Annual Report 2012: From the Ground Up
We are at the beginning of an era of new opportunities to address the challenges faced by countries rich in natural resources but in many cases fragile and poor, work that Revenue Watch is uniquely equipped to perform.
Political changes in the Arab world, new openness in parts of Asia and Africa, and growing public demand for transparency and accountability have created the opening to improve the lives of citizens. Despite their potential, resource-rich countries often experience more corruption, more conflict, more inequality and more poverty than other nations.
Over the past 30 years, Nigeria has earned more than $400 billion from oil, while its poverty rate has risen to 70 percent from 26 percent. Timor-Leste’s earnings from oil and natural gas include a $9 billion sovereign wealth fund, but 45 percent of its children under the age of five suffer from malnutrition. In the Middle East and North Africa, many oil-producing states are less industrialized than they were 40 years ago, leaving them oil-rich but job-poor. In the more than 50 developing countries the International Monetary Fund classifies as resource-rich, more than 1.5 billion people live on less than $2 a day.
We understand the problems and how to address them. The oil, gas and mining sector’s tradition of secrecy prevents effective oversight and fosters corruption. At the same time, the revenues make governments less dependent on taxes from citizens, which weakens their voices and governments’ accountability. The complexity of the industry compounds these challenges. Governments and citizens often lack the expertise to make good policy choices, which too often leads to unfavorable deals, lower government revenues and fewer benefits for the public.
Our experience shows that four fundamental changes are necessary. Countries need a better deal from companies, which entails negotiating effectively, enforcing contracts and strengthening laws. Citizens need a better deal from their governments, including governance that ensures that revenues from natural resources are spent for the public good. Countries also need investment strategies that put savings to work improving citizens’ lives. Finally, international transparency standards need to be stronger, to reinforce citizens’ and lawmakers’ demands for greater transparency at home.
Slideshow
Introduction
Full Report (2.5mb)