Liberia on Verge of Delisting from Global Extractives Transparency Body Risking further Blow to Economy
Monrovia – Liberia risks being delisted from the Extractives Industries Transparency Initiative, the global body which monitors transparency in oil and mining industries, in a move that will likely deal another blow to the shaky economy. Liberia will be delisted if it doesn’t meet a deadline set for December 31 to file overdue reports according to Bady Balde, EITI’s Africa Director.
Report by Bettie K. Johnson-Mbayo, [email protected], and Mae Azango, [email protected] New Narratives Extractives Correspondents.
Balde told journalists in a Skype interview from the organization’s base in Oslo, Norway, that EITI member-states are mandated to publish periodic reports of companies’ payments. Liberia, which became the first implementing member country in 2009, was initially a high performer, but it has not submitted a report since 2016. Reports from 2016-2017 and 2017-2018 are now overdue. Liberia was suspended in September 2018 for failing to meet earlier deadlines. December 31 will be the final deadline to avoid removal. A delisting would make Liberia far less attractive to international investors in the mining industry. Investors and their shareholders favor EITI-listed countries because of their transparency.
“In Liberia it would be very unfortunate because it would have serious consequences not just for the extractives sector but also for the entire economy,” said Balde.
Problems with LEITI, the Liberian secretariat, continued into the Weah administration. In March this year, President George Weah fired Konah Karmo, then head of LEITI, and appointed Gabriel Nyenkan. It was a move that ran counter to the EITI’s standard process which recommends the country secretariat be selected by the multi stakeholder group (MSG). The MSG comprises the government, private sector and civil society. Nyenkan’s forceful takeover of the institution, with the aid of armed police, made headlines at the time.
Nyenkan, who went on to face criticism for his management of LEITI, was removed by President Weah after the EITI international secretariat’s mission to Liberia in early September. Within days he was re-appointed by Weah as Advisor on Communications to the Presidency.
All of the MSG committees were only recently constituted after several months of delays created by upheavals at the secretariat following Nyenkan’s takeover. EITI says the absence of the MSG’s committees has impacted the performance of the agency.
Signing up to the EITI is vital in assuring potential investors that a country is transparent in its operations and that mining royalties are going to the right government departments and corruption is discouraged. Countries that are not compliant with EITI will not be attractive to mining investors. It can also impact International Monetary Fund support.
The EITI standard is in place in 52 countries around the world. Equatorial Guinea and Gabon are the only two African countries that have ever been delisted, according to Balde. Yemen is the only country outside of Africa to be delisted.
Once a country is delisted, rejoining is very difficult said Balde.
“The country loses credibility in terms of its commitment to international actors and partners and companies and civil society actors,” Balde said. “The bar is much higher when you have been delisted.”
Equatorial Guinea was delisted in 2010 and Gabon followed in 2013. Balde said the impact was a withdrawal of funding from international donors and partners. “The IMF program in Equatorial Guinea is still contingent on EITI membership and it is a serious source of contention,” Balde said.
Liberia’s economy is in bad shape. Inflation is soaring at a rate of 28.5 percent, the economy will barely grow this year and the currency has dropped The Liberian dollar’s value has depreciated by more than half in the last 2 years. By the end of 2017 it was 125.45, according to the Central Bank of Liberia. Now it rests at 208.52.
In a bid to boost the economy President Weah called on investors to come to Liberia at last week’s United Nations General Assembly. “My administration has recently developed a new investment framework of incentives and tax relief that will directly benefit the private sector, and we hereby invite the investment community to take advantage of this new opportunity,” he said to world leaders. He told the UN General Assembly that his government was engaging the IMF in a recovery program.
At press time, the IMF Liberia office had not responded to queries for comment on whether a LEITI delisting would impact IMF involvement with Liberia.
The World Bank, through its communication officer Michael Sahr, said the Bank’s support to Liberia was not based on the country’s adherence to standards set by the EITI.
“However, upholding EITI standards is consistent with and complementary to the support that the World Bank provides in the area of transparency and accountability,” said Sahr.
Balde believes that the upheaval in leadership at LEITI is in large part responsible for the institution missing its deadline. He said the country is a case of its own in that it performed extremely well initially, setting standards for other countries, but since that time, things have taken a severe turn.
“The LEITI used to undertake audits of how licenses were awarded, for example, which went beyond the minimum of reporting, and showing whether institutional procedures were followed in that license process. That process has been discontinued,” Balde said.
He added that in order for EITI to be useful, it needs to be an independent instrument fighting corruption which is not politically motivated. Work needs to be based facts and evidence.
According to Balde, autonomy is an important part of EITI implementation. Countries are asked to respect their national laws and procedure, and choose leadership on their own through the MSG, but he says that it unfortunately often comes at the expense of speedy actions and effectiveness.
LEITI’s website was a vital tool for journalists and civil society actors in the country. It was a repository of almost all Mineral Development Agreements in the country along with government laws regulating the industry. The LEITI website is currently suspended due to lack of payment.
“Sorry!!! Website is suspended due to lack of payment,” the website currently says. “If you are the owner of this website, please contact your hosting provider in 5 days to avoid the deletion of your account.”
EITI Country Director Gamawa, who joined the Skype call from Abuja, said it’s important that LEITI’s IT is kept and the data is not lost because there is information that they (EITI) wouldn’t have.
“The EITI is prepared to give an ultimatum to the government up to December this year to make changes, and if the government fails Liberia will be delisted by early 2020,” Balde said.
According to Liberia’s Deputy Information Minister Eugene Fahngon, the government has written the MSG to look for a possible replacement for Nyenkan, and action has already been taken for the replacement.
“The government is taking the EITI issue very serious, because if the government was not serious, it would not have taken this action. EITI is very important, this is why the President moved swiftly,” said Fahngon.
“As for Liberia getting delisted, it has not reached to that point; we have enough time to correct the situation this is why we are treating the matter seriously. Lastly, Liberia remains committed to all the international protocols and treaties it has signed and we remain committed to all of those protocols unless otherwise. We will do everything in our power to ensure we cooperate with the EITI.”
This story was a collaboration with New Narratives as part of the West Africa Excellence in Extractives Reporting Project. German Development Cooperation provided funding. The Funder had no say in the story’s content.