Why Africa will no longer be last ranking in the World Bank's Doing Business report?
On September 16, 2021, the World Bank announced that it would not continue the annual publication its “Ease of Doing Business” report. This ranking, which covered 190 countries, was published each year from 2002 to 2020, and Africa, in particular French-speaking Africa, did not particularly shine.
The Doing Business ranking
The purpose of the Doing Business index was to set a comparison between the world countries based on the ease of doing business, by assessing if the regulatory environment was favorable. To draft this ranking, the World Bank relied on the opinions of public authorities, academics, practitioners and observers. It assessed different criteria such as processes to start a business or to obtain building permits, connection to electricity, transfer of ownership, financial loans and facilities, protection of minority investors, paying taxes and levies, cross-border trade, contract enforcement and insolvency settlement.
The Doing business ranking has long been a reference for investors or entrepreneurs, with a real persuasive or dissuasive effect for project leaders. It had a significant impact on the countries’ image and was eagerly awaited, taken up by the national and international press, and, thanks to the publicity from which it benefited, pushed the States to adopt reforms aimed at improving the business climate in their countries.
Africa and the Doing Business ranking
If Singapore, New Zealand or the United States could be found in the top ten, Africa did not shine in the Doing Business rankings. For instance, in the 2015 edition, which covered 189 countries, 44 African countries (out of 53) were after the 100th rank. However, some countries, such as South Africa and Rwanda, which respectively held the 43rd and 46th rank, were in a good position. Others such as Tunisia, Ghana, Morocco or Bostwana were found between the 60th and the 100th ranks. But so-called French-speaking sub-Saharan Africa was at the very bottom of the ranking, appearing for the first time at the 144th rank with Gabon. It was followed, among others, by Mali (146th), Cameroon (158th), the 3 last countries being Central African Republic, Libya and Eritrea.
Different reasons can explain Africa's low ranking: political instability since independence, fragile institutions and a rule of law that is difficult to guarantee, and as a result an environment marked by corruption. The legal tradition inspired by French law, often considered as more bureaucratic and less flexible than that of Common Law countries, can also be an explanation for French-speaking African countries.
It should however be noted that in the last edition, issued in 2020, Togo jumped 40 places, from 137th to 97th (149th in 2015). This progression can be explained by five successful reforms to improve the business climate, in particular the facilitation of business creation procedures or the reduction of costs and delays in obtaining building permits.
In this last ranking of 2020, the trend was also up for other countries: Côte d'Ivoire was at the 110th rank (compared to 146th in 2015) and Senegal at the 123rd (compared to 161st in 2015).
The discontinuation of the Doing Business report
On September 16, 2021, the World Bank announced the discontinuation of the publication of the “Doing Business” report, following an independent investigation which revealed irregularities in the preparation of the report. This study finds that countries, including China, have (successfully) lobbied to improve their position in the rankings. This report also revealed that the World Bank provided paid advice to states to improve their rankings, which had the effect of making it both judge and jury. The independence of the World Bank was thus strongly called into question.
Is the discontinuation of the report a loss or an opportunity for Africa?
As we have seen, the Doing Business ranking had the positive effect to encourage African countries to adopt reforms improving the business climate, and some which had initiated reform processes may have been disappointed to be stopped on such a good path. However, one can wonder about the effective implementation of these reforms: indeed, under these conditions, the temptation can be great to adopt laws to progress in the classification, without ensuring that they are properly understood and implemented by institutional and economic actors. Furthermore, the ranking was based on an ultra-liberal economic model: a pause in the race for better ranks could be seen by African countries as an opportunity to carry out a fundamental reflection on the economic and legal model that will favor reducing poverty and increasing opportunities for youth, two issues that remain crucial for the continent.
