Poor Africans need land rights
Robert Robb
Arizona Republic
columnist
Jul. 15, 2005 12:00 AM
At the Group of Eight summit last week, the news was the big things the big boys pledged to do to relieve African poverty.
The major developed countries - the United States, Canada, Britain, Germany, France, Italy, Russia and Japan - would forgive even more governmental debt and double development assistance to Africa, reaching $50 billion a year by 2010.
There actually isn't anything much new in this news. Over the past 40 years, Africa has been given an estimated $450 billion in foreign aid. Yet incomes have remained stagnant and poverty rates heartbreakingly high.
Three months earlier, a much smaller initiative took place that went virtually unnoticed. Yet it actually holds much more hope of alleviating poverty in Africa than all the big pledges of the big boys.
It was a grant from President Bush's Millennium Challenge Corporation to Madagascar. Bush has recognized the futility of the government-to-government aid for big projects approach, and sought to change the way in which the U.S. dispenses economic development assistance.
Aid would be given only to countries adopting governmental reforms conducive to democratic capitalism. The Millennium Challenge Corporation, named after the lofty U.N. goal adopted at the turn of the century to largely eradicate worldwide poverty by 2015, was established to render the scrutiny and make the grants.
The Bush initiative has been widely panned. Bush pledged $5 billion a year for it but has not pushed for full funding. Over the past two years, Congress has appropriated just $2.5 billion total. But the Bush administration hasn't been able to spend hardly any of even that.
In fact, the grant to Madagascar, made this April, was the first. And it was small potatoes, just around $110 million.
But about a third of the money is for a land titling project, and therein lies the hope.
Madagascar is a largely rural and impoverished country. Per capita GDP is just $800 a year and half its population lives in poverty.
According to The Economist magazine, Madagascar initially made a business-as-usual proposal for the Millennium grant - the preferred big project of each cabinet member.
The Millennium Challenge Corporation suggested that the country think more broadly and consult more widely with its people to identify blockages to improving their economic lot.
Which Madagascar did, with telling results. What the people wanted most was legal entitlement to what they owned and controlled.
Less than 7 percent of land in Madagascar is legally titled. The government has a backlog of 200,000 title requests, but processes only about 1,500 a year.
As a result, rural subsidence farmers don't have the capital or the incentive to improve or protect the land upon which they work. This is also environmentally disadvantageous, since it promotes a practice of exhausting land and then moving on.
That the poor in Madagascar wanted, first and foremost, legally protected property rights illuminates the insight of Peruvian economist Hernando de Soto, most clearly explicated in his book, The Mystery of Capitalism. De Soto has inventoried the assets the poor in developing countries already control, and they are considerable. But, because the poor do not usually have legally protected property rights to what they possess, they are what he calls dead capital - they cannot be leveraged for economic improvement.
In much of the developing world, the poor tend to live and work outside the formal institutional and governmental structure. In Mexico, for example, de Soto estimates that nearly half of employment and a third of the country's output is in what he calls the informal sector.
Madagascar's Millennium grant will go, in part, to create an efficient system of granting legal titles, turning the dead capital into a tangible property right.
Compared to the big ideas of the big boys, this may seem like a small thing. In fact, the New York Times, in an editorial, positively turned up its nose at the Madagascar grant, lecturing that "real growth cannot exclude the basics," such as running water, clinics and schools.
But truly eradicating poverty requires unleashing the productive capacity of the poor. And for that, legally protected property rights are the most fundamental "basic" of all.
Reach Robb at robert.robb@arizonarepublic.com"
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