1. Inspections reforms in the context of
developing countries
Andreja Marusic, Senior Business Regulation Specialist
Maputo, 1 July 2014

2. Ease of doing business and inspections
Title of Presentation 2
An inefficient and burdensome inspections regime imposes direct costs on
the private sector…..
DB 2014 - Mozambique
• 4 different inspections and 40 days (out of 130) in obtaining a
construction permit
• 2 inspections and 23 days (out of 107) for getting electricity
…..but can have a deeper adverse effect on the trust and competitive climate
necessary for investment and growth (How to Reform Business Inspections, World
Bank Group, 2011)

3. The inspections problem – overview of “systemic” issues
Institutional Framework
Lack of risk based approach
Administrative Burdens
Communication and Transparency
Legislative Framework
Inspections are numerous and decentralized within the competence of different ministries. Lack of
cooperation or coordination and overlap
a large number of defragmented laws and regulations. Regulations are changing frequently
making it difficult for businesses to comply and for inspectors to oversee implementation
Inspections focused on covering all businesses don’t have the time to inspect more risky
enterprises in depth
Inspections impose unjustified burdens to businesses. This is particularly burdensome for micro
and small enterprises
While focusing on inspecting as many businesses as possible, inspections do not have time and
resources to communicate the requirements to businesses, in a simple and comprehensive way

4. The inspections problem (2) - regulators vs. businesses
REGULATORS BUSINESSES
think all businesses are offenders don’t trust regulators
are inconsistent and don’t
understand how businesses
operate
don’t understand the rules or think
they are unreasonable
are untransparent and focused on
penalizing rather than informing
can’t access information they need
to comply with the rules

5. Objectives of inspections reforms
support business growth and
competitiveness
improvement of safety for citizens,
businesses and the environment
reduce the
costs for
government
and
businesses
improve
regulator
understanding of
how businesses
operate
improve
transparency
and
accountabilit
y of
regulators
create an
efficient and
effective
institut.
framework
improve
business
understanding
of rules
create a system of inspections which is effective, efficient, transparent and
accountable

6. Ad hoc Coordination Coherent/
consolidated approach
Institutional
Framework
Reforming individual
inspections
Creating a
coordinating body
Mergers of closely
related agencies
Legislative
Framework
Ad hoc reforms of laws
and regulations
related to specific
inspections
Common legal
framework
Common framework
law + strategic
approach in reforming
particular laws
E-Government Ad hoc IT solutions for
particular inspections
IT communication
among inspections
Joint e-government
network for all
inspections
From ad hoc to systemic reforms
change staff/professionalism, governance/performance management, incentives

7. WBG support to inspections reforms
• The WBG’s Investment Climate Department helps governments
implement reforms to improve their business environments and
encourage and retain investment, thus fostering competitive markets,
growth, and job creation
• In developing countries, most of the work done so far in inspections
reforms has been led by the WBG. Some examples:
• Latvia 1999-2000
• many Former Soviet countries (particularly acute problem there):
Uzbekistan (2001-2008), Georgia (2003-2004), Tajikistan (2004 ->),
Ukraine (2005 ->), Belarus (2005 ->), Armenia (2008 ->), Azerbaijan
(2008 ->), Kyrgyzstan (2008 ->), Moldova (2010 ->), Kazakhstan
(2011 ->)
• Central Europe – Bosnia (2002-2006), Albania (2011 ->)
• Jordan (2007 ->), Colombia (2007 ->), Mongolia (2009 ->), Kenya
(2010 ->), Cambodia (2011 ->), Peru (2011 ->), Liberia (2012 ->)

8. Examples – Legislative Framework
Reforms:
• Ukraine: Law on Inspections
Introduces a risk based approach
to inspections, Introduces
checklists, sets out duration of
inspections, clarifies procedures,
rights and obligations
• Tajikistan, Azerbaijan, Kyrgyzstan,
Kazakhstan, Uzbekistan
• Bosnia and Herzegovina (Rep.
Srpska) – Law on Inspections
creating centralized inspectorate
Challenges:
• a large number of
defragmented laws and
regulations still remain
• a framework law also needs to
be enforced/implemented
• regulations are changing
frequently making it difficult for
businesses to comply and for
inspectors to oversee
implementation
• no implementation mechanism

9. Examples - Increasing transparency and predictability and
reduction of administrative burdens
Reforms:
• Introduction of check lists -
Lithuania, Mongolia, Armenia,
Ukraine, Bosnia have made check-
lists a requirement for most or all
inspections
• Lithuania - Declaration on the First
Year of Business and uniform
telephone consulting
• Armenia - moratorium on
inspections – MSME with annual
turnover below USD 140k should
not be inspected
Challenges:
• cultural resistance, "legalism" and
rigidity in legal thinking (refusal
to accept that executive branch
can openly state how it will
interpret laws), lack of qualified
professionals / resources

10. Examples - Using ICT for joint planning, consolidating
information, improving targeting and communication
Reforms:
• Bosnia and Herzegovina (Rep. Srpska)
has an inspection system model and
software application including risk
assessment, planning, recording and
reporting, automated Complaints System
• Jordan is the process of implementing a
feedback Mechanism - an application
that enables business owners to provide
feedback on inspection visits by
responding to a short questionnaire,
available for use via smartphones (iOS
and Android), the web, and SMS.
Challenges:
ICT is a tool not a solution –
before embarking on ICT
driven reforms, the
institutional, legislative
framework must be
reformed and processes re-
engineered.

11. Risk based inspections
Reform:
Foreseen in most of the countries which
have a framework inspections law (Ukraine,
Tajikistan, Azerbaijan, Kyrgyzstan,
Kazakhstan, Uzbekistan, Bosnia and
Herzegovina)
Challenges:
Difficult to implement in the context of
developing countries because:
• the lack of an up to date data base
of businesses –business registries are
not accurate, up to date and
transparent
• many businesses are informal and
difficult to reach
• resistance (vested interests, culture).

12. Examples - Coordinating inspections
Reforms:
• Latvia - Inspectorate Coordination
Council promoted information sharing
and operational collaboration between
inspectorates and piloted joint
inspections
• Bosnia - Coordinating body at central
level to overview key inspection activities
• Uzbekistan -established a coordination
body tasked with improving inspection
practices
• Moldova - the Ministry of Economy was
tasked as the de facto general
coordinator of inspections at the national
and regional levels
Challenges:
• Without high level political support
coordinating structure will have no
impact
• Its more difficult to coordinate actual
inspection visits except through a
unified information system
• Inspection Reform Team should be
independent: inside the Ministry,
which has no inspectorates or inside
the Government

13. Examples - Consolidation of inspection agencies
Reforms:
• Croatia - State Inspectorate to merge
inspectorates under 4 different ministries
• Bosnia and Herzegovina - State
Inspectorate gathering all inspection
functions except tax/customs and
controls
• Mongolia – the Generalised Agency for
Specialised Inspections
• Food safety inspectorates with
consolidated functions in a number of
countries – Estonia, Lithuania, etc.
• consolidations into a small number of
agencies each in charge of a domain/risk
type - Armenia
Challenges:
Consolidation of inspection agencies
does not by itself solve the problem
of lack of coordination and
overlapping of inspections -
duplicating functions generally
remain in place
lack of proper internal restructuring,
Resistance against merging, not to
lose administrative power
Reforms usually cover only central
level of administration – how to
include local level

14. The opportunity and need to engage in inspections
reforms is increasing:
• Business registration reforms are being implemented
with the objective to create up to date and reliable
business registries
• Licensing reforms are being implemented to reduce
administrative burden for businesses
• Sector specific reforms (agriculture, health..) often
involve inspections reforms
Opportunities for inspection reforms
14

15. • 2006 Inspections – Guidelines for Reformers
www.wbginvestmentclimate.org/uploads/Bus%20Inspect%20Toolkit.pdf
• 2009 Note on Inspections Measurement
www.wbginvestmentclimate.org/uploads/2009_note_measuring_busines
s_inspections.pdf
• 2011 Inspections Reform – Do Models Exist?
www.wbginvestmentclimate.org/uploads/inspection%20reforms%20pap
er.pdf
• 2011 How To Reform Business Inspections
www.wbginvestmentclimate.org/uploads/How%20to%20Reform%20Bus
iness%20Inspections%20WEB.pdf
• Also sector-specific work e.g. on food safety, tax, construction etc.
WBG Publications on Inspections
15