Home » Africa Won’t Miss the World Bank’s ‘Doing Business’ Report
Global Politics

Africa Won’t Miss the World Bank’s ‘Doing Business’ Report

Last week, the World Bank Group announced its decision to end publication of the Doing Business report, its flagship annual publication that rates the business environment of countries around the world, after a probe concluded that senior World Bank management pressured staff to alter data affecting the rankings of China and other nations.

After data irregularities on the 2018 and 2020 editions of Doing Business were reported internally, World Bank management paused the report to conduct a series of reviews and audits into the report itself and its methodology. The controversy surrounding Doing Business first became public in 2018, when the World Bank’s then-chief economist, Paul Romer, told The Wall Street Journal that he had concerns about the report’s integrity. Shortly afterward, Romer resigned from his position at the Bank.

The decision to discontinue the Doing Business report comes on the heels of a bombshell report released by the international law firm WilmerHale, commissioned by the bank, specifying how then-World Bank President Jim Yong Kim and his then-deputy Kristalina Georgieva—now managing director of the International Monetary Fund—allegedly played a prominent role in rigging the index to boost the rankings of China, Saudi Arabia, the United Arab Emirates and Azerbaijan.

The World Bank’s announcement that it would discontinue the Doing Business report is, to borrow the famous expression Joe Biden used to describe the Obama administration’s health care reform, a BFD. Not only is the episode a reputational hit for the World Bank, the Doing Business report was arguably the single most influential data point for global investment. International benchmarking—the systematic measurement and comparison among countries against a selected group of indicators—has become a widely popular and influential policymaking instrument, with the World Bank leading the way thanks to its size and scope. Faith in the inerrancy of its data was widespread, with investors, international organizations, global foundations, universities, research institutions and even governments themselves all dependent on World Bank information.

Nowhere was the consequential nature of the report more evident than in Africa, where the post-independence economies of the continent’s many countries remain strongly tethered to the World Bank and other international financial institutions. In the years that followed the “SAP era”—as the period of bank-imposed structural adjustment programs that began in the early 1980s is known—the World Bank and the neoliberal model it champions have played an outsized role in African domestic policymaking. It is no exaggeration to call it the most influential hub of economic thought and practice on the continent. African presidents, prime ministers, heads of central banks as well as finance and trade ministers—many of them World Bank alums—have come to rely on the bank’s information and analysis.

In practice, the Doing Business report, like the World Bank itself, is a deeply ideological project dressed up in the language of technocratic rationalism.

And the bank’s validation is golden, with governments taking particular interest in their country’s ranking on the Ease of Doing Business Index contained in the annual report. The World Bank’s influence on the continent goes far beyond the halls of government. It is embedded in a constellation of forces—including other international organizations, universities, development and aid agencies, international media, private sector organizations and consulting firms like McKinsey and PwC—that combine to serve as the gatekeepers of the boundaries of economic policy.

The World Bank has always posited itself and its products like the Doing Business report as neutral arbiters of “common sense” policies free from political considerations. In practice, the report, like the World Bank itself, is a deeply ideological project dressed up in the language of technocratic rationalism. Its methodology and findings have been a foundational pillar of neoliberalism. And given the atmosphere at the time of the Doing Business report’s introduction in 2003, it cannot be divorced from the complex web of international security and trade interests that drive donor incentives and govern the political economy of development assistance. African countries whose leaders display strong pro-Western leanings and implement policies favored by the World Bank are likely to see a spillover of support in other policy areas of Western interest.

“The Doing Business report was largely based on the ease with which businesses could operate within a country,” Funzani Mtembu, a South African development economist and activist, told me. “If their methodology and data is being questioned, then it makes one wonder to what extent policies informed by such data had an impact on the development and growth of African countries.” Mtembu notes that many African scholars, such as Senegalese economist Demba Moussa Dembele, have long questioned the World Bank’s policy recommendations and interventions.

Yet, the Doing Business report had a near mythical status in African countries, particularly the Ease of Doing Business ranking. During the “Africa Rising” era—from roughly 2000 to 2015, when an optimistic narrative of the continent’s economic prospects dominated—it was commonplace for policymakers in Africa to create teams of advisers and consultants, many of them from the World Bank and other international organizations, dedicated to aligning government policies with Doing Business recommendations and improving their ratings on key Ease of Doing Business indicators. This was a signal to international foreign stakeholders that they were serious about “reform.”

Whether these exercises resulted in changes to behavior in-country always remained open to debate; more often than not, they didn’t. No less a pro-market voice than The Economist noted this discrepancy in 2015. Evidently, many Africans have also noticed.

“My experience is that ease of doing business awareness at the national level leads to a lot of rhetoric aimed at assuaging investor nervousness about certain risks, and in some cases leads to limited reforms, but seldom anything deep enough to change the risks and opportunities for investors looking into a country,” Jamil Toyo, a Nigerian financial services professional, told me. He pointed to examples in Nigeria, whose government has played up its improved ranking on the Ease of Doing Business index between 2016 and 2019, even while the evidence on the ground about an improved business climate remains thin.

There’s a good case to be made for benchmarking exercises, even allowing for the obvious incentive-related problems. There will always be a demand for rankings like the Ease of Doing Business Index from people who want concise but rigorous information. Governments also care a great deal about their perception and how they are ranked internationally, as much scholarship shows. Moreover, many Africans really do want to see many of the reforms the Doing Business report touted, as they genuinely can improve business conditions locally when approached with integrity. “Getting electricity, which is one of the key ease of business indicators, has improved from taking 91 days in 2012 to about 66 days in 2020,” Brian Arinaitwe, a Ugandan economist, told me. In addition, he explained, the key indicators used by the Ease of Doing Business Index “are of paramount interest to the large informal economy in Africa, which is largely dominated by women.”

But these benchmarks can and should be better channeled into more productive ways of influencing behavior changes, particularly in parts of the world like Africa, where the need to improve business conditions are more urgent.

Civil Society Watch 

The war in Ethiopia’s Tigray region has taken a toll on its population, inflaming opinions and amplifying longstanding disputes over regional autonomy. Thousands have died. Hundreds of thousands are at risk of starvation. And yet, the fighting continues, raising fears of ethnic warfare and a full-blown conflict in the Horn of Africa.

Now a group of 24 prominent local civil society organizations has come together to call for a halt to the fighting and for other civil society organizations in Ethiopia “to focus on activities of transforming conflicts as well as engaging in comprehensive peacebuilding and reconciliation efforts.” Representing Ethiopia’s diversity, the participating organizations advocate for a broad array of social issues, ranging from women’s rights and criminal justice reforms to media freedom. So far, they have not publicized any plans actions or engagements as a collective.

Culture Watch

Rashid Diab is a Sudanese artist and painter whose work is steeped in an awareness of his homeland’s cultural heritage. He takes his inspiration from the Nile, the desert, Sudanese women and Arab calligraphy.

In this interview with Arab News, Diab talks about his career, newer projects he is working on and the younger generation of Sudanese artists.

Sources: www.worldpoliticsreview.com