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WCO Research Conference on Performance Measurement

07 March 2012

WCO Research Conference on Performance Measurement

Algiers, 5 March 2012

Opening Speech by Kunio Mikuriya, Secretary General of the WCO

Mr. Djoudi, Minister of Finance,

Your Excellencies,

Ladies and Gentlemen,

It is my great honour to open this Research Conference on Performance Measurement and Measurement in Administrations here in Algiers. It is indeed a pleasure for me to be in this beautiful country with such hospitable people, particularly in this festive year in which you are celebrating 50 years of independence. This is a country of rich cultural and environmental heritage, with good natural harbours and stunning oases in the Sahara Desert. This was beautifully captured by this photograph of Customs officers working in the desert – a photo which won the 2011 WCO Photo Competition, and which reminds us of the importance of trade and the role of Customs that connects people and culture across the borders. For our part, the WCO is celebrating its 60th anniversary by promoting the theme “Connectivity”, and I have chosen this photo to symbolize this theme throughout this year.

I would like to begin by expressing my great appreciation to Mr. Mohamed Abdou Bouderbala, the Director General of Algerian Customs, for his determination in modernizing Customs following a policy which fits perfectly with WCO standards and programmes. His recent initiatives are enhancing the professionalism of Customs officials and intensifying partnership with the private sector to facilitate trade. Finally, and more specifically to the event which concerns us here today, the Director General and his staff have done an outstanding job in hosting this Conference as they have understood its full relevance to their reform process.

I also want to express my gratitude to all the sponsors for this Conference. Without their contribution, this Conference would not have been possible, and many of us would not have been able to attend. Thus, I would like to personally thank the Customs administrations of Algeria, France and Korea, as well as lending institutions such as the World Bank, the Islamic Development Bank and the Swedish International Development Co-operation Agency, for their support.

I would also like to thank everyone for attending from each of the 6 WCO regions. This diversity shows the strong interest from both practitioners and researchers on the specific topic of measurement. This demonstrates the high potential of measurement and its uses in the area of Customs. I am extremely pleased by the fact that many disciplines are represented, such as sociology, anthropology, economics and political science.

As Customs in the 21st Century moves towards knowledge-based professionalism, I strongly believe that it is our responsibility to develop empirical research in strong partnership with researchers to improve the performance of Customs.

In this context, I am very pleased to learn that Algerian Customs has concluded a partnership agreement with the Centre de Recherche en Economie Appliquée pour le Développement, or CREAD, a national centre specializing in economics. I congratulate both the head of CREAD and Mr. Bouderbala for this original and fruitful initiative that we will promote within the international Customs community. Yesterday I also visited the Ecole Supérieure Algérienne des Affaires or ESAA, a business school which plans to develop a specialist Master’s programme in Customs, and I was pleased to see a lot of potential for the future.


Measurement

The central idea of this Conference is that “experiments”, using “measurement,” “data mining,” and “quantitative analysis”, could be helpful in formulating and implementing reform and modernization policies in Customs and tax authorities.

There are a number of strategic reasons for the importance of measurement in the Customs realm. Firstly, measurement enables Customs to identify bottlenecks in border procedures which will also provide the baseline data to measure the effects and improvements generated by reform. The best-known example in the Customs world is the measurement of time needed for clearance. The World Bank has the “Doing Business” and “Logistic Performance” indicators in this respect and both methods enable comparison of clearance time, based on the perception of trade.

The WCO Time Release Study Guide is a fact-based tool that helps Customs to collect objective and quantitative information on each clearance step and thus to measure the efficiency of Customs, other border agencies and service providers. The WCO recommends that all stakeholders get together to draw up an action plan for each responsible party to improve performance. This method is widely recognized as a powerful tool to facilitate trade and investment and thereby enhance the competitiveness of a country. I would like to add that, at a time when the African Union is hoping to boost intra-African trade, the WCO revised its Guide last year to enable measurement of the efficiency of a trade corridor from a transit country to a land-locked country. An operation of this kind is currently underway in East Africa.

Secondly, measurement enables Customs to apply scarce resources to the high end of the risk continuum.

Customs are best positioned to identify and handle the evolving and emerging risks at borders. The recent WCO Policy Commission discussed the five areas of risk for enforcement, namely, revenue, drug trafficking, counterfeiting, piracy and other risks of health and safety, security and the environment. With the introduction of information and communication technology, Customs should be able to collect data in an efficient manner. Data management to detect and analyse risks has become the major task of Customs in the 21st Century. This Conference will showcase several concrete examples illustrating the full potential of measurement in this area.

Improved management of resources is not dependent solely on risk management. Measurement also helps decisions in developing strategies for deployment in the field. Many administrations are developing strategic plans with measurable indicators on tasks to be carried out and on the expected outcomes. The recent session of the WCO Capacity Building Committee discussed performance measurement, using the example of French Customs. The presence of a representative of French Customs at this Conference will allow us to deepen the evaluation of this approach. One challenge is the difference between the output of resource allocation and its impact on policy objectives. Some administrations have gone further in concluding Performance Contracts with the government with measurable performance indicators.

Thirdly, measurement also enables Customs to break down the asymmetry of information between the Director General and frontline officers. This is a typical case of principal agent model. Hence the Director General can ensure effective Customs operations and, through simplified procedures, can reduce opportunities for unnecessary interaction between Customs officials and the business sector, and thereby reduce opportunities for corruption.

In this connection, the Performance Contracts experiment between the Director General of Cameroon Customs and its frontline officers has been a great success. Cameroon Customs has raised its revenue collection, it has improved trade facilitation, and it has reduced corruption. This approach to modernization is now being introduced in other countries.

Fourthly, measurement helps Customs administrations to communicate progress and the results of reform more effectively both internally and outside the administration. Internal communication, supported by concrete results, is a powerful tool for motivating Customs officials, and external communication can obtain support from the government and business sector which can lead to backing for and co-operation in Customs modernization. As we all know, in the realm of development assistance and capacity building, experiments using measurement have gained momentum in recent years. This is explained in part by the fact that donors are asking for an impact assessment to be carried out as a condition for development assistance.

This was a key element in the Paris Declaration on Aid Effectiveness of 2005 which called for “measurable results.” During the 3rd Aid-for-Trade Global Review that took place in the WTO last July, the effective measurement of Aid for Trade was extensively discussed, this being a complex topic. In this connection, it was encouraging for me to hear the President of the World Bank quoting the Cameroon Performance Contract experiment as one concrete example of a success story in measurable results. The political and technical leaders of Cameroon Customs deserve all the credit. And I am very pleased that several representatives from Cameroon Customs will be presenting their research at this Conference.

Qualitative approaches are also helpful

Of course, measurement needs a focused and relevant dataset, meaning that we must guard against information overload. The Cameroon performance contracts have for instance focused on just 8 performance indicators. These indicators therefore have a real value. It is a well-known fact that a chosen measure must be valid, reliable and appropriately sensitive for impact assessments to be credible. Otherwise it can produce misleading estimates.

Measurement is of course not the only effective approach improving the collection and analysis of information. Qualitative information, if sufficiently robust, can also provide a deeper understanding of reality. And by this I mean that comprehensive interviews with stakeholders who are willing to provide useful and accurate information can greatly enhance quantitative information.

Conclusion

In conclusion, I am looking forward to the outcomes and conclusions of this Conference. We will all learn a lot, and I am confident the results will help us to envisage better solutions for reforming and modernizing Customs and tax administrations.