Why is EITI necessary?

EITI is an effort to prevent corrupt practices, such as the diversion of revenues from extractive industries intended for public government accounts into private accounts. Corrupt practices can include:

• Fraudulent reporting of the content and quantity of exported extractive industry products;
• Payment of reduced taxes and fees;
• Lack of transparency in the management of extractive industry royalties; and
• Corrupt practices of private actors and government officials responsible for company payments or collection of extractive industry fees, taxes, and royalties.

The large revenues from extractive industries have frequently fuelled corruption, exacerbated conflict, and weakened economic development, thereby contributing to high levels of poverty. Revenues from the extractive industries should be an important engine for economic growth. When spent on public investments such as health and education, these revenues can lead to development and a higher quality of life as well as a reduction in poverty if revenues are not diverted out of the country. Through the process of transparency and accountability, EITI is trying to prevent corrupt practices and address the "resource curse" faced by many countries around the world. Transparency over payments and revenues increases accountability as this information is publicly available, it is easier to exert pressure on governments for better spending on key basic services such as health and education.