Category Archives: Best Practices

Dead Capital in Latin America

Latin American De



ILD Research indicates: Fully 65.0% of houses also exist outside of the formal market, lacking access to full legal title or other legal descriptions that enable housing to serve as a store of value and the basis of accumulating family wealth.

91.7% of enterprises are outside of the formal economy, lacking access to the legal protections and instruments that enable enterprises to productively use all of their assets.

The bad bureaucracy ratio is the amount of dead capital relative to per capita GDP.  Dead capital represents wealth that could be in the hands of citizens but isn’t due to poor policies and procedures.  Redesigning policies and procedures, the software of governance is one of the cheapest and easiest way to help people lift themselves out of poverty.

Map and data above are available upon request.  Source material ILD document and CLC Latin American Dead Capital spreadsheet

Shack / Slum Dwellers International

Shack / Slum Dwellers International , the name doesn’t sound very promising, but the ideas and actions happening sound very promising.  SDINET.org is doing some interesting work in helping urban slum dwellers add value to their properties and neighborhoods.  “I dreamt of sleeping in a dry house.” is how one story starts for Katana Goretti, 35 in Kampala.

Like many efforts to make things better, victories occur quietly,impacting one life or family at a time.

If you are interested in a boots on the ground charity working to improve property rights and lives of the poor, then Slum dwellers international may be a good place to read and study about.

Their summary is here:

SDI/UPFI FACTSHEET – MAY 2009.

Founding Dates 1996: Slum Dwellers International (SDI) is registered in South Africa as a Non Profit Organisation in 2000 and in the Netherlands in 2008.

2008: Urban Poor Fund International (UPFI) registered in South Africa as an SDI subsidiary.
2008: Urban Poor Fund Netherlands (UPF Netherlands) registered in the Netherlands.

Description

Slum/Shack Dwellers International (SDI) is an alliance of country-level organisations (called ‘federations’) of the urban poor from 33 countries in Africa, Asia, and Latin America. It was launched in 1996 and became a formally registered entity in 1999. Several well-developed national federations of community-based organisations of slum and shack dwellers – particularly in India and South Africa – joined hands to found SDI.

Our mission is to link poor urban communities from cities across the South to transfer and adapt the successful mobilisation, advocacy, and problem solving strategies they develop in one location to other cities, countries and regions. Since SDI is focused on the local needs of slum dwellers, it has developed the traction to advance the common agenda of creating “pro-poor” cities that integrate rather than marginalse the interests of slumdwellers in approaches to urban development.

The 2010 International Property Rights Index. A gripping read :)

Property rights and the rule of law are an economy’s soft infrastructure, they are measures of development and civility.  The IPRI is set up a bit like Transparency International with a normalized 0-10 ranking for property rights in various countries.  As with all normalized and arguable qualitatively derived data sets, your opinions of veracity may vary, but hey what a great conversation starter about the vital nature of soft infrastructure.

From the report: “The IPRI is an annual study that compares countries in terms of their protection of property rights – both physical and intellectual.

Like previous editions of the IPRI, the 2010 report seeks to investigate the effects of a country’s strong legal and political environment, recognition, and enforcement of physical and intellectual property rights on the economic development of a country. This year’s report compares 125 economies using these three variables as core components and ranks them accordingly.”

“If history could teach us anything, it would be that private property is inextricably linked with civilization.”

—Ludwig Von Mises

International Property Rights Index 2010

Take a look at the International Property Rights Index Site.  We think it is quite cool.

Streamlining Process and Procedure for Economic Development

In the area of human rights, the problem of violations usually isn’t about inadequacy of current laws.  Many developing countries with relatively new constitutions have laws that are even more protective of our own in the US, but they are not enforced. This can happen for a number of reasons, whether lack of institutional / agency capacity, political forces, corruption, etc.

In other fields that touch upon non-constitutional / basic “rights” issues, regulatory structures and laws conducive to economic development simply are not in place. In a McKinsey study cited by C.K. Prahalad, the cost of microregulations in the areas of import-export, labor laws, and transactions involving land can be as high as 2 to 3% of GDP growth. “Microregulations” are not the laws themselves, but are the often arbitrary bureaucratic interpretation of the laws and how they should be implemented. “Arbitrary” is a signal for unfairness. In the U.S., it invokes an Equal Protection question of unequal application of a law, and in the developing world, arbitrariness often is a precursor to corruption. Additionally, as Prahalad explains, “The consequence of proliferation of microregulations can be the same as not having laws in the first place. An informal sector emerges outside of the law of the land. The private-sector businesses remain small and local. For large firms, corruption becomes the cost of doing business.”

In discussing the importance of building transaction governance capacity (TGC), Prahalad outlines four essential criteria in eliminating systemic arbitrariness. (Government capacity is essential for legal economies to function):

  1. Access to information and transparency for all transactions
  2. Clear process so that selective interpretation by bureaucrats is reduced, if not eliminated
  3. Speed with which the processes can be completed by citizens
  4. Trust in the system (with its faults). Trust is a result of the first three criteria, and is a crucial component of TGC. (See my other writing on the importance of trust)

One exciting project in the Andhra Pradesh region of India integrated these principles in creating an e-Government system around property rights.  As government records, and processes were brought online, the property registration system (the same laws remained on the books) was dramatically streamlined. Again, Prahalad chronicles the key changes:

  1. All the steps that are required are now transparent and easy to access. The sequence of steps to be followed is also clear. All interdependent steps are completed automatically.
  2. In the old system, the officials calculated the value of the land and the associated fees for registration. There were opportunities for selective vale assessment. Now the entire process of calculation is automated with market value assessment algorithms built in. The documents are scanned and stored digitally, reducing the opportunities for them to be lost or displaced.
  3. The entire process of registration of land now takes one hour (from initiation to completion), compared to 7 to 15 days in the old system. Title searches over the past 20 years from 50 different offices can be done in 15 minutes versus 3 days. Certified copies of documents can be obtained in 30 minutes against the three days of the conventional system.

The key question this example brings to mind is what are the mechanisms that can be scaled to other regions? How can we share these best practices and figure out what project aspects can be applied to different areas were land formalization procedures can literally take years?