NGO "ANOTHER WAY" (STICHTING BAKENS VERZET), NETHERLANDS, SUSTAINABLE INTEGRATED SELF-FINANCING DEVELOPMENT PROJECTS AND ADVANCED DEVELOPMENT TECHNOLOGIES

“Time is money” (Franklin, B., To My Friend A.B., Advice to a Young Tradesman Written by an Old One, in Benjamin Franklin, written by Himself, to which is added his miscellaneous essays, Miller, Orton and Mulligan, New York, 1855, essay 251.)

This section provides general information on local money systems in industrialised countries. The innovative application of local money concepts to integrated development projects in different from that described in this section. For example, all adult inhabitants of an integrated development zone automatically become members of the local money system there as of right. At the same time, they are always free to use the system of not to use it, except for certain services provided for the project itself. All members are issued with a start capital, representing a certain number of hours’ (probably 50) work, so as to avoid all sensation of indebtedness.

«Each morning we wake up with 86.400 seconds paid into our personal time account » Terris François (co-founder of the first local Money system in France : Montbel in the Ariège region), SEL Mode d’emploi, Edition November 2002., p. 26 (Translation T.E.Manning)

“When designed well and appropriately for the specific context, local currencies can boost a local economy and reward important work that needs to be done. Where national currency is not available because of overall scarcity or there is not enough market value for the work, local currencies can create real, tangible wealth we can see and control. Investing in community currency means investing in your community's health for the long haul, and therefore your own security and happiness.” (Luna M., Local Money Creates Real Wealth Outside the Bubble , Shareable.net, CommonSource, Tides, San Francisco, 01 November, 2011.

1. Opinion.

On one page, relate this concept to local money systems.

An important resource for local economic development in general (it is not specific to local money systems as such) is the manual by Ward B. and Lewis J., Plugging the Leaks, New Economics Foundation, London, 2002. The example of leakage of water from a bucket with holes in it was brought up in 1. Basic concepts - introduction of this section of the course.

2. Opinion.

On one page apply the example of the perforated bucket to your chosen project area.

Click here to see how a local money transaction works.

Because of the nature and distribution of the populations in most integrated development project areas only one local money system is generally foreseen for each project area. However, the inhabitants are quite free to opt for two or more systems should they wish to do so. All adults within a system should be registered as members, but use of the system with exceptions for goods and services necessary for the project itself, would be voluntary. Any member may usually freely choose whether to conduct a given transaction in the local currency system or within the formal currency system.

The LETS group will usually have +/- 35000 registered adult members. Children under the age of 14 will not be registered as they are not, under the international convention on the rights of children, allowed to work. They will become registered members of their local LETS systems upon reaching the age of (14). The members of (the, each) group will be coded so that their and tank-commission and well areas can be identified and the cost of more local, optional, initiatives such as PV lighting for study purposes debited to the members directly involved rather than to the whole project area.

Integrated development projects provide for a rapid increase in the educational facilities made available to all of the children in a project area. The populations will decide on the age for the entry of children into the local money system. In principle, participation in the local money systems is not in conflict with secondary and tertiary education, provided the rights of children are respected..

A "catalogue" of goods and services is may, where considered useful, be prepared periodically in a form which can be understood/read by the group members. In the various project areas what is available and who provides it will often be widely known at local level.

All the local LETS currencies within the region of which the project area is part will have the same reference value. This will be decided with the local population for this project, as it is serves as pilot project for the region.

The reference value will normally be based on the perceived value of an hour’s work. Since the local LETS currencies in the region will have the same reference value, they can be transferable from one to another. However, not all goods and services will be transferable between the different systems, as this could lead to a drain of resources from one system to another. LETS systems work best when the financial resources remain balanced within each system. The LETS coordinators and the members will decide which goods and services are "exportable". Gypsum composite products made in group A, for instance, could be exportable to group "B". Cloth made in group "B" may be exportable to group A. Crops and vegetables not grown in one group could be importable from the others.

Assume that a gypsum composite product is sold by a group A member to a group B member. The transaction would be in local currency A. The gypsum composite product manufacturer would be credited in local currency A. The coordinator of group A would advise his counterpart in group B of the debit for the group B member and separately credit group A with the same amount in group B currency. The group B coordinator would debit the group B buyer in local currency B, and, separately, debit group B with the same amount in group A currency. Goods and services supplied by group B to group A would be registered the other way round. The group A and B coordinators then simply eliminate the respective debits and credits by pairing value units one for one.

The following registrations take place:

a) The group A producer would be credited in local currency A.

b) The coordinator of group A would advise his counterpart in group B of the debit for the group B member.

c) The coordinator of group A would credit his group A with the same amount in group B currency.

d) The group B coordinator would debit the group B buyer in local currency B.

The group B coordinator would debit his group B with the same amount in group A currency.

e) Goods and services supplied by group B to group A would be registered the other way round, following the procedures described in steps a) to e).

f) The group A and B coordinators then simply eliminate the respective debits and credits by pairing value units one for one.

g) In case of a (large) remaining credit balance of one of the two groups at the cost of the other, the coordinators will take whatever steps necessary to bring the balance of the accounts as close as possible back to zero as quickly as possible. There are many ways of doing this. Allowing extra goods and services to be exported from the debtor system to the creditor system is one way. Organising markets or fairs with debtor area products in the credit area is another. Organising tourist outings of creditor area residents in the debtor area is another.

It is a key to the success of the system that the imports and exports of each group remain balanced, their sum tending to zero.

There will be an elected local LETS coordinator in each tank commission area. The LETS coordinator will need to be literate and will be responsible to the general LETS systems coordinator. The local coordinators will help those members unable to write/sign their cheques (or deal with other methods of payment), arrange distribution of chequebooks (or other payment forms)to the LETS users, collect the used cheques (or equivalent) deposited in the LETS POST box near the local water tank and take them to the general LETS systems coordinator for registration. The local coordinators will also display the monthly or weekly reports on the LETS NOTICE BOARD near or above the LETS POST box, advise illiterate members of their LETS balances, call a fortnightly or monthly meeting where the users can discuss the operation of their LETS system, make special requests (such as, for example, increasing the debt limit for sick members or for those making special purchases), and discuss ways to use the goods and services of those with high debts so as to help balance their trading accounts. The local coordinators will also discuss with the members selected proposals for allowing export and import of goods and services into the local LETS system and report back to the general LETS coordinator.

Modern systems for the registration of transactions are being developed. One of them is a slate for micro-finance described in an article by P. Pain in the Hindu, Los Angeles, 18 September, 2011.

The first general LETS systems coordinator will be chosen by the Project Administrator. He and the locally elected LETS coordinators will make up the LETS COMMISSION. The LETS COMMISSION will meet at least once a month to discuss particular problems and to decide on actions needed to balance the export/import accounts amongst the various local LETS currencies.

The fortnightly/monthly reports for members in each tank commission area will be published on the local LETS NOTICE board and discussed at a general meeting of the local members. The report will show, for each member, the previous balance, the current balance, the total number of plus transactions and minus transactions conducted, and list each plus and minus transaction since the previous report.

Payments for LETS services provided by members to their communities will be debited to a special LETS code for the community. When the community debt reaches one LETS currency unit (or other agreed amount) for each member, each member will be debited with that amount. The community LETS code will then be credited by the same total amount. This system allows collective communal property to be involved in the LETS transactions. For example, the sale of wood from communal land can be registered as a credit to the LETS group involved, and then transferred from there to individual group members.

The processes broadly follow traditional balance of payments transactions but the objective is to maintain a balance in imports and exports. A large debit balance between one LETS group and another would show resources are being transferred from one group to another. The coordinators would then have to take steps to correct the imbalance. They could, for example, temporarily extend the range of goods and services the debtor group can export to the creditor group, such as by arranging a special market.

In areas with a high illiteracy rate, one of the main problems to be solved is the form of the local transactions. In Latin America «scrips» are often used. These are values in the form of notes, comparable with formal money cash.. The advantage of these systems is that they are immediately comprehensible to all participants. They also have important disadvantages. Amongst these is the lack of control on the concentration of notes in the hands of a small group, leading to insufficient funding availability in other sectors of the populations. They also tend to favour fraud through unauthorised emission of notes. One way of avoiding this is by frequent recall of notes and their replacement with new emissions. This adds to the administrative work load, and can add to external printing costs.

Where cheques (or other transaction forms) are used, they will have three parts. Each part will have the member's name and LETS number pre-printed on it. The SELLER'S cheque is used in each transaction. The BUYERS name and system code are filled in on the cheque, with the assistance of the local coordinator where necessary, as well as a description (with LETS code) of the goods or services sold. Finally the cheque is signed by BOTH parties and deposited in the LETS post box. The amount credited to the seller must be exactly the same as that debited to the buyer.

3. Opinion.

Give a one-page indication on the acceptance of a local money system in your chosen project area, and the type of system which would be the most appropriate.

Poor people in your project area cannot participate in transactions for the transfer of goods and services because they don’t have «the means » to do it. Through the introduction a a local money system, you will provide them with this possibility. It is your job to encourage them to make use of the system.

4. Opinion.

Write a one-page, down-to-earth speech to convince the people in your project area of the opportunities opened through the introduction of a local money system there.

For a rapid introduction of your local money system, you need the support of locally-known persons to create precedents and to act as « «role models » .

5. Research.

Make a list on one page of at least 10 people in your project area that you would choose as «role models ». Next to each one, say why.

◄ ►

◄ Fourth block : Section 3: Financial structures.

◄ Fourth block : The structures to be created.

◄ Main index for the Diploma in Integrated Development (Dip. Int. Dev.)

◄ List of key words.

◄ List of references.

◄ Course chart.

◄ Technical aspects.

◄ Courses available.

◄ Homepage Bakens Verzet

"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.

“Poverty is created scarcity”

Wahu Kaara, point 8 of the Global Call to Action Against Poverty, 58^th annual NGO Conference, United Nations, New York 7^th September 2005.

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