Tracking Mining Revenues – Tools, Standards, and African Innovations

This lesson focuses on tracking mining revenues in Africa, drawing on the Extractive Industries Transparency Initiative (EITI) and the SIVIO Institute Mining Revenue Monitoring Index (MRMI):

1. Context: The Importance of Mining Revenue Tracking in Africa

Africa’s mineral wealth includes gold, copper, cobalt, uranium, and more—resources that are vital to global industry and local economies.
Despite this endowment, most African countries remain poor, with mining often failing to drive broad-based development due to governance and transparency challenges.
In 2019, minerals and fossil fuels made up over a third of exports for at least 60% of African countries, and 42 out of 54 countries are resource-dependent.
Key challenge: How to ensure mining revenues are managed transparently and equitably, benefiting both national economies and local communities.

2. Global and Regional Standards: The Role of EITI

What is EITI?

The Extractive Industries Transparency Initiative (EITI) is a global standard for promoting open and accountable management of oil, gas, and mineral resources.
EITI requires member countries to regularly disclose data on:
- Company payments to governments
- Government revenues from extractives
- Licensing, contracts, production, and beneficial ownership

How EITI Enhances Transparency:

Revenue Flow Disclosure: EITI mandates publication of all payments and receipts, allowing public scrutiny and reducing corruption risks.
Beneficial Ownership: Requires disclosure of the real owners of mining companies, making it harder to hide illicit activities or conflicts of interest.
Multi-Stakeholder Governance: EITI brings together governments, companies, and civil society to oversee reporting and reforms, ensuring diverse perspectives and accountability.
Anti-Corruption: By exposing payment flows and ownership structures, EITI helps detect and deter corruption and illicit financial flows.
Public Debate: Open data enables citizens, media, and policymakers to debate and influence how mining revenues are managed.

African Examples:

Nigeria: Open data policies under EITI have improved transparency in oil and gas, enabling public scrutiny and reducing corruption.
Mozambique: EITI reporting uncovered revenue embezzlement, leading to criminal charges and revenue recovery.
Ghana: EITI’s review of major mining deals has influenced government negotiations and improved fiscal outcomes.
Zambia: EITI disclosures and systems like MOSES have helped address trade misinvoicing and increase government revenue.

Limitations:

Not all African countries are EITI members (e.g., Zimbabwe, South Africa).
Implementation varies; some countries face challenges with data quality, stakeholder engagement, and timely reporting.

3. African Innovation: SIVIO Institute Mining Revenue Monitoring Index (MRMI)

Zimbabwe’s Context: Not an EITI member, but faces similar challenges—opaque revenue flows, limited community benefit, and governance gaps.
MRMI Platform: The MRMI was developed to address the persistent data and governance gaps in Africa’s mining sector, especially where official frameworks are weak or absent. It aims to:
- Provides comprehensive, publicly accessible data on mining revenues.
- Aims to enhance transparency, inform policy, and support community and national development.
Scope and Expansion: Piloted in Zimbabwe, MRMI now covers Zambia and Mozambique, using a consistent, policy-focused methodology to drive regional learning and advocate for harmonised mining governance. The platform is expanding across Africa to track key mining companies and support domestic resource mobilisation.

How MRMI Works: Methodology and Indicators

Data Collection: MRMI aggregates data from:
- Annual financial reports of mining companies.
- Newspaper articles and performance reports.
- Data from mining oversight committees and organisations.

All figures are converted to USD using historical exchange rates for cross-country comparability. Data gaps are transparently noted, and the platform welcomes public submissions for verification and updating.

Indicators Tracked (2017–present):
- Ore outputs
- Gross revenues
- Net profits
- Total taxes paid
- Corporate Social Responsibility (CSR) spending

Index Calculation: MRMI scores companies on two core dimensions:
- Transparency Index: Measures consistency in disclosure across the five indicators.One point per disclosed variable per year; scores are averaged annually and across the entire period.
- CSR Significance Index: Assesses the percentage of net profit allocated to CSR annually, averaged over the years.
- Both indices are normalized to a 0–100 scale and averaged to produce a final MRMI score for each company, reflecting both transparency and social responsibility.

MRMI’s Policy Impact and Regional Relevance

Driving Accountability: By making mining revenue data public and comparable, MRMI supports evidence-based advocacy, empowers civil society, and pressures companies and governments to improve disclosure and governance.
Supporting Harmonisation: MRMI’s standardised approach encourages harmonised mining governance across SADC, complementing regional calls for fiscal and revenue management reforms.
Enabling Domestic Resource Mobilisation: Ultimately, MRMI aims to ensure mining revenues contribute to national development and economic sovereignty, rather than enriching external actors at Africa’s expense.

4. Key Takeaways

Transparency tools like EITI and MRMI are essential for tracking mining revenues, exposing corruption, and ensuring communities benefit from natural resources.
Open data and multi-stakeholder engagement are critical for effective oversight and policy reform.
Local innovations (like MRMI) can complement or substitute for global standards, especially in countries not participating in EITI.

Practical Exercises

Exercise 1: Revenue Flow Mapping

Task: Using a hypothetical mining project, map the flow of money from the mining company to the government and to local communities.
Questions:
- What payments should be disclosed under EITI?
- Where could revenue leakages or corruption occur?
- How could tools like MRMI help track these flows?

End of Lesson Reflection:
How can improved revenue tracking transform the mining sector’s impact on African economies and communities? What are the next steps for your organisation or country in advancing mining revenue transparency?

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