The Model

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Incorporating innovative social, financial, economic, local administrative and productive structures, numerous renewable energy applications, with an important role for women in poverty alleviation in rural and poor urban environments.



"Money is not the key that opens the gates of the market but the bolt that bars them"


Gesell, Silvio The Natural Economic Order

Revised English edition, Peter Owen, London 1958, page 228



Edition 11: 22 November, 2006


6.20 Second phase lasting about 9 months

This is the most critical phase during which the basic structures necessary for the operation of the entire system are set up by way of a series of organizational workshops following the method introduced by the Brazilian sociologist Clodomir Santos de Morais.

Refer  to schedules 1 and 2 for some material and a bibliography on Organisational Workshops.

The sequential order of the workshops is very important. The first workshops are the ones setting up the Health Clubs, which offer women a platform from which they can organise themselves. After that, the tank commissions, which are the heart of the system, can be established. The third structure is the local money LETS systems, followed by the micro-credit system, then the gypsum composite manufacturing units, the water supply system, the recycling system and, where applicable, the radio station and other planned structures.

Within the project area, an interest-free, inflation-free cooperative financial environment is created. Local economic systems are created, from which financial leakage is discouraged and where possible blocked, and the small amount of formal money available in the project area stays there and is re-circulated locally. Financial leakage is caused mainly by interest (up to 40% of the price of a typical industrial product is in fact accumulated interest), all energy sources, including electricity supply and fertilisers, not produced in the area, and health costs for medicines and medical services  imported into the project area, often also into the host country. Articles on these innovative cooperative local financial and economic structures.

Within each of these local economies:

a) Each LETS local money system in the project area must have a zero balance with the others in the project area.

b) The LETS local money systems in a project area must have a zero balance with LETS local money systems outside the project area.

c) The formal money system in the project area must tend towards a zero balance with the formal money system within the host country.

d) The foreign currency (formal money) balance between the cost of items and services imported into the project area from outside the host country and the value of items and services exported from the project area outside the host country must be zero.

So long as these balances tend towards zero, it is impossible for one local economic system to get rich at the cost of another. The idea is to set up a patchwork quilt of these local economic structures in a given country. Local development is then powerful, fully sustainable, and decentralised. The local people (and especially women) are fully empowered and manage their own decentralised structures.

So how are the local economic systems set up?

A number of simple, cooperative financial, economic, social, and productive structures are created in each project area. The order in which this is done is critical.

1) Cooperative health clubs are set up. The health clubs are based on groups of about 40 families (200 people) based around what the Model calls tank commissions but which could be called local development committees. The health clubs are important because they constitute a platform enabling women to organise themselves so that they can vote in block at meetings and participate fully in the structures. The gender issue (the role of women in development) is addressed this way as it is women who are expected to take most of the responsibility for the projects. The initial costs of the health clubs are covered by the project funds until the LETS local money systems are set up.

2) Once the women's health clubs are working, the local tank commissions or local development committees are set up. These are also based on the same 40 families (200 people) . The people can decide how many members the tank commissions will have, typically 3 or 5.The tank commission is the heart of the project. Its functions are fully described in the Model and draft projects and illustrated in diagrams. The cost of organising the tank commissions (local development committees) is covered by the project until the local money systems are set up and become operative.

3) Once the tank commissions have been formed, LETS local money systems can be created. Poverty is often coupled with "lack of formal money". If the people haven't got any formal money, they cannot buy goods and services. Yet the absence of formal money does not mean they do not have goods and services to transfer. The LETS local money systems give the people the means of exchanging all goods and services produced within the project area. The art then is to use technologies enabling most of the items and services basic to local development to be built or executed with 100% local value added in the project area, so that they can be produced, installed, maintained and paid for within the LETS local money systems, without the need for formal money. For instance, under the Model and the draft projects, the entire integrated sanitation system can be built, installed, run and maintained without a cent of formal money! The costs of running the LETS local money systems are covered under the local money systems themselves.

4) Once the LETS local money systems are in place, a distinction can be made between what can be done under the local money systems and what cannot. At this point of time the cooperative interest-free micro-credit structures are put in place. These recycle the users' monthly contributions to the Cooperative Development Fund interest-free for credits for sustainable productivity purposes, for the purpose of purchasing goods not locally produced. The micro-credit systems will allow at least Euro 1500 of interest-free micro-credit per family during the first ten years of each project. Probably more, as the Euro 1500 is conservatively based on an average two-year pay back time. The costs of running the micro-credit structures are covered under the local money systems. Where local cooperative bank structures willing to work within the local money systems do not exist, the project in question will set one up.

5) Once the cooperative micro-credit structures and the LETS local money systems are in place, the gypsum composite factories can be set up. Amongst the priority items for manufacture in these factories are products necessary for the water supply project such as water tanks, well linings, water containers, etc. and even some or all of the water pumps themselves, though work on the development of these is still on-going. When capacity is available they can start making the planned ecological sanitation systems, and other necessary items such as high efficiency stoves.

6) Cooperative interest-free self-terminating building society type structures can be set up at tank commission, well commission, or central project level to finance the purchase of interest-free solar home systems and other renewable energy structures of particular common interest to the people in the project area.


The following graphs can be downloaded from internet site www.flowman.nl or transmitted as attachments to an a-mail message on request.


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List of drawings and graphs.
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List of abbreviations used.
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