Doing Business is overrated

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The World Bank on Thursday released this year’s instalment of its influential Doing Business ranking, which tracks pro-business reforms in 190 countries, ranging from the ease of starting a business to contract enforcement.

The annual ritual is a calendar highlight for economies that do well, usually resulting in positive media coverage, with governments using it to promote their countries as good places to invest. This year’s top performers from Africa are Togo and Nigeria, climbing 40 and 15 places to 97th and 131st respectively.

It’s a great PR opportunity, but the significance is often overstated, despite well-known problems with the ranking.

For one, it’s superficial.

The number of reforms passed by governments says little about implementation and the wider economic environment – with potentially misleading results. Zimbabwe, for example, has climbed as many places as Nigeria this year, despite seeing its economy basically implode in the last 12 months.

Methodology is also an issue.

In early 2018 the Bank’s then chief economist Paul Romer resigned, following comments suggesting that Chile’s ranking may have been manipulated to embarrass its socialist government. Meanwhile, countries like India may have unfairly benefited from changes in methodology since its launch in 2003.

Doing Business can help gauge policy direction in a given country, but it doesn’t say much about what it’s actually like to do business there.

This report reflects the views of the author alone, not those of How we made it in Africa.


Today’s picks

From the continent

Egypt and Ethiopia have agreed to restart talks aimed at reaching an agreement on operating terms for the $4 billion Grand Renaissance Dam project on Ethiopia’s Blue Nile, following a public diplomatic spat. Tensions over the project, which could see Ethiopia become a major regional power exporter, have stifled its development since construction began in 2011. More: Bloomberg

Large-scale protests broke out in Guinea’s capital, Conakry, on Thursday over plans for a constitutional change that could allow president Alpha Conde, 81, to remain in power in the mineral-rich west African country beyond the current two-term limit. This follows similar protests in mid-October that left at least nine people dead. More: Al Jazeera

The global perspective

The China Development Bank (CBD) is providing a $629 million financing facility for a consortium led by China Harbour Engineering Company to build a new deep sea port in Nigeria’s commercial capital Lagos. Development of the Lekki port project, which has ambitions to become the busiest in west Africa, began in 2011. More: CGTN

Russian state development bank VEB has signed an agreement to build a $2.2 billion oil refinery in northern Morocco, with planned capacity of 200,000 barrels per day. The deal was announced at this week’s first major Russia-Africa summit in Sochi. More: Reuters

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