SABOTI SUSTAINABLE SELF-FINANCING INTEGRATED RURAL DEVELOPMENT AND POVERTY ALLEVIATION PROJECT "NEW HORIZONS FOR SABOTI" SABOTI DIVISION, TRANS NZOIA DISTRICT, KENYA, INCORPORATING LETS, COMMUNITY BANKING AND RENEWABLE ENERGY APPLICATIONS

 

Application Data Sheet for pre-qualification under the EU-ACP Water Facility

The Applicant, the Ministry of Water, Resources Management and Environment Development of the Government of Kenya has set up the following national and regional level programmes to honour its obligations under the Millennium Development Goals (MDG’s) adopted in 2000 to reduce by 50% the proportion of the Kenyan population without access to clean drinking water by 2015, and those under the 2002 Johannesburg World Summit on Sustainable Development (WSSD) to reduce by 50% the proportion of the population without access to sustainable sanitation, and the promotion of integrated and effective structures for the management of water resources.

Kenya’s National Drinking Water Plan 2004-2005 (???????change as required) provides for a series of regional actions involving (?????? change as required) the rehabilitation of existing drinking water structures, the supply of new boreholes and water sources. In particular in the Trans Nzoia District, the National Plan includes projects for the decentralisation and transfer of responsibility for water services, an improvement in the supply of clean drinking water and a reduction of the proportion of the un-served population, together with an improvement in the condition of health of the population and a contribution towards poverty reduction in the area.

The Saboti Division, the subject of this project, is one of the six administrative divisions of the Trans Nzoia district. It is divided into five locations and six sub-locations. The Division covers an area of about 200 km2, being about 25 kilometres from north to south and 18 km from west to east. The population in the area is estimated to be 60.000. Activities under the National Plan in the district include ?????????????????? for a total value of Kenyan shillings ???????????????????

The innovative project “New Horizons for Saboti” here presented covers 40 localities in the Saboti Division, Trans Nzoia District, Kenya. As a result of an innovative approach to the inter-relationship between the social and financial structures necessary for development and poverty alleviation, a wide range of basic services can be made available to the entire population in the project area for the same price as the water facilities originally included in the National Plan.

The project qualifies under both section 1.2.2.1 “Co-financing of Water and Sanitation Infrastructures” and under section 1.2.2.2 “Co-financing of Civil Society Initiatives” of the ACP-EU Water Facility. It is based on the improvement of the quality life of all of the inhabitants in the project area and in particular of that of the poorest, but is not limited to water supply and sanitation. It also covers, by way of example, structures for hygiene education, for the autonomous management of services at local level, local money systems, interest-free micro-credit systems for productivity increase, local production of most of the goods necessary for the basic services and structures to be set up, waste recycling, communication, lighting for study purposes, local production of high efficiency stoves and the production of mini-briquettes for them, rain-water harvesting, etc.

The project sets an interest-free, inflation-free, cooperative financial environment up for all of the inhabitants in the project area under which private initiative and genuine economic competition can flourish. It gives direct employment to about 15% of the local adult population and powerfully influences the economic development potential of the remaining 85%. All of the social and economic structures set up are executed, and sustainably managed and maintained by the local populations who also own them, without any form of public support following their formation.

The project contributes to the fight against AIDS and to the general conditions of health of the people in the project area through the creation of Health Clubs, hygiene education courses in schools, the supply of clean drinking water, the supply of a complete sanitation system for homes and in public places and schools, the recycling of waste, better aeration with smoke reduction in homes and in villages, the elimination of stagnant surface waters and improved nursing for the sick made possible under the local money systems set up.

The project has been submitted under category 1.2.2.2 “Co-financing of Civil Society Initiatives” because it promotes a general mobilisation of the entire population as foreseen under decision 7300/04 dated 17/03/2004 of the Council of Europe, which provides that funds be destined for:

- innovative systems for the solution of the problems cited by the World Panel on Financing Water Infrastructures “Financing Water for All”
- ensuring access of the poorest to water supply and sanitation schemes as set out in art. 65 of the Cotonou Agreement

The project establishes a new form of public-private cooperation combining the wide executive experience and technical expertise of the applicant Ministry in the supply of drinking water and sanitation in Kenya with a powerful and direct social and economic mobilisation of the inhabitants in the project area.

Most of the project activities are carried out by the local populations themselves under the local economic and autonomous management structures set up during a series of “Capacitation Workshops” using methods developed by the Brazilian sociologist Clodomir Santos de Morais.

The funds of the project “New Horizons for Saboti” are destined:

- for the creation of autonomous social and economic structures, with particular reference to the integration of water supply structures with other services necessary to ensure a good quality of life for all of the people living in the project area and in particular of the poorest
- to act as catalyst for a general social and economic mobilisation in the project area to establish a “Best Practices” precedent which can be emulated in other regions throughout Kenya and in both rural and poor urban areas in other countries throughout the world.
- to ensure that property in all of the cooperative social and economic structures set up following a carefully organised logical order, remain in the hands of the local people through the formation of a Cooperative called “New Horizons for Saboti” registered in the name and for the benefit of the entire population in the project area.
- for an innovative and flexible project which promotes the integrated development of the local economy and supplies the missing link between the financing of sustainable projects and productive activities.
- for a project where all activities foreseen, including factories, materials, and products are 100% ecological and recyclable, where used water is treated at the lowest possible level, usually that of the individual households.
- for a project which reduces and attempts to sustainably eliminate all pollution of water resources, the earth, and the atmosphere due to human activity in the project area, advantages which will be progressively spread at regional, national, and international levels as the new concepts introduced are applied there.
- for a project where women play a dominant role both in the execution and administration of the project structures and works, and in respect of the individual benefits in terms of improved living conditions deriving from the project execution.
- to launch a new cooperative interest-free, inflation-free non-profit cooperative economic environment in the project area operating in parallel with the national formal currency system without replacing it, which leads to a powerful mobilisation of resources and increased local private productive capacity.
- to create a grassroots interest-free micro-credit system favouring productivity increase in the product area which is managed without the need for any national formal money (Kenyan shillings) under the framework of the local money systems set up.
- to create a local economic system which inhibits financial leakage from the project area and promotes the continual recycling of the limited formal money resources available in the project area for the purposes of productivity increase.
- to create three-tiered cooperative structures managed and paid for by the populations themselves for the execution, management, monitoring, financing and ownership of the goods and services supplied under the project.
- to the creation of inherently sustainable structures including financing for the long-term replacement of capital goods and for the extension of services.
- to setting up a complete range of structures passing from hygiene education to the supply of drinking water and rain-water harvesting, to a complete system of sanitation (eco-sanitation), waste recycling, high efficiency cooking stoves and briquettes for them, the fight against de-forestation and the destruction of local eco-systems and to improved education structures for the benefit of the poor and un-served.
- to make a complete range of social, financial and economic structures available to the poorest to enable them to increase their productivity.
- to create employment for about 15% of the adult population in the project area.
- to enable coverage of the monthly contributions paid by the population into a Cooperative Development Fund by way of strong direct and indirect reductions in their Current outgo for water, fuel, kerosene, batteries and medicines etc
- to create a strong reduction of CO2 emissions in the project area and qualify for the issue of CER certificates for sale to industrialised nations.

The applicant Kenyan Ministry of Water, Resources Management and Environment, through its District Water Officer for the Trans-Nzoia is responsible for the execution of the project and in particular for the drilling of the boreholes foreseen.

In accordance with the above-described description of the activities, inclusion under category 1.2.2.2 Financing of Civil Society Initiatives is justified because most of the project activities take place within the framework of social and financial cooperative structures financed by the populations as an integrated part of the project. These activities may be coordinated by an NGO, the Sima Community Based Organisation, which is already based in the town nearest the project area, Kitale, Kenya.

The NGO will act as “sub-contractor” and will nominate a coordinator for the creation of the social and local structures foreseen. The coordinator will in turn use the services of a consultant “sub-contractor”, T.E.Manning of the Netherlands, the author of the new development concepts, which have been duly placed in the public domain, at the basis of this pilot project (Details www.flowman.nl)

The participation of specialist sub-contractors is foreseen for the management of the Moraisian Capacitation Workshops, for the adaptation by the people of the Health Club material already available, and for the setting up of the three low-cost, labour-intensive, zero-energy input factories for the production of articles based on anhydrite (Beosite).

The following are some of the innovative aspects of the project:

a)The project is financed by a seed-capital investment of Euro 75 per inhabitant, which covers a very complete range of structures and services necessary for a good quality of life for all of the inhabitants without exception in the project area.
b)The project sets up an open competitive free-enterprise productive system within the framework of an interest-free, non-profit, cooperative financial environment operating in parallel with but not replacing the existing formal money system.
c)No-one is required to carry out work for the project on a voluntary basis without due payment. All administrative, construction and maintenance operations will be carried out by local village operators paid according to local tariffs expressed in the local money structures set up.
d)Users pay Euro 0.75 per person per month into an interest-free cooperative local development fund. This formal currency fund, which is the property of the inhabitants, remains in the project area and is used and continuously recycled for interest-free micro-credits for local productivity development.
e)Funds destined for long term replacement of capital goods and for extensions to services are also used for interest-free micro-credits until they are needed.
f)The local money systems set up constitute the usual means of payment for most locally produced and consumed goods and services, including those necessary for the execution of the project itself, but without substituting the formal economic system based on the Kenyan shilling.
g)Users are 100% responsible for operation, administration, maintenance, long-term capital goods replacements, and for future extensions to the structures set up. The monthly contribution paid by each inhabitant is enough to cover these costs, with a “fail safe” system at several levels to protect the interests of the poor, the sick, and the elderly.
j) The project, with the exclusion of the initial seed capital provided, is self-financing. Savings on current outgo for fuel, energy, water and other services will be sufficient to cover most, if not all, of the monthly contributions made by the families.
k)Women play an active role in the execution and the administration of the project.
l) Financial leakage of formal money funds (Kenya Shillings) from the project area is reduced, and if possible, eliminated altogether.

Within each of these local economies:

a) Each local money system in the project area must have a zero balance the others in the project area.
b) The local money systems in a project area must have a zero balance with local money systems outside the project area
c) The formal money system in the project area must have a zero balance with the formal money system within the host country
d) The foreign currency balance in the project area (items imported into the project area from outside the host country must be balanced by the export of items from the project area outside 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 money systems in a given country. Local development is powerful and decentralised. The local people are fully empowered and manage their own decentralised structures.

So how are the local economies set up?

A number of structures are created in each project area. The order in which this is done is critical.

1) Health clubs are set up. The health clubs are based on groups of about 40 families (200 people) based around what I have called 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. 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 local money systems are set up.

2) Once the women's groups are working, the local tank commissions are set up. These are based on about 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. It's functions are fully described in the Model and draft projects and illustrated in diagrams. The cost of organising the tank commissions is covered by the project until the local money systems are set up.

3) Once the tank commissions have been formed, 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 local money systems give the people the means of transferring all goods and services produced within the project area. The art then is to use technologies enabling most of the items basic to local development to be built with 100% local value added in the project area, so that they can be produced, installed, maintained and paid for within the local money systems, without the need for formal money. Under the Model and the draft projects, the entire sanitation system can be built, installed, run and maintained without a cent of formal money! The costs of running the local money systems are covered under the local money systems themselves.

4) Once the local money systems are in place, a distinction can be made between what can be done within the local money systems and what can't. At that time the interest-free micro-credit structures are put in place. These recycle the users' monthly contributions interest-free for credits for productivity purposes, for the purpose of purchasing goods which cannot be locally produced. The systems will allow at least Euro 1500 of interest-free micro-credit per family during the first ten years of the 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 micro-credit systems and the local money systems are in place, the Beosite factories can be set up. Amongst the priority items for manufacture in these factories are products necessary for the water supply project, water tanks, well linings, water containers, etc. and even some or all of the water pumps themselves. (We are currently working on Beosite water pumps - one pump should be ready in a few months' time, the deep well pump about mid 2004.) When capacity is available they can start making the sanitary systems and other items such as high efficiency stoves.

6) Interest-free self-terminating building society type structures can be set up at tank commission or other level to finance the purchase of interest-free solar home systems and other structures of common interest.

Apart from structures basic to an improved quality of life, such as hygiene education at home and in the schools, water supply, sanitation in the homes at schools and in clinics, solar lighting for study purposes, solar refrigeration for medicines in clinics, improved cooking stoves etc, neither the Model nor the draft projects attempt to list all of the initiatives which could take place, as these are as varied as the minds and wishes of the people.

However, any services the local people may consider of special importance can be included in the project and itemised in the budget. Some examples are the setting up of a local radio station, setting up local milk shops for the pasteurisation and distribution of milk, the creation of cooperative storage facilities for food, the creation of a seed bank, perhaps the draining and re-structuring of market squares, all of which may require some formal money funds. Other initiatives, for instance, creating sports clubs, theatre groups, local consultants offices, or communications centres, plant nurseries, re-forestation etc would be done under the local money and micro-credit systems.

Project applications directly mobilise about 15% of the adult population in the project area and the remaining 85% indirectly. I would expect unemployment to be eliminated within three or four years.

The financial structures have not been discussed here in detail - these are fully described in the introduction, in the Model, in the draft project applications, and in specific papers written. Of particular interest are the application of the compensation principle and the new possibilities offered under the Kyoto treaty.

Under the compensation principle, the monthly contributions of users are covered by savings on some of their current expenditure. For instance, where families now spend a large slice of their income for wood for cooking or for drinking water or medicines, these costs will be eliminated or reduced under the projects, releasing formal money for other uses. Wood will not be used. It will be replaced by mini-briquettes made under the local money systems. The supply of drinking water and the maintenance of structures are already covered under the monthly contributions. General increases in living conditions (hygiene education, clean drinking water, sanitation, elimination of smoke, better drainage, a more varied diet) should lead to less illness and less need to buy medicines.

Some applications under project applications reduce CO2 emissions. The main one is through the use of high efficiency stoves, others are the substitution of the use of kerosene lamps by solar home systems, and of some pumping systems by solar or advanced hand-pumping technologies. They therefore qualify for the issue of CER certificates which can be sold to industrialised countries. The value of these certificates will contribute to the cost of the projects.

The concepts apply equally to (poor) urban areas and rural areas. First applications in a given host country should however be carried out in mainly rural areas, as it is important to block migration from rural areas to shanty towns in the larger cities.

The elimination of all possibility of corruption is a condition precedent to the success of the project. Subject always to full compliance with the conditions laid down by financing parties, the ACP-EU funds will be paid into a Euro account, and those of the government of Kenya into a Kenya shillings account, in the name of the “Ministry of Water, Resources Management and Environment Development of Kenya Project New Horizons for Saboti, for and on behalf of the inhabitants of the Saboti Division, Trans-Nzoia District, Kenya”. Only a combination of authorised persons, being the District Water Officer, Trans-Nzoia District, Kenya working with the project coordinator for social and financial structures nominated by the SIMA Community Based Organisation, and/or the consultant T.E.Manning, together with an independent auditor nominated by the ACP-EU Water Facility can make payments from or withdraw money from the account. The project will set up, together with the independent auditor nominated by the ACP-EU Water Facility a system for on-going continuous preventive auditing and subsequent monitoring of all payments from time to time made during the project execution.

The sequence of project execution is critical.

The most delicate phase is the first one, where a platform is created for the active participation of women in the project execution and administration through the formation of Health Clubs. The first Moraisian “Capacitation Workshop” will be held. In case of necessity, the first workshop may have to be repeated. Purpose of the first initiatives is the creation of a local economic system within which most of the structures can operate and most of the project works can be executed. Since on project start-up there is still no local economic system in place, the first activities have to be financed out of the project funds. Once the local economic systems are in place, financial risks in connection with project execution are minimal. The most important purchases of capital goods, such as the purchase of water pumping systems, can only be made once the social and economic structures are in place.

Final project results are subject to physical monitoring and counting, in accordance with the execution of the various phases of the project, by way of a practical visual check of the structures actually operating in the field. The extent of utilisation of the various structures will, however, be progressive, and the speed of acceptance by the populations of the various structures will vary from operator to operator, from village to village, according to the personal capacity of those nominated by the populations during the Capacitation Workshops to carry out the various functions.

Formation of the permanent project home base : Buildings, offices etc. Check physical presence and operation.
Hygiene education structures : 276 health clubs are foreseen; physical check of their formation; individual evaluation of their operational level.
Local administrative structures : 276 tank commissions: physical check of their formation; individual evaluation of their operational level.
Local money structures : Formation of two self-managed local money systems; 276 self-managed structures at tank commission level; about 29 structures at intermediate (well) level; self-managed general management at project level; physical check of their formation; individual evaluation of their operational level.
Micro-credit structures : Formation of a self-managed interest-free micro-credit structure for productivity increase; 276 administrative structures at tank commission level; about 29 structures at intermediate (well commission) level; a central general management structure at project level. Physical checks on the institutions in operation; individual evaluation of the investments and repayments plan will be supplied together with the project documents. Micro-credit funds made available should be at least Euro 19.380.000 over the first period of 10 years of activity, or about Euro 1500 per family. The state of the fund at the moment of monitoring is the amount of micro-credits conceded but not yet repaid plus the balance (which should tend towards zero) remaining in the fund. The figures should conform with those in the graph supplied as an integral part of the final project documents, but could be substantially higher as the graph is based on an average pay-back time of two years.
Local production structures: Three low-cost, labour intensive, zero-energy input production units to start with for items made for the project; physical check on presence and operation; analysis products and productivity.
Water supply structures: Creation of an integrated drinking water supply system with water at a distance indicatively of not more than 150 metres from dwellings; a self-managed central project level structure ; about 29 intermediate management structures at well-commission level ; triple backup hand-pump systems, washing places; 276 structures at tank commission level with water points equipped with solar photovoltaic pump systems ; drinking water supply in all the schools and clinics and in market squares ; physical check on presence and operation.
Sanitation Structures : Formation of an ecological integrated dry composting sanitation system (Eco-San) at family level ; about 10000 systems in the individual homes ; self-administered public systems in schools, clinics and market squares. Physical check on presence and operation.
Waste recycling structures: Formation of an integrated system for the collection and recycling of organic and non-organic waste and grey water. Physical check of the presence of collection centres and effective waste collection facilities in place.
Radio structures: Physical presence and operation of the radio station.
Structures for lighting for study : 276 study rooms with photovoltaic lighting; photovoltaic lighting in schools where required; photovoltaic lighting and refrigeration facilities in clinics in the project area where required.
Rainwater harvesting structures : Physical observation and counting of the structures installed.

 

Indicative cost breakdown

Budget in Euro

Year

 

 

 

First phase

 

 

 

 

 

Formalities

7.000

1

Workplace

36.000

1

Administration

36.000

1

Workshops for and formation of health clubs

67.500

1

Workshops for and formation of local social structures

130.000

1

Workshops for and formation of micro-credit structures

30.000

1

Workshops for and formation of 3 Beosite production facilities

163.000

1

Workshops for and formation of waste recycling structures

185.000

1

Workshops for and formation of drinking water structures

853.000

1

Other costs first phase

648.200

1

 

 

 

Second phase

 

 

 

 

 

Workshop bio-mass production

15.000

2

Water points (276)

1.123.800

2

Transport international and national

45.500

2

Ecological sanitation structures

15.000

2

 

 

 

Third phase

 

 

 

 

 

Water purification installation

176.000

3

PV lighting

728.000

3

Radio station

77.000

3

 

 

 

 

 

 

 

 

 

Total outgo

 

 

 

 

 

First phase

2.112.700

 

Second phase

1.199.300

 

Third phase

981.000

 

Salaries/pro-diem subcontractors

200.000

 

 

 

 

Total

4.500.000 (1st year Euro 2.112.700)

 

 

 

 

 

Annual income and outgo with structures in operation

Budget in Euro

 

 

Outgo

 

 

 

Coordinator

15.000

Maintenance

5.000

Tank commissions (276) @ Euro 5/month

16.560

Spare parts

15.000

Theft fund

15.000

Unforeseen

19.940

 

 

Total recurrent annual costs

84.500

 

 

Revenues

 

 

 

Monthly contributions (60.000 people @ Euro 0.75)

540.000

 

 

Less on-going costs

84.500

Net annual income for Cooperative Development Fund

455.500


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