World Bank Report: Gaps in public services hinder business growth
A new report from the World Bank Group, Business Ready 2024, has revealed that while many economies, particularly in Sub-Saharan Africa, have made progress in improving regulatory frameworks to enhance their business climate, they lag significantly in delivering the public services necessary to secure actual business growth.
This discrepancy is creating barriers to economic development, preventing businesses from fully benefiting from reforms intended to make doing business easier.
The report, which assesses the business climate in 50 economies, highlights a clear pattern: countries are performing well on regulatory fronts but struggle with public service delivery. While regulatory quality scored an average of 65.5 out of 100, public services that ease compliance, such as online tax systems or transparent credit databases, averaged just 49.7. This gap is particularly pronounced in lower-income regions like Sub-Saharan Africa, the Middle East, and Northern Africa, where businesses face significant hurdles in accessing necessary services to operate efficiently.
World Bank Chief Economist Indermit Gill noted that private enterprise remains a critical engine for economic growth, but it can only thrive if the right conditions are in place. “Economic miracles happen when businesses are given the opportunity to flourish, but without effective public services, the full potential of a healthy business climate cannot be realized,” he explained. The report emphasizes that while regulatory reforms are essential, governments must also focus on delivering services that help businesses navigate and comply with these regulations.
Among the 50 economies assessed, the time it takes to register a domestic business varied dramatically—from as little as three days to as long as 80 days—further illustrating the gap in public service quality. Electrical outages, a significant impediment to business continuity, averaged four per month globally, with some regions experiencing up to 22 outages monthly. Similarly, resolving business disputes through the courts could take anywhere from 105 days to five years, presenting additional challenges for businesses trying to grow in uncertain environments.
The report also underscores that the disparity between regulatory progress and public service delivery isn’t confined to poorer economies. Even countries with higher income levels showed room for improvement, though the gap is widest in low-income regions. The absence of efficient public services means that businesses face unnecessary delays and costs, which ultimately slow down growth and innovation.
Norman Loayza, Director of the World Bank’s Indicators Group, emphasized that a robust business environment isn’t solely the domain of wealthy nations. “Low- and middle-income economies such as Rwanda, Georgia, and Colombia have demonstrated that it’s possible to create a strong business-enabling environment with the right mix of regulations and services. The challenge lies in ensuring that public services are as strong as regulatory frameworks to ensure businesses can fully thrive,” Loayza said.
The Business Ready report, a successor to the World Bank’s previous Doing Business index, adopts a more comprehensive and transparent methodology. It evaluates not only the regulatory burden businesses face but also the quality and efficiency of public services required to enforce those regulations. The report aims to guide governments in creating a more business-friendly environment, recognizing that a solid regulatory framework is not enough to drive meaningful economic progress unless it’s coupled with efficient public service delivery.
As the report continues to assess more economies—reaching 180 by 2026—it will provide valuable insights into where governments can focus their reforms. In particular, Sub-Saharan Africa stands out as a region that, despite regulatory improvements, must urgently address public service gaps to unlock the full potential of its entrepreneurial sector. Without targeted reforms in service delivery, the report suggests that businesses in these regions will continue to face delays, higher costs, and a lack of access to critical services needed for their success.
The findings also serve as a call to action for policymakers worldwide. With global economic growth slowed by debt, demographic changes, and geopolitical tensions, fostering private enterprise is more important than ever. Bridging the gap between regulatory reform and effective public service delivery will be key to unlocking future economic growth and prosperity, especially for economies that are striving to build a business-friendly environment that can compete on the global stage.
