Extractives and Beneficial Ownership Data Disclosure (SL0033)

What is the public problem that the commitment will address? Sierra Leone is endowed with rich natural resources contributing up to 67% of total exports. Given that natural resources played a significant role in sustaining conflict during the Sierra Leone Civil War (1991-2002), the transparent management of these resources remains a national priority. The Government of Sierra Leone first announced its intention to join the EITI in June 2006 to promote transparency and accountability in the management of its natural resources. Ever since, SLEITI has made steady progress, producing 10 EITI reports covering the period 2006 to 2019 and achieving the global body’s ‘meaningful progress’ status following its last Validation in 2018. While progress has been made to improve reporting and transparency in the extractive sector, opportunities remain to promote routine disclosure and accountability for i) revenues derived from natural resources extraction and production, ii) the ultimate beneficial owners of companies engaged in extractive projects iii) contracts entered into between government and companies and revenues accrued to subnational entities. Additionally, SLEITI reports contain critical information and data about how the extractives sector is managed, but the reports are not adequately utilized by the public, and their findings and recommendations are often not fully implemented by the relevant government agencies and companies. By implication, these pose several problems including inadequate public engagement in the affairs of the sector, and lack of optimization of the benefits that can accrue to the government and the citizens. To ensure that transparency is an integral and systematic part of extractive sector management, EITI implementing countries including Sierra Leona are increasingly making more information available online through systematic disclosures. Disclosing data at source; through government and corporate databases, online registries, websites, and portals can provide citizens and stakeholders with accessible and up to date information on the sector.

What is the commitment? This commitment is about working together with all relevant agencies and stakeholders to enhance transparency in the extractives sector through a concrete set of systematic disclosures of data related to extractives sector management including the legal frameworks, licenses, contracts, beneficial ownership of companies, exploration, production, and export, and payments by companies and receipts by governments on all transactions across the sector’s value chain. Disclosing EITI data at source through government and corporate databases, online registries, websites and portals can provide citizens and stakeholders with accessible and up to date information on the sector. Like other requirements, beneficial ownership disclosure is a major government commitment to be followed through owing to H.E. President Maada Bio’s pronouncement at the EITI Beneficial Ownership Conference in Dakar in 2018. With this commitment in place, EITI reporting in Sierra Leone becomes simpler, timelier, and more costeffective, in addition to disclosing beneficial owners of corporate entities. It would help stakeholders to shift their focus from collecting data to using data. Extractive sector stakeholders would be better placed to analyze and present findings for public debate and reform. For companies, disclosing data at source would help them to build trust by improving their ‘social license to operate’ and help set the right expectations with communities and citizens in their areas of operation.

How will the commitment contribute to solve the public problem? Evidence suggests that citizenry engagement in transparent and accountable governance have positive impact on social trust, corporate integrity and efficient management of government revenue. This in turn contributes to inclusive economic growth and peaceful societies. Systematic disclosure of extractives sector data will enhance increased public access to and use of information from the sector. When citizens are empowered with information, it is expected that it would lead to increased public debate about how the sector is managed. In addition, a more open extractive sector would create a level playing field and send positive signals to genuine investors about doing business in the Sierra Leone. SLEITI and OGP will work with all relevant agencies to clearly specify information/data that should be routinely disclosed and how best they should be disclosed. SLEITI and OGP will also work to encourage civil society and accountability actors to improve their engagement and use of systematically disclosed data.

Why is this commitment relevant to OGP values? The commitment is targeted at enhancing citizens’ engagement in the extractives sector by increasing access to essential data on extractive sector management. A more transparent extractive industry will help to increase corporate and government accountability, increasing public integrity and trust, ensure effective management of public resources by government and ultimately, create safer communities for the citizens to live and work in.

Additional information

Milestone Activity with a verifiable deliverable Start Date: End Date: Review and update existing Open Data Policy and orient all relevant government agencies towards open data by default 1 st March 2022 29th April 2022 Systematically disclose All oil, gas and mining licenses and contracts in the area of exploration and production, on a publicly accessible government website/portal in both human and machine-readable formats 1 st March 2022 31st March 2024 Develop an appropriate and comprehensive legal framework to mandate beneficial 1 st March 2022 31st March 2024 ownership reporting (by companies) and disclosure (by government and companies) for companies that hold exploration, production and export licenses and publish in publicly in an accessible formats that are human and machine readable All relevant government agencies commence efforts (for example develops appropriate template or policy/legal provisions) to systematically disclose up-to-date information on their operations (e.g. government revenue data, subnational revenues) in the extractives sector 1 st March 2022 31st March 2024 Redrafting and passage of SLEITI Bill into law 1 st March 2022 31st March 2024 Passage of the New Mines and Minerals Development Bill 1 st March 2022 31st March 2022

Action Plan Review

Commitment 4. Open Extractives/BO & Systematic Disclosure of Extractives Data

● Verifiable: Yes

● Does it have an open government lens? Yes

● Potential for results: Substantial

[Sierra Leone Extractives Industries Transparency Initiative (SLEITI), National Advocacy Coalition on Extractives, Natural Resources Governance and Economic Justice Network, Human Rights Defenders Network, Women on Mining and Extractive, Sierra Leone Chamber of Mines, Initiatives for Media Development]

Context and objectives:

This commitment’s objective is to enhance transparency and accountability in extractives resource governance to increase responsible investment, prevent conflict of interest, close channels of corruption, and increase tax revenue and economic development. To do so, it aims to strengthen systematic disclosure of a wide range of information in the oil, gas, and mining sectors, including legal frameworks; licences; contracts; BO of companies; exploration, production, and export; and payments by companies and receipts by governments on all transactions across the sector’s value chain. The commitment aims to promote public debate through data that is accessible, timely, comprehensive, reliable, and comprehensible.

This commitment’s milestones seek to strengthen the legal framework and technical infrastructure to ensure ongoing and comprehensive information disclosure. Regarding legal reforms, activities include updating the Open Data Policy (1), mandating BO disclosure (3), redrafting and passing the SLEITI Bill (5), and passing the New Mines and Minerals Development Bill (6). The government also commits to publishing BO information (3); publishing all oil, gas, and mining licences and contracts in the area of exploration and production on a publicly accessible government portal (2); and disclosing up-to-date information on operations (e.g., government revenue data, sub-national revenues) in the extractives sector across government agencies (4).

Potential for Results: Substantial

This commitment has a substantial potential to improve the public’s access to key extractives sector information to inform participation in government decision-making and to hold the government to account. Disclosure of BO is especially key in addressing corruption risks and aiding in integrity checks and due diligence. ^[31] Already, Sierra Leone has updated its open data policy, adopting a set of principles to guide the release of existing and new datasets under the Extractives Industries Transparency Initiative (EITI), and thus provides a foundation for the access, use, and reuse of data. ^[32] Besides taking an open-by-default approach to the release of further datasets, SLEITI commits itself to systematic disclosure of EITI data, BO disclosure, and contract transparency.

Sierra Leone has a large mining sector, which accounted for 67% of exports in 2019. Sierra Leone is also home to small-scale and artisanal mining in diamonds and gold. Transparent resource management has been a national priority, as the extractives sector played an influential role in the Sierra Leone Civil War (1991–2002). Sierra Leone has been a member of the EITI since 2008. Sierra Leone’s EITI Multi-Stakeholder Group is within the Office of the Vice President. [33]

SLEITI publishes information through the EITI reports to promote accountable and equitable management of natural resources. ^[34] However, the open data policy recognises the need to increase the usability and interoperability of data released under the EITI to create a firmer foundation for individuals, media, civil society, students, and industry to make use of data in making decisions and contributing to public debate. ^[35] Sierra Leone does not have a contract disclosure policy, but the SLEITI Bill includes provisions to promote contract disclosure. [36]

The 2022 SLEITI Validation Report, which looked at data from 2019, found that disclosure of information on contracts and BO in the sector remains limited and the legal frameworks remain in progress. The report also found little evidence that published contract data is used for research and recommended publication in an open data format. The report also noted the importance of transparency around the state’s principal interests in the sector and the implications of the global energy transition. There is also an absence of information on small-scale and artisanal mining and environmental impacts. [37]

The government of Sierra Leone sought to mandate the disclosure of companies’ beneficial owners under the previous action plan. The need to enshrine BO disclosure in law under an amended Companies Act slowed progress. In the interim, the government focused on progress towards the disclose of owners of mining companies, as required under Sierra Leone’s membership in the EITI. [38] SLEITI established a technical working group and a road map ^[39] outlining the institutional and legal framework. ^[40] The 2021 Mines and Minerals Development Act requires the disclosure of any owner with a 5% or greater interest in a company (Milestone 6 of this commitment). [41]

Opportunities, challenges and recommendations during implementation

The SLEITI Multi-Stakeholder Group benefits from refreshed civil society membership in 2020 and high-level political support from the Office of the Vice President. [42] The passage of the Mines and Minerals Development Act has established the legal foundation on which the disclosure of BO data in the mining sector can be pursued. As SLEITI and partners undertake this ambitious package of reforms, the Independent Reporting Mechanism (IRM) recommends the following for consideration:

• Inform the public on the proposed legislative changes in regard to process and content so the public can meaningfully participate in consultations on the drafted bills and amendments.
• Prioritise mandates and sanctions to ensure compliance. Sierra Leone should prioritise passing enabling legislation (Companies Act, Mining Act) with thresholds for disclosure and dissuasive sanctions for non-compliance.
• Make BO transparency a precondition for licencing. The government could use BO disclosure as part of background checks when making licencing decisions. ^[43]
• Communicate the business case for BO disclosure to find private sector partners to advance reforms. [44]