By Hussein Wahib
International Consultant in Investment and Private Sector Development
Introduction
In October, the World Bank Group announced the release of its new report on business environment and private sector development, titled B-Ready. This article aims to highlight the key features of the B-Ready report compared to its predecessor by addressing a fundamental question: To what extent can such reports incentivize countries to implement genuine reforms, particularly concerning small and medium-sized enterprises (SMEs)?
The article explores three main themes: The first section seeks to clarify the concept of the business environment and private sector development. The second section focuses on comparing the main features of the B-Ready report with the Doing Business report. The third and final section examines some indicators that may make the new report an effective tool for promoting reforms that strengthen SMEs.
How Does the B-READY Report Define the Business Environment?
A key concept frequently mentioned in World Bank literature when discussing the private sector and its role in economic development is the « business environment. » By analyzing various documents issued by the bank within the framework of the new Business Ready report, the following definition emerges. The World Bank defines the business environment as:
« A set of conditions outside a company’s control that significantly influence its behavior and performance throughout its lifecycle—from inception to growth, development, and potential closure or liquidation. These conditions can be broad, ranging from macroeconomic policies to microeconomic regulations at the company level. »
This definition highlights that the factors beyond a company’s control are extensive, encompassing various economic, political, social, and cultural aspects, such as infrastructure, public financial policies, governance, and institutional integrity. Naturally, documenting all these components in a single report using a precise scientific methodology presents a major challenge. Moreover, collecting data on these aspects can be complex and unproductive if the goal is to compare each country’s progress in a specific domain.
For this reason, the World Bank distinguishes the B-Ready report’s approach to the business environment from the broader concept by focusing on two key elements:
- Scope of the Report:
The report primarily examines the legal and regulatory framework and the provision of public services that impact companies directly. Unlike macroeconomic policies concerning national economic conditions, accountability, anti-corruption efforts, or human capital, B-Ready specifically assesses policies that affect businesses at a more direct level. - Core Pillars of the Report:
The report is built upon three fundamental pillars:- Legal and Regulatory Framework: This includes procedures that businesses must follow throughout their lifecycle, such as company formation, tax compliance, and operational requirements.
- Public Services: These refer to government-provided services (either directly or via private entities) that support businesses in regulatory compliance and access to essential infrastructure.
- Operational Efficiency: This relates to the ease of complying with legal and regulatory frameworks and the effectiveness of public services, measuring costs and performance.
Thus, the B-Ready report defines the business environment through the following two elements:
- Focus on public policies and the legal framework that directly influence companies throughout their lifecycle.
- Evaluation of these policies based on three pillars: legal framework, public services, and operational efficiency.
Key Features of the B-READY Report Compared to Doing Business
The launch of B-Ready marks a significant event, not only due to its findings but also because of the broader context leading to its release—particularly the World Bank’s decision to discontinue the Doing Business report. This decision followed concerns about methodological flaws that affected the credibility of previous analyses. While the World Bank did not adopt all the recommendations from these reviews, it acknowledged them by suspending Doing Business and developing a new report with a different methodology and approach.
This shift reflects the Bank’s intention to provide more accurate and objective analytical tools, allowing for a better understanding of the environments in which businesses operate. But what distinguishes B-Ready from Doing Business?
The new report differs significantly in five key ways:
- Balanced Assessment of Business Impact and Societal Benefits
- B-Ready evaluates both the impact on individual companies and the broader economic and societal benefits. Unlike Doing Business, which primarily focused on regulatory burdens, B-Ready incorporates indicators that assess transparency, service quality, and economic competitiveness.
- Consideration of Both Regulatory Burden and Implementation Efficiency
- The report does not only evaluate the complexity of regulatory frameworks but also examines their effectiveness in practice. It assesses whether regulations facilitate business growth and whether public services efficiently support compliance.
- Reliance on Dual Data Sources: Experts and Businesses
- Unlike Doing Business, which heavily relied on expert opinions, B-Ready combines expert assessments with direct surveys from businesses. This hybrid approach ensures that regulations are evaluated not only in theory but also based on their practical implementation.
- Striking a Balance Between Global Comparability and National Representation
- B-Ready ensures that its indicators are both internationally comparable and representative of each country’s business landscape. It avoids relying on narrow case studies and instead collects data from national samples to ensure broader representation.
- Elimination of Country Rankings in Favor of Thematic Scoring
- Unlike Doing Business, which ranked countries based on aggregate scores, B-Ready replaces this approach with thematic scoring. This change promotes a more objective analysis and encourages countries to focus on meaningful reforms rather than merely improving their rankings.
Can B-READY Drive Real Reforms for SMEs?
While B-Ready represents a methodological advancement over its predecessor, the key question remains: Can it effectively incentivize governments to implement genuine business environment reforms, particularly for SMEs?
Several aspects of the report suggest that it encourages meaningful reforms rather than superficial adjustments:
- Diverse and Thematic Indicators
- The report evaluates ten topics covering various stages of business development, each assessed based on legal frameworks, public services, and administrative efficiency.
- Direct Inclusion of Business Owners’ Perspectives
- Unlike Doing Business, B-Ready incorporates direct surveys from business owners, ensuring a more accurate representation of regulatory challenges.
- Use of Empirical Research and Best Practices
- The report is backed by extensive research from international institutions and universities, providing governments with data-driven insights into effective reforms.
- Incorporation of Cross-Cutting Themes (Digitalization, Sustainability, and Gender Equity)
- The report includes indicators that assess the impact of reforms on digitalization, environmental sustainability, and gender inclusivity—pressuring governments to pursue meaningful improvements.
Conclusion
In conclusion, B-Ready presents a valuable opportunity for countries to implement substantive reforms that benefit SMEs, rather than merely improving their rankings in global reports. However, for the report to be truly impactful, policymakers must view it as a tool for in-depth economic analysis rather than a competitive ranking system.
Future editions of B-Ready will likely see continuous improvements in methodology and data collection, making it one of the most comprehensive and objective reports on business environments worldwide.
