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I must confess that I was totally at a loss as to why the organisers of the 2011 annual Asiwaju Bola Ahmed Tinubu colloquium to commemorate the 59th birthday anniversary of the former Governor of Lagos State and National Leader of the Action Congress of Nigeria (ACN) decided on the choice of the noted Peruvian Economist, Hernando de Soto, to be the guest lecturer. Yes, ‘de Soto ranks among the most cerebral economists and public intellectuals of our time. He is especially venerated by neo-liberal, conservative Think Tanks and publications. For instance, The Economist magazine has described him as a potential Nobel Prize winner. The Times of London enthused that his book, ‘The Mystery of Capital’, had provided “The blueprint for a new industrial revolution”.

Hernando de Soto in ‘The Mystery of Capital’ sought to unveil the reason why capitalism has been such a tremendous success breeding remarkable prosperity in the West while it has failed in many other parts of the world. Since the publication of his book in the Year 2000, capitalism even if of a largely state-centred variety, has flourished in non-western countries like China, India, Brazil, Russia and Japan. But the capitalist ethos is still struggling to take root in many ex-communist countries as well as Africa where capitalism spawns unprecedented poverty, inequality, exploitation and alarming corruption. As I listened to the distinguished guest lecturer on that occasion, I could not but admire his brilliance. However, I had a feeling he was not properly acquainted with the realities of contemporary Nigeria and so had to speak in general terms dwelling largely on the contents of his seminal book.

Why do many nations fail to create strong market economies that can empower the majority of their people to create wealth out of their abundant but dormant assets? Hernando ‘de Soto blames this situation on the absence of an information network that keeps accurate records of property ownership and other economic information. Many small entrepreneurs, he contends, operate in the informal sectors of the economy. They lack legal ownership of their property. Consequently, they cannot enter into meaningful legal transactions. Since their property has no recognition in law, they cannot obtain credit, sell their assets or expand their economic operations. Hernando ‘de Soto makes the startling discovery that the majority of the world’s poor actually sit on tremendous but invisible and therefore useless wealth because their assets have no legal validity and is therefore excluded from the formal economy of their respective countries.

A key concept in understanding ‘de Soto’s thought is what he calls ‘dead capital’. Citing the examples of Peru, Haiti, and Egypt among others, he demonstrates that a majority of the poor that operate in the informal economy sit on ‘dead capital’ – shanties, land, decrepit buildings, shacks – that is worth a fortune in monetary terms. However, because such properties lack legal titles, they cannot be transferred from the informal to the formal sectors of the economy through legal validation. He characterises such assets as ‘dead capital’ because lacking legal recognition, they could not be utilized to raise capital to create wealth or expand businesses. Applying his methodology to Peru, for instance, ‘de Soto’s Institute for Liberty and Democracy, helped to implement property sector reforms which gave titles to over 1.2 million families while also helping some 380,000 firms previously in the black market to enter the formal economy.

Yet, does ‘de Soto not have an overly optimistic, even romantic, notion of capitalism? Is moving people from the informal to the formal economy through legal titling of assets a sufficient condition to ameliorate poverty and create prosperity? How appropriate are this economist’s ideas to the Nigerian reality where the financial sector is dissociated from the real economy and those with valid, legal assets cannot obtain credit and do meaningful business at the prevailing rate of interest? How about the millions who lost their homes to the sub-prime mortgage crisis in the west where legal titling of assets has taken firm root? Does the serious economic crisis from which the United States and Europe are still struggling to emerge not indicative that there is something more fundamentally wrong with capitalism today than ‘de Soto suggests?

However, on further thoughts I found that ‘de Soto’s concept of ‘dead capital’ helped me to better appreciate aspects of the thought of the late statesman, Chief Obafemi Awolowo, that are clearly more relevant to the contemporary Nigerian and African condition. ‘de Soto’s economic thought starts and ends with property. Move the poor into the formal economy by titling their assets and everything else will be added unto you he seems to suggest. On the other hand, Chief Awolowo’s political thought begins and ends with man. In the fourth of his Kwame Nkrumah memorial lectures delivered in 1977, Awolowo posited thus “Man is the sole creative and purposive dynamic in nature: everything else by comparison is in a state of inertia…Other things being equal, and barring frictions, it can be said without fear of contradiction, that a man who is healthier and stronger physically, who is more developed in his subjective mind and who is more purposeful psychologically, will economically be a better dynamic active, causative agent, and achieve more quantitative and qualitative effect than any other man who does not have these attributes”. We can thus see why education, healthcare and full employment loomed so large in Awolowo’s welfarist agenda. Without proper education, efficient health care, good nutrition and productive engagement, man will be no better than ‘dead labour’, which like ‘de Soto’s ‘dead capital’ will be unable to maximise its potentials both for individual and collective good.

Let us end with further insight on Awolowo’s thought on this subject. In his words “The sum total of what we have said is that man is the prime mover in every economy. Cocoa plantations, oil wells, rubber, oil palm produce, copper, groundnuts, timber, iron and steel, etc, are not. All these things in their natural states are either passive, inert and in a state of rest, or purposeless when in motion. Their induced rest in any place, or motion or acceleration towards any direction, depends on man alone”. My summation: Man, not property must be the centre piece of any progressive economic policy.