(Ecofin Agency) - One of the requirements of the Extractive Industries Transparency Initiative (EITI) is the disclosure of the true owners of mines and oil and gas projects. This, according to the initiative, helps reduce the risk of corruption and fraud in the extractive sector. 

In his address to the nation on April 3rd, Senegal’s new President, Bassirou Diomaye Faye, said he intends to disclose the actual ownership of extractive companies active in the country. The move aligns with a directive from the Extractive Industries Transparency Initiative (EITI) that requires its member countries to reveal the identities of the true mine owners. 

According to the EITI, keeping the identity of these owners, known as "beneficial owners”, hidden increases the risk of corruption and conflicts of interest in the sector. In Senegal, a decree issued in 2020 defines a beneficial owner as any individual holding a stake of 2% or more in an extractive company. 

A report from ONE, an international NGO, estimates that since 2011, developing countries have lost $1 trillion annually due to fraudulent or illegal transactions, many involving anonymous companies. This reflects how hiding the identity of beneficial owners impacts resource-rich countries.

Besides beneficial ownership, another priority of President Faye is the audit of the mining, oil, and gas sectors. The leader also announced sustained protection of local content, without providing further details on the moves' implementation. 

Auditing mining contracts, however, often leads to deal renegotiation between companies and States. This recently happened in the Democratic Republic of Congo, with the "mines for infrastructure" contract. 

Mali also adopted a new mining code after an audit commissioned by President Assimi Goïta in 2023. The new code increases the State's stake in mines, with a potential increase of CFA500 billion in mining revenues.

Regardless of the potential benefits for States, contract auditing can also spark tensions with foreign investors and make the concerned States less attractive. Commenting on this aspect, President Faye declared in his address: “I would like to say to all our private partners that they are welcome in Senegal. By existing laws and regulations, investor rights will always be protected, as well as the interests of the state and the people.” 

Gold and phosphate are the two most mined minerals in Senegal. The country's two gold mines are owned by companies based in the United Kingdom (Endeavour Mining) and Australia (Resolute Mining), while phosphate mining involves companies with Senegalese, Asian, and European capital. As a whole, the extractive industry (mines, oil, and gas) accounted for 4.5% of GDP in 2022 and approximately 7% of State revenues.

Emiliano Tossou