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‘The majority of the world’s poor live their lives outside the rule of law, without the basic legal protection that recognises their homes, assets and hard work. Without property rights, they live in fear of forced eviction. Without access to a justice system, they are victims of corruption and violence. Without enforceable labour laws, they suffer unsafe and abusive work conditions.  If they own an informal business, they cannot access the legal business protections that entrepreneurs in the developed world take for granted – they are locked out of economic opportunity in their own countries and in the global marketplace. Many are unregistered from birth, and have no access to basic public services. Outside the law, the ability of the poor to create wealth is frustrated; without access to justice, their dignity is violated.’ That’s the central case of a report released last week entitled, “Making the Law Work for Everyone”. The authors, the Commission on Legal Empowerment of the Poor called on national governments and international institutions to make legal empowerment a key pillar of the anti-poverty agenda. 

Reports matter, while many rightfully gather dust on bureaucratic shelves, occasionally they hit the target and change how we think of issues. The words, ‘North/South’, the principle of 1% of GDP payment as aid to poor countries, comes from the Brandt Report. The cliché, ‘sustainable development’, came from the Bruntland Report.

Other than my good self, this Commission consisted of a stellar cast, including Nobel prize winners, former Presidents of Brazil, Ireland, Tanzania and Mexico; Supreme Court justices from Benin and the U.S.; and former Finance Ministers from Egypt, U.S. and Afghanistan.  After several years of solid consultation, the evidence is overwhelming. Far from the idea that globalisation now means that governments don’t matter, they matter more than ever. Look at the worst places to live in the world – Burma , North Korea , Zimbabwe . What have they in common? No democracy, no human, civil, commercial and legal rights. When governments deny you your rights, then they have the worst outcomes for ordinary people. The elites always do well. Equality under the law, the fact that the sovereign is accountable to the law, are fundamental to man’s progress.

Recently, I was given a 500 million Zimbabwe dollar note, worth a few cents.  They have now printed a 25 billion dollar note that won’t buy a loaf of bread, if there was any bread in the shops.  The right wing have argued that government is the problem.  Come with me to places where there is no, or little, government.  It’s the quality and level of government that’s important.  Poor and indigenous peoples in most places have assets, traditional property, it’s just not formalised and recognised by the law.  Over 80% of land in Latin America is owned outside the law.  Ninety percent of homes in Tanzania , and 65% of homes in the Philippines are unregistered.  In most poor countries, the informal economy represents the largest part of the economy.  Why?

In Egypt , to establish a bakery, you have to go through 29 agencies, comply with 315 laws, and this can cost about 2 years of the average wage.  Big business and powerful interests know how to navigate the system, they know who to call, who to pay.  It’s the small businessperson who’s locked out, kept in the back streets.  Licensing by governments can often create opportunities for bureaucrats to steal.  Only 10% of street hawkers and rickshaw drivers in New Delhi are registered, the majority have to pay up to a third of their incomes to bureaucrats and protection rackets to stay in business.  Even where there are courts, in many places they don’t function, encourage corruption, and speed-up and go-away money.  Around a million cases are pending in Kenya , it can take 20 years to get a case heard in some places in India where there are 11 judges for every million people, and each judge in The Philippines has an average backlog of over a thousand cases.

When the quality and availability of legal access improves, and trust emerges in governance, the developmental results are stunning.  People come out of the shadows, business is formalised, you can borrow, use the courts, the tax take increases.  Much of this is not new but this Report credibly provides comprehensive evidence and a roadmap of how we can improve governance and lift the poorest.  The Commission was co-chaired by former U.S. Secretary of State, Madeleine Albright, and Peruvian economist Hernando De Soto.  De Soto has written about this phenomena before.  Odds are he will get the Nobel Prize for Economics for his work.

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