Creating

DEALING WITH LICENSES 19
Not in Sierra Leone. There, municipal inspectors
visit construction sites every week. Benin, Botswana,
Burkina Faso, Egypt, Guinea and Niger have similar
systems. The potential for informal payments is higher
in such systems. “He walks around the site, finds a fault
and looks expectantly. I pay. The next time it is something
else,” says Ignace, a contractor in Sierra Leone.
Update zoning maps periodically
In the Serbian city of Belgrade zoning maps date from
1986. Many areas of the city are still deemed agricultural
land and so unsuitable for offices or warehouses. To
build in such areas, businesses must obtain zoning exemptions
that the municipality decides case by case—
at a cost of $1,025 apiece (figure 3.3). New construction
projects require a location permit or zoning exemption
in 45 other countries as well. Such countries might consider
following the example of Bangkok, which updated
its zoning map in 2002. When applying for a building
permit, a business need only specify the address of its
proposed site. No cost is involved. Reform is under way
in Serbia and Montenegro too. Zoning will be updated
by early 2006.
they rarely are in transition economies. “The [1967]
code asks for a roofing material which is no longer
produced—it previously came from the Soviet Union—
and the fire department does not approve new materials.
You either bribe or use fake receipts with the name
of the approved material,” says Benko, a hotel owner in
Bulgaria. Many roofs are built illegally.
Don’t mandate use of specific materials
Some building codes specify what materials can be used
in construction. Such materials are tested for their safety
and their technical parameters mandated in the code.
This approach works when codes are up-to-date. But
Why reform?
There are four reasons to reform licensing regimes. First,
countries with simpler procedures and less costly regimes
have larger construction sectors. Second, they have
cheaper offices and warehouses for all businesses. Third,
reducing the cost and hassle of obtaining licenses keeps
more businesses in the formal economy, which may improve
safety. Finally, governments can save money with
fewer and simpler licenses and inspections.
With fewer burdens on construction, the sector
expands (figure 3.4). In the United Kingdom the construction
sector accounts for 6.2% of national income.
In Australia, 7.4%. But in Nigeria and Togo construction
generates less than 1% of income. This is not because
there is less construction in Lagos or Lomé, but because
many buildings are constructed illegally.