Nigeria post independence has aimed to develop an economic system in which investment and ownership of the means of production, distribution and exchange of wealth is made and maintained chiefly by private individuals or corporations. Sadly she suffers the same fate most developing countries and former communist nations that trend the same path encounter: Abject Failure.
Hernando De Soto in his book; The Mystery of Capital, studies the effect of capitalism in the west and tries to analyse why such a strategy is so successful there, but fails to make an impact every other place it is being introduced, Nigeria inclusive.
Capitalism entails among other things foreign investments, stable currencies, transparent banking practices, free trade and also privatisation of state owned industries. However, Hernando describes the major ingredient that is missing in countries trying to adopt capitalism as “Ability to produce Capital”.
Capital is a force that raises the productivity of labour and creates the wealth of nations. It is the lifeblood of the capitalist system, the foundation of progress and the one thing that poor countries of the world fail to produce. Nigeria is a typical example of a country with vast potential that has tried and failed to adopt capitalism system of governance and this is due to the fact that she has failed to produce enough capital to propel her growth. Nigeria has adapted all the western inventions that support capitalism system but has failed to set up the necessary structure required to take off the system.
In the west, every asset is represented in a property document that is the visible sign of a vast hidden process that connects all these assets to the rest of the economy. Effective documentation of such asset can lead to the becoming source of capital. The west has effectively implemented such a system and as such draw capital out of the assets documented. In America for instance, mortgage on the entrepreneur’s asset is the easiest source of fund. This is due to the fact that the assets are registered and well documented, can be proven to belong to the said entrepreneur, has a documented value that covers the credit amount he needs, and can be sold off legally to recover the credit if it crystallises. The same cannot be said of Nigeria, where assets are poorly registered, documentation outdated and exchange of assets from one owner to another is largely untraceable. Trade within the country is usually focused on local buyers who usually have a long friendship with the property owner and a certain level of comfort in the transaction.
Most capitalist nations suffered similar problems before finally perfecting the implementation of the capitalist system. The United States in 1783 had to deal with illegal squatters and settlers who occupied land that legally did not belong to them. This was as a result of no one legal system acceptable in all parts of the country that indicated the various processes that had to be used to legally acquire such lands and document the transaction. Nigeria also suffers similar problems presently as a flaw legal system is implemented and fails to check the various transactions that involve acquisition of assets that can lead to capital generation for the nation.
Hernando De Soto analysed that capital is the most essential component of western economic advancement and is also the most neglected by developing including Nigeria. He explained that for any nation to successfully implement capitalism, certain areas of the transition had to be conquered. They are:
1. Mystery of Missing Information
2. Mystery of Capital
3. Mystery of Political Awareness
4. Mystery of Lessons of the West
5. Mystery of the Legal failure
MYSTERY OF MISSING INFORMATION
Nigeria is a country that suffers from poor record keeping and this has often lead to problems where identification of...