In response to the release of the 10th World Bank Doing Business report, which ranks the business-friendliness of different economies according to a checklist of reforms, CAFOD warns this one-size-fits-all regime is undermining the fight against poverty.
CAFOD’s economist Christina Chang said: “It is not just that some reforms promoted by the Doing Business rankings might be irrelevant for the majority of businesses in developing countries – in some instances they are actively harmful to poor men and women.
“The World Bank’s mandate is to reduce poverty. Yet the rankings skew vital resources away from small and micro-enterprises that account for the majority of jobs in poor countries - jobs that are critical in reducing poverty.
“The Bank has already removed some of the most egregious aspects of these rankings – for example rewarding countries for reducing rights for workers, but the direction of travel remains the same.“
“As a result, we are seeing countries like Zambia devote huge effort to raising themselves up the rankings, despite these reforms providing no benefits for the majority of its poorest citizens."
In this year's rankings, Zambia ranks 12th globally for ease of access to business credit, yet 98% of Zambian small businesses have reported credit as the overriding obstacle to their success. Zambia is also rewarded for a regulatory regime that gives tax breaks to its profitable copper mining sector – even though it is reducing money available to invest in health, education or support for small businesses.
CAFOD believes that Doing Business must do more to progress the Bank towards fulfilling its mandate to reduce poverty. The majority of poor men and women work in small businesses, often sole enterprises, providing around half of GDP and up to 90% of jobs in developing countries, but they gain little or nothing from the approved checklist of Doing Business reforms.
New World Bank President Jim Yong Kim has launched a review into the Doing Business rankings, but as they become increasingly influential in developing countries and in guiding aid spending, their relevance for the Bank's poverty mandate should be a central question in this enquiry.
In a new briefing paper, CAFOD highlights the poor development record of the Doing Business rankings and calls on the review to be an independent and comprehensive overhaul that puts poor men and women first.
To read the full report see: http://www.cafod.org.uk/content/view/line/6869