Business Leadership Development

Hernando De Soto (2000:6) writes that Africans are not poor, only poorly organised. He maintains that “The value of savings among the poor is, in fact, immense: forty times all the foreign aid received throughout the world since 1945”. He illustrates that in Egypt “the poor have accumulated forty-five times more wealth than all direct foreign investment, including government investments that went towards constructing the Suez Canal and the Aswan Dam. He continues in Haiti “…the total assets of the poor are more than 150 times greater than all the foreign investment received since the country’s independence from France in 1804”. The problem he propones is that these resources are held in defective forms such as houses built on land whose ownership rights are not adequately recorded, unincorporated businesses with undefined liability, industries located where financiers and investors cannot see them” This lack of structure or documentation means that the assets cannot be turned into capital or traded. Furthermore, they cannot be used as collateral for a loan and cannot be used as a share against an investment. The poor have resources but lack the mechanism of converting these assets into cash because it is undocumented.