Four billion people are excluded from the rule of law

Commission on Legal Empowerment of the Poor makes a global call to make legal empowerment a key pillar of the anti-poverty agenda

New York – Four billion people — the majority of people living on our planet — are robbed of the chance to build a better life for themselves because they are excluded from the rule of law. That’s according to a new report launched in New York today by the Commission on Legal Empowerment of the Poor, as it called on governments, international institutions and civil society to put legal empowerment front and centre in the fight against global poverty.

“The lesson is clear. When democratic rules are ignored and there is no law capable of providing shelter, the people who suffer most are those who can least afford to lose,” said former US Secretary of State Madeleine Albright who co-chairs the independent Commission, which is supported by the United Nations Development Programme (UNDP). “Creating an infrastructure of laws, rights, enforcement and adjudication makes the difference between vulnerability and security, desperation and dignity for hundreds of millions of our fellow human beings”.

The Report, entitled ‘Making the Law Work for Everyone’ highlights that half the people in urban areas worldwide live in squatter settlements and work in shadow economies. An even larger numbers live in isolated rural areas with limited secure access to land and other resources. They operate outside the law: they enter into informal labour contracts, run unregistered businesses and often occupy land to which they have no formal rights. In the Philippines, 65% of homes and businesses are unregistered, in Tanzania 90%. In many countries the figure is over 80%. The informal economy accounts for over a third of the developing world’s economy.

“The law is not something that you invent in a university — the law is something that you discover. Poor people already have agreements among themselves, social contracts, and what you have to do is professionally standardize these contracts to create one legal system that everybody recognizes and respects.” said Hernando de Soto, Commission Co-chair.

No modern market economy can function without law and to be legitimate, power itself must submit to the law, stresses the Commission. It identifies four crucial pillars which must be central in national and international efforts to legal empowerment of the poor: access to justice and rule of law, property rights, labour rights, and ‘business rights’.

  • Access to justice and rule of law — Legal recognition starts at birth, says the Report. Over seven in ten children in the worlds least developed countries do not have birth certificates or other registration documents. As people grow up, they live in homes, sell their labour and open small businesses, without formal papers or recourse to justice. Not only are the laws too complicated to understand or in languages they don’t speak, but there is also little or no legal assistance for the poor. In India there are approximately 11 judges for every million people, over 20 million legal cases are pending and some civil cases take over 20 years to reach court. The average judge in the Philippines has a backlog of 1,479 cases,
  • Property rights — To be fully productive, assets need to be formally recognized by a system that includes both individual and collective property rights and that recognizes customary rights. Recording and valuing assets — be they a business or a tool box — in standard records, titles and contracts protects households and businesses. Moveable and fixed property should be available to the poor to use as collateral to obtain credit, business loans and mortgages.
  • Labour rights — Informal work accounts for over half of total employment in developing countries and as much as 90% in some South Asian and African countries. Giving workers secure labour rights encourages them — and their employers — to invest in new skills that enhance their productivity.
  • Business rights — Obtaining a license, the first step to registering a business, is often blocked by bureaucratic ‘red tape’ and costly fees. A recent study of 12 Latin American countries by the Inter-American Development Bank found that only 8% of all enterprises are legally registered, and that nearly 23 million businesses operate informally. The business owners cannot get formal bank loans, enforce contracts or expand beyond a personal network of familiar customers and partners. It is also difficult for the owners to pass the company to the children. Formalizing companies allows ownership to pass from one generation to another and such concepts as limited liability companies, help contain personal risk and shield assets.

Legal Empowerment and the food crisis…
Commenting on the current food crisis, co-chair Albright remarked in New York today, “while the reasons for the rapidly escalating food prices are many, it is clear that those suffering most are the poor and vulnerable. Legal empowerment of the poor is vital to reducing long-term vulnerability. Only when the poor have legal protection for their property, security of tenure and access to affordable credit will they make the necessary investments for increased growth and productivity.” Ms. Albright concluded, “Unlocking the hidden energies and creative potential of the poor is at the heart of the Commission’s work — and should be at the heart of any effort to eradicate poverty.”

Legal Empowerment and democratic governance…
When the laws of society present a barrier to the poor, then the idea of the law as a legitimate institution of democratic governance is injured, warn the commissioners. In contrast, by expanding legal protection, more citizens develop an increased stake in the maintenance of a peaceful social order and the stability of the local government. The Commission argues that strategies that expand legal empowerment to the poor have an impact on the broader issues of stability, peace and democratic governance.

“Governments exist to serve the needs of their citizens. Expanding the blanket of legal protection to the poor serves to strengthen — particularly in the eyes of the poor — the value and legitimacy of the local government.” Co-chair, Hernando de Soto continued, “The establishment of institutions that expand legal protection and reduce vulnerability and insecurity can be the difference between desperation and dignity for hundreds of millions of our fellow human beings.”

The way forward:
Leaders from across society can champion policies and smooth the way to Legal Empowerment, says the Report, but change cannot happen without the active involvement of the poor. Pro-poor community associations, civil-society activists and local social action groups can also help defend poor people in court and expand their rights. Bundling service delivery can help cut costs and simplify procedures.

Legal empowerment can reenergize the human rights agenda and drive advances that would otherwise be out of reach. The Commission’s report concedes that, “making poverty history cannot be accomplished through Legal Empowerment alone, but it is hard to see how it can be done without it.” The Legal Empowerment agenda focuses on improving the internal dynamics of counties. By improving these internal dynamics and frameworks, the Commission’s work serves as a complement to existing efforts focused on issues of debt forgiveness and international aid. Taken together, the legal empowerment agenda can assist nations in transforming debt forgiveness and aid into a realization of the Millennium Development Goals.

The Commission is comprised of 21 Commissioners, including former heads of state and government, cabinet ministers, jurists, economic researchers, and other senior policymakers from the North, South, East and West. Over three years, the Commission conducted 22 national consultation processes with representatives from local governments, academia, civil society and grassroots movements and launched five technical working groups which submitted specialized reports.

For further information please call: Shomwa Shamapande, Commission on Legal Empowerment of the Poor, in New York: +1 212 906 6127 or (Mobile) +1 917 447-5752, Shom.Shamapande@undp.org or visit www.undp.org/legalempowerment/

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