World Bank Flags Deterioration in Nepal’s Business Climate

Nepal’s business and investment climate has deteriorated, according to the latest World Bank report.

Business Ready (B-READY) 2025 shows that Nepal’s scores declined across most indicators compared with the previous assessment.

B-READY, a World Bank initiative, replaced the earlier Doing Business project. The project is being rolled out over three years, from 2024 to 2026, with geographic coverage and methodology being expanded and refined in successive reports. The 2024 report assessed 50 economies, including Nepal, across all income groups and regions. The 2025 edition covered 101 economies.

The report evaluates the business environment across the life cycle of a firm — covering entry, operation or expansion, and exit or reorganisation. Topics are selected based on their relevance to private sector development, their ability to fill data gaps, and their contribution to comprehensive reform analysis.

The assessment covers 10 Topics: Business Entry, Business Location, Utility Services, Labour, Financial Services, International Trade, Taxation, Dispute Resolution, Market Competition, and Business Insolvency.

Across these areas, the report also examines three cross-cutting themes: digital adoption, environmental sustainability, and gender. Digital adoption focuses on the use of technology by governments and businesses. Environmental sustainability assesses regulatory provisions affecting business operations. The gender component looks at the availability of sex-disaggregated data and the implementation of gender-sensitive policies.

Each topic is assessed across three pillars. The Regulatory Framework pillar evaluates laws and regulations governing business activity. The Public Services pillar measures government services, institutions, and infrastructure supporting compliance.
The Operational Efficiency pillar assesses how easily firms can comply with regulations and use public services in practice. 

Scores range from 0 to 100.

Nepal’s Regulatory Framework score improved from 59.34 in B-READY 2024 to 61.46 in 2025. However, it remained below the global average of 66.32.

Nepal’s Public Services score fell from 49.29 to 42.04, while the global average in B-READY 2025 stood at 53.97.

Operational Efficiency also declined sharply. Nepal scored 72.21 in B-READY 2024, ranking 11th among the 50 assessed economies. In B-READY 2025, the score fell to 56.15, slipping below the global average of 60.03.

Globally, economies score highest in the Regulatory Framework pillar, followed by Operational Efficiency, and lowest in Public Services. The gap of more than 12 points between Regulatory Framework and Public Services highlights a common weakness: strong laws but weak service delivery, the report said.

Nepal’s performance followed this pattern, with the country’s scores declining in seven of the 10 topics.

Scores improved in three topics. In Financial Services, up from 70.58 to 71.84. In Taxation, from 57.99 to 59.49. And, in Market Competition, from 33.06 to 37.23. The latest scores in Financial Services and Taxation remained above the global average, while Market Competition stayed well below it.

Business Insolvency recorded the steepest decline. Nepal’s score dropped from 52.04 to 24.09, less than half the global average of 48.19.

An effective insolvency system enables non-viable firms to exit, allows capital to be reallocated efficiently, and supports business reorganisation, according to the report. Weak insolvency frameworks undermine entrepreneurship, access to finance, and job creation.

Globally, Business Entry and Utility Services recorded the highest average scores, at 71.74 and 70.69 respectively. Business Insolvency and Market Competition scored the lowest, at 48.19 and 50.22. “This means that while it is relatively easier to start a business or obtain utilities, resolving insolvency or ensuring fair competition remains a challenge in many economies,” the report added.

Among global leaders, Czechia topped the Regulatory Framework pillar with a score of 80.73. South Korea led Public Services with 80.22. Singapore ranked highest in Operational Efficiency with 79.25.

In South Asia, the report did not assess India, Sri Lanka, Afghanistan, or the Maldives.

Pakistan led the Regulatory Framework pillar in the region with a score of 62.31. Bangladesh and Bhutan followed, behind Nepal as well, with scores of 53.01 and 52.19, respectively.

Pakistan also ranked highest in Public Services with 54.58. Bangladesh scored 45.14, while Bhutan posted 41.87, slightly below Nepal.

But, in Operational Efficiency, Bhutan led the region with a score of 66.29. Pakistan followed with 59.64, and Bangladesh scored 57.77.