.org