The Five Stages of the ILD Program
The ILD prefers to initiate its Program in a client country at the invitation of the Head of State who has learned of ILD's work from the media, top aides and ministers, or personally reading the books of ILD President Hernando de Soto. This effort to create Awareness about how our work can help a country make the complex transition to an inclusive market economy in fact begins even before the Program starts --in the effort to inform and educate the country's top leadership and key decision makers-- and keeps on going in a continual effort not only to keep political leaders and stakeholders informed on how the Program is progressing but to continue to educate the political and bureaucratic classes, businesses, academia, local NGO's, and the press about the ILD Program, thus creating a well-informed vanguard of reform inside the country.
With the backing of the Head of State, the ILD helps recruit top professionals based in the client country for the Program's first stage: Training and Team Building in Lima where experienced ILD staffers will prepare them to carry out the Program in their country as part of teams responsible for different aspects of the Program (Strategic, Executive, Technical, and Implementation). Back in their country, the teams then initiate the sine qua non stage of the ILD Program --the Diagnosis to obtain a clear picture of the extent and value of the extralegal economy and the specific legal barriers that force the majority of people into it. With that data in hand, the Program's next stage can begin --designing proposals for Institutional Reform that will build on well-established local legal and extralegal practices that all citizens identify with and respect, making sure that their user-friendly qualities are reflected in the reformed legal mechanisms and that the current law, on-going programs, and reforms all address the same issues that the extralegal practices were invented to handle. The Institutional Reform stage streamlines the rules and procedures that govern real estate and business activities, reducing the time and cost to enter and operate in the legal sector. An institutional vehicle created with the responsibility of integrating all citizens into one legal economic system --with the over-riding goal of enabling people to generate capital.
The reforms must also lay the groundwork for a massive formalization campaign and its Implementation. Resistance to reform from vested interests is likely and to overcome such opposition, ILD establishes local ownership of the reform process and thus the client country itself sustains it over time; the ILD typically recommends that the Government create a new, independent institutional vehicle for setting up:
- A Field Operation Program to establish procedures, recruit and train personnel, and equip offices to recognize and process individual property rights in the extralegal sector.
- A Consensus Building Program to demonstrate publicly --through the media-- the benefits of formalization to any group inclined to support the status quo (e.g. the business community, the bureaucracy, even the extralegal sector).
- A Feedback Mechanism to ensure continually that the rule of law stays in touch with the needs of the poor and that any new legislation or government regulations are in sync with the property system.
- A National Database that will pull together the nation's dispersed record keeping and registration processes with all the economically useful descriptions of extralegal assets into one easily accessible location.
Once in place, these various systems will, in turn, pave the way to the Program's --and the client country's-- ultimate objective, Capital Formation. In this final stage, the ILD's legal and economic experts will help formulate as well as help implement recommendations for relating newly legalized property to opportunities in larger national and international markets where it can be leveraged to generate additional wealth, create capital, and achieve sustainable development. This includes helping set up: a) credit and mortgage applications; b) collections systems for credit, rates, and taxes; c) the provision of housing and infrastructure; d) insurance and information services; e) identification systems; and f) the use of property to enhance accountability. ILD recommendations for Capital Formation will also facilitate good governance --by providing reliable information about market behavior, property status, and the extent of the rule of law.
The entire process of how the ILD Program moves from finding out how the poor operate in the extralegal sector (and why) to designing a reformed system that does not just capture that dispersed data but brings it together into one place to be leveraged into economic benefits for the majority of entrepreneurs is illustrated in Figure 2 below.
Fig. 2. ILD: The Opportunity
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Crucial Institutions for Legal Empowerment
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