Generating Capital in Africa

With an ever-increasing population of 163 million people, Nigeria has a lot of consumers. Nigeria also has a lot of business entrepreneurs.  Nigeria also has a lot of money. So how is it that people with all the ingredients for developing their economy still live on an average of $2 a day?

In The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, Hernando de Soto has an idea. He argues that a lack of legally protected property rights in the global south impedes people’s ability to transform their meager assets into greater capital.  Poor countries have the “stuff” necessary to not be poor, but because their stuff isn’t legally legitimate they can’t buy, sell, or trade that stuff in order to build up the economy. They remain in this rut of dead capital. For example, the rural-to-urban migrants living in self-made islands around Lagos may have shacks worth hundreds or even thousands of dollars, but because they do not legally own that property in the eyes of the state, they cannot take out loans against their property in order to make larger investments.

In contrast, property rights in Western law create beneficial economic effects that undergird the health of European and the American economies.  He writes that Western law fixes the value of assets, puts all asset information in one place, tracks and protects transactions, and makes assets “fungible,” meaning that they can be modified to suit different types of transactions. Additionally, it networks business agents so they can engage in transactions that build more capital as well as makes business people accountable for their practices, accountability that is sorely lacking in Nigeria.

In reading, I wondered how I could apply his argument to my analysis of law in rural Niger Delta.  I remembered that one of the common themes in my interviews with protesting women was their sense of injustice that the state and oil companies had extracted crude on their property without consulting or compensating them.  When I asked them if they owned the land, a first cluster of women said that they did, but their grandfather has passed away and he was the last elder who could attest to it, or they had lost their deeds decades ago, or that they had inherited it based on a public agreement.

A second cluster didn’t have titles per say, but that it was theirs “collectively” as Ogoni people. I wondered why in their minds it didn’t belong to just the people of the village, or Rivers State people, or Niger Delta people. Some also said that the land was theirs personally because their family had farmed on it for many years. As an urban American, I didn’t understand these responses initially.

The answer is social contract. Property and rights are socially constructed first, and then legitimated in formal written law second. In rural villages property disputes are resolved by asking the eldest community member where they remember boundaries being drawn or which family they remember as being the owner; land titles filed with the state are not the basis of ownership necessarily.  For the second cluster, this land was “Ogoni property” long before the advent of the post-independence Nigeria legal system, and for them their ownership based on social contract will always remain more salient that the modern state’s claim to that same land. When the federal government or oil companies use that land as if it belonged to the state, Nigerians view that property use as illegitimate and thus engage in collective action.

The women who claimed to own their land because they had farmed it are in good company.  When settlers were initially dividing up vast tracts of American land two centuries ago, they gained official titles based on the idea that the land belonged to them because they had made use of it. However, American pioneers had the benefit of staking claim to virgin territory in the legal sense.  Deltans’s claims are obfuscated by legal pluralism, their pre-existing social contracts co-existing with formal Nigerian law derived from British common law as well as foreign companies’ claims to access that land. It is therefore not surprising that such frustration and feelings of violation would have lead to collective demonstrations in the area over the past twenty years.

To de Soto’s point, Deltans have assets, e.g. huts, houses, farmland, etc.  But, they can’t officially prove so because they long ago lost their titles or don’t have the literacy necessary to file paperwork, or most commonly, because Nigerian government bureaucracy is so unnavigable that people are forced to work and live extralegally. Functioning outside of the protections of law limits their ability to utilize their property in ways that drive the economy, e.g. they can’t use property as collateral on a loan or apply to open a legal business if they don’t “own” the property.  Law is supposed to fit the needs of its people, but Nigerians have been forced to fit into the confines of a post-independence legal order that does not have a foundation in social practices. And that, it could be argued, is a big part of why so many Nigerians are still so poor.

For a critical look at de Soto’s book, see the New York Times Book Reviews.

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2 responses to “Generating Capital in Africa

  1. Another wonderful piece of work there. It very insightful such that it could spur communities into action in such a way that they use what they have to empower and enrich themselves and future generations. Greak work again!!

    Like

  2. Pingback: Generating Capital in Africa (II) | Niger Delta Politics

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