Analysis of Cameroon’s 2014 EITI Report

Having joined the EITI in March 2005, Cameroon has been required since 2006, through its National Implementation Monitoring Committee and in accordance with requirement 3 of the revised Standard of February 2016, to produce an exhaustive reconciliation report that publishes data, volumes and production value by material for the fiscal year concerned. This includes full disclosure of revenues received by the State from extractive industries and all significant payments made to the Government by oil, gas and mining companies.

Cameroon’s latest EITI report, the 9th of its kind, was published on December 31, 2016, and in order to measure the report’s effectiveness and relevance in promoting transparency in Cameroon’s extractive sector, it is necessary to analyze its good and bad points. With regard to what could be considered as the EITI report’s good points, it should be said at the outset that this report constitutes an important information resource for Cameroon’s extractive sector. Indeed, the report presents all payments made to the State and declared by extractive companies holding mining or petroleum titles in Cameroon, and the revenues from these companies declared by the State for the fiscal year in question. It also provides information on revenues generated by the extractive sector and oil transport, amounting to 842.371 billion FCFA, with 782.414 billion FCFA allocated to the State budget. The report provides a wealth of other useful information, including the extractive sector’s contribution to the Cameroonian economy, which stands at 37.8%, 26.94%, 7.06% and 0.14%, respectively representing exports, government revenues, GDP and employment. This is also the case with the identification of all extractive companies operating in Cameroon, as well as the various Cameroonian administrations involved in the management of this sector. Furthermore, despite an extractive sector in difficulty as observed over the last five years, the report notes an increase in revenues of 2% for hydrocarbons and 50% for oil transport.

On the other hand, revenues from the mining sector fell from 2.5 billion FCFA in 2013 to 1.8 billion in 2014. On the other hand, the 2014 EITI report notes the persistent opacity in Cameroon’s extractive sector. Indeed, on p.15, we note that certain extractive companies, retained in the conciliation perimeter, have not submitted a declaration form, notably Granulats du Cameroun, Clima Dubai, and MURPHY. In addition, the report notes, the value of gold exports was not communicated by MINMIDT. The report concludes with a number of recommendations for improving the management of the sector, including better management of extractive revenues transferred to the Communes, as the traceability of sub-national transfers remains difficult. However, beyond the above, there are still limits to the implementation of true transparency in Cameroon’s extractive sector. These are due both to the EITI report itself, and to factors external to it. Among the limitations inherent in the report, it should be noted that it is quite voluminous, and its vocabulary is technical and complex. This makes it difficult to read and understand. As a result, the report remains restricted to a small segment of the population.

To get around this difficulty, the report should include a glossary explaining technical concepts, as the aim of the EITI report is to “enhance understanding of the level of contributions made by the extractive sector to Cameroon’s economic and social development, with a view to improving transparency and good governance…”. Consequently, and even if the EITI committee often produces a document summarizing the EITI report, the fact remains that it should be simplified in language and thus become an important citizen watch instrument in the hands of local populations for monitoring the management of revenues from the extractive industries. With regard to data reliability, some of the information contained in the EITI report is ambiguous. As can be seen on p.13, among the companies that have ceased operations, the report mentions Géovic Cameroon Plc, C&K Mining Inc. and, above all, Rocaglia. On p.88, the conciliator himself acknowledges that he was unable to assess whether the financial statements of the reporting entities had been audited as required by the Standard. On p.15, it is stated that the Direction Générale des Impôts (DGI) has not communicated information on sub-national transfers from FEICOM to the Communes. And even when this information was provided, it did not include all the information required by the reporting instructions.

Yet it is the same EITI report, like the Chambre des Comptes, which confirms the quality, reliability and regularity of the EITI declarations of the State and the financial authorities, emphasizing that it has not found “any elements that could call into question the exhaustiveness and reliability of the revenues from the extractive sector reported by the collecting bodies”. In view of all the above, there are grounds for questioning such reliability. Another concern about data reliability is linked to the taxation model, which is based on a declarative system whereby it is up to the extractive company to declare what it produces. This may explain the drop in mining revenues from “unilateral declarations” observed on p.10 of the report. The argument put forward by Ministry of Finance officials to justify the use of the declaratory system is the lack of human and financial resources needed to carry out site visits. As for the limitations external to the report that could constitute a major obstacle to the work, there is, among other things, the lack of coordination between the DGI and MINMIDT regarding the monitoring and control of extractive revenues.

At the end of this analysis of Cameroon’s 2014 EITI report, it appears that the problem of the effectiveness of sub-national transfers persists. And even though these transfers have been made, it is still not possible to trace them, even though the country is in its 9th EITI report and a new validation of the country’s compliance is scheduled for next July. As a result, it is necessary to continue the advocacy aimed at making sub-national transfers effective and ensuring the traceability of operations. This would provide information on the various destinations of sub-national transfers, the mechanisms used for these transfers, the actual beneficiaries and the amounts of these transfers. In this way, these transfers can make a significant contribution to the socio-economic development of the areas where they are used, and consequently to the development of local communities.

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