The halt to the World Bank’s flagship Ease of Doing Business Report, after a data irregularities scandal, does not diminish SA’s effort to build a competitive economy, tackle obstacles to investment and cut red tape for businesses, economic adviser to the president Trudi Makhaya said on Thursday.
The bank’s Doing Business report — which ranked countries on their business environments’ attractiveness and became a byword for investment — has been sunk by allegations that its former CEO Kristalina Georgieva interfered to improve the rankings of China in 2018.
Georgieva, who now leads the IMF, has denied the allegations contained in an investigation report by law firm WilmerHale, released by the bank in September.
One of the explicit aims of President Cyril Ramaphosa’s annual investment drive had been to raise SA’s position in the rankings to get into the top 50 places from its position, at last count, of 84 among 184 countries.
Makhaya told Business Day that along with the rankings the report also “highlighted the inefficiencies and obstacles to the smooth operation of both domestic and multinational enterprises in an economy, which, if addressed, can contribute to increased economic growth and development”.
“SA has in the main approached the [Doing Business] process with a view to making such improvements,” she said. Its discontinuation “does not diminish our underlying efforts to build an inclusive, resilient and globally competitive economy.”
“When President Ramaphosa announced our intention to improve our ... rankings it was [with] this purpose in mind, with the measurement providing a form of accountability,” she said.
According to Makhaya, a task team led by the department of trade, industry & competition has been working with stakeholders at national and municipal level to tackle obstacles to investment and “this important work will continue”.
SA is battling to attract much-needed fixed investment in the face of years of delays, inefficiency and uncertainty over government policies in a range of areas, including mining legislation, electricity and spectrum allocation.
Though Ramaphosa is working to attract R1-trillion in investment over five years through the annual SA Investment Conference, gross fixed capital formation declined in recent years. According to SA Reserve Bank data, this measure of brick and mortar investment fell to 13.7% of GDP in 2020, its lowest level since the mid-1990s and well below the National Development Plan’s target of 30%.
In coming years, the Bank expects investment growth to remain weak, shrinking 0.3% in 2021 before improving to 0% in 2022 and 1.8% in 2023.
“Improving the ease of doing business remains a priority for this administration,” Makhaya said, noting Ramaphosa’s renewed commitment to improving the business and investment climate in SA, specifically reducing red tape for small and medium-sized enterprises.
Makhaya did not comment on the findings of the World Bank investigation itself or the implications it has for the credibility of the work done by the multilateral institution.
The investigation, however, found that changes were made to China’s data in the 2018 report, in part thanks to pressure applied by Georgieva and her adviser Simeon Djankov, in an effort to increase the country’s ranking while China was expected to play a key role in the World Bank’s capital raising efforts.
It also flagged the role of Djankov in irregularities related to data from Saudi Arabia, the United Arab Emirates and Azerbaijan, in the 2020 report, as well as a toxic work culture, replete with fear of retaliation, on the team that worked on the Doing Business Report.
Georgieva has said she fundamentally disagrees with the findings and interpretations of the investigation as it relates to her role. The IMF, meanwhile, is conducting its own ethics review.
This has not stopped high-profile calls from the likes of The Economist for Georgieva to resign from the IMF in the face of perceptions that multilateral bodies cannot stand up to China “in a new era of geopolitical rivalry”.
But Georgieva has people in her corner. A group of finance ministers from 16 African countries including Nigeria, Egypt, and Botswana, described Georgieva as a “true partner” to African nations, seeking to mobilise funding to tackle coronavirus fallout, according to a Bloomberg report.
Though the ministers said the allegations were “serious and should be investigated” this should be “done in a manner that doesn’t undermine the integrity of the IMF and most of all must allow for a fair and just process”, Bloomberg reported.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.