EXTRACTIVE SECTOR NEEDS TO RE-FOCUS ON LOCAL INVOLVEMENT
A well-attended meeting of the Policy Forum Guyana (PFG) on Saturday October 22nd reviewed progress made with respect to Guyana concluding the application process for entry to the Extractive Industries Transparency Initiative (EITI). What should have been a relatively straight-forward process has become a somewhat protracted exercise.
This is particularly the case with respect to selection of the body charged with the direction of the EITI known as the Multi-Stakeholder Group (MSG). Once this hurdle is cleared and a Secretariat established by the Ministry of Natural Resources, the final piece in the candidacy process will be for the MSG to approve an operational plan for 2017. The current intention is to have the process completed by mid-November.
Since the selection process for the civic component of the MSG was completed in August, Saturday’s meeting needed only to endorse the four alternates for the civic component of the EITI. Alternates will attend meetings and have a voice but not a vote. Membership of the MSG will be announced by mid-November by the Ministry of Natural Resources.
During July and August the PFG had conducted outreach visits to Corentyne, Linden and the UG campuses. Copies of a recently published awareness-raising leaflet on the EITI were distributed at these meetings.
While the purpose of the EITI may appear technical and abstruse, focusing as it does on remittances made by extractive companies to and revenues received by Governments, the issue of who benefits from foreign investment goes to the heart of the development discussion on a global scale. Whether it is giants in the communications, cosmetics or clothing industry or their local equivalents operating in Guyana’s mines and forests, tax evasion and avoidance takes place on a massive scale. Indeed, it challenges the dogma promoted for decades by the multi-lateral financial agencies that Foreign Direct Investment is essential to economic development.
The recent announcement by Barama to relinquish its concessions illustrates precisely this point. It would be interesting to calculate, over the twenty-odd years of its activities, what financial benefits Barama has brought to Guyana when off-set against the waivers, concessions and tax holidays and exported profits from which the company has benefitted.
More pertinently, had a level playing-field existed for Guyanese companies to access similar concessions a greater percentage of the profits now re-patriated to Asia would remain in Guyana. At present Guyanese investors receive none of the incentives routinely made to attract overseas companies. It is not unreasonable to link this short-sighted policy to the woeful performance reported by the Guyana Revenue Authority (GRA) in which 85% of companies and individuals do not submit tax returns, with those who ought to pay tributo’s tax being notably delinquent. Employees are the only sector effectively paying taxes, while the bulk of companies, professionals, companies, miners and farmers have a free pass.
While fully supportive of the limited aim of the EITI process to produce Annual Reports containing accurate and transparent information on financial remittances from extractive companies, the PFG is interested in a wider purpose, namely, that a reformed economy must prioritize mandatory accountability of all investors in extractive industries, not just the biggest operators. All extractive companies – small, medium or large, – contribute to negative social and environmental impacts on communities hence the need for all to participate.
The PFG will be seeking opportunities at the sub-national level to institutionalize transparency and accountability mechanisms. Communities affected by extractive operations must be able to make informed decisions on the role of extractives that directly affect their lives. People sitting on oversight Committees should have wider access to monitoring reports produced by bodies such as the GGMC, the GFC and the EPA in order to make informed decisions. Similarly, multi-stakeholder participation at regional and local levels involving genuine and credible CSOs, government and business could be encouraged to engage in regulatory oversight and rehabilitation of mine sites.
While at the civil society level, the PFG is taking steps to develop the ideas set out above, a more purposeful approach by Government to completing candidacy arrangements and launching of the EITI would raise the profile of transparency and accountability in general.
PFG Steering Committee
October 28 2016