Is the EITI relevant for reducing diversions of public revenue? Mozambican experience

This policy briefing argues that the Extractive Industries Transparency Initiative in Mozambique (MEITI) is largely ineffective at preventing the diversion of public funds because it monitors payments after they have already been reduced through secret fiscal negotiations and mispricing. The author contends that the most significant losses occur during the negotiation of fiscal regimes and the declaration of the tax base, stages that remain shrouded in secrecy and are outside the current scope of MEITI.

• The Extractive Industries Transparency Initiative in Mozambique (MEITI) is considered largely irrelevant in preventing the diversion of public funds because most diversions happen before the stage MEITI monitors. These diversions occur during the negotiation of the fiscal regime and the declaration of the tax base, phases characterized by a "high and unjustified level of secrecy."
• The briefing identifies several stages where the state loses revenue, including the inability to establish taxing systems, the provision of excessive investment benefits, non-transparent tax base declarations leading to mispricing (under-invoicing sales or over-invoicing costs), failure of companies to pay according to the fiscal regime, and the diversion of payments from state coffers.
• There is evidence of an alliance between the executive government and extractive companies, with senior government figures potentially benefiting personally through shares in companies, positions on Boards of Directors, or preferential treatment for linked service companies.
• Data from MEITI reconciliation reports for 2008 and 2009 show that the government was unable to account for approximately $110,651 in 2009, representing about 0.25% of total payments. However, this discrepancy is dwarfed by losses from fiscal incentives; for example, revenue lost to redundant incentives for Sasol Petroleum Temane on company profit tax alone was more than 12 times the total discrepancy found across the entire extractive sector.
• Mispricing practices in Mozambique, indicated by differences between reported export and import values and reductions in royalties as a share of production, result in estimated losses more than 15 times higher than the payments the government could not justify.
• The contribution of the extractive sector to state revenues is described as "feeble." In 2009, direct payments from companies accounted for about 1% of total state revenue. For two companies already exporting, data shows that for every $1,000 of exports, $946 remained with the companies and only $54 was paid to the state.
• The author recommends that the EITI broaden its scope to monitor all stages of the extractive process, including the fiscal regime and the system for valuing resources and costs. The EITI Multi-Stakeholder Group (MSG) should move beyond implementing international standards to assessing the specific phases where the most significant revenue diversions occur.

APA

Ossemane, R. (2013). Is the EITI relevant for reducing diversions of public revenue? Mozambican experience. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2013/01/Policy-Briefing-61.pdf

Chicago

Ossemane, Rogério. Is the EITI relevant for reducing diversions of public revenue? Mozambican experience. South African Institute of International Affairs, 2013. https://saiia.org.za/wp-content/uploads/2013/01/Policy-Briefing-61.pdf.

Wikipedia

{{cite report |last1=Ossemane |first1=Rogério |title=Is the EITI relevant for reducing diversions of public revenue? Mozambican experience |publisher=South African Institute of International Affairs |date=January 2013 |url=https://saiia.org.za/wp-content/uploads/2013/01/Policy-Briefing-61.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ossemane2013eiti, author = {Ossemane, Rogério}, title = {{Is the EITI relevant for reducing diversions of public revenue? Mozambican experience}}, institution = {South African Institute of International Affairs}, year = {2013}, month = jan, url = {https://saiia.org.za/wp-content/uploads/2013/01/Policy-Briefing-61.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }