Microsoft word - extractive industries.doc

What are the extractive industries?
Extractive Industries is the industry that involves mining and other valuable natural resources that found in the ground. Essentially
extractive industry concerned with the physical extraction of metals, oil and natural gas. However, these differ in what, how and what
they extract.
Mining can be defined as extraction of metals and the extraction can take place in either an underground mine or above ground mine
which know as surface mine or open pit. Oil extraction can be defined as the extraction of liquid fossil fuel while gas extraction can
be defined as the extraction of gaseous fossil fuel.
What is the EITI?
The Extractive Industries Transparency Initiative (EITI) is a global coalition of governments, companies and civil society
working together to improve openness and accountable management of revenues from natural resources. Natural resources, such as
oil, gas, metals and minerals, belong to a country’s citizens. Extraction of these resources can lead to economic growth and social
development. However, when poorly managed it has too often lead to corruption and even conflict. More openness around how a
country manages its natural resource wealth is necessary to ensure that these resources can benefit all citizens.
Stakeholders of EITI
The EITI is a multi-stakeholder coalition of governments, companies and civil society organizations. How EITI Is Working
State Production Companies Government
Transparency Transit investments Company payments are Disclosed and independently Assessed in an EITI Report
A national multi-stakeholder
group (government, industry
public awareness and Debate about how
the country should manage its resources Benefits from implementing EITI
Countries rich in natural resources such as oil, gas, and mining have tended to under-perform economically, have a higher incidence of
conflict, and suffer from poor governance. These effects are not inevitable and it is hoped that by encouraging greater transparency in
countries rich in these resources, some of the potential negative impacts can be mitigated.
Benefits for implementing countries include an improved investment climate by providing a clear signal to investors and international
financial institutions that the government is committed to greater transparency.
EITI also assists in strengthening accountability and good governance, as well as promoting greater economic and political stability.
This, in turn, can contribute to the prevention of conflict based around the oil, mining and gas sectors.
Benefits to companies and investors centre on mitigating political and reputational risks. Political instability caused by opaque
governance is a clear threat to investments. In extractive industries, where investments are capital intensive and dependent on long-
term stability to generate returns, reducing such instability is beneficial for business. Transparency of payments made to a government
can also help to demonstrate the contribution that their investment makes to a country.
Benefits to civil society come from increasing the amount of information in the public domain about those revenues that governments
manage on behalf of citizens, thereby making governments more accountable.
What is the aim of EEITI?
The Ethiopia Extractive Industry Transparency Initiative (EEITI) aims to increase transparency, Accountability and Good
governance in financial transactions between Ethiopian government and companies within the extractive industries. EEITI involves in
the full publication and verification of company payments made to the government and of government revenues received from mining,
natural gas and oil activities. The extractive industry is responsible for providing the raw materials that make it possible for you to
survive and enjoy your everyday lives! “From the Ground Up! Helping our Resources Wealth Work for all Ethiopia” that’s our Slogan. Transparency can only lead to accountability if there is understanding of what the figures mean and public debate about how the country’s resource wealth should be managed. Therefore, the EITI Standard requires that EITI Reports are comprehensible, actively promoted and contribute to public debate. • Accountability:-The obligation of an individual or organization to account for its activities, to accept responsibility for them,
and to disclose the results in a transparent manner. • Transparency:-Openness and public disclosure of activities.
• Good governance:-In international development literature this describes how public institutions conduct public affairs and

Source: http://www.mom.gov.et/upload/EITI2466.pdf