The Extractive Industries… Political parties risk fueling corruption, economic distortion in the absence of informed policies-NRGI

Jul 20, 2018 News

Political parties have a fundamental role to play in designing and implementing good resource governance systems. By developing comprehensive resource positions, they are better able to communicate who they are and what they stand for to constituents and, whether in power or in opposition, participate in policy making and public debate in a more informed, strategic and unified way.
But without comprehensive resource positions, political parties risk exacerbating the challenges associated with resource wealth—challenges such as corruption, mismanagement, untenable public expectations, revenue volatility and economic distortion.
Given the aforementioned, the International Institute for Democracy and Electoral Assistance (IDEA) and the Natural Resource Governance Institute (NRGI) have noted that Guyana and other emerging oil producers develop clear, informed and comprehensive policy positions that cover relevant issues across the natural resource value chain.
These issues include beneficial ownership, contract transparency and monitoring, corruption, economic diversification, licensing and negotiation, mandatory payment disclosure, revenue management, sovereign wealth funds, tax policy and revenue collection.
To cement its point on the importance of political parties having comprehensive policies for the extractive sector, the organizations presented the case of Ghana.
GHANA AND POLITICAL RIVALRY
NRGI and IDEA noted that in 2008, after the discovery of commercial quantities of oil, the New Patriotic Party (NPP) government initiated public consultations on the drafting of key laws governing Ghana’s nascent oil sector and revenues.
The organizations said, “Domestic and international civil society organizations and donors pushed the government to consult the people of Ghana. Citizens were initially wary of news of the oil discovery, because of historical public discontent with the management of mineral revenues in Ghana and neighbouring Nigeria’s challenges in the oil sector. However, broad public consultations led to a greater awareness of the oil discovery as a unique opportunity to get things right.”
The transparency bodies continued, “In spite of the consultative approach to developing the revenue management principles, intense political rivalry between the two main parties had a detrimental impact on revenue management outcomes.
The NPP’s energy Minister at the time of oil discovery went as far as presenting a bottle of crude oil in a parliamentary session to celebrate the discovery. These types of public appearances and accompanying positive messages raised expectations among the assumption that revenues would be large enough to quickly transform the country’s economy.”
They added, “Consequently, public consultations led to wide backing for saving a minority of the resource revenues for future generations and investing the rest in national development. Political rivalry has continued to play a role in shaping the sector’s management, with the subsequent NDC government publicly declaring that it would produce production.”
IDEA and NRGI noted however, that this strategy was not accompanied by equal determination in developing a comprehensive set of policies, laws and regulations before the oil sector today, as expressed by Kwame Jantuah, Vice Chairman of Ghana’s Public Interest Accountability Committee (PIAC). This institution was created to increase accountability of the use of oil revenues.

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