Business Case and Intervention Summary
Title: Natural Resource Management in the Middle East and North Africa
(MENA) Region
ARIES Project – 203966
Revenue Watch Institute
Intervention Summary
What support will the UK provide?
£4.8 million over 3 years (2013-2015) to support Revenue Watch Institute (RWI) to implement an
intervention that will improve management and oversight of natural resource revenues in Libya and
Tunisia. The programme will begin in July 2013 and end by July 2016 and will support governments to
manage resource wealth effectively for sustainable development, while simultaneously building the
capacity of civil society to hold government to account for its management of this sector.
Why is UK support required?
The governance of oil, gas and mining will be critical to the future of the MENA region. Natural
resources represent a fundamental source of financing for economic diversification, job creation and
development for the Middle East and North Africa (MENA). However, regimes in the MENA region
have traditionally derived huge rents from natural resource wealth, leading to corruption, patronage and
mismanagement of resource revenues.
The Arab Spring was largely inspired by broad-based political discontent, an increased awareness of
levels of state corruption, and a lack of gainful employment. Restoring and maintaining political and
economic stability will require a change in the extractive industry’s role and management, as a sector
that is a major source of revenue and also vulnerable to corruption. Libya’s huge natural resource
wealth makes it a prime candidate for an intervention that improves government’s ability to manage
resources effectively and civil society’s ability to hold government to account. Successful reform of the
extractives industry sector will be central to a successful transition process that allows the Libyan
government to deliver for its citizens. Although Tunisia has smaller resource wealth, there is strong
political will to adhere to Extractives Industry Transparency Initiative (EITI) norms, and the phosphate
industry has political importance beyond its relative size in the economy. Success in Tunisia could
provide a positive example for other countries of the region. After the first year of implementation, DFID
will consider with Posts and RWI the potential for expanding the programme to either one or both of
Morocco/Egypt.
This programme fits with the UK’s wider efforts to step up its work on anti-corruption and transparency.
In line central policy DFID supports work on EITI and the Natural Resource Charter; this is being
expanded to include working with partners like RWI. MENAD is ahead in its support to RWI
programme to improve natural resource management and potentially driving strong and sustainable
growth. A view further supported in the recent G8 communique to raise the standards on transparency
of extractives. The RWI programme also fits with FCO support to the Open Government Partnership
and the APPF Transparency International (TI) programme. On the latter we will be looking for
opportunities to jointly work with TI in its efforts to improve transparency across the MENA region.
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What are the expected results?
The impact of the intervention is that citizens of resource rich countries gain full and sustained benefits
from the oil, gas and mineral wealth of their respective countries.
The planned outputs (supported by output indicators) that will be attributable to UK support include:
1. Governments progress towards extractives international transparency norms, particularly
revenue and contract disclosure.
2. Accountability actors - media, parliamentarians and civil society - have the skills, contacts and
support needed for improved oversight of extractive governance.
3. Increased demand in revenue management transparency and accountability improves
disclosure practice in target countries
Strategic Case
A. Context and need for a DFID intervention
Extractives industries have the potential to generate significant revenues for low and middle income
countries, which can be channelled into public service delivery and economic development. However, the
state too often plays an out-sized role in the sector, concentrating influence in the hands of those officials
who allocate licenses and collect revenues. Citizens play no part in the generation of these rents, and
information imbalances hinder public oversight and ability to hold government to account. A tradition of
sector secrecy, justified on grounds of commercial sensitivity, contributes to this challenge. The large sums
of money involved present powerful incentives for corruption and high entry costs to the sector often lead
to natural monopolies, usually with the state at its centre. Global demand drives investors to tolerate high
levels of political risk. Furthermore, the finite and volatile nature of revenues creates incentives for
unsustainable and politically-driven expenditures, such as on patronage networks to secure political
support.1 This uneven playing field leads to the waste of resources that could contribute to strengthening
economic, social and political outcomes.
In the Middle East and North Africa region, oil producers collect large rents from their sector. The fiscal
revenues of oil-exporting governments jumped from £84 billion in 2004 to over £500 billion in 2008, and
were approximately £373 billion in 2010.2 Yet, the absence of transparency, government accountability and
effective management of natural resources has left the region plagued with high levels of corruption and
patronage alongside poor human development indicators (see Table 1). A decade of growth in the MENA
region averaging 4.3 per cent between 2000 and 2010 did not create enough jobs for the growing
population, and income inequality worsened over the same period.
At the same time, voice and
accountability deteriorated in most Arab countries.
The social contract between the governed and the governors across much of the Arab world has been
characterized by the state providing jobs, a reasonable standard of living and stability to citizens in return
for their acquiescence in the maintenance of a political status quo that eliminated political inclusion and
allowed the state to take on a substantive role in repression and economics. Following Ben Ali’s fall in
Tunisia, governments in the region attempted to use wealth from natural resources to buy stability. Libya’s
government promised cash grants to each household to offset rising food costs, and pledged to raise
salaries of government workers by 150 per cent. These efforts did not work, as they failed to resolve the
1
Kolstad, Williams and Søreide (2008) Corruption in Natural Resource Management: U4 Brief, Chr.
Michelsen Institute
2http://www.economist.com/node/21553424.
Petrodollar profusion: Oil exporters are the main drivers of global
imbalances. Apr 28th 2012.
2
underlying problems that triggered the revolts. The social contract is now changing, with citizens seeking
out a greater role in shaping the future of their countries.
The economic and political drivers of the Arab Spring were inextricably linked, and economic and social
inclusion will be fundamental to sustaining successful political transition, particularly in a challenging global
Transparency
Share of
International
Revenue from oil,
Government Non-resource fiscal
Corruption
UNDP HDI 2011 gas and minerals
Revenues
balance in 2010
Perceptions
Score/Ranking4
in 2010 (billions
from
Natural
(as % of GDP) 7
Ranking 2011
£)5
Resources6
(out of 182)3
Egypt
112th
0.64/113
3.4
8-10%
-10.6%
th
Libya
168
0.76/64
28.4
80-90%
-46.9%
Morocco 80th
0.58/130
1.048
5-7%
-35.2%9
rd
10
Tunisia
73
0.69/94
0.2
2-3%
-3.0%11
macroeconomic environment. Natural resources represent a fundamental source of financing for economic
diversification, job creation and development for the Middle East and North Africa (MENA). Reforming this
sector will be crucial to underpinning the wider reforms that will lead open societies and economies that
deliver strong development outcomes for their people.
Table 1: A comparison of corruption perceptions and human development indicators against
natural resource revenues
Choice of Target Countries
DFID’s Arab Partnership Team, which manages the Arab Partnership Economic Facility, focuses on five
priority countries – Egypt, Jordan, Libya, Morocco and Tunisia. Within this group of target countries, DFID
has chosen to focus its work on managing natural resource revenues on Libya and Tunisia in the first
instance. After the first year, the potential to expand the intervention to either one or both Egypt /
Morocco will be reviewed. If a viable programme exists it will be appraised and presented to the APEF
Board... When deciding which focus countries to launch the intervention in, the following criteria were
considered: resource dependency, political opportunity and demand for reform, and positive spill over
effects.
First phase: Libya and Tunisia
Libya:
 Resource dependency: Libya has the largest oil reserves in Africa, and is the 9th most oil rich nation in
the world. It is also 23rd in the world for proved natural gas reserves. Hydrocarbons account for 95% of
export earnings. Libya’s large non-resource fiscal deficit (e.g. -46.9 per cent in 2010) illustrates the
country’s degree of dependency on resource windfalls.
 Political opportunity and demand for reform: Libya’s massive oil wealth fuelled corruption under the
3Transparency
International Corruptions Perceptions Index 2011.
4UNDP.
5EIU.
6EIU,
WB, and IMF data, 2008-2010.
7EIU.
8To
arrive at the extractive revenue figure, we estimate that the payments to government of the state-owned
phosphate company constitute 75% of total oil, gas and mineral revenue. Data is from 2011, as 2010 financial
statements unavailable. See: http://www.ocpgroup.ma/finance/etats-financiers/resultats-annuels.
9IMF Article IV: 2010 Overall balance (commitment basis, excluding Fonds Hassan II).
10http://www.africanmanager.com/site_eng/detail_article.php?art_id=17730.
11IMF Article IV: 2009 Central government balance, excluding grants and privatisation.
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Qaddafi-led government that ruled Libya for 42 years. Since the fall of Gaddafi, at least £250 million
worth of stolen Libyan assets have been discovered in Swiss bank accounts.12 As the Libyan
Government gains control of the massive windfall from the Libyan hydrocarbon sector proper
transparency and accountability will become vital. The current frailty of political institutions and lack of
social organisation frameworks presents a huge challenge to government, but the new political order
also presents an enormous opportunity to improve the management of natural resource revenues for
the greater good of the Libyan people. Processes such as the drafting of the new constitution and
formulation of new governance rules for the Libya Investment Authority are of paramount importance to
the future of the country. Reforms that lead to the sound management of Libyan assets could inject
much-needed capital into the state’s weakened infrastructure and cultivate a climate of political
accountability and rule of law. Libya has been officially invited to join the Extractives Industry
Transparency Initiative, and DFID’s intervention would support Libya to become a full member.
Tunisia:
 Resource dependency: Tunisia’s natural resource wealth is more modest than that of Libya. Although
Tunisia has the 5th biggest phosphate industry in world, this generates only a small amount of
government revenue. The industry is worth approximately 850 million Tunisian dinars ($540 million)
annually13, although it is unclear how reliable such figures are.
 Political opportunity and demand for reform: The extractives industry has been the focus of protests
surrounding issues such as social justice, the environment, decentralization and local administration.
In 2008, phosphate miners went on strike to protest the high cost of living and corruption in hiring
practices. Since the revolution, the controversy surrounding the phosphate industry has not abated.
Recent labour disputes in the phosphates sector have ground some mines to a halt.14 Greater
transparency and the involvement of civil society in revenue management would allow workers who
currently feel disenfranchised to engage in policy processes and to hold government to account.
Tunisia announced its intent to implement the Extractives Industry Transparency Initiative in June
2012, signalling strong political will from the current interim government.
 Spill overs: Successful natural resource revenue management reforms in Tunisia could provide strong
examples for other countries in the region, especially Morocco, the world’s biggest phosphate
producer.
Possible Second Phase – Egypt and Morocco
Options to expand the programme will follow the normal DFID appraisal and will be presented to the APEF
Board for consideration.
Egypt:
 Resource dependency: Between 2005 and 2009, oil and gas exports accounted for between 44-55 per
cent of total exports, and between 6-10 per cent of national GDP. Crude oil reserves in Egypt amount
to approximately 4.4 billion barrels, placing it 26th in global proved oil reserve rankings. Over the past
decade, Egypt has become a significant natural gas producer and a strategic source for Europe.
 Demand for reform: Natural gas has long been a contentious issue in the country. The interim Egyptian
government has taken steps to review oil and natural gas contracts of the Mubarak regime. Selling gas
to Israel was deeply unpopular in Egypt and it was a rallying point for the Tahrir Square protest
movement. The situation has been exacerbated by energy supply shortages in Egypt, bringing further
attention to the value of such energy contracts.
 Spill overs: Improved revenue management in Egypt would be a strong example, due to the country’s
leadership role in the region.
 Political Opportunity: The continued political uncertainty in Egypt makes the risks of initiating an
intervention at the current time too high. The possibility of intervening in Egypt will therefore be
12http://www.globalwitness.org/library/global-witness-banks-and-corruption-new-york-times
13
14
AFP, ‘Tunisia phosphate production grinds to halt over protests’, Tunisia Live, 9 November 2012
AFP, Ibid
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reviewed at an appropriate time after the parliamentary elections take place.
Morocco:
 Resource dependency: Morocco is the world's top phosphate reserves holder (equivalent to 85 per
cent of the world’s total) and a key supplier of fertilizers and phosphoric acid. Proceeds from phosphate
mining make up about 22 per cent of the country's revenues. However, the phosphate establishment
operates with little transparency or accountability. King Mohammed VI acts as unofficial overseer of the
state-owned Office Chérifien des Phosphates (OCP), Morocco's largest industrial company.
 Political opportunity and demand for reform: Morocco recently published a new code of good
governance for all state-owned enterprises that emphasises transparency. Despite constraints, there
are opportunities to work with Morocco’s civil society, which is diverse, vibrant and well-established,
and which enjoys more space and autonomy than counterparts in the Maghreb. Beginning in 1999, the
government of Morocco has allowed for a shift in the public discourse over transparency and corruption
issues. Nevertheless, the depth of such criticisms has been limited. The authorities have also permitted
the prosecution of government officials for corruption, though these legal proceedings generally target
lower-level officials in the government and deal with matters of petty crime. The intervention will first be
trialled in Libya and Tunisia to take advantage of the current window of opportunity, and will be rolled
out to Morocco if it proves successful.
DFID priorities
Improving the management of resource revenues through increased transparency and accountability
directly contributes to three of DFID’s strategic policy objectives under the Structural Reform Plan.



Priority 3 - Boost Wealth Creation, which specifically states that DFID will “work in natural resource-rich
developing countries, especially in Africa, to ensure that the benefits of natural resources (oil, gas and
mining) are used to improve the lives of the poor”.
Priority 2 - Drive Transparency, Value for Money and Open Government
Priority 4 - strengthen governance and security in fragile and conflict-affected countries and make UK
humanitarian response more effective.
The UK’s G8 Presidency will also take transparency and extractives industries as key issues for action. It is
therefore timely that DFID contributes to work on increasing transparency and accountability of natural
resource revenues, as it will complement the UK’s other initiatives in these areas. In Libya, DFID is already
providing support for public financial management reform in Libya through funding IMF and World Bank
resident experts to help the Libyan authorities improve their capacity.
Furthermore, interventions in extractives industry sectors necessarily aim to reduce corruption and
mismanagement of natural resource revenues. This focus contributes to DFID’s anti-corruption strategy,
both to reduce corruption in partner countries in order to improve the development outcomes of public
resources, and also to protect the UK’s contribution to recipient countries.
B. Impact and Outcome that we expect to achieve
The long-term Impact of this intervention will be that citizens of resource rich countries gain full and
sustained benefits from the oil, gas and mineral wealth of their respective countries.
Proposed country level and regional interventions will seek to achieve the following Outcomes:



Oil, gas and mineral management in target countries is more transparent.
Governments are held accountable for how resource wealth is managed.
Governments choose and implement effective policies for managing resource wealth.
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Appraisal Case
A. What are the feasible options that address the need set out in the Strategic case?
Three options for meeting this need have been identified:
Option 1: Do nothing more than the current Country Impact Funded Revenue Watch Institute project in
Libya.
Option 1 would lead to the termination of DFID’s work with RWI in the MENA region when the current
APEF-CIF project in Libya finishes (due to end June 2013).
Option 2: Fund Revenue Watch Institute (RWI) to carry out a project to promote natural resource
revenue transparency and accountability in Libya and Tunisia, with the possibility of increasing the
project scope to include Egypt and Morocco at a later stage.
This option would involve funding RWI to carry out an intervention initially in Libya and Tunisia. RWI is
the only civil society organisation of significant size and profile to work in the area of natural resource
revenues. The intervention would include action to strengthen transparency and accountability across
the natural resource revenue management value chain. There are three components to the work that
RWI would lead:
1.
Greater transparency of revenues from natural resources. RWI would hold capacity-building
workshops to develop the capacity of civil society, parliamentarians and media to understand
what information should be made public and how to utilise that information to demand
accountability on public spending. In parallel, RWI would provide technical assistance to
governments to encourage publication of earnings from extractives, work towards
implementation of the Extractive Industries Transparency Initiative, make public all oil, gas, and
mining contracts, regularly disclose information about reserves accumulated in sovereign wealth
funds and disclose the revenues, spending and assets of state-owned enterprises in Libya.
2.
Increased political participation. RWI will provide grants to approximately 20 Civil Society
Organisations (CSOs) in Libya and a similar number in Tunisia to help them pursue advocacy
agendas in this sector. RWI will train parliamentarians to ensure an effective collaboration
between parliament and civil society to hold the executive to account and inform policy making.
3.
Sound revenue management policies delivering strong development outcomes. CSOs would
also be trained to monitor the governance of resource revenues, while technical assistance to
policymakers will develop their ability to formulate sound revenue management policies and
actively participate in EITI. In Libya, RWI would provide TA to the government to ensure the
consideration of provisions on natural resource management in the new constitution.
Option 3: Increase funding to an existing IFI partner to implement a similar intervention, for example
through a Trust Fund for the region.
In line with APEF’s strategy of working through International Financial Institutions (IFIs), option 3 is to
work with an existing partner to either initiate a specific project addressing natural resource revenue
management, or to augment the size of an existing Trust Fund with the goal that the extra funding would
be used to implement a resource revenue management project in our target countries. There may be
the opportunity to specifically earmark funding for projects in the natural resource sector. The IFIs’ main
area of expertise would be in ‘downstream’ revenue management (i.e. once the natural resource
revenues are in government accounts) and would focus strongly on supply-side (government) capacity
building for revenue management, rather than balancing this with a strong demand-side (civil society,
media and parliament) element.
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B. Assessing the strength of the evidence base for each feasible option including delivery routes
In the table below the quality of evidence for each option is rated as either Very Strong, Strong, Medium,
Limited (or No Evidence)
Option
1
2
3
Evidence rating
Strong
Medium
Limited
Option 1
There is strong evidence15 from the economic literature and empirical case studies16 stressing the risks
that would arise without support to oil, gas and mining governance reform (“do nothing”) at this crucial
moment in history. As described in the strategic case, resource revenues are particularly vulnerable to
state capture and undermine the social contract by providing the state with revenues that are not
derived from tax. Without a suitable intervention to increase the political will of governments to improve
transparency in revenue management, and to increase the capacity of parliament, civil society and the
media to understand the sector and hold government to account, countries are in danger of slipping
back into the opaque governance patterns demonstrated before the revolution. The result could be
instability and economic stagnation.
Option 2
There is medium evidence to support the prospects of a successful intervention by RWI in the MENA
region. While evaluations of RWI’s delivery model and the impact it has achieved have been generally
positive, the volatility of the region and political uncertainty increases the project risk.
An evaluation by Redstone Strategy Group (2012) into RWI’s impact found that the organisation had
made substantial progress towards its overall goal of improved governance. The Redstone evaluation
drew on internal and external documents as well as case studies of seven countries where RWI has
worked.
The evaluation used three metrics to provide a partial summary of RWI’s impacts.

Increased government revenues: Successes include technical assistance to revise the mining
code in a country from West Africa has contributed to policy changes that could bring well over $1
billion in additional revenues per year from 2017, and an increase in domestic investment of
resource revenues instead of purchase of overseas assets from $4.6 billion to $8.4 billion.

Increased oversight capacity: RWI has increased oversight capacity through training, funding
and network-building and ongoing support to CSOs, parliamentarians and the media. Although
there is no concrete standard by which to judge how much the increased capacity has resulted in
improved governance, those interviewed as part of the evaluation consistently mentioned the
importance of RWI’s grant and non-grant support to their work in the field.

Increased transparency of payments to government: $500 billion of payments to governments
were covered in Extractive Industries Transparency Initiative (EITI) reports between 2009 and
2011. EITI compliance increased from zero to eleven countries, and the total funds covered in EITI
reports increased from $13 billion to $589 billion. RWI has been a leader in the field of advocacy
The Natural Resource Charter: set of economic principles for governments and societies on how to
best manage the opportunities created by natural resources for development. Paul Collier et al
16 EITI, Nigeria EITI: Making transparency count, uncovering billions. http://eiti.org/document/casestudy-nigeria
15
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around both this initiative and the Dodd-Frank Wall Street Reform and Consumer Protection Act,
which mandates the reporting of payments to governments by US-listed companies.
These macro-level metrics indicate that RWI can use a relatively low budget to affect transformational
change by contributing to the improved management of billions of dollars of revenue when it works in
the right context. The evaluation found RWI to have provided a good return on investment and good
value for money, showing comprehensive use of a strong toolbox including technical assistance that has
directly influenced national policy decisions in receptive countries.
The sustainability of RWI’s intervention was questioned by a separate evaluation by the World Bank.
However, the intervention period evaluated was only one year, and longer interventions are needed to
build sustainable coalitions (e.g. the 3-year period of this programme). This aspect of RWI’s work would
be closely monitored under any DFID-funded intervention and be a focus of the evaluation of this
intervention.
The World Bank evaluation also found that RWI was too thinly spread to ensure value chain integrity
everywhere, and should focus on fewer countries. The team has ensured a narrower focus in this
intervention on countries where progress is most likely to occur and where it will have greatest impact,
moving RWI from a regional hub-based approach to stationing staff in-country.
The CIF project currently underway in Libya has delivered a number of outputs in a short timeframe,
including training of CSO’s, media and lawyers on governance of natural resources and engagement
with a different parts of government and semi-government bodies involved in the management of Libya’s
natural resources. This includes the discussions with the GNC Energy Committee Members regarding
the finalisation of an MoU with RWI for future work; a workshop with 30 government officials from the
National Economic Development Board (NEDB)- a quasi-governmental think-tank on governance
issues; 20 high level government stakeholders from executive and legislative branches of government
met to discuss hydrocarbon revenue management and revenue sharing, extremely sensitive issues in
the current Libyan political climate; 16 Libyan General National Congress’s (GNC) members from
Energy, Legislative and Budget Committees engaged in-depth discussions, facilitated by RWI, around
natural resource issues in constitutions. This is to name a few of the activities delivered since
November 2012, when the CIF Libya project started. RWI clearly have access to the right parts of
government and starting the Libya project in 2012 has allowed RWI to gain stronger ground at an
important time. This project is still in its infancy and RWI have more work to do in understanding DFID’s
approach to monitoring and management. We are arranging a meeting with their operations director,
M&E specialist and development associate, to discuss what DFID requires for the effective monitoring
and management of this programme.
Option 3
APEF’s rationale for working through IFIs is to ensure that smaller amounts of UK funding leverage the
larger pots of funding, influence and technical expertise that IFIs can provide. Through this model, IFIs
may be able to finance a larger project than the proposed £4.6million RWI project by drawing on the
contributions already made by other donors. IFIs often have significant access to government
stakeholders, making them an appropriate partner to offer support to government reform.
IFIs have shown some appetite to work on tackling corruption in transition countries. However, IFIs do
not have the in-house expertise to work across the value chain, incorporating demand-side capacity
building. It is therefore likely that, in order to reach all actors across the value chain, an IFI would need
to sub-contract the civil society and media capacity building elements to an organization such as RWI.
C. For each feasible option, what is the assessment of local capacity? Is the intervention likely to
strengthen capacity in a durable manner?
8
Option 1: No capacity building would occur beyond that provided under the Libya CIF project.
Option 2: RWI is recognized as playing a critical role in increasing the capacity of local actors to work
on revenue management issues. In Tunisia, the number of civil society organisations has increased
dramatically since the revolution,17 but civil society remains fragmented and in need of the formation of
networks to help achieve the aims of the various organisations. Transparency and accountability is
emerging as a strong focus of many new CSOs, providing potential partners for RWI’s work.
In Libya, most civil society organizations are in their infancy due to the lack of civil society activity under
the previous regime. Most Libyan CSOs have no institutional capacity or experience. Grant-making in
Libya will be much more proactive than in Tunisia, involving heavy-duty mentoring. There are a number
of groups emerging that are interested in advocacy around Extractives Industry Transparency and RWI
will play a crucial role in building their capacity to engage meaningfully on this subject, through grants,
workshops and training. 18
RWI will also target the media, parliamentarians and government for capacity-building. The
governments of Tunisia and Libya are both relatively new and RWI will build their capacity to work
towards EITI compliance.
Option 3
Working through an IFI would alter the balance of capacity building towards a heavier focus on
government capacity. Although it is essential to build government understanding of EITI norms, without
increasing civil society’s ability to oversee implementation of new constitutional provisions and laws on
natural resources, the government is less likely to keep to new commitments.
D. What is the likely impact (positive and negative) on climate change and environment for each
feasible option?
Categorise as A, high potential risk / opportunity; B, medium / manageable potential risk / opportunity; C,
low / no risk / opportunity; or D, core contribution to a multilateral organisation.
Appraisal
Success Criteria
Sensitivity Analysis
None
Option
No
Climate & Environment Category
Risks & impacts
Opportunities
1
C
C
2
C
B
3
C
C
See annexe for full appraisal
E. If any, what are the likely major impacts on social development?
This programme is directly concerned with DFID’s empowerment and accountability agenda. It aims to
strengthen legitimacy of public institutions and enable more inclusive political settlements by supporting
17
A March 2012 report prepared by the EU evaluating the state of civil society in Tunisia revealed that 2700 civil
society organisations were created in Tunisia between the revolution and October 2011.
18
RWI (2013) Strengthening Resource Governance in Libya: Inception Report.
9
increased transparency of governments and private sector. It will be important during the start-up phase
to ensure that accountability building extends beyond the vertical links between CSOs and government
to include the interests of local communities. CSOs involved in the programme should be representative
of the huge array of interest groups in the countries – whilst maintaining a focus on those which will be
the most effective and interested parties – in order to go beyond a narrow dialogue. To do this, the
programme should ensure that the activities and lessons of the programme are disseminated
appropriately to citizens from a range of backgrounds and regions, for example through public hearings
with government officials. RWI could consider conducting Focus Groups Discussions in a range of
locations to complement the findings of their planned perception survey, discovering more about the
motivations and understandings that prompt the responses on the survey.
Whilst the potential for building in gender to the project may seem limited, given the heavy dominance
by men of the sector, it will be possible to nurture and document the involvement of women, highlighting
examples to contribute to the breaking of stereotypes in communications, annual reviews and other
programme documents.
F. For fragile and conflict affected countries, what are the likely major impacts on conflict and
fragility, if any?
Two years after the revolutions swept away the top echelons of the old regimes in Tunisia, Egypt and
Libya (with substantive change happening in Morocco) tensions remain high across society. As yet the
legitimacy of the new regimes is not cemented or entrenched. Contestation for the state continues to be
a major source of conflict in society. Awareness of the unfair distribution of state assets and corruption
in patronage-based rentier states has been growing in recent years, with the issue of corruption rising
up the political and social agenda. Supporting new states and civil society actors to reduce corruption
and increase transparency will contribute to the legitimacy of new states and thereby reduce potentially
violent tensions in society. Increased transparency could lead to increased tensions if governments do
not simultaneously change the way they manage resources, but in the long term greater transparency
and accountability will contribute to the foundations of a new social contract based on an open political
system. The improved management of natural resource rents will also contribute to increasing the
resilience of society through better targeting of public finance to areas of need.
Resistance from vested interests that benefit from corruption will be strong and is likely to create
conflicts that need to be managed carefully. Those who will lose out through anti-corruption reforms
need to be incentivised to participate. RWI’s strong credibility, derived from their specialist technical
knowledge of the sector, will make an important contribution to the project’s ability to defuse tensions by
helping government stakeholders. DFID will work with RWI to ensure they are applying a conflict
sensitive lens to their analysis and activities, reviewing the potential sources of conflict and tools for
mitigation in partnership with RWI and other stakeholders at six-monthly intervals. The project is also
very much based on locally-owned process which will help manage the risk that this is seen as
external/western interference.
G. What are the costs and benefits of each feasible option? Identify the preferred option.
As outlined in the strategic case, the aim of this intervention is to support the development of
accountable and effective management of natural resources. The following section sets out the main
expected benefits of each option and compares the likely outcomes in each scenario.
Option 1: Do nothing more than the current Country Impact Funded Revenue Watch Institute project in
Libya.
Costs: There would be no additional costs for the UK. It is unlikely that RWI would be able to continue
its work in Libya, unless the organisation is able to secure funding from other donors.
10
Benefits: There would be no further benefits attributable to UK funding. There could be a negative
benefit in that the value for money of the APEF-CIF project currently underway in Libya may be
jeopardized, as failing to continue RWI’s engagement in Libya would undermine the sustainability of the
achievements already made.
Option 2 (preferred): Fund Revenue Watch Institute to carry out a project to promote natural resource
revenue transparency and accountability in Libya and Tunisia, with the possibility of increasing the
project scope to include Egypt and Morocco at a later stage.
Costs: The cost would be £4.8m for the UK, as well as DFID staff time to manage the intervention. The
profile of costs is set out in the Financial Case (see below) and will see funding split roughly equally over
the next three financial years.
Benefits: The profile of costs and benefits would see the costs more or less evenly distributed across
the first three years, while the timing of the benefits is more uncertain. Initial output level benefits could
be expected within the first year of the project, while the outcome/impact level benefits are more
uncertain and would not materialise for some time. The benefits should therefore be discounted more
than the costs, but as the potential benefits are significant the project would still be expected to have a
good cost-benefit ratio.
The main direct benefits would include:



Increased awareness of and demand for transparency and accountability in the
management of natural resources among journalists, parliamentarians, and civil society actors in
Libya and Tunisia.
Better capacity to understand the management of natural resource revenues among these
actors, enabling more effective scrutiny of government and engagement on legislation and
regulation of the natural resource sector.
Progress on Libyan and Tunisian governments implementing international norms on
resource transparency, particularly revenue and contract disclosure under the EITI standard.
This is expected to lead to the following outcomes:



Oil, gas and mineral management in target countries is more transparent.
Governments are held accountable for how resource wealth is managed.
Governments choose and implement effective policies for managing resource wealth.
As indicated in the discussion of the evidence base (section B), there is evidence linking RWI’s work in
other countries to increased implementation of the EITI and, in some cases, more directly to increased
government revenue from natural resources. Specific RWI interventions supporting different legislative
initiatives that result in increased government revenue from natural resources thanks to revised
contracts, improved regulations, or new taxation arrangements. Given that this is the main monetary
benefit useful to indicate the amount of revenue that would potentially be affected (using the figures in
Table 1 from the Strategic Case):

In Libya it is estimated that the government’s revenue from hydrocarbons in 2010 was £28bn
(actual revenue in future years depends on the evolution of international energy prices and the
volume of production), accounting for 85-90% of government revenue. Even a small
improvement in the way this revenue is managed would have a significant impact – a 1%
improvement would mean an extra £280m in government revenue each year.

In Tunisia, government revenue from natural resources is more limited, estimated at £200m each
year. A 1% improvement would mean an extra £2m in government revenue.
11
These figures are meant only to indicate the potential revenue flows that could be affected by this
project. Evidence from previous RWI interventions suggests that the level of revenue increases is highly
dependent on the country context and the specific arrangements in place for extracting government
revenue from the country’s natural resources. For example, in Sierra Leone parliament training and civil
society advocacy contributed to legislation raising the effective royalty rate paid by the mining sector,
leading to an increase of $4 million per year from the diamond sector alone. In Peru, a revised law
establishing higher royalty rates and a windfall profit tax could increase government revenues by $600 1,200 million annually (depending on prices). At this stage, it is not known what specific changes would
be implemented in Libya and Tunisia, but given the very high level of oil and gas revenues and the weak
governance structures inherited from the Gaddafi era it seems reasonable to expect significant gains
could be possible.
Finally, there is a clear link between supporting this project and the work to improve public financial
management (PFM) in Libya that DFID is already supporting through the IMF and the World Bank. This
work is aimed primarily at the systems for managing and spending government resources, while the
RWI project is aimed mainly at the revenue that government generates from natural resources. By
strengthening the demand side capacity on natural resource transparency, the RWI project will help to
generate support for increased transparency on government revenues and spending. Conversely,
improved capacity in government resulting from the PFM programme will help the government to
respond to increased demand from relevant constituencies, thereby creating a positive dynamic
between government and demand side actors.
Option 3: Increase funding to a current implementing partner (IFI) to implement a similar intervention, for
example through a Trust Fund for the region.
Costs: This option has not been fully articulated, but the £4.8m allocated to option 3 could instead be
used to make a further contribution to one or more of the IFI Trust Funds that the APEF have already
supported, possibly with the additional contribution specifically earmarked for projects in the natural
resource sector. As in option 2, there would also be some input of DFID staff time the profile of costs
would likely see funding begin later than under option 2.
Benefits: The benefits from this option are likely to be somewhat different from those identified in option
2. Unlike RWI, the IFIs do not have particular expertise in the area of natural resource revenue
transparency, and would not able to deliver the type of training and capacity building aimed at improving
‘upstream’ revenue management (i.e. the contracts, regulations, and taxation arrangements that
determine the government’s income from natural resources). The IFIs’ main contribution would be in the
‘downstream’ revenue management (i.e. once the natural resource revenues are in government
accounts). As mentioned above, DFID is already supporting the IMF and World Bank to deliver technical
assistance on public financial management in Libya, which means that there would be limited added
value in allocating further resources to this area.
The operating model of the IFIs is also different from RWI’s. Rather than working mainly with civil
society, as RWI does, the IFIs work directly with governments and private businesses. This means that
some of the direct benefits of this option are different in nature, and would likely focus on improving
technical skills within government rather than among non-government actors as in option 2.
The expected outcomes would remain the same as in option 2, with the exception of the accountability
outcome which would not feature under option 3. The lack of this outcome would have an effect on the
sustainability of government reforms, as without accountability actors, governments are less likely to
honour commitments to transparency and effective management of resource revenues. The amount of
government revenue potentially impacted by the project is the same under both options.
H. Theory of Change for Preferred Option
12
RWI’s Approach & Assumptions
To tackle the obstacles to good resource management outlined in the strategic case, and to help
countries unlock the development potential of natural resources, RWI promotes transparency,
accountability and effectiveness, targeting discreet components of the extractive sector value chain.
Areas of Focus
RWI employs an integrated mix of supply and demand side strategies to develop policies and
safeguards that can help translate resource wealth into development gains. Each strategy seeks to shift
the incentives of decision-makers towards delivering good policy and practice. The possibility for impact
depends on critical political economy assumptions regarding the political space for reform and the
motivation of different stakeholders in charge of the change process, which are outlined in the theory of
change diagram on page 14.
RWI pursues three intervention strategies based on political economy assumptions:
 Promotion of global norms: Policymakers respond to international cues about desirable practice, and
they use domestic policy to signal intentions and improve their reputations abroad. By defining and
spreading extractive sector transparency as an international norm, RWI increases the rewards and
support available to those countries which align themselves with these practices.
Assumption: There is openness to international norms and influence from external actors. Libya
and Tunisia have already indicated their willingness to adopt and adapt good international practice.

Working with Accountability Actors: RWI strengthens the demand for good policy by providing
parliamentarians, journalists and civil society with the specialized information and skills needed to
monitor and advocate in this sector. Oversight and pressure from these actors increases the
rewards associated with good policymaking and the costs of its abandonment, protecting gains
when political dispensations change. Greater revenue transparency is not an end in itself, but rather
shifts public grievance from companies to the government, who have the responsibility to deliver
public services and respond to citizen demand. As revenue data becomes available, citizens begin
to ask questions about how those revenues are spent for public benefit and hold the governments to
account for what they do with the revenues.
Assumptions: An enabling political environment allows CSOs, media and parliamentarians to
exercise at least minimum oversight. Libya and Tunisia have undergone full regime change,
significantly widening the space for civil society and other actors to demand change. Interventions in
this area also require that civil society is willing and able to engage in a policy dialogue on oil,
gas and mining reform. Unlike in other regions, radical opposition to extractive industries in rather
muted in MENA.

Government Capacity Building: RWI supports governments to develop the expertise and skills
needed to implement effective policy and respond to citizen demands. Along with sector expertise,
RWI mainstreams guidance on achieving transparency, accountability and multi-stakeholder
dialogue in its technical assistance.
Assumption: A cadre of policymakers is committed to natural resource governance reform.
Change requires cooperation and leadership from the executive. Strong champions are needed
within government to drive reforms. Libya offers good prospects for engagement with the
government and the Tunisian Government has declared its intention to implement EITI.
13
Annex 2 presents the project logframe.
I. What measures can be used to monitor Value for Money for the intervention?
The value for money of this project will monitored through the annual review and project completion
processes.
Economy: VfM can be measured through the unit costs of the intervention – RWI have provided a
detailed budget indicating the costs of activities, including salaries. This can be compared to the unit
costs of similar projects, for example the Demand Side Accountability component of the Libya PFM
project, which involves similar activities.
Efficiency: Data on the activities undertaken by RWI, such as number of individuals trained, number of
workshops held (and if possible number of attendees), number of high-quality analysis papers and briefs
produced, can be used to measure efficiency.
Effectiveness: A key measure will be amount of revenues brought under EITI standards. Estimates of
increased government revenue due to improved transparency and management of the hydrocarbon
sector could also be used.
J. Summary Value for Money Statement for the preferred option
Both options 2 and 3 are considered to provide positive value for money. Option 2 is the preferred option
because cost-benefit ratio is likely to be higher, the RWI intervention is tailored to the specific issues
identified in the strategic case, and the option 2 will be able to be deployed more quickly than option 3.
14
Revenue Watch Institute Theory of Change
Revenue Watch
Impact
Citizens of resource rich countries gain greater benefits from the oil, gas and mineral wealth
Positive Externalities:
- Reduced
Spendingrisk
directed
of natural
toward
resource
development
driven conflict
priorities
- Improved
Reduced risk
investment
of naturalclimate
resource driven conflict
- Lower
Improved
costinvestment
of capital climate
- Lower cost of capital
Better governance of oil, gas and mining resources
Revenue Watch
Outcome
Transparent management of
natural resource wealth
Revenue Watch
Outputs
Revenue Watch
Inputs
RWI Direct Influence:
- Greater revenues and positive returns from oil, gas
and mining
- Reduced
and more
responsive
governance
Spendingcorruption
directed toward
development
priorities
- More
investment
in the
Reduced
corruption
andeconomy
more responsive governance
- More investment in the economy
Governments are held
accountable for how resource
wealth is managed
Governments choose and
implement effective policies
for managing resource wealth
International extractives
norms and
transparency
domestic
practicesnorms
generate
greater transparency
Demand: Parliament, civil
society & media are capable
and informed
Supply: Decision makers are
capable and informed
Evidence base: Medium
- International advocacy advances
-transparency
Internationalnorms
advocacy
alongadvances
the value
transparency
alongtothe value
chain includingnorms
payments
chain
includingcontract
payments
to
governments,
transparency,
governments,
contract
Sovereign Wealth
Fundtransparency,
Standards
Sovereign
Wealth
Fundprinciples)
Standardsand
(Santiago and
Truman
(Santiago
and and
Truman
principles)
and
development
promotion
of the
development
and
promotion
Natural Resource Charter. of the
Natural Resource Charter.
- Leadership in and support to develop
- Leadership
in and support
to develop
strong
international
mechanisms,
strong
international
including
EITI and themechanisms,
Open
including
EITIPartnership
and the Open
Government
helps to
Government
Partnership,
helpspolicy
to
incentivize and
operationalize
incentivize
and
operationalize
policy
reforms.
reforms.
- Building strong civil society networks
-like
Building
networks
Publishstrong
Whatcivil
You society
Pay creates
a
like
Publish What
Pay creates a
sustainable
globalYou
movement.
sustainable global movement.
- Applied research helps establish and
-promote
Appliednew
research
helps establish
and
standards,
such as the
promote
new standards,
the
Natural Resource
Charter,such
the as
Revenue
Natural
Resource
Charter,
the
Revenue
Watch Index, contract and national oil
Watch
Index,
contract and
national
oil
company
transparency,
oil and
minerals
company
trading. transparency, oil and minerals
trading.
- Engaging strategic players, including
-emerging
Engagingeconomies
strategic players,
including
and G20/OECD
emerging
economiesglobal
and G20/OECD
countries advances
norms of
countries
advances
global
norms
of
transparency.
transparency.
- Promotion of strong IFI, OPIC, ECA
-disclosure
Promotionrequirements
of strong IFI,for
OPIC,
ECA
resource
disclosure
requirements
for resource
project financing
creates incentives
for
project
financing
countries
to applycreates
norms.incentives for
Evidence base: Medium
- Capacity development tailored for
-accountability
Capacity development
tailoredabilities
for
actors increases
accountability
actorsresource
increasesoversight
abilities
to conduct effective
to
effective
resource
andconduct
advocacy,
understand
andoversight
make
and
advocacy,
andglobal
make
use of
data, andunderstand
capitalize on
use
of data, and capitalize on global
standards.
standards.
- Regional training hubs offer a cost
-effective
Regional
training
hubs offer
a cost
vehicle
to deliver
training
effective
vehicle toenable
deliver
training
across countries,
peer
learning
across
countries,among
enableCSOs,
peer legislators
learning
and interaction
and
among
legislators
and interaction
media. Hubs
createCSOs,
sustainable
and
media.
Hubsof
create
sustainable
regional
centers
expertise
and
regional
centers of expertise and
capacity building.
capacity building.
- Grantmaking, mentoring, and
-networking
Grantmaking,
mentoring,
andthe
provide
CSOs with
networking
CSOs
with theto
financial andprovide
technical
resources
financial
technical
engage inand
oversight
andresources
advocacy.to
engage in oversight and advocacy.
- Multi-stakeholder policy dialogue
-facilitates
Multi-stakeholder
dialogue
oversight, policy
encourages
facilitates
oversight, and
encourages
information-sharing
builds trust.
information-sharing and builds trust.
- Data analysis and mapping tools
-helps
Datacitizens
analysistrack
and resources
mapping tools
and policy
helps
citizens track
resources
and policy
developments,
ensure
that disclosed
developments,
ensure
disclosed
data is actively used
to that
improve
data
is actively used to improve
governance.
governance.
- Applied research and policy analysis
-inform
Applied
research
and policy analysis
capacity
development
inform
capacity
development
programs,
and meet
specific demands
programs,
and
meet specific
demands
for technical
expertise
(e.g. legislation
for
technical
review)
fromexpertise
partners.(e.g. legislation
review) from partners.
Political
Economy
Assumptions
Openness to international norms and
influence by external actors
Problems
Sector secrecy prevents oversight,
limits competition, and facilitates
misappropriation
An enabling political environment :
(1) CSOs, media and parliamentarians can
exercise at least minimum oversight
(2) Civil Society is willing and able to engage
in a policy dialogue on oil, gas and mining
Control over natural resources makes
government less dependent on
people, weakening accountability
15
Evidence base: Limited
-- Direct
Direct expert
expert support
support to
to
governments
governments on
on contract
contract analysis
analysis
and
negotiation
improves
and negotiation improves terms
terms and
and
increases
returns
to
the
country.
increases returns to the country.
-- Expert
advice on
on resource
resource laws,
laws,
Expert advice
regulations
and oversight
oversight systems
systems
regulations and
helps
helps governments
governments operationalize
operationalize
and
institutionalize better
and institutionalize
better policies.
policies.
-- The
The Natural
Natural Resource
Resource Charter
Charter
provides
provides aa comprehensive
comprehensive policy
policy
framework.
framework. Charter
Charter benchmarking
benchmarking
and
and trainings
trainings help
help officials
officials apply
apply
Precepts
(RWI with
Precepts (RWI
with partners).
partners). RWI’s
RWI’s
Index
governments design
design and
and
Index helps
helps governments
track
track transparency
transparency elements.
elements.
-- Advice
Advice on
on revenue
revenue management
management
improves
improves ability
ability to
to manage
manage and
and
allocate
allocate volatile
volatile and
and finite
finite resources
resources
and
and increase
increase domestic
domestic investment.
investment.
-- Multi-stakeholder
Multi-stakeholder policy
policy dialogue
dialogue
facilitates
facilitates oversight,
oversight, encourages
encourages
information-sharing
and
builds
information-sharing and builds trust.
trust.
-- Support
Support to
to subnational
subnational
governments
governments improves
improves regional,
regional,
local
revenue management,
management, and
and
local revenue
service
service delivery.
delivery.
-- Applied
research and
Applied research
and thought
thought
leadership
leadership contributes
contributes to
to aa better
better
understanding
of
effective
resource
understanding of effective resource
management.
management.
A cadre of policymakers are
committed to natural resource
governance reform
Asymmetries of knowledge and
capacity lead to unfavorable deals,
reduced revenues and weak resource
management
Impactand
Fiscal
assumption:
expenditure
fiscal
policies
and
expenditure policies are
effective
are
effective
andand
accountable
accountable
enough
enough
to
translate
to translate
natural resource
gains in good
governance gains
of natural
into resources
improved
into improvedoutcomes.
development
development
(Work
outcomes.
done
by other
(Work
actors)
done by other
actors)
Commercial Case
Delivery through a third party entity (multilateral organisation; civil society
organisation or support to government)
A. Why is the proposed funding mechanism/form of arrangement the right one for this
intervention, with this development partner?
DFID will set up and deliver its contribution through an Accountable Grant with Revenue Watch
Institute, who is registered as a not-for-profit corporation in the USA. This is the correct funding
arrangement when working with civil society, and has previously been used by DFID to fund grants
through RWI.
B. What assurance has been obtained on capability and capacity to deliver?
DFID has conducted a due diligence assessment of RWI, assessing its ability and capacity to
manage DFID’s grant and deliver increased transparency and accountability. The assessment was
conducted by a Due Diligence advisor from Risk and Control unit, shadowed by an Anti-corruption
adviser and the regional team’s programme manager.
The assessment found that RWI has sufficient professional experience, staff processes, systems,
financial capability and assets to ensure delivery of the programme, stating: ‘RWI is an established
business that has had extensive relationships with various Government and NGO organisations
globally. RWI has coped well with the variety of projects it has undertaken and has an unblemished
record in terms of its delivery.’
The review recommended a number of action points for improvement, noted below, ranking the
overall assessment as Medium - the findings do not pose unacceptable negative fiduciary and/or
reputational risk to DFID but it would be advisable for the Partner to improve their systems,
processes or procedures. MENAD will share the findings with the RWI team, putting forward the
recommendations to improve their procedures.
Recommendations from the due diligence assessment:
1) Develop a Risk Register, which identifies internal and external risks, including those for ongoing programmes
2) Create stand- alone policies for Anti-Bribery, Ethics, Whistleblowing, Environmental issues,
Data Protection and Intellectual Property Rights, which are currently embedded within staff
protocol policies.
3) Update the Financial and Administrative Procedures (currently being reviewed).
4) Create stand-alone policy for monitoring and reporting downstream activity.
C. Is there an opportunity to negotiate on anticipated costs?
DFID’s Middle East and North Africa department have worked closely with RWI to understand the
resources required to deliver a programme which can increase transparency around extractive
industries in the MENA region. The main costs drivers are staff salaries, capacity building activity
and grants to civil society organisations.
Across the board, the budget has been revised downwards significantly from the original proposal.
Reductions are due to the narrower scope of the programme, but detailed negotiations with RWI
have also identified significant cost savings on many budget lines including staff salaries; travel;
capital purchases and overhead costs.
16
Financial Case
A. Who are the recipients of all proposed payments?
RWI will be the direct recipient of DFID’s grant. 15% of the grant will be used by the RWI to manage
and disburse small grants to civil society in Libya and Tunisia.
B. What are the costs to be incurred directly by DFID?
The cost of delivering this programme is estimated at £4.8 million. This budget includes relatively fixed
costs including human resource inputs; cost to deliver training course; rent, occupancy costs and
overhead costs. For budget lines including travel; grants and participants attendance at events,
estimates have been provided. RWI costings are based on their analysis of the needs in country and
similar activities from existing programmes in other regions. DFID will contribute a maximum grant
amount to the RWI programme; this will not be affected by increases to estimates.
C. What are the costs to be incurred by third party organisations?
N/A
D. Does the project involve financial aid to governments? If so, please define the arrangements
in detail.
N/A
E. Is the required funding available through current resource allocation or via a bid from
contingency? Will it be funded through capital/programme/admin?
Funding will come from the Arab Partnership Economic Facility (APEF) 2013/2014 programme budget.
There is adequate funding put aside to meet the cost of this intervention.
F. What is the profile of estimated costs? How will you work to ensure accurate forecasting?
DFID will provide up to £4.8 million for this project which is expected to last for three years from
2013/14 to 2015/16. Costs profiled beyond the current CSR period to 2014/15 have been flagged with
the Finance and Corporate Performance Division.
The expected annual profile will be as follows:



2013/14 - £1,333,176
2014/15 - £1,692,556
2015/16 - £1,734,337
DFID will manage its grant to Revenue Watch Institute in line with financial management procedures; it
will ensure the contribution represents an effective use of DFID’s budget, offers value for money and is
used for its intended purpose during the life time of the programme. Once agreed DFID will work with
RWI to agree a planned payment schedule. RWI will be required to report changes to the forecasts as
they arise, but at a minimum every quarter
G. What is the assessment of financial risk and fraud?
DFID’s due diligence assessment of RWI’s financial management capability found RWI has sound
financial management policies and procedures in place. Overall the risk of project resources not being
used for the intended purpose is deemed to be low to medium risk. The main financial risk will be the
17
misuse of funds by grant recipients.
RWI have shared their procedures for assessing and approving grants to grantees. RWI applies its
own due diligence framework when assessing a partner’s capability to manage a grant. This looks at
recipients physical and financial resource; staff skill and competencies and other similar areas found in
DFID’s own framework. DFID’s Due Diligence assessment found RWI has a substantial policy in terms
of the governance of downstream partners and delivery. All of RWI’s grants within this programme will
be valued at £26,000 or below, requiring approval by RWI senior management.
H. How will expenditure be monitored, reported and accounted for?
RWI will be required to provide quarterly financial statements, accounting for contributions received,
actual spend and a forecast of subsequent quarters. Statements will be combined with bi-annual
narrative reporting, with cursory quarterly updates, on the programmes progress towards achieving the
expected results. RWI’s finances and administrative team is based at its HQ in New York; who will
manage and report on spend.
DFID’s programme manager will be responsible for managing the grant finances with RWI; ensuring
RWI reports provide a sound account of spend and accurate forecasts are maintained. During the
lifetime of the programme DFID’s programme manager will work with RWI to understand changes to
activities and ensure the budget is managed accordingly.
In line with DFID’s procedures Annual Audited reports must be provided for all funded projects.
I. Are there any accounting considerations arising from the project?
None.
Management Case
A. What are the Management Arrangements for implementing the intervention?
RWI: RWI’s MENA Program Director will be responsible for the overall delivery of the programme,
reporting to RWI’s Deputy Director. An RWI team, including operational, country and thematic staff, will
be involved in inception planning to agree the strategy and priorities for its MENA programme. This will
complement the existing strategic planning activities that have taken place to date.
RWI will hold annual strategy review meetings, to which DFID staff will be invited. The first strategy
review meeting, planned for June, will be extended to include discussion with DFID staff to finalise the
details of the programme, including detailed discussion of monitoring arrangements with the M&E
specialist. During the programme RWI will hold internal periodic review meetings with the Libya and
Tunisia teams to monitor project delivery.
In line with RWI’s internal approach to project management, day to day budget tracking and linkage
between expenditures and project approach will be the responsibility of the project manager for each
activity. Budgetary oversight for the project is provided both by the Project Director and the Director of
Finance and Administration, who signs off on and submits financial reports.
DFID: MENAD’s senior governance adviser will have overall lead responsibility for managing DFID’s
contribution to RWI, with direct support from the Policy Officer in the Middle East and North Africa
Department (MENAD) and its programme manager to manage and monitor the programme. MENAD is
working with HMG staff based in Libya and Tunisia to identify how they can be actively engaged in
country, ensuring the programme responds to the country-specific needs and continues to stay
18
relevant.
The first six months (maximum) will involve an inception phase, during which RWI and DFID will work
together to finalise RWI’s plan of delivery (activity plan) ensuring the programme’s fit with the strategic
objectives of both organisations. During this time DFID’s programme team will be in regular dialogue
with RWI as the programme is shaped. This period is also necessary to enable RWI to fill new posts,
both in country and regionally, which are dependent on DFID’s funding.
DFID and RWI have agreed to bi-annual board meetings where strategic progress is reviewed and
high-level challenges and opportunities are discussed. The meeting will also be the forum for agreeing
changes to strategy / direction of the programme. Once a year, the board meeting will be sequenced to
coincide with RWI-MENA’s annual strategy review.
B. What are the risks and how these will be managed?
The overall programme risk is considered medium
Risk
Governments/key
stakeholders
unwillingness to engage
Probability
High
Impact
High
Mitigation Strategy
The project will adopt a case-by-case
approach to deal with MPs from each
country.
RWI
has
worked
with
policymakers in a variety of contexts and
initial discussion in Libya and Tunisia
indicate demand for RWI’s services.
RWI will attempt to partner with credible
actors. RWI has a well-defined and honed
training program, drawing on lessons from
implementation around the world and good
practices in adult learning. We will draw on
this experience to tailor programs as
needed.
Civil society and non- Medium
state actors capacity –
unable to build on skills
developed and challenge
governments to increase
transparency
around
extractive industries
High
Cooperation with
Low
CSOs limits RWI’s ability
to engage governments.
Medium
Libya: Deterioration of the Low
security situation prevents
local actors and RWI to
safely undertake activities.
High
Libya: NGOs attempt to Medium
take
advantage
of
increased
supply
in
development funds
Medium
19
Partnering with organisations that have the
potential to build positive relationships with
their respective governments will help
mitigate this risk. RWI has worked with
governments and civil society in countries
as diverse as Guinea, Ghana, and Iraq
with success.
Undertake a risk and vulnerability
assessment at start and continually consult
with local leaders and communities. RWI
will identify and work primarily through
country staff who will inform and steer
project implementation. Contingency plans
for holding meetings outside country have
been drawn in case of deterioration of the
security situation.
The project will seek to identify and help
nurture independent CSOs/partners. RWI
will engage and help build the technical
and institutional capacity of promising
independent actors, who will be involved in
designing and implementing project
Misuse of funds in sub- Low
granting activities
Medium
activities on the ground.
RWI will apply its rigorous DD assessment
and
monitor
how
partners
are
implementing their grants.
C. What conditions apply (for financial aid only)?
N/A
D. How will progress and results be monitored, measured and evaluated?
Monitoring
Revenue Watch are responsible for collecting data in order to monitor progress towards the targets in
the log frame. RWI will send formal reports to DFID reporting against the log frame every 6 months. In
addition there will be quarterly informal monitoring meetings to discuss progress on the project.
RWI have developed a comprehensive plan for monitoring, evaluation and learning. To ensure that this
is fully implemented to a high standard, RWI are recruiting a full time monitoring and evaluation
specialist to be based in Beirut, Lebanon.
Once the M&E specialist is in post, they will further develop the M&E strategy in conjunction with DFID,
and initial data gathering will take place in Libya as soon as possible, and immediately for Tunis upon
project approval. The initial phase of the project will be used to complete and develop the log frame;
this includes collecting baseline data, currently not available, and developing public perception surveys.
This will be led by the programme’s new M&E specialist, due to be appointed once the grant starts. A
final log frame with expected results and indicators to be measured will be completed by December
2013 and thereafter presented to the APEF Board.
The M&E Specialist will be responsible for supporting RWI staff to collect monitoring data and will
oversee design and implementation of key data sources including:




Assessment of partner countries’ score on the Resource Governance Index (RGI) using
standard methodology –note that the baseline data which will be collected in 2013 will cover
2011 to date. The Index will be assessed for the following MENA countries: Saudi Arabia,
Kuwait, Yemen, Iraq, Iran, Algeria, and Libya, which will enable us to analyse the differences
between the different countries and to feed into future decisions about RWI operation in the
region and it is also to serve as a counterfactual for any evaluation work.
Quantitative monitoring of programs done on a quarterly basis will provide updates on progress
towards delivery of key outputs throughout the project. This information will be critical for the
project director to manage the different activities and hold staff accountable for results.
Collected data will also form the backbone of the information required for discussions and
annual reviews with DFID. The regular collection of data can also form the basis of a
longitudinal study with potential academic partners interested in following the impact of the
project.
Qualitative assessments providing examples of impact and anecdotes of policy change play a
central role in communicating results to project participants, staff, media and the donor
community. This information can help demystify the oil and gas sector, show that change is
possible and thus reinforce civil society, parliamentarians, media and policymakers’ incentives
and willingness to reform.
Public opinion surveys: the M&E adviser will contract polling agencies for survey design, the
20
content of which will be developed in detail at a later stage. Among the issues surveyed will be
public perception of the quality of media coverage of extractives. Polling for extractives-related
issues will be done in tandem with other planned polling to conserve resources.
Evaluation
A budget of £45,614 has been included in the project for an independent end of project evaluation.
The M&E adviser will develop the proposal for the evaluation further once in post in conjunction with
DFID. The evaluation will be in line with DFID guidance.
The evaluation will be facilitated by good programme monitoring (see above) and thought will be given
to monitoring different control groups in order to be able to draw conclusions around project impact.
At the country level, we should be able to compare progress target countries with countries excluded
from RWI programs (i.e. no intervention) such as Algeria and Bahrain. We will be able to make direct
comparisons through the Revenue Watch Index. To assess the effectiveness of our activities targeting
parliamentarians, civil society and the media, we will monitor trends for groups that have not benefitted
from our program. For instance we can assess whether parliamentarians that have not benefitted from
our training, capacity development and technical assistance support make less, equal or more
interventions on extractive debates.
Lograme
Quest No of logframe for this intervention: 3928301
21
ANNEX 1. Climate & Environment Assurance Note
Title
Natural Resource
Management in the MENA
region
Title
Project Owner
Climate Change and
Environment Advisor
Intervention Details
Home Department
MENAD
Budget
£4.8m
Responsible Officers
Name
Helen Thompson
Su-Lin Garbett-Shiels
Department
MENAD
CED
Appraisal
Success Criteria
Sensitivity Analysis
None
No
Climate & Environment Category
Risks & impacts
Option
Opportunities
1
C
C
2
C
B
3
C
C
Management
Risks and opportunities
defined
Opportunities
There
are
limited
opportunities for options 1
and 3 but some opportunities
for option 2.
The key opportunities that lie
in option 2 relate the potential
for RWI to help deliver
environmental benefits from
strengthened
transparency
and accountability across the
natural resource revenue
management value chain in
the chosen countries.
The overall opportunity for
option 2 is ranked as B as
opposed to A because there
is little evidence to indicate
that membership of the EITI
or more general transparency
in the extractives industries
directly reduces the impact of
the oil industry on climate
change or the environment.
However,
given
the
Climate & Environment
Measures agreed
Describe briefly what actions
were decided upon to
mitigate any environmental
impacts
Given the limited evidence
available on the relationship
between:

progress
towards
extractives international
transparency
norms,
particularly revenue and
contract disclosure;

improved capacity of, and
support for, accountability
actors
needed
for
improved oversight of
extractive governance;

and greater demand in
revenue
management
transparency
and
accountability improves
disclosure practice,
on environmental outcomes,
22
Climate & Environment
Measures in log-frame
None applicable.
importance of those sectors
to the four countries and the
importance of the impact that
the extractives sector has on
climate and the environment,
the
programme
should
encourage
environmental
reporting alongside other
national resource governance
reforms. The business case
reports that the mineral
industry in Tunisia has
already been the focus of
protests surrounding issues
such as social justice and the
environment.
the evaluation included in the
business case should include
a specific focus on this
relationship.
RWI are well placed to
support
improved
and
increased
environmental
reporting given their focus on
promoting measures such as
the benchmarking of policies
against the Natural Resource
Charter and RWI Index. One
of the 12 precepts of the
Natural Resource Charter
specifically states ‘Resource
projects can have significant
positive or negative
local
economic,
environmental and social
effects
which should be identified,
explored,
accounted,
mitigated
or compensated for at all
stages of the project cycle.
The decision to extract
should
be
considered
carefully’.
And the RWI Index states
that regarding environmental
and social impact reports that
the majority of governments
do not publish documents
incorporating this type of
information. They report that
‘only 15 countries reviewed
(nine hydrocarbon and six
mining countries) publish
some
assessment
of
environmental and social
impacts’ and highlights the
importance
of
‘further
research
on
how
governments
report
information
on environmental issues,
23
given that a global standard
regarding production and
publication of these
reports are still emerging’.
RWI have already experience
in advancing environmental
standards in the extractives
sector.
The
Redstone
Evaluation of EITI makes
reference to EITI’s drafting of
the Mines and Minerals Act
of 2009
in Sierra Leone which
which raised the effective
royalty rate on the mining
sector, in addition to other
significant
revenue-raising
and
governance
improvements
and
strengthened environmental
and labour requirements in
mining areas.
There is a possibility that IFIs
could support this aim given
their
development
and
application of environmental
safeguards (option 3) but
given IFIs have not displayed
strong appetite to work on
tackling
corruption
in
transition countries, and the
likelihood that IFIs would subcontract such a project to a
partner organization such as
RWI rather than carrying it
out themselves, suggests
that opportunities to this end
are limited.
There are some longer term
and
potentially
very
significant
climate
and
environment
opportunities
from greater transparency
and reporting. The business
case identified the need for
these countries to alter the
role that natural resources
play in their economies
through
large,
long-term
investments in other sectors
of their economies in order to
create necessary jobs. The
need for long term economic
planning could open up
opportunities for investments
away from sectors in which
the state plays an out-sized
24
role such as the extractives
into low carbon forms of
energy which the Libyan
transitional government are
already
considering
and
which may help to address
the energy supply shortages
such as those experienced in
Egypt which brought attention
to the value of a number of
energy contracts.
These opportunities are not
within the scope of this
particular
flagship
and
pioneering programme but
must be registered as part of
the risks and opportunities for
climate and environment in
the region.
Risks
For options 2 and 3 there are
some risks around increases
in resources and energy use
from offices, travel,
consultations and project
activities.
Limit the number of physical
meetings and people
attending these, and/or use
of virtual technology to
reduce need for travel for
meetings and workshops
(including economy air travel
in accordance with
institutional guidelines).
The hard-copy production of
papers will be minimised and
any produced will be printed
on recycled paper.
All
reports should be produced
in electronic form only where
possible.
The “no project” option does
not increase risks but carries
no opportunity (i.e. This is the
Actions to mitigate risks are
adequately addressed in the
management case, including
the appointment by RWI of
staff based in-country to
avoid the need for frequent
travel from headquarters or
the regional hub in Beirut.
DFID staff in Post will take
responsibility for the country
level
management
and
oversight of implementers,
while London-based staff will
make infrequent trips to the
region to monitor progress
and review strategy (1-2
times a year).
25
risk)
Evidence
Relevant documents
Redstone (2012) The Revenue Watch Institute’s Impact: Evaluation of RWI’s work from 2009
to 2011
World Bank (2009):Engagement with Civil Society, Extractive Industries for Development
Series #12
November
RWI (2010: Revenue Watch Index
Natural Resource Charter (2010): Natural Resource Charter
World Bank (2012): The World Bank’s role in extractive industries, Sustainable Energy, Oil,
Gas and Mining Unit
Insert Hyperlinks to any relevant documents (e.g. Business Case template, additional
EIA/SEA if required, Climate and Environment check list etc.)
SIGNED OFF BY: Su-Lin Garbett-Shiels
DATE: 8 March 2013
26