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.
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.