World Bank Flags Deterioration in Nepal’s Business Climate
Nepal’s business and investment climate has weakened, according to the latest World Bank assessment, with the country recording declines across most indicators in the Business Ready (B-READY) 2025 report.
The report shows that while Nepal made limited progress in its regulatory framework, performance fell sharply in public services and operational efficiency, pulling down the overall business environment compared with the previous year.
About the B-READY Report
B-READY is a World Bank initiative that has replaced the earlier Doing Business project. The assessment is being rolled out over three years from 2024 to 2026, with expanded geographic coverage and refined methodology in each edition.
The 2024 report assessed 50 economies, including Nepal, while the 2025 edition expanded coverage to 101 economies across all income groups and regions.
The report evaluates the business environment across the full life cycle of a firm, including entry, operation or expansion, and exit or reorganisation. Topics are selected based on their relevance to private sector development and their contribution to reform analysis.
Assessment Areas and Methodology
The B-READY framework assesses 10 core topics: Business Entry, Business Location, Utility Services, Labour, Financial Services, International Trade, Taxation, Dispute Resolution, Market Competition, and Business Insolvency.
Each topic is evaluated across three pillars. The Regulatory Framework pillar examines laws and regulations governing business activity. The Public Services pillar measures government services, institutions, and infrastructure that support compliance. The Operational Efficiency pillar assesses how easily firms can comply with regulations and access public services in practice.
Scores range from 0 to 100. The assessment also considers three cross-cutting themes: digital adoption, environmental sustainability, and gender.
Nepal’s Overall Performance
Nepal’s Regulatory Framework score improved from 59.34 in B-READY 2024 to 61.46 in 2025. Despite this improvement, the score remained below the global average of 66.32.
Performance in Public Services declined significantly, with Nepal’s score falling from 49.29 to 42.04, compared to a global average of 53.97.
Operational Efficiency recorded the sharpest fall. Nepal’s score dropped from 72.21 in 2024 to 56.15 in 2025, pushing the country below the global average of 60.03. In the previous assessment, Nepal had ranked 11th among the 50 economies assessed under this pillar.
Topic-Level Trends
Nepal’s scores declined in seven of the 10 assessed topics. However, improvements were recorded in three areas.
Financial Services improved from 70.58 to 71.84. Taxation increased from 57.99 to 59.49. Market Competition rose from 33.06 to 37.23. While Financial Services and Taxation remained above the global average, Market Competition continued to lag significantly behind.
Business Insolvency saw the steepest decline, with Nepal’s score falling from 52.04 to 24.09, less than half of the global average of 48.19.
According to the report, effective insolvency systems allow non-viable firms to exit, enable efficient reallocation of capital, and support business reorganisation. Weak insolvency frameworks undermine entrepreneurship, access to finance, and job creation.
Global and Regional Comparison
Globally, economies scored highest in the Regulatory Framework pillar, followed by Operational Efficiency, with Public Services scoring the lowest. The gap of more than 12 points between Regulatory Framework and Public Services highlights a common global challenge of strong laws but weak service delivery, the report noted.
Globally, Business Entry and Utility Services recorded the highest average scores, at 71.74 and 70.69 respectively. Business Insolvency and Market Competition were the weakest areas, with average scores of 48.19 and 50.22.
Among global leaders, Czechia topped the Regulatory Framework pillar with a score of 80.73. South Korea led Public Services with 80.22, while 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 region in the Regulatory Framework pillar with a score of 62.31, followed by Nepal, Bangladesh at 53.01, and Bhutan at 52.19.
Pakistan also ranked highest in Public Services with 54.58. Bangladesh scored 45.14, while Bhutan recorded 41.87, slightly below Nepal.
In Operational Efficiency, Bhutan led the region with a score of 66.29. Pakistan followed with 59.64, and Bangladesh scored 57.77.
Outlook
The World Bank findings suggest that while Nepal has made modest regulatory improvements, weaknesses in service delivery and implementation continue to weigh heavily on the business environment. Strengthening public services and improving operational efficiency will be critical for improving investor confidence and supporting private sector growth in the coming years.
