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The World Bank’s inaugural Business Ready (B-Ready), 2024 report finds that implementation gaps are hindering the business climate in 50 economies and provides a roadmap for change, reports JOSEPH INOKOTONG.
NIGERIA has been instituting measures to enhance The Ease of Doing Business (EoDB) index,a ranking system established by the World Bank Group. In the EODB index, ‘higher rankings’ – a lower numerical value – indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
The ease of doing business index was created jointly by Simeon Djankov, Michael Klein, and Caralee McLiesh, three leading economists at the World Bank Group, following the release of the World Development Report 2002.
According to the World Bank annual ratings, Nigeria is ranked 131 among 190 economies in the ease of doing business. The rank of Nigeria improved to 131 in 2019 from 146 in 2018.
Over the years, the country has made tremendous and steady improvements in its ranking. According to the World Bank’s annual ratings, Nigeria was ranked 131 in 2019 from 146 in 2018 among 190 economies in the ease of doing business. Ease of Doing Business in Nigeria averaged 143.92 from 2008 until 2019, reaching an all-time high of 170.00 in 2014 and a record low of 120.00 in 2008.
However, as the country moves to improve its position on the ladder, a new ranking methodology, Business Ready (B-Ready), has evolved.
Business Ready (B- Ready) is a new World Bank Group corporate flagship report that evaluates the business and investment climate. It replaces and improves upon the Doing Business project. B- Ready provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment.
The 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centres on 10 topics essential for private sector development that correspond to various stages of a firm’s life cycle. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B- Ready draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.
A vibrant private sector is central to efforts to end extreme poverty and boost shared prosperity on a livable planet. When it functions well, the private sector sparks innovation and entrepreneurship, and can unlock economic opportunities for people who need them the most. It can drive more efficient and sustainable use of natural resources.
According to the World Bank, today, the private sector generates about 90 percent of jobs, 75 percent of investment, more than 70 percent of output, and more than 80 percent of government revenues in developing economies. But it has stalled since the global financial crisis of 2008 -09. Private investment in these economies has slowed substantially. It projected that per capita investment growth between 2023 and 2024 to average only 3.7 percent, barely half the rate of the previous two decades.
The private sector, the Bank noted, must become more dynamic and resilient to meet formidable development challenges, stressing that in the coming decade alone, the world must create jobs for 44 million young people each year, 30 percent of them in Africa.
To end extreme poverty within a decade, the Bank stated that most low-income economies will need to achieve a gross domestic product (GDP) per capita growth of about nine percent every year. And to escape the “middle-income trap,” developing economies will need a GDP per capita growth of more than five percent per year over extended periods. To tackle climate change and achieve other key global development goals by 2030, they need to secure a hefty increase in investment – about $2.4 trillion per year.
The World Bank highlighted these challenges are far beyond the capacity of governments to tackle alone. Any viable plan for overcoming them will depend on a particular type of private sector development, one that mobilises private capital and maximises the benefits for businesses, entrepreneurs, workers, and society as a whole.
“That requires answering some critical questions. What exactly are the elements of a business climate that can deliver such benefits? Which economies have done best at creating that climate, and how can others learn from them? Which policies must be introduced or ramped up? Which should be phased out? This report is designed to help economies answer those questions. It is the first of an annual series that will assess the business climate of a successively larger number of economies over the next three years, reaching worldwide coverage by 2026. Until then, its design and methodology will evolve by lessons learned from each rollout year,” the World Bank stated.
Business Ready (B- Ready) is the World Bank Group’s new data collection and analysis project to assess the business and investment climate worldwide, accompanied by an annual corporate flagship report. It is a key instrument of the World Bank Group’s new strategy to facilitate private investment, generate employment, and improve productivity to help economies accelerate development in inclusive and sustainable ways.
It replaces and improves upon the World Bank Group’s earlier Doing Business project, and reflects a more balanced and transparent approach toward evaluating an economy’s business and investment climate, building on recommendations from hundreds of experts from within and outside the World Bank Group, including from governments, the private sector, and civil society organizations.
The Bank said B- Ready will provide a quantitative business environment assessment with an annual frequency and worldwide coverage. “The project aims to balance de jure and de facto measures, ensuring that the data produced are both comparable across economies and representative within each economy,” it stated.
The senior management of the World Bank Group on September 16, 2021, decided to discontinue the Doing Business report and data collection. It also announced the development of a new approach for assessing the business and investment climate: the Business Ready (B- Ready) project. This new project draws on advice from experts in the World Bank Group and recommendations from qualified academics and practitioners outside the institution, including the External Panel Review on Doing Business methodology, World Bank 2021, as well as feedback from an extensive consultation process with potential users in government, the private sector, and civil society.
While the Doing Business project focused on assessing the business environment for small and medium enterprises, the B- Ready project targets private sector development as a whole. Doing Business centered on the regulatory burden for firms, with some attention to public services. In contrast, B- Ready evaluates the regulatory burden and the quality of regulations and provision of related public services, along with the ease of compliance with the regulatory framework and the effective use of public services directly relevant to firms. All topics examined by B- Readyare structured under three pillars: Regulatory Framework, Public Services, and Operational Efficiency.
Furthermore, the new project assesses not only the ability to conduct business for individual firms, firm flexibility, but also the inclusive and sustainable aspects of private sector development, social benefits. The Bank said B- Ready uses 21 questionnaires to gather data, compared with 11 questionnaires used by Doing Business. In its first year, it collected data on almost 1,200 indicators, from about 2,000 data points per economy. It also covers all major topics related to a firm’s life cycle, stressing that Doing Business sometimes omits critical areas such as labour.
“Doing Business collected data through expert consultations and extensive case studies with strict assumptions, covering either de jure or de facto regulations, but not both uniformly. In contrast, B- Ready combines expert consultations, firm surveys to capture a balanced view of de jure, and de facto aspects. This allows B- Ready to achieve a better balance between data comparability across economies,” the Bank further explained.
It stated that Doing Business assessed economies’ performance based on rankings and scores, focusing on aggregate rankings to drive public interest and motivate reforms, while B- Ready uses quantifiable disaggregated indicators, aggregating points into scores by topic and pillar. This approach, the Bank noted, identifies specific areas for reform and encourages reforms without overhyping economy-wide rankings.
“While Doing Business covered the main business city in 191 economies and the second-largest business city in 11 economies, B- Ready aims for wide coverage within and across economies, with coverage for different topics based on whether regulations are national or local. Like Doing Business, B- Ready updates yearly data for indicators based on expert consultations. For data derived from firm-level surveys, it updates for different sets of economies each year, resulting in stable data for each economy over a three-year cycle,” the Bank further explained.
The World Bank said B- Ready assessments aim to improve the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. It aims to achieve this objective by focusing on three main areas: Reform advocacy; Policy guidance; Analysis and research.
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