Doing Business Report blackout woes


. . . Expert says its absence holds back Lesotho economy


MASERU – Exactly a year after suspending its “Doing Business report”, the World Bank Group has taken a bold move by putting a permanent stop on the publication of the document.    This perpetual blackout will be detrimental to Lesotho’s efforts of attracting foreign direct investment which would ensure economic emancipation in the long run.

This is according to the Chief Executive Officer (CEO) of the Private Sector Foundation of Lesotho (PSFL), Thabo Qhesi.  PSFL, a business association registered in Lesotho, is aimed at promoting long-term development of the private sector in the country and sustained dialogue between the government and the private sector.

“This is going to have a huge impact because that report was able to force the government to act on certain areas of the economy. For instance, the previous report helped the country to put more effort and improve its position on access to finance.

“The country was behind all the other members in the SADC region when it comes to issues of access to finance. But the report was able to influence decisions that would be in line with improving on that aspect,” Qhesi said in an interview on Tuesday this week.

The absence of the report, he said, also means that policy makers will not be in a position to make decisions with regards to prioritising key areas to allocate resources.   The report has considerable influence over business regulations in Lesotho, helping the country to gain recognition across the world, as well as providing information that investors are looking at when they think of economic indicators for countries.

“The biggest challenge is that economies will not be able to track progress in the development of building blocks of a good business environment, which is crucial towards increased opportunities for the country,” Qhesi further showed.

The report and rankings are grounded in the notion that smarter business regulation promotes economic growth. This means an effective regulatory environment in Lesotho as well as a sound financial market infrastructure, and straight forward business registration procedures will no longer be well monitored with this abolition, thus affecting potential investor movement.

After data irregularities on “Doing Business” 2018 and 2020 were reported internally in June 2020, the World Bank management paus the next “Doing Business” report and initiated a series of reviews and audits of the report and its methodology.

In addition, because the internal reports raised ethical matters, including the conduct of former board officials as well as current and former bank staff, management reported the allegations to the bank’s appropriate internal accountability measures.   “After reviewing all the information available to date on Doing Business, including the findings of past reviews, audits and the report, the World Bank Group management has taken the decision to discontinue the Doing Business report.

“The World Bank Group remains firmly committed to advancing the role of the private sector in development and providing support to governments to design the regulatory environment that supports this,” the bank said in a statement.  Going forward, the bank stated that it will be working on a new approach to assessing the business and investment climate. In September last year, the World Bank made a rather shocking announcement, suspending the “Doing Business” report, pending investigations into data irregularities.

“Trust in the research of the World Bank Group is vital. The World Bank Group research informs the actions of policymakers, helps countries make better informed decisions and allows stakeholders to measure economic and social improvements more accurately. “Such research has also been a valuable tool for the private sector, civil society, academia, journalists and others, broadening understanding of global issues,” the bank added.

The PSFL is not entirely pleased with the decision, raising concerns that Lesotho may struggle to attract more foreign investment, mainly because the report was used as a benchmark towards which areas of the economy needed to be developed.  This report would collect data on indicators that create a conducive environment for private sector development and attract Foreign Direct Investment into a country.    Over the 17 years of its existence, the Doing Business report has been a valued tool for countries seeking to measure costs of doing business.

Doing Business indicators and methodology are designed with no single country in mind, but rather to help to improve the overall business climate.  In the latest statistics of 2020, Lesotho ranked 122 out of 190 countries with good overall business climate at 59.4 points while Swaziland appeared on position 121 with 59.5 points. Rwanda was the highest ranked African country at position 39 with 76.5 points.

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