Eritrea is the worst country that failed to adequately govern the way it extracts and manage natural resources, according to an index that tracks accountability and corruption.
The New York-based Natural Resource Governance Institute (NRGI), in its annual index released on Wednesday, said that Norway ranked top, closely followed by Chile, Britain and Canada.
The institute ranked 81 countries according to the transparency and accountability of their oil, gas and mining sectors.
Sixty-six countries were found to be “weak, poor or failing” in their governance of extractive industries, with less than 20 per cent achieving “good” or “satisfactory” overall ratings.
Launched in 2013, the index aims to help commodity-rich nations avoid the pitfalls of the “resource curse”, in which their economies grow slowly due to poor institutional management and oversight of their natural resources.
“Good governance of extractive industries is a fundamental step out of poverty for the 1.8 billion poor citizens living in the 81 countries we assessed…,” said Daniel Kaufmann, president and chief executive of the NRGI, an independent non-profit organisation.
“It is encouraging that dozens of countries are adopting extractives laws and regulations, but often these are not matched by meaningful action in practice.”
The index showed some middle-income countries including Colombia, Indonesia, Ghana, Mongolia, Peru, Mexico and Botswana achieved good or satisfactory overall ratings.
Burkina Faso was placed highest among the low-income countries studied and its mining sector ranked 20th overall.
The NRGI said the situation is worse in countries where corruption is systemic, including in policy areas such as environmental and social impacts, and the sharing of resource revenues by national governments with local authorities.
The index also looked at how well citizens and local communities could voice concerns and hold governments to account.
It also examined the transparency of management of sovereign wealth funds in 33 countries. Eleven sovereign wealth funds, managing 1.5 trillion dollars in wealth, were rated as failing.
The best governed of those studied was Colombia’s Savings and Stabilisation Fund followed by Ghana’s Stabilisation Fund.
Chile’s Codelco state mining company was rated the best-governed of 74 extractive sector state-owned enterprises that were assessed for their disclosures and corporate governance. The Oil and Natural Gas Corporation of India came second.
In total, 48 countries’ state-owned companies were given “unsatisfactory” ratings. The NRGI called on governments to support transparency measures, including laws to ensure the identities of the true beneficiaries of oil and mining companies are clear.