Managing Change through High Quality Data: The 2017 Change Readiness Index

No country is immune to change. Whether the ‘change’ in question is a natural disaster, financial crisis, or an economic opportunity brought about by new technology, how a country’s government, private enterprise and civil society prepares for and reacts to that change has a significant impact on the welfare of its citizens and institutions. Take urbanization as an example. Today over half of the global population lives in cities, creating unprecedented demands on energy, food security, and human development. Conversely, urbanization also drives innovation, economic growth, and social inclusiveness, particularly when supported by coordinated policy and strategic investments. As the urban population doubles by 2050 mostly in developing countries, it is imperative to use all tools at our disposal to transform this change into positive social and economic impact. The pace of change is accelerating beyond cities. Two years ago, 193 countries pledged to eliminate poverty and hunger, and to fight climate change through the Sustainable Development Goals (SDGs). These 17 targets have the potential to deliver unprecedented economic and social dividends for citizens in both the developed and developing world. But how well these targets are implemented depends on a country’s ability to identify and prepare for the required change to make them a reality. Access to high-quality data is a key step for stakeholders in the public, private and civil society sectors to prioritize development initiatives and investments needed to meet the changes required by the SDGs while navigating fiscal constraints. Anticipating Change Since 2012 KPMG have published the Change Readiness Index, a data-driven tool designed to measure how effectively a country’s institutions—government, private sector, and people and civil society—manage and respond to this challenge. Using a combination of primary and secondary data, the CRI paints a comprehensive picture of change readiness in 136 countries which are home to 97 percent of the World’s population. A wide range of public and private organizations can benefit from the data and insights provided by the CRI to better understand country needs and tailor interventions to identified demands. For example, the CRI can be used to:

• Improve government policy by benchmarking a country’s competitive advantages and identifying areas in need of reform;
• Inform investment decisions by highlighting the strengths and weaknesses of target countries and providing a better understanding of risk;
• Identify opportunities for public and private sector partnerships by highlighting relative strengths and weaknesses in capabilities and resources; and
• Benchmark national strengths and weaknesses to other markets in the region and beyond, gauging performance across business issues such as technology adoption, macroeconomic framework, and business environment.

Key takeaways from the 2017 CRI                                   Wealth and change readiness are related, with important variations. The 2017 CRI indicates that countries dependent on natural resources and export incomes tend to have institutional capability which lags behind expectations given their income level. Heavy reliance on natural resources is one factor associated with poor performance.  Seven of the fifteen biggest 'underperformers’ relative to their GDP per capita were oil rich nations. Nevertheless, resource rich countries (such as United Arab Emirates and Norway) can achieve high change readiness, often with an especially strong performance in government capability. Amongst those which exceed expectations relative to their income level, there are both low and high income countries.  These countries have done better than their income-level peers in achieving robust governance, a strong social foundation, and a positive business environment. For example, Rwanda was one of the strongest performers relative to its GDP per capita, rising from 69^th to 46^th place in the CRI between 2015 and 2017, and in 2017 outperforming many countries with higher income levels. This reflects Rwanda’s continuing strong performance in the government capability pillar, where it ranked 21^st, and in particular the areas of security, fiscal and budgeting, regulation and enterprise sustainability. Inclusive growth means better change readiness. Countries with higher scores for more inclusive economies tend to perform better in the Index overall. Conversely, high levels of income inequality tend to be associated with low change readiness. The top 10 countries ranked highest for inclusive growth are all in the top 50 of the Index. Policies promoting inclusive growth may provide a more robust basis for societies to adapt to changes and weather shocks, than highly unequal societies. Alignment with the Sustainable Development Goals.  CRI sub indicators can inform analysis of the SDGs in areas such as to promote inclusive and sustainable growth, employment, and decent work for all; build resilient infrastructure, industrialization and innovation; and to reduce inequality within and among countries. The CRI provides a tool for stakeholders interested in mapping country capabilities to these key SDGs. Next steps: Partnerships to achieve the SDGs   An estimated $2.5 trillion in additional financing is needed to implement the SDGs. To achieve the ambitious goals and timeline articulated by the SDGs, it is essential that countries, public and private sector institutions, and citizens access reliable data on factors that determine their ability to drive necessary change. The ability to prioritize interventions and make the case for strategic investments is key to sustaining long term impact. More importantly, effective partnerships are required across sectors — between advanced and emerging nations, and among experienced local and international agencies, innovative corporations, investors, and academic institutions — to develop necessary solutions. Leveraging actionable data such as the CRI can help inform these activities. Over the next several months, KPMG will publish analytical pieces applying the CRI to the interconnected challenges and opportunities facing 136 countries today, including those posed by the SDGs. We believe that by highlighting the strengths, weaknesses, and progress evident around the world, the CRI can illuminate the opportunities and focus the alliances, collaboration, and dialogue to tackle issues like urbanization, climate change, and natural disasters, that are already at our doorstep. About the Authors: Martin Chrisney is the Director of KPMG’s International Development Assistance Services (IDAS) Institute where he coordinates the delivery of strategic and technical work on development topics. Martin has worked extensively with governments, multilateral development banks, bilateral agencies, non-profit organizations, and the private sector during his time with the IADB and the World Bank. Jeremiah Magpile is an Associate at the IDAS Institute where he supports the development of research and knowledge products for KPMG clients and member firms.