Sub-National Pilot Projects

With the support of the Bill and Melinda Gates Foundation, RWI is launching a series of sub-national capacity-building pilot projects that aim to improve the ability of state/regional and local governments to formulate and execute policies that support the effective collection and use of extractive industry revenues and build the capacity of civil society to participate, monitor and evaluate both government processes and company performance. As oil, gas, and mining revenues have steadily increased, countries are increasingly adopting constitutions and passing laws that distribute a larger share of extractive income directly to state and local governments, along with a larger share of the responsibility to provide basic public services. But though the share of public funds directly managed by state/regional and local government officials has dramatically increased, capacity of government at this level to manage these resources is worryingly low.

Additionally, in some countries, companies are establishing special social funds that are jointly managed with the local political and community authorities. The funds allotted to these direct or indirect expenditures are often as large as or larger than those directly in the hands of the local and regional authorities, but because they are considered "private," they are not subject to legal mandates for planning or transparency.

Finally, the absence of a well organized civil society with the institutional and technical capacities needed to monitor companies or the government authorities has aggravated a situation in which EI activities benefit companies and some public officials, but not the population at large.

The objectives of RWI's sub-national pilot projects are to:

• Build the capacity of officials at this level to assess how much revenue the region is entitled to under constitutional/legal provisions.
• Ensure proper and public accounting of the revenues the state/province/municipality has at its disposal.
• Assist companies in creating transparent and participatory budget processes for their local social expenditures.
• Build the capacity of local civil society to monitor revenue inflows and government accounting.
• Build citizen capacity to participate in public spending decisions and priority- setting at the provincial and local levels.
• Identify the elements of sub-national governance of the extractive sector and disseminate a best-practice model.

The pilot projects will collaborate with state and local officials to help them understand local EI industry structures, report to the public their extractive income flows and uses, participate in public discussions and more effectively prepare policy and regulatory frameworks for the exploitation of natural resources for the public benefit.

The capacity building phase begins in 2008 with three-year pilots in Peru, Indonesia and at least two countries in sub-Saharan Africa. If successful, the pilots will provide a replicable model, and help establish platforms in sub-Saharan Africa, Latin America and the Asia Pacific from which other countries in these regions can build.

RWI will also work with civil society to help them better understand the EI structures, revenues and expenditures in their regions and to support monitoring and advocacy efforts that create incentives for the responsible collection, use, and expenditure of natural resource wealth by governments. RWI will document its efforts through case studies and impact analyses which will be published and disseminated internationally in 2010.