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

The Moraisian trainers.
The project coordinator.
General consultant.
2 Representatives of the project NGO.
Representative of the Finance Ministry.
Representative of the Rural Development ministry.
At least 5 observers (possible coordinators for future projects).
At least 6 qualified persons, 3 indicated by the NGO and 3 by the project coordinator.
350 persons, indicated by the tank commissions, interested in participating with responsibility for credit arrangements at tank commission, well-commission and central management levels.

Duration of the workshop: about six weeks.

The Workshop will be expected to produce the following structures:

The Cooperative Local Development Fund (Bank)

a) Definition of the social form
- statutes
- rules
- professional and administrative structures
- financial aspects
- relations with the LETS local money systems

b) Physical aspects
- land
- office
- safety
- communications

c) Financial aspects (Definition of initiatives at each structural level. How much money is to be distributed at each level?)

- funding of initiatives at general project level (recycling structures, important productivity initiatives, public works)
- funding of initiatives at intermediate, well commission, level
- funding of initiatives at local tank commission level
- funding of socially based initiatives (clubs, interest groups etc)
- traditional banking activities

Organisation of the operations of the Fund

a) Central structure

b) De-centralised structure
- Preparation operators
- Meetings at tank commission level

c) Coordination
- With LETS structures
- With tank commissions
- With project coordinator

d) Financing of specific projects
- Relations with financiers

e) Communications structure
-Vertical, at project level (project coordinator, transactions operators, tank commission level operators, end users)
Commercial, radio, website

Recycling of funds

The funds recycled over the first period of ten years are approximately Euro 16.000.000. This is a very conservative estimate.

They are made up of:

a) A payment of about Euro 0,60 per user per month into the Cooperative Local Development Fund. Where seed funds are in the form of an interest-free ten year loan, these monthly payments make up the interest-free seed loan repayment. These are shown as horizontal lines at the bottom of the micro-loans graph. They are constant. During quarters 42-45 the amounts left for repayment UNDER THE PROJECT are reduced to zero. However users continue to make monthly contributions on their own account, so the recycling of funds will in practice continue. The capital fund will build up again as shown in the micro-loans graph. It will drop again when replacements of the original capital goods are made or the system services extended. It will then build up for a third time to cover further collective capital investments and so on for so long as the users continue making their monthly contributions. Where the initial project is in the form of a grant, the large amount of capital which has built up in the Cooperative Local Development Fund can either be used for interest-free micro-credit loans for productivity increase. However, project management may also make proposals for the extension of the services available to the users.

b) Certain capital sums such as repayments for the gypsum composite factories, the mini-briquette manufacturing units, the buses and vehicles, and project and maintenance reserves.

c) Repayments under the micro-loans. These are seen as diagonal lines in the micro-loans graph. Towards the end of the project period, payback times are shortened to ensure capital re-enters in time for repayment of the original seed loan.

Costs for the creation of the interest-free micro-credit structures.

Click to see the typical costs for the creation of interest-free micro-credit structures in integrated development projects.

The micro-credit structures are interest-free. They are also especially innovative because there are no formal money administration costs either. The local money system developed is used for the administration of the micro-credits. That means that beneficiaries receive formal money funds to increase their productivity but pay neither formal money interest nor formal money costs. Further, it is the beneficiary who proposes a plan for the reimbursement of his loan.

1. Research.

On one page, explain these concepts to the populations in your chosen area.

2. Opinion.

After your presentation, the populations think that what you have said is so far outside their own personal experiences that you must be talking of magic. At the beginning they do not take you seriously. Describe on one page your dialogue with the populations, with their objections and your answers.

3. Opinion.

During a public meeting of the tank commission to which they refer, three women propose to set a theatre cooperative up for the spreading of information on family planning, AIDS, the use of condoms, etc. On two pages present their application and the reaction of those responsible for the micro-credit system at the tank commission level. Write an introduction to the problem, a description of the proposal made by the women, the reaction of the tank commission and your conclusion. Remember that the women’s application should be refused at tank commission level and passed to the central committee level for handling. The reason for this is that the initiative implies theatrical performances in all +/- 200 tank commission areas and/or the+/- 40 well commission areas in the project zone. The initiative is therefore general in nature. Consider as well the relationship between the proposed initiative and the work of the Health Clubs. Distinguish between what the women can do under the local money system set up, and their expected formal money costs, which are the subject of their application for a micro-credit loan. Explain how they would earn formal money from their initiative to pay their formal money micro-credit loan back.

4. Opinion.

A group of youths wants to found a Football Club. On one page, advise the group on how to make a micro-credit application. At which level would the club operate ? A which level should it apply for a micro-credit loan ? . Distinguish between what the women can do under the local money system set up, and their expected formal money costs, which are the subject of their application for a micro-credit loan. Explain how they would earn formal money from their initiative to pay their formal money micro-credit loan back.

It has been seen that each family, during each period of ten years of operation, will, on an average, receive at least +/- Euro 2600 in interest-free micro-credit loans. During work in Block 1 Section 1. Analysis of the causes of poverty the important role played by interest in financial leakage, one of the main causes of poverty, was stressed. Each time an initiative is financed without interest (and without formal money costs), thereby keeping the formal money in the micro-credit fund in on-going recirculation in the project area, an important local economic advantage is achieved in comparison with the traditional financial system. The longer formal money can be held in circulation locally, the more rapid the recycling of the funds, and the greater the advantages for the local populations. This concept is well explained in Chapter 2 « Understanding the Local Economy » of the manual by Ward B. et Lewis J., Plugging the Leaks, New Economics Foundation, London, 2002 already cited at point 3. Local money systems - introduction of this section.

5. Opinion.

Make a one-page summary of the foreseeable financial effects from the savings in interest over the first ten-year period of management of an integrated development projects.

6. Opinion.

Explain on one page how your summary influences your vision of the citation from the work of Silvio Gesell «Money is not the key that opens the gates of the market, but the bolt that bars them» The Natural Economic Order, Revised English version, Peter Owen, London 1948, page 228.

◄ ►

◄ 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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