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Does Niger have a market mentality?

The Washington Post article, The Rise of a Market Mentality Means Many Go Hungry in Niger, has generated a lot of heat in the blogosphere. Here's an extract:

In a country adopting free market policies, the suffering caused by a poor harvest has been dramatically compounded by a surge in food prices and, many people here suspect, profiteering by a burgeoning community of traders, who in recent years have been freed from government price controls and other mechanisms that once balanced market forces.

I'm not going to fight any ideological battles here. (Everyone else has done that. Check out Cafe Hayek for a counterargument; Owen Barder claims the middle ground.)

Instead, I just wanted to check out the facts about these free market policies.
- It costs nearly four years' income to pay the fees required to set up a limited liability company in Niger; entrepreneurs also have to deposit minimum capital of over seven years' income.
- Niger has the most rigid employment laws in the world.
- If you want to get a loan, it costs nine months' income to set up some kind of collateral. Coverage by credit registries is almost nonexistent.
- Trying to collect an unpaid invoice by going through the courts will take nearly a year and cost over 40% of the invoice's value.

I wouldn't blame this red tape for the crisis, but such policies and institutions have been shown to slow down growth, increase unemployment, increase the size of the informal sector (where people have no legal protections) and keep women and young people out of the labor market.

Here's the World Bank's official response to the crisis in Niger.

Comments

Great post. I just want to point out the rhetorical question is a bit confusing. Which "Niger" does not have a market mentality? All the examples you mention are bureaucratic impediments. So perhaps the government doesn't have (much of) a market mentality. But the common people of Niger are a different matter. Do you mean some kind of confidence in the working of markets among the citizenry at large, so that there is a constituency for market reform? I certainly hope you don't mean that the private sector in Niger does not respond to the way the rest of the world with a "market mentality" does!

Submitted by Andrew Wright on
If you wouldn't blame the red tape for the crisis, is it relevant to an article about the causes of the crisis? It seems clear that "free market policies" here refers to the government's alleged failure to intervene effectively in a crisis situation in which food is on sale but the poor are starving. I don't know how fair this interpretation is, but would it not be logically possible to consider both such a failure to act in a crisis and the crazily excessive red tape to be bad things, and indeed both symptomatic of poor and unresponsive governance?

Submitted by Rahmane Idrissa on
Here are some other non-ideological facts however: the red tape listed has to do with employment and contract, not with trade. Free trade is a reality in Niger, and the World Food Organization has recently warned that Nigeria might suck up Niger's agricultural surplus this year because there is no control on trade. Furthemore, in a free trade environment prices are dependent on the self-regulated market, and in Niger, agricultural prices soar in particular because of the higher demand from the huge Nigerian market, served by a currency weaker than Niger's euro-pegged CFA franc.

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