The institution will first investigate irregularities in the data aimed at favoring several countries. Time for Africa to take a step back?

This is a first: the publication of the World Bank's “Doing Business” report has been suspended following “irregularities” . It was the Bretton Woods institution itself which made the announcement in a press release published on Thursday August 27: “A number of irregularities have been reported concerning changes made to the data of the Doing Business 2018 and Doing Business 2020, which were released in 2017 and 2019 respectively. These changes were not consistent with the Doing Business methodology. Launched in 2002, the annual Doing Business report has become an influential indicator for assessing the business environment and the relative competitiveness of countries.

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“Doing Business” an influential indicator

Indeed, in recent years, many states on the continent have taken up this document to carry out several key reforms. Its annual publication has also made this indicator a motivating factor for governments. A country that rises in the ranking tends to stimulate foreign direct investment. In 2019, 294 reforms were implemented in one year around the world to improve the business climate. And the African continent was not left out. Over the past ten years, sub-Saharan Africa has even become the most reforming region in the world . "An entrepreneur can register a company in 20 days or less in 26 of the 48 sub-Saharan economies, whereas ten years ago this was only possible in three countries", highlighted the World Bank in its previous edition. "This is a huge admission by the World Bank with far-reaching implications," said January Makamba, a member of parliament and former deputy minister in Tanzania . "Many of the policy recommendations and prescriptions, and judgments on the direction of FDI...in developing countries have been based on this report," he tweeted .

“Why am I not surprised by this admission”, replies a Tanzanian Internet user, before concluding “it is high time that they suspend the report”. Some African governments immediately went to the front, such as Senegal . “In 2013, the government of Senegal drew the World Bank 's attention to data validation procedures. Senegal had asked the question of properly re-auditing the reform validation processes,” said Lamine Bâ, Director of the Business Environment at the Agency for the Promotion of Investments and Major Works (Apix) in Senegal. Responding to questions from our colleagues from IGFM , he wanted to reassure by saying that “States do not make reforms for classification purposes”. “We are making reforms to make life easier for businesses in Senegal in order to create more added value and jobs,” he says. Senegal is one of the most attractive countries in sub-Saharan Africa for investors. A position that continues to improve under the impetus of Apix, an ad hoc structure responsible precisely for supervising investments and which has enabled it to increase its rank in the World Bank ranking.

Irregularities in two of the most recent reports

But no African country is affected by these new “irregularities”. Officially, the four countries most affected by irregularities in the 2020 and 2018 reports are China , Saudi Arabia, the United Arab Emirates and Azerbaijan, the World Bank said. For example, five years ago China ranked 90th in the report, last year the Middle Kingdom moved up to 31st. If confirmed, the revised data could affect the ranking of these countries.

This is not the first time that the World Bank 's flagship publication has found itself at the center of suspicion. In June, the Bretton Woods institution appointed Carmen Reinhart as its new chief economist. His two predecessors, Penelope Koujianou Goldberg and Paul Romer, resigned in less than two years in office.

Even more concerning, in 2018, Paul Romer, said that the data in the report was susceptible to manipulation. He specifically alleged that the data for Chile appeared to have been manipulated to drag the country down the rankings (demoted from 44th to 55th place) and show a deteriorating business environment while the country was under socialist rule. Michelle Bachelet between 2014 and 2017. Paul Romer resigned after denouncing the political motivations behind the ranking changes. His allegations had caused an uproar internally and in Chile. An audit was immediately carried out, highlighting a change in methodology. “The changes over time in the Doing Business rankings are not particularly significant. They largely reflect changes in methodology and samples – which the World Bank makes every year, without correcting past figures – and not changes in the reality on the ground,” explained researchers from the Center for Global Development in February 2018 in an article titled “The Power of Ranking: The Doing Business Indicator and Global Regulatory Behaviour” .

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A tarnished reputation?

To avoid any controversy, the institution will carry out a thorough review of the data on the last five reports and will conduct an independent audit to verify the process of collecting and reviewing the data. This is to ensure data integrity. “We will act on the results and retrospectively correct the data of the countries most affected by the irregularities,” the World Bank said. The Board of Executive Directors of the World Bank has been informed of the situation, as have the authorities of the countries most affected by the data irregularities. The suspension of publication will remain in effect for the duration of the evaluation, the World Bank said, without specifying the duration.

For years, Doing Business has generated deep conflicts of interest. For Carlos Lopes, professor of economics at the University of Cape Town and former head of the United Nations Economic Commission for Africa , data integrity is not the only problem. Interviewed by the Wall Street Journal, he explains how global investors' focus on the World Bank index has encouraged countries to "prioritize creating low-tax, low-regulation environments, sometimes to the detriment of macroeconomic considerations”. “It puts countries in a kind of race to the bottom against the hope that they will be rewarded with more FDI when in fact what matters most to investors is stability, predictability and clarity. regulations,” he added. On the continent, the latest report, released last year , ranked Togo and Nigeria among the 10 countries that had made the most progress and accounted for "one-fifth of all recorded reforms globally". There are no reports that the scores for either country have been tampered with. In the report, only two sub-Saharan economies, Mauritius and Rwanda, ranked among the top 50.

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