It has been more than a decade since that visit and Lima, the Peruvian capital city, played host to the seventh EITI Global Conference in February 2016.
It was the first time the event took place in Latin America, and the choice of venue was in recognition of Peru’s achievements in becoming the first country in the Americas to reach EITI compliant status – in 2012 – and for its leading efforts to further the transparency agenda.
Peru has been able to maintain its compliant status by releasing a number of conciliation reports, the last two of which were completed under new standards which mandate, among other requirements, full disaggregation of individual company payments to the state.
The sixth conciliation report – corresponding to the 2014-2015 financial years –is currently underway and is expected to address new issues being raised – such as calls to disclose beneficial ownership of companies, as well as other types of disbursements such as social and environmental expenditures.
Empowerment through transparency
Why is transparency important in relation to the extractive sector in general, and mining in particular?
The root of the matter lies in the age-old economic debate over natural resources endowment, more particularly as it relates to resource-dependent developing countries.
On one hand, there are those who claim that resource endowment is akin to a curse, as it fosters corruption and impedes development. And there are those who believe that, if well managed, resource endowment can contribute to sustainable development.
One way to address these challenges is through transparency, which is not an end in itself but is fundamental in empowering an informed constituency to demand the adequate and equitable use of natural resource rents for optimum development impact.
Peru is already going beyond traditional transparency by having conducted two pilot regional processes – presented at the EITI Conference – that follow the trail of fiscal monies generated by the extractive sector from the tax collection agency to local governments, and then proceed to evaluate how they are invested and if these investments translate into real development outcomes.
Anglo American has actively participated in the pilot experience involving the region of Moquegua on behalf of the mining sector. The hope is that all local governments in Peru will eventually follow suit.
Looking ahead, some civil society constituencies are now demanding that EITI should include other topics, such as disclosure of social and environmental expenditures, as well as beneficial ownership. Whether they will be adopted whole, in part, or none at all, is up for debate – there are strong opinions either way.
But one thing is already evident after all these years: the EITI process in Peru has made a significant contribution towards demonstrating that proper governance in the management of natural resources rent can and does contribute to true development.
Find out more about our approaches and policies at Anglo American.
