FYR Macedonia Pioneers Risk Based Border Inspections to Improve Trade

June 1, 2014

Veles Bridge, Macedonia

  • Trade in Macedonia is marked by burdensome import procedures and frequent inspections of goods.
  • The World Bank Group developed a risk-based inspections methodology composed of risk scores and rankings.
  • This new approach can reduce inspection rates at border and inland terminals by as much as 50 percent.

Getting goods across Southeast Europe can be a lengthy endeavor. Regional cross-border trade is hampered by burdensome import procedures and the high frequency of physical examinations conducted by food, veterinary, and phytosanitary agencies. FYR Macedonia is no exception, a challenge highlighted on numerous occasions by private sector stakeholders. Sampling of consignments can take days, sometimes even weeks, before laboratory results are released – results that in most cases are found to show no signs of contamination.

While effective veterinary and food safety controls play an important role in the protection of animal and human health and safety, such measures should not impede international trade. A balance between these two objectives is needed.

A collaborative effort by the World Bank and the International Finance Corporation (IFC), both members of the World Bank Group, is addressing this challenge. Since May 2013, Bank Group experts and Macedonian agency staff have been using historical trade data, test results, and relevant EU findings to develop a risk-based inspections methodology composed of risk scores and rankings. Based on this methodology, internal documents have been developed to standardize implementation, including a methodology document, standard operating procedures, and annual sampling plan.  The hands-on instruction and joint development of this methodology ensures that agency staff will be able to sustain and replicate the approach going forward.

This systematic, risk-based approach is expected to reduce inspection rates at border and inland terminals by as much as 50 percent. Such a reduction will greatly benefit traders as  goods can be released to the market faster, allowing for lower handling, warehousing, and transport costs.

“Before, the goods of our companies were inspected quite frequently and without an apparent systematic approach,” says Ms. Biljana Peeva Gjurik from the Economic Chamber of Macedonia. “We are very pleased to learn that the agencies will now apply a risk-based approach, which will result in fewer inspections and allow companies to move their goods across the border with fewer delays. Their costs will be lower and goods more competitive as a result.”

The new approach will also conserve agency resources. By focusing their efforts on high risk consignments, agency staff will be able to use their limited resources more efficiently. And by conducting fewer laboratory tests, they will be able to cut down on costs.

“In the past, the inspection and sampling were based solely on the experience of the inspector,” says Mr. Colin Gazeley, a project expert. “Now we are helping to introduce a methodological, standardized approach throughout the country. The inspectorate will be able to use their staff resources more effectively and efficiently, reducing agency costs and at the same time facilitating cross-border trade."

Collaborating for Regional Impact

The improvement in inspectorate practices has contributed to a $50 million World Bank development policy loan, the second of its kind for FYR Macedonia. The initiative is part of the IFC’s Western Balkans Trade Logistics Project, which provided technical assistance to the Macedonian Food and Veterinary Agency, State Sanitary and Health, and State Agriculture Inspectorates during the development of the risk-based inspections methodology. Funding was provided by the World Bank’s Macedonia Competitive Industries and Innovation Support Program, which addresses capacity building and investment needs in selected industries, and the global Multi-donor Trust Fund for Competitive Industries and Innovation Program.  

Since 2012, IFC’s Western Balkans Trade Logistics Project has been working to alleviate the regulatory and administrative bottlenecks that hamper regional cross-border trade. During this time, the project has helped to:

  • Introduce an e-payment feature in Albania, enabling traders to pay their customs fees online;
  • Facilitate a transit agreement between Albania and Kosovo for goods entering the Port of Durres;
  • Achieve expanded working hours for technical inspectorates at the three most frequented border crossings between Bosnia and Herzegovina and Croatia, shortening clearance times in the process;
  • Fund the introduction of software that will randomly assign customs officers in Montenegro to declarations and enable online communication with traders; and
  • Provide risk management training to technical inspections agencies from Albania, Macedonia, and Kosovo.

The project aims to improve the competitiveness of the private sector by improving access to regional and global markets. Activities implemented by the project are expected to generate $10 million in private sector savings.

Looking ahead, the Western Balkans Trade Logistics Project is planning to continue its support to Macedonian border inspection agencies in data collection and communication, capacity building, and implementation monitoring. It will use this experience as a way to initiate similar efforts in neighboring countries.