CAFOD praises World Bank President as independent panel urges bold rethink of ‘Doing Business’

25 June 2013

Staff from a small grocery business in Colombia, one of the countries where CAFOD works.

Staff from a small grocery business in Colombia, one of the countries where CAFOD works.

CAFOD has welcomed the results of the independent review of the World Bank Doing Business project which calls for far-reaching changes to the flagship report. The Catholic aid agency has also applauded World Bank President, Dr Jim Yong Kim for allowing scrutiny of the report, despite pressure from lobbyists.

The report launched yesterday finds that Doing Business is out of kilter with the World Bank’s mandate to reduce poverty, the latest development thinking, and its own stated claims.

CAFOD’s lead economist Christina Chang said: “The panel deserves praise for taking such a clear, fresh look at the report, and President Kim deserves credit for putting the Bank’s flagship publication up for such comprehensive scrutiny.

“After years of working with small and micro enterprises in developing countries, CAFOD knows that helping people to set up and run a business is only half the job. Without a conducive regulatory environment, the odds are stacked against their success and many may never even get off the ground.

“The 2008 financial crisis has shown very clearly that everyone in every country is affected by the regulatory regime in place. The stakes are high and it is vital to have the right guidance for policy-makers in developing countries wishing to provide jobs and a route out of poverty for the poorest men and women.

”It is now vital the panel’s recommendations are taken on board and there is a meaningful and transparent process to decide the next steps.”

The Doing Business report – the World Bank’s highest profile publication - ranks countries’ business regulations and laws across ten key indicators, but the group of experts,  led by former South African Minister of Planning and Finance, Trevor Manuel, found many of these indicators were a poor guide for policy-makers, and of limited relevance to the majority of businesses in many countries.

In the review, the panel recommends the publication should not be scrapped, but renamed, re-homed within the Bank's research department rather than sit with its private sector arm, and that its controversial ranking of countries should be removed.

CAFOD believes the panel is right to call on the Bank to keep the Doing Business report, but make it fit-for-purpose. The aid agency has repeatedly pointed out problems with how countries are scored within the report, what they are scored on, and how results are presented and interpreted. Some indicators are linked with a drive to lower labour standards and corporate taxation rates. These are not ideas that other publications of the Bank endorse, and they should not be in their most influential publication.

This is not the first time that far-reaching reforms to Doing Business have been proposed. In 2008, the World Bank's independent evaluator reached similar conclusions, although little was done to follow it up. This time the Panel raises many questions and recommends further work.

Getting to this point has not been easy, with some lobbyist groups calling the review a “tragedy” and even threatening President Kim with losing support for the Bank, particularly from the US, if he considers big changes to the project.

Christina Chang said: “This project is too important to leave to ideology, but must be based on practical considerations of what works. The only real way forward is an open consultation with a broad range of groups, which wasn’t possible during this first stage of the review.”

CAFOD’s briefing paper What kind of review do we need of the Doing Business rankings? >>>

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