Inspectors at Colombia’s National Food and Drug Surveillance Institute, Invima, were physically inspecting 100% of food and beverages arriving at the country’s borders and wanted to increase their scrutiny of medicines and medical devices. Physical inspections are a vital part of Invima’s role in ensuring essential goods are safe for the public, but they are also time-consuming and costly for Invima and businesses who need to keep goods moving, particularly those companies trading perishable products.
WHAT WE DID
We worked with Invima and business to introduce a risk management system (RMS), IVC SOA Puertos®, that can facilitate trade while protecting public health.
The RMS uses mathematical methods to assess the risk level of imports and exports arriving at the border and tell Invima inspectors whether a documentary or physical inspection is necessary. It does this by developing risk profiles over time based on factors such as the shipment’s country of origin, manufacturer’s and trader’s track records of compliance and any health alerts.
Businesses who play by the rules benefit. Over time, compliant businesses can expect to see a reduction in physical inspections of their goods as the model ‘learns’ of their compliance. The system also supports the traceability of goods.
In its first 18 months of operation, the RMS for food and beverages has delivered results for the government and business.
- Invima cut its average rate of physical inspections of food and beverages by 30% – from 100% to 70%. At some border crossings the rate has been cut to just 37%. Invima inspectors can now focus their resources on high-risk shipments and work more efficiently without jeopardising safety or security.
- Goods that only require a documentation inspection can be cleared by Invima in just three hours, compared to the up to two days (16 working hours) needed for physical inspection.
- The system is making trade more cost-effective for companies. When goods are physically inspected, traders must pay for container handling and storage and could face demurrage and detention fees. A container that undergoes only a documentary inspection by Invima costs on average US$ 379 less to move than a container that is physically inspected – that adds up to US$ 8.8M in savings in 18 months for importers alone.
When trade is simpler, faster and more cost-effective, more trade happens, unlocking inclusive economic growth that can benefit government, business and consumers.
It is expected that customs revenues will increase over time thanks to efficiency gains and higher trade volumes. The benefits for traders could be even greater than the results show if predictability and fewer delays mean they can better retain customers. In the longer term, these cost savings can be passed on to consumers.
The project’s impact goes beyond just the results. Both Invima and business have found the open public-private dialogue that underpinned the project has helped to build trust and understanding between the two sectors, that can potentially facilitate future reforms.
VALUE FOR MONEY
The project demonstrated how governments, aid organisations and businesses can work together to get more done, faster and with better value for the public purse.
The project was designed and delivered with business efficiency – it took just one year to assess the functional and technical gaps, propose recommendations, pilot the system, and scale it up to 13 points of entry. Business has worked alongside Invima, contributing its resources and expertise in-kind to the value of almost USD 1 for every USD 1 in the donor-funded budget. Overall the project has delivered approximately USD 29 of savings to business for every USD 1 of investment.