AFRODAD Welcomes the Discontinuation of the Doing Business Report

September 17, 2021 – Harare, Zimbabwe- The African Forum and Network on Debt and Development
(AFRODAD) welcomes the World Banks discontinuation of its Doing Business Report. AFRODAD has
been one of African Civil Society Organisations which have been calling upon the World Bank’s board of
executive directors to end the publication of the World Bank’s Doing Business Report. The publication of
this report has been the focus of longstanding and well-substantiated criticisms, including from academics,
legal experts, civil society organisations and trade unions. These criticisms have been raised on several
grounds, including methodology, data selection and scope, questionable robustness of the aggregate
rankings, and its anti-regulation bias.

After 17 years driving economic policy and regulatory reforms including corporate income tax cuts and the
reduction of worker rights and social protection benefits, the World Bank finally suspended its harmful
business climate ranking. For too long, the Doing Business Report has encouraged policies that have
worsened inequalities – including deregulations which exacerbated the global gender and racial division of
labour, eroded labour protections and domestic resource mobilisation capacity, suppressed domestic
aggregate demand and economic diversification and thus strained the legitimacy of state institutions.

The Doing Business Report agenda has had an intrinsic correlation to jeopardising the achievement of
some SDGs goals and respective targets in that it was focussed more on the costs of doing business than
“the benefits of running a society as it failed to consider social or environmental impacts. Moreso, for the
DBR, it did not matter if reducing regulations harmed the environment or employment conditions, or if
lowering taxes constrained governmental capacity to fund public investment and provide decent public
health or social protection for as long as such reforms lowered the costs of doing business. This agenda
thereby encouraged harmful tax competition and races to the bottom regarding the protection of the
environment and labour rights.

The DBR also promoted a race to the bottom that had limited positive results in that it led governments to
seek improvements in their country’s DBR ranking believing that these would increase growth through
increased investment, especially foreign direct investment (FDI). However, evidence noted otherwise as
a World Bank Policy Research Working Paper found that countries that undertook large-scale reforms as
compared to other countries did not necessarily attract greater FDI inflows. For developing countries such
as those in Africa, the report noted a limited statistical relationship between FDI flows and implementing
ease of doing business policy regulations. As such, we applaud this discontinuation because the DBR’s
ranking competition was encouraging debilitating investor-friendly government behaviour whereby the DBR
had become a tool for governments to formulate, evaluate and legitimize their economic policies through
development and pronouncement of cosmetic reforms. “The discontinuation of the DBR comes at an
opportune time where the African continent seeks equality in the governance on the global status quo. The
reality of opening up African economies at the expense of financing the continents’ transformational agenda has been evidenced with poor social development outcomes and it is time for African leaders to own and
defend the continents’ sovereignty and broad-based economic development” Adrian Chikowore,
International Public Finance, AFRODAD. Moreso, as the African continent has been struggling to respond
to and recover from the health and economic crises triggered by the Covid-19 pandemic, the consequences
of the deregulatory race-to-the-bottom incentivised by the DBR and its world rankings had become painfully
evident.

Moving forward, we believe that the discontinuation of the report is just but one of the few progressive steps
towards a just recovery that still requires that the world addresses key weak aspects of the development
trajectory that the bank was promoting. The development trajectory was centred on economic analyses that
contributed to the lack of preparedness of policymakers through promoting wrong notions of resilience that
focused on doing business and foreign investors, rather than good jobs and income security – with an
attendant narrowing of the aims and objectives of economic policy.”

“The discontinuation if the DBR is testament the operation of global finance, debt, and economic
architecture is not fit for needs for Africa’s structural transformation under Agenda 2063. Policies informed
by approaches and methodologies aimed at benefitting wealthy countries and multinational corporations
has been the order of the day at the expense of African economies.” Jason Braganza, Executive Directors,
AFRODAD.

As highlighted in AFRODAD’s Harare Declaration Observation 8 and AFRODAD’s African Borrowing
Charter on responsible lending policies, we recommend that the World Bank through a reformed and
equality based global financial architecture keeps concentrating on its original mandate of intermediating
finance at the lowest possible cost for sustainable development, relief and recovery in trying times such as
COVID-19.

Author: Adrian Chikowore – International Public Finance