Precious in the sight of the law
Finance rests on the twin pillars of verifiable information and executable property rights, and both in turn require that property, income, and economic activity all operate in sight of the law.
That’s the main thesis advanced by Madeline Albright and Hernando de Soto, co-chairs of the Commission on Legal Empowerment of the Poor, in a crisp and effective editorial recently published in Time Magazine:
In slums like Kibera, people often lack birth certificates and titles to their land.
Margaret Atieno Okoth, 49, sells cabbage six days a week from a cramped stall in the teeming Toi market of
Like many others, I’ve been to Kibera, and seen its extraordinary conditions.
A main street in Soweto East, open sewage everywhere
Yet no one is forced to live in Kibera;
Thanks to her enterprising spirit and a community-savings scheme, she can obtain small loans to keep her business going or cover the costs of a family emergency.
Communities organize microfinance, a critical emerging specialty, and savings co-operatives.
From Soweto East; a list of co-op members and their savings.
‘Save something every day, even one shilling.’
In Kibera–and in thousands of other urban settlements around the world — poor citizens like Margaret have no legal identity: no birth certificates, legal addresses or deeds to their shacks and market stalls. Without legal documents, they live in constant fear of being evicted by local officials or landlords.
Here’s the rub — law is how we protect property from raiders, the vulnerable from the predatory. But the price of law is documentation, and some people arrive in the world’s cities unable to prove who they are.
Joseph Muturi, 33, who runs a small clothing business in Toi market, says, “We live with the thought that bulldozers can flatten our stalls anytime. I know that in a matter of hours, all this can disappear.”
A furniture-maker in Kibera
Mr. Muturi is right his stalls could disappear, but wrong as to the likely actor. Except for a megalomaniac tyrant like Robert Mugabe, he has nothing to fear from the Kenyan government (full disclosure: I’ve done some work on Kibera, and may do some more in the future). The threat is from gangs, criminals, and other forms of organized extortion.
Powerlessness and poverty go hand in hand, yet neither is inevitable. As co-chairs of the Commission on Legal Empowerment of the Poor, we believe there is a better way […] extend enforceable and fungible legal rights to impoverished people in societies across the globe.
The right goal, unquestionably, but devilish hard
Now if only we can score it
Our goal is to bring about a consensus on what needs to be done and find incentives for national and local leaders to do it.
The problem is twofold.
1. Illiteracy is a major reason poor people often choose not to seek the protection of local courts, since in many countries, laws established under colonial rule have never been translated into local languages.
2. [Administrivia] When would-be entrepreneurs do set out to legally register a business, they are easily discouraged by the mass of bureaucratic red tape and costly fees. In
Permits available just inside
I understand how the law of bureaucratic entropy can lead to this result, but I cannot really understand how leadership tolerates it.
As a result, the poor have no choice but to accept insecurity and instability as a way of life.
When becoming legal is made too difficult, remaining illegal looks more promising, and from documentary illegality to criminality is merely a shade of technique.
A recent study by the Inter-American Development Bank in 12 Latin American countries found that only 8% of all enterprises are legally registered and that close to 23 million businesses operate in the shadow economy.
Trillions of dollars’ worth of wealth, invisible to legality
Any government worth its salt should know that government succeeds in creating and channeling economic activity with four actions: Legalize, regulate, quality-control, and tax.
The proprietors of these businesses cannot get loans, enforce contracts or expand beyond a personal network of familiar customers and partners.
When guns are outlawed, only outlaws will have guns, runs the simplistic bumper sticker, but it is not simplistic to observe that when businesses are functionally illegal, only illegal business will be functional. Administrivia, like lack of finance, cripples economies and nations.
But when governments grant people legal means to control their assets, they empower them to invest and plan for the future. In San Francisco Solano, a barrio outside
While many folks (like me!) respect Mr. De Soto’s work and are convinced he’s absolutely onto something, others question whether in fact entitlement procedures are the magic elixir.
You mean, this is all it takes for us to become wealthy and successful?
They argue, quite reasonably, that title reform and faster/ cheaper administrative throughput are necessary but not by themselves sufficient, needing accompaniment by (say) honest bureaucracy, an advanced and developing financial ecosystem, and a liberalizing government motivated to help the poor help themselves. One senses that Mr.
Our organization is visiting settlements around the world to map out practical paths for change.
We are also working with partners like Sheela Patel of [SPARC and] Slum Dwellers International, who is helping to relocate more than 23,000 households in Mumbai by organizing communities to present their demands directly to state and municipal governments.
Sheela Patel, making the case for slum dwellers
Earlier I posted at length about Dharavi, and the importance of engaging the community:
In many a scheme, the most difficult issue has been having the resident council become a knowledgeable and effective participant in the transaction structuring. Over the years, I’ve found that often residents immediately suspect anyone who dresses decently and talks as if educated. Education and any material successare seen as infallible indicators of betrayal, which also makes the residents easy prey for paranoiac demagogues.
People are smart; communities of people always have some very smart people. Communities can be even smarter than individuals, if the community is knowledgeable andparticipates constructively— not naively but with an ability to engage and debate and negotiate and learn. That takes some doing, and some time, and the right mix of community people in the community leadership. It’s hard to define how to achieve it, but easy to recognize when it occurs— when the community group or resident council is participating actively in the deal structuring with the explicit goal of making happen not the best possible result, but the best result possible.
People are clever, resourceful, and cheerful
Making that engagement constructive is a huge and complex exercise, one that is not readily portable. It happens one community at a time:
The challenge is to replicate that experience globally–to give the poor a platform for demanding legal rights and hold political leaders accountable for responding.
Political accountability is an easier thing to achieve than ‘demanding legal rights,’ since most slums are located on land that is, at least notionally and legally, owned by some other party.
Businesses arise in the most humble circumstances
The commission is also partnering with CIVICUS, an international alliance dedicated to strengthening citizen action, to put this vital issue on the agenda in the global fight on poverty.
For all their passion, the authors end on a curiously flat note:
You can get involved by visiting our website, where you can vote in a CIVICUS poll.
Perhaps the awareness is enough. Perhaps it is a start.
Start somewhere!
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