Transparency in mining: Large decline under the transitional government in Burkina Faso

Doubts expressed on the completeness and reliability of data

Unjustified differences on export data

Burkina Faso has just published its fifth report for the Extractive Industries Transparency Initiative (EITI) covering the year 2013. The information in the report, prepared under the country’s transitional government, indicates that overall transparency in the sector has greatly decreased, thus making it difficult to assess the contribution of mining to Burkina Faso’s economic growth. In addition the authors of the report have raised concerns about the completeness and reliability of this data which is a basis requirement for the EITI. Realising these are controversial statements allow us please to clarify.

Indeed, in determining the scope of consolidation, 24 companies were selected based on three criteria, namely:

1. Companies whose payments to the state exceed 100 million CFA francs, or about US $ 165,000;
2. Companies who were listed in the 2012 EITI report, and;
3. Purchase counters with a volume greater than or equal to 50 kg.

According to the 2013 EITI report, all companies included in that scope submitted a declaration in accordance with the instructions, except for five; Kalsaka Mining, Newmont Ventures LTD, Pinsapo Gold, Metals SAV’Or and SA ‘Or. The last two are in the process of setting up offices in the country and could not be contacted as part of the EITI report. For the first three, the Ministry of Mines and Energy gave explanations. We learnt that Kalsaka Mining would stop production and faces liquidation. Newmont Ventures LTD decided to sell its shares to Cluff Africa Associates following unsatisfactory results of the additional research in Poura.

Finally, the activities of Pinsapo Gold have stopped since 2011 for technical reasons. Although none of the five companies reported any payments, according to data from the country’s public administration, revenues collected from these companies amounted to 7.82 billion CFA francs, approximately US $ 11,5 million, which represents 3.8% of total revenues from the sector in 2013.

As for the reliability of the data, differences were observed in the quantity of gold export. In fact a difference of 8 kg gold was noted between the statements of mining companies and those of the state. This resulted in a monetary difference of 8.177 billion CFA francs (approx. US $13 million) between the statements of both parties, without an explanation given by any of the parties.
The report also notes that none of the public administrations involved in the collection of data have shared information about their received payments.

The Ministry of Economy and Finance did not release information relating to the Environment Rehabilitation Fund (FRE) with the authors of the EITI 2013 report. However, mining companies reportedly payed 919 million CFA francs (US $ 1,5 million) in 2013 towards this Fund, representing 0.45% of total industry revenue for 2013.

Moreover, the actual ownership of mining companies was not disclosed through the Budget Direction (DGB), as wasn’t the contribution of the extractive sector to overall employment levels in the country. Finally, data on mining licenses provided by the Ministry of Mines did not contain any information about the date of the application, the date of expiry and the geographical coordinates of each permits. Financial and technical conditions for the granting of permits in 2013 have not been provided by the General Directorate of Mines and Geology. “This situation is likely to call into question the completeness of financial data and contextual information disclosed in the report, and could be an obstacle to validation against the EITI standard,” the auditors of the EITI report concluded.

The data of the Directorate General of Taxes is unreliable

The statements of the Directorate General of Taxes (DGI) have several duplicates, erroneous attributions of receipt numbers and payments relating to previous years. This was due to a change in the DGI software package from “SYNTAX” to “2 SYNTAX” which has generated database errors. The situation has generated significant discrepancies between the statements of the two entities, part of which could not be reconciled. It may compromise the data published by the DGI on data collected and recorded in government accounts.

Difficulty in reconciling customs duties

The authors of the EITI report noted that payments to Customs are made by third parties on behalf of the companies before these payments are recorded at company level on the basis of aggregated freight bills. This means that companies do not always have the details of each individual payment made. Also, the reconciliation of the details from receipts and aggregated freight bills are not routinely done by companies. This situation, according to the report, is not likely to facilitate the conciliation proceedings. It even generated a delay in the recovery of payments and the gap analysis.

PWYP Burkina Faso clearly takes note of the above which will threaten the country’s compliant status within the EITI. We will continue to engage in the EITI to help ensure that our natural resources benefit our citizens, the ultimate goal of the EITI.