Put needs of small businesses first
This year the World Bank celebrates the tenth anniversary of its Doing Business project, which reveals which countries it considers provide the best environment for business.
The Doing Business rankings use indicators, including some on tax, credit and employment law, to judge which countries are most accessible to business. However, CAFOD has successfully lobbied for a review of these rankings, based on our concerns that they can be irrelevant and even harmful to small and medium-sized businesses in developing countries.
Impact on human rights
CAFOD Policy analyst Christina Chang said “The rankings skew vital resources away from small enterprises, which are often informal, rural and run by women, and account for the vast majority of jobs in developing countries. These enterprises are critical in reducing poverty, yet the Doing Business rankings do not address reforms which would help boost these businesses.”
“In addition, introducing policies like lower taxes or lower labour standards, which are judged by these rankings to make business easier and more profitable, can have a negative impact on development and human rights. This could mean, for example, that a nation that improves rights for workers would drop down the rankings. This was the case for Brazil, which moved down the rankings after introducing a minimum wage.”
In a new briefing report released this week to coincide with the World Bank and International Monetary Fund annual meetings in Tokyo, CAFOD calls for the review of the rankings to put the needs of poor men and women first. Read the briefing here>
Impact on agriculture
Geoffrey Chongo from CAFOD partner Jesuit Centre for Theological Reflection (JCTR) explained the impact of focusing on these rankings on Zambian small businesses: “The Zambian government devotes significant resources to moving up the Doing Business rankings. Yet even though the country now ranks sixth globally on the ‘getting credit’ indicator, 98 per cent of small businesses still report that lack of access to credit is their most pressing problem. These rankings do not help Zambian small businesses, because they do not focus enough on the reality of the business environment.”
CAFOD is concerned that this method of ranking businesses is now being extended to the agricultural sector. Although the needs of smallholder farmers are frequently cited in the World Bank’s plans, some of the proposed indicators do not prioritise meeting the needs of small-holder farmers, by focusing on ease of importing seeds rather than being able to access seed banks for good quality seed for example.
Clare Lyons, Head of Campaigns, said: “As part of our Get Down to Business campaign, campaigners called on the UK government to ‘think small’ and prioritise the needs of small business in policy making. Reforming these rankings gives us another important opportunity to ensure that the potential of small businesses in developing countries to help tackle poverty is realised. Our new campaign, Hungry for change, also highlights the need to rebalance policies to work for small-scale entrepreneurs.”
Christina Chang and Geoffrey Chongo will be taking part in a panel discussion at the World Bank meetings in Tokyo on ‘Doing Business for Development? Considerations for a good review of Doing Business ’on 12 October. For more information or to interview Mrs Chang, please contact Pascale Palmer email@example.com or 020 7095 5459.