Making the Green Transition Work for People and the Economy 2025

Frontier economies In the World Economic Forum’s equitable transition country archetype framework, frontier economies are typically low- and lower-middle-income countries with high reliance on agriculture, low emissions per capita, and lower levels of financial and technological development. With over one-fifth of the global population, but less than 3% of global GDP , this archetype includes a large share of Sub-Saharan Africa alongside a few Asian and Latin American economies. Businesses in these countries report facing significant challenges around energy and commodities costs and investment capacity. Higher costs of energy and commodities are cited by 43% of executives across these countries. Limited investment capacity and access to finance follows at 41%, well above the global average. Concerns about access to critical raw materials, clean technologies and green skills are all above global averages. One out of five executives highlighted the lack of access to critical materials and lack of reliable supply chains for sustainable products. When it comes to the impact of the green transition on workers and consumers, businesses in frontier economies express higher-than-average concerns over a decrease in affordability of goods and services: nearly two-thirds of them believe that at least one major industry in their country will have to pass on higher costs to consumers in order to decarbonize, especially in the energy sector. Concerns over workers’ displacement are also more than the global average, particularly in the infrastructure and energy sectors. These risks are amplified by lower levels of social protection in countries in this archetype. Ensuring adequate access to climate financing remains critical for governments and businesses in frontier economies to align climate and socioeconomic goals. Building a strong human capital foundation and investing in green skills, particularly in agriculture and food production sectors, can help ensure that the transition supports economic competitiveness and shared prosperity among the population.In Pakistan, 43% of executives have identified regulatory uncertainty and compliance burden as one of the key barriers they face to stay competitive in the green transition, above peer countries and global average. Higher cost of energy and key commodities (39%), slow ROI and lack of investment capacity and access to finance (28%) are also among the top challenges, amid uncertain public sector finances and macroeconomic stability. Finally, almost one out of five businesses highlight the lack of green skills: with Pakistani youth representing nearly one-fifth of the population, upskilling for the green transition will represent both one of the key challenges and opportunities for the country. Limited investment capacity and access to finance emerges as the key barriers to climate competitiveness for businesses in Nigeria, cited by 60% of executives and well above peer countries and global average. With domestic credit to the private sector at just 13% of GDP , among the lowest globally, companies seem to struggle to secure financing for necessary green investments. The higher cost of energy and key commodities and the burden of regulatory uncertainty and compliance are also among the key competitiveness concerns of businesses when facing the green transition, highlighted by 48% and 40% of executives, respectively. Finally, concerns over worker displacement are also significantly higher than global averages at 46% (33% globally), coupled with low social protection coverage at 14.8% of the population. In Bangladesh, limited investment capacity and access to finance is the top barrier to climate competitiveness, cited by 43% of executives and above peer countries and global average. Higher cost of energy and key commodities follows at 39%. More than one-third of businesses report challenges in recruiting green talent, well above global average. Finally, most businesses are concerned about affordability of goods and services for consumers as a result of the decarbonization of major parts of the economy: with real wage growth stagnating at -1.9% over the past decade, these concerns may be particularly acute for low- and middle-income households. 24 Making the Green Transition Work for People and the Economy