Research note by Camilla Adelle
Poor quality regulation can impede innovation and stifle competition in any country but is a particular challenge in developing countries. Regulatory Impact Assessment (RIA) is about embedding good regulatory governance into the rule producing machinery of government in order to improve the quality of decision making. RIA introduces a systemized process or tool for making policy, including a way of institutionalizing stakeholder participation. However, despite some notable efforts to establish RIA in a number of developing countries over a decade or more, RIA appears to be failing to take root.
An article published in Public Money and Management presents a state of the art picture of the challenges facing the practice of RIA in these countries. The discussion is based on the findings of a practitioner workshop on ‘The Challenges and Opportunities of Regulatory Impact Assessment in Developing Countries’ held on 7-8 April 2014 at the Centre for the Study of Governance Innovation at the University of Pretoria, South Africa.
- Camilla Adelle, Donald Macrae, Andreja Marusic & Faisal Naru (2015). New development: Regulatory impact assessment in developing countries—tales from the road to good governance, Public Money & Management, Volume 35, Issue 3, pp. 233-238
Key Challenges of RIA
RIA in developing countries is severely hampered by a lack of financial and human resources as well as a high turnover and low motivation of technical staff. While to some extent capacity issues can be addressed through carefully planned and executed internationally funded projects, these issues tend to resurface when the period of funding comes to an end.
Another challenge is the marked lack of available data for developing countries with which to assess potential impacts. Further, there are challenges associated with creating ownership of RIA and over coming the institutional norms and behaviours that RIA seeks to replace. RIA brings with it a new set of institutions and incentives, heightened levels of transparency, and can ultimately change the power relations between actors leading to fears from both politicians and policy makers that they will lose control over decision making.
Linking RIA to the wider policy making process and planning procedures is also a major challenge in developing countries. There is a tendency for RIA to become separate from the policy making process, especially if it is carried out late or if the policy direction has already been chosen. Weak policy planning can also severely limit the ability of stakeholders, both internal and external to government, from contributing to RIAs.
Finally, the duration and complexity of developing and sustaining RIA systems over many years and even decades is not always (or often) reflected in the time frames of regulatory reform programmes or supporting international funding.
The Pretoria Principles
So what can be done to overcome these challenges and establish RIA systems in developing countries that are appropriate, effective and sustainable? The article proposes the following principles for promoting RIA in developing countries:
- Clarify what is to be achieved by RIA. Is the objective to make sure that the costs outweigh the benefits? If so, detailed CBA is needed. However, the article argues that more fundamental questions are whether regulation is necessary and if the proposed policy is going to work. In this case the focus needs to be on identifying and assessing the appropriate impacts and testing assumptions.
- Manage expectations from the outset. There has been a tendency to ‘oversell’ the potential outcomes of RIA as well as when these will be achieved. RIA will not work perfectly or radically change policy making decisions on every occasion. It is a cumulative learning process.
- Create a demand for RIA. Momentum should be built through champions, platforms and incentives at all levels both inside and outside government to create a demand for RIA.
- Target capacity building through ‘learning by doing’. It is important to raise awareness and conduct training, both at the outset and then continuously, in particular by helping officials apply RIA to real life proposed legislation.
- Focus on institution building. Efforts must be made to build strong institutions to provide oversight, scrutiny, challenge, support and guidance for RIA long after the initial programme to establish RIA has ended.
- Activate key stakeholders. This is necessary not just in government but also in the private sector, civil society, media, and parliament. Similarly the results of RIA should be communicated to bring about an awareness of the benefits and potential savings made by RIA.
- Keep RIA methodology simple and apply it flexibly. CBA should be an occasional tool rather than the central component of RIA in developing countries. Complex quantification techniques do not need to be included in the design of RIA methodologies, at least in the first instance.
- Monitor, evaluate and refine RIA. RIA is often put in place without performance measurement systems that can demonstrate the benefits of RIA or identify areas of improving the RIA process. Measuring performance also provides an incentive for greater compliance by regulators with the RIA requirements.
- Improve collection and access to data. Until national statistical databases are improved, regulators should collect, keep and make publicly available the data they use in developing policies.
Although the challenges facing RIA in developing countries may not be substantially different from those facing developed countries, they are often of a different order of magnitude. Furthermore their solutions need to be construed within the very different and diverse contexts of developing countries. However, there is limited literature on the experiences of RIA in developing countries. The article argues, therefore, that a much more deliberate and concentrated research focus on the practice of RIA in developing countries is needed.
 This workshop was attended by 28 RIA experts and practitioners from around the world who considered the state of play of RIA in 17 developing countries, namely: South Africa, Kenya, Botswana, Egypt, Uganda, Ghana, Mexico, Ecuador, Columbia, Chile, Brazil, Mongolia, Nigeria, Guyana, Malaysia, Viet Nam and Indonesia.
Camilla Adelle holds a PhD in European Union environmental policy and has a particular interest in the international or the ‘external’ dimensionof the EU’s pursuit of sustainable development, especially in Africa. Camilla is also interested in policy coordination and integration and has considerable research experience in the governance aspects of policy level (regulatory) impact assessment.