The Revenue Watch Index is the first attempt to measure and compare the information governments disclose about the oil, gas and mining industries, including payments to those governments, contracts, regulations and related data. The extractive sector plays a critical role in resource-rich countries and in the global economy. Petroleum and its derivates account for 15 percent of world trade, and resource-related sovereign wealth funds—with some $2 trillion in assets—are major players in global financial markets. Industrial economies depend heavily on imported minerals, and investment in extractives in developing countries is increasing dramatically. From 2000 through 2008, mineral resources accounted for 24 percent of Africa’s GDP growth. Over the next 20 years, an estimated 90 percent of hydrocarbon production is expected to originate in developing countries. State-owned companies control approximately 80 percent of global hydrocarbon reserves. The quality of resource management in key countries affects the entire global economy.
This index assesses 41 resource-rich countries that have almost half of the world’s population and are among the top producers of petroleum, gold, copper and diamonds. These include advanced industrial countries such as Norway and the United States as well as countries that rank among the world’s poorest despite being endowed with vast natural resources. Political economists have noted that states that rely on oil, gas and mineral revenues may be particularly prone to mismanagement, high-level corruption, authoritarianism and entrenched conflict.
Revenue transparency is essential to confront challenges such as corruption and citizens’ mistrust of government management of resource wealth. Transparent, accountable management of natural resource revenues is fundamental to the successful development and stability of all oil-, gas- and mineral-producing countries.
A New Tool for an Uncharted Field
To measure revenue transparency, the Revenue Watch Index evaluates the availability of information covering seven key areas of natural resource management:
Indicators were scored on a scale of 0 to 100, reflecting the variable availability of information to the public. The results were aggregated into a final Revenue Transparency score for each country. Based on the final results of the index, we identify three groups of countries, ranked according to their relative score out of a possible 100:
In addition, Legal and Regulatory Framework indicators provide information regarding the institutional context in which oil, gas and mineral industries operate in these countries. This section examines laws and regulations calling for disclosure and access to information or placing checks on discretionary powers.
Results: A Mixed Global Picture for Revenue Transparency
The Way Forward
This index provides a detailed picture of the areas in which government efforts to increase transparency are urgently needed. We find substantial room for improvement in virtually all the countries surveyed.
The index results also suggest that claims regarding the need for confidentiality are without foundation. The index shows that many countries disclose information that other governments shroud in secrecy. Information is a prerequisite for accountability; it is also an essential tool for effective management of a complex sector. The ability of countries with substantial mineral or hydrocarbon reserves to use these resources for development may be severely hindered by low transparency.
The Revenue Watch Institute (RWI) and Transparency International (TI) call on governments, civil society, parliamentarians and companies to advance revenue transparency in order to improve management of oil, gas and mineral revenues and to promote accountable resource management for the public good.