T.E.(Terry) Manning 
Schoener 50
1771 ED Wieringerwerf
The Netherlands
Tel/fax 0031-227-604128
Homepage: http://www.flowman.nl
E-mail:pumps@flowman.nl


SABOTI INTEGRATED RURAL DEVELOPMENT PROJECT

"NEW HORIZONS FOR SABOTI"

TRANS NZOIA DISTRICT, KITALE KENYA

INCORPORATING LETS AND COMMUNITY BANKING

PREPARED BY THE NGO "SIMA COMMUNITY BASED ORGANISATION", KITALE, KENYA

AND

T.E.MANNING, CONSULTANT, WIERINGERWERF, THE NETHERLANDS


Edition 03: 29 December 2004

EXECUTIVE SUMMARY OF THE "NEW HORIZONS FOR SABOTI" SELF-SUPPORTING INTEGRATED DEVELOPMENT PROJECT

1.0 INTRODUCTION

The accompanying Integrated Development Project for the Saboti Division of the Trans Nzoia District in Kenya covers a complete package of basic services for sustainable development in the beneficiary communities. It includes hygiene education, the creation of local money systems and a cooperative interest-free local development fund for productivity development, the provision of drinking water and sanitation services, PV lighting for study, PV lighting and refrigeration in clinics, waste removal, high-efficiency stoves and bio-mass to fuel them. It provides a strong thrust for on-going local development, productivity, and employment. It contains many decentralised alternative energy applications.

The project is strongly demand response oriented. It has been worked out together with the people concerned, who will execute, run, maintain own all the structures set up and pay all related on-going administrative, short, and long-term costs, including the costs of long-term replacement of capital goods and/or system extensions.

The project provides practical working solutions for sustainable integrated development in the Saboti area and covers all major development priorities. It constitutes a practical way of applying modern development concepts such as those outlined in the DFID "Guidance manual on water supply and sanitation programmes" (WEDC for DFID, 1998). It integrates in a practical and feasible manner policy, finance, technology and human capacity building to offer sustainable solutions to development.

The project is self-supporting, subject to a seed-fund investment. It is structured for about 7500 extended households (60000 users). The amount of the investment is Euro 4.500.000 or approximately Euro 75 (or equivalent in US$) per user. Users pay a monthly contributions of Euro 0,75 per user into a Cooperative Development Fund. This is enough to sustainably cover all ongoing and long term maintenance and capital replacements costs for the entire basic package offered.

The project requires 75% financing by an External Support Agency within the framework of a country programme with a partner donor or under international funding facilities. Regional or state authorities in Kenya are expected to supply the remaining 25%.

The project is self-sustaining because it allows the recipient communities to fully exploit a network of sustainable development activities using:
(i) The seed capital investment fund
ii) Monthly contributions by users into a Cooperative Development Fund
(iii) Local Exchange Trading Systems (LETS)
(iv) Multiple re-cycled interest-free micro-credits to be administered by a local bank. They are generated by recycling monthly contributions, loan repayments and reserves.

2.0 THE MAIN PROJECT PACKAGE

The project is centered on the following main components:

a. Hygiene education at community level through the formation of 274 Health Clubs and in schools
b. The formation of 274 Local Development (Tank) Commissions, of 58 Well Commissions with multiple handpumps emergency backup, and 58 community washing places
c. The formation of two local money systems, integrated with each other
d. The formation of a cooperative, interest-free, inflation-free Micro-credit system for productivity increase
e. The construction of three low-cost, labour intensive, zero-energy, ecological local production units for the manufacture of items essential to the basic services provided using 100% local value added
f. Distributed clean drinking water (274 solar pump installations placed close to users houses) and for schools and clinics in the project area
g. Sustainable sanitation (based on the separation of urine, faeces, grey water, other organic waste) in every household (at least 7500 households), school and clinic in the project area
h. Supply of about 25000 high efficiency stoves for cooking (plus solar cookers)
i. A integrated system for the production of biomass and mini-briquettes to fuel the cookers
j. An integrated system for the collection and local recycling of organic and non-organic waste products (rubbish collection)
k. 274 PV lighting facilities for study purposes
l. PV lighting where needed in schools and clinics and vaccine refrigeration where needed in clinics
m. Rainwater harvesting initiatives throughout the project area
n. A local PV powered radio station
o. Reafforestation initiatives
p. Improvement of local education structures and teaching facilities
q. Local food-storage facilities
r. Permanent employment for About 5000 adult residents.

3.0 PRINCIPLES BEHIND THE PROJECT

The basic principles behind the project are:

a)The development of self-sufficiency in local economies.

b)Use of local expertise, labour and materials.

c)Women play an active role in the project.

d)The project encourages open competition and free enterprise within

e)The local people take full responsibility for all goods and services provided under the project, for their ongoing administration and maintenance, and for long-term replacement of capital goods. They accept the powers of all organs elected by them, and in particular those of the elected tank- and well commissions.

f)Users cover all on-going costs by making a monthly payment into a Cooperative Investment Fund. The project is inherently sustainably self-funding.

g)Savings on traditional fuel costs for cooking and other services will cover most if not all of the monthly contributions made.

h)Fail-safe mechanisms are provided to enable every individual user to meet his financial commitments to the project. Household difficulties in meeting monthly quotas can be cushioned either from the monthly allowances received by the tank commissions, or by creating a simple LETS system safety net. Members temporarily in difficulty can be allowed to run up a larger than usual debit balance. Members permanently in difficulty can perform services within the LETS group in exchange for group payment of their outstanding debts.

i)Small decentralised systems are preferred wherever possible. This promotes close contact of the people with the ownership, installation, running and maintenance of the infrastructures set up.

j) Local LETS currencies will complement, but not substitute, the use of formal money. They will make up for the lack of formal money that would otherwise be needed to expand the quantity of local goods and services. Economic development within the LETS systems will also stimulate growth in the formal economy and increase its formal tax base.

k)Seed capital is systematically recycled to users as interest-free micro-credits for productivity development to allow goods and services that cannot be locally produced to be bought with formal currency outside the project area.

l)Leakage of formal currency out of the project area will be reduced. Seed capital will be retained in the local area.

4.0 GENERAL ECONOMIC BASES AND PRINCIPLES OF THE PROJECT

a)The project will be financed by a seed capital investment of Euro 75 for each inhabitant.

b)75% of this capital will be contributed by an external support agency and the remaining 25% by the Government of Kenya.

c)General financial supervision, on-going audit and project monitoring will be on terms required by the financing parties, but with the elimination of unnecessary bureaucratic restraints.

d)The project encourages open competition and free enterprise within the framework of a cooperative and non-profit-making global financial structure.

e)No-one is required to work on a volunteer basis without payment. All administration, construction and maintenance work is done by local operators and villagers who are paid at current local pay rates expressed in the local LETS currencies.

f)Users pay monthly instalments of Euro 0.75 per person into a cooperative interest-free local investment fund. All funds collected are retained in the local area and used to grant revolving interest-free micro-credit loans for local development purposes.

g)Seed capital not required for short term use and funds destined for long term replacement of capital items and service extensions are similarly be used to grant interest-free revolving micro-credit loans.

h)The local currency (LETS) systems set up will form the general method of payment for (most) local goods and services at community level, including those provided for the project from within the local community.

i)Users are 100% responsible for all on-going administration, maintenance, long-term capital replacement and system extension costs. Each household pays a monthly contribution sufficient to cover those costs. The monthly instalments are to a large extent covered by savings on funds traditionally spent on fuel, water, batteries and waste removal.

j)Users must make their first monthly contributions in advance, as soon as the Local Development Fund structure becomes operative.

k)The tank commissions will be paid a small monthly allowance in formal currency for their work. The well commissions will be paid a monthly allowance under the local LETS currencies for their work.

l)Individual women or women's groups will, without payment, each look after their individual sanitation units. A regular system for on-going inspection of all water supply and sanitation installations will be paid for under the local LETS currencies.

m)The operation of the local interest-free cooperative development bank will be supported and supervised by a Green Bank to be named.

n)The-Trans Nzoia District Council will undertake not to intervene to impede the development of the local LETS currencies either during or after the project period.

o)The Project Coordinator will reach a specific agreement with the applicable tax authorities before the start of the project as to taxation of activities under the Local Exchange Trading (LETS) systems.

p)Before the project starts, a formal agreement will be made to ensure ownership of the project is vested in the beneficiary communities.

4.0 IMMEDIATE GOALS

The immediate goals of the project are:

a) To extend existing hygiene education activities by establishing Community Health Clubs in the Saboti division area and promoting formal hygiene education courses in schools.

b) To install technically appropriate sanitation for the people in the Saboti division.

c) To provide a permanent safe drinking water supply in the project area in all foreseeable circumstances.

d) To make safe drinking water available within a radius of 150-200m from users' homes.

e) To contribute to the fight against water-related diseases through hygiene education, the supply of appropriate sanitation and clean drinking water systems.

f) To reduce the work load on women

g) To provide for the continuity of health, sanitation and drinking water systems by establishing appropriate institutional structures.

h) To enable students and others who wish to study in the evening to do so.

i) To reduce the use of wood and promote reafforestation.

j) To introduce efficient bio-mass fuelled means of cooking and solar cookers for daytime applications.

k) To create added value through recycling of non-organic waste.

l) To keep available financial resources (LETS money and formal money) revolving within the beneficiary communities.

m) To stimulate on-going local industrial and agricultural development through the use of local currency (LETS) and micro-credit systems.

n) To create large-scale job opportunities

5.0 LONG TERM GOALS OF THE PROJECT

The long term goals of the project are:

a)To sustain on-going improvement of the general quality of life wellbeing and health of the local people.

b)To free more human resources for local production and development.

c)To reduce water-borne diseases so that medical staff and financial resources can be re-directed to other health objectives such as vaccination programmes and preventive medicine.

d)To decrease infant mortality and promote family planning.

e)To increase literacy levels.

f)To eliminate dependency on fuels imported from outside the project area.

g)To help reduce deforestation and global warming.

h)To create value added from locally recycled non-organic solid waste.

i)To create a "maintenance culture" to conserve the investments made.

j)To increase the local pool of expertise so that local people can improve their sustainable well-being and development by identifying and solving problems with a minimum of outside help.

k)To create full employment in the project area.

l)To offer meaningful opportunities to youth and help stop movement of population from rural areas to towns.

6.0 INSTITUTIONAL STRUCTURES

The various parties which will be presumably be involved in the project are:

i. The Ministry for Water. Resources Management, and Environment Development

ii. The District Water Officer

iii. National level NGO

iv. The Local NGO (SIMA)

v. The Project Coordinator

vi. Consultant to the Project Coordinator

vii. The Organisational Workshops

viii.Locally Elected MP

ix. Trans Nzoia District council

x. State Health Authorities and the WATEER AND SANITATION COMMITTEES

xi. The Ministry of Education

xii. The Local Tax Authorities

xiii.The Saboti Cooperative Development Bank (to be formed)

xiv. The External Bank (Barclays)

xv. The Local Beosite Production Units

xvi. Tank Commissions - the Key Structures

xvii.Well Commissions

xviii.Zimbabwe AHEAD (NGO)

xix. EOS CONSULT

xx. Medical Commissions

xxi. Teachers' Commissions

xxii.The independent auditor(s)

The details of the roles of each of the above and how they all interact with one another are set out in detail in section 2.6 of the project and in the diagrams and charts part of the project documents.

7. Short indicative budget

ItemOutgo (Capital)PhaseEstimate (Euro)
01OW health clubs230.000
02Formation of health clubs210.000
03Material for health clubs25.000
04Training of health workers210.000
05OW health courses in schools210.000
06Material for school courses22.500
07OW social structures240.000
08OW LETS systems260.000
09Office and equipment LETS systems230.000
10OW Micro-credit system220.000
11Office/equipment Micro-credit system210.000
12OW Beosite production units230.000
13Shovel/preparation anhydrite supply site 2/310.000
14Construction and equipping anhydrite factory (*20000 FOR EACH FACTORY) ASSUMING 3 UNITS2/360.000
15Moulds for anhydrite products (*20000 FOR EACH FACTORY) ASSUMING 3 UNITS2/360.000
16Location gypsum depots and quality control23.000
17OW recycling system230.000
18Setting up recycling centre network3150.000
19Setting up compost collection network35.000
20OW Bio-mass system315.000
21OW Drinking water system2/325.000
22Setting up of project workplace232.000
23Project transport2100.000
24Vehicles and materials for wells3150.000
25Fuel and maintenance vehicles326.000
26Drilling/lining costs3300.000
27Labour for wells - LETS systems3pro-memoria
2858 Washing places- LETS systems3pro-memoria
2958 Platforms for handpumps - LETS systems3pro-memoria
30276 Solar Pumps 3357.000
31276 Supports for solar panels375.000
32Solar panels (82.8 kW)3496.800
33Handpumps groups (142 pumps)380.000
34Cables, feedpipe for pumps/wells398.000
35Pipe lines from wells to tanks - 150000m @ Euro 0.653100.000
36Labour for laying water pipelines- LETS3pro-memoria
37276 Water tanks (@ 2m * 1.7m)- mostly LETS360.000
38276 Bases for water tanks - mostly LETS330.000
39Supervision of installation and training maintenance operators315.000
40Purchase spare parts supplies320.000
41Permits and formalities21.000
42Preparation and formulation of project specifications26.000
43100 Solar water purification installations for clinics and schools347.500
44900 Solar water purification installations (inc.15.000 Wp panels)4128.500
45276 PV lighting units for study purposes4300.000
46PV television for study4pro-memoria
4790 PV lighting systems for schools488.000
48PV lighting for clinics outside the project area4pro-memoria
49PV lighting for clinics inside the project area480.000
50PV refrigeration for clinics @ Euro 5000/clinic480.000
51Water testing equipment45.000
52Transport costs Euro to Kenya2/330.000
53Transport costs internal to Saboti2/322.500
54Administration and supervision at Saboti Kenya3/436.000
55Fee Project coordinator @ Euro 50000/year1/5100.000
56General project consulting Manning @ Euro 50000/year1/5100.000
57Fund for PV lighting solar home systems4180.000
58Sanitation facilities with exception of some additvites will be manufactured and installed within the local LETS systems3/415.000
59OW radio station425.000
60Fund for radio station452.000
60Reserves 14.67% of total5648.200
61General total54.500.000

8.0 SHORT ANALYSIS

Outgo (Capital)PhaseEstimate (Euro)
Total first phase10
Total second phase2534.500
Total phase 332.153.300
Total phase 44964.000
Fees project coordinator1/5100.000
Total supervision Manning1/5100.000
General total all phases 3.851.800
Reserves 14.4%5648.200
Total 1+2+3+4+5 4.500.000

9.0 ON-GOING COSTS

On-going costsEuro
  
Coordinator for administration15.000
Maintenance operators5.000
Tank commissions (276*5 Euro p.m.)16.560
Spare parts15.000
Reserve for theft15.000
Unforeseen (about 21%)17.940
Total recurrent costs84.500

10.0 INCOME

IncomeEuro
  
Annual contribution for use of water (60000 people @ Euro 0.75 p.m.)540.000
On-gong costs per year84.500
Net annual income for loan repayment455.500

Comments

1. The above net income is sufficient to sustainably support all maintenance and running costs and to build up funds for long term extension of services and replacement of capital goods.
2. Interest-free loan for Beosite (R) each factory Euro 40.000, for repayment over a period of 3-5 years is included in the above figures.
3. Large capital reserves are built up for use in Micro-credits for productivity development and, subsequently, for the extension and renewal of the capital goods.
4. Payments for water facilities for schools and clinics are included in the users' monthly contributions.
5. Payments and financing for eventual PV lighting and refrigeration facilities in clinics within the project area are covered in the users' contributions. Those for clinics and schools outside the project area partly serving users within the project area to be discussed.
6. Payments for PV lighting installations for study purposes will be financed by each tank commission area separately.
7. Savings on the purchasing of bio-mass for cooking and the costs of drinking water will at least partly offset the costs of the project.

11.0 RECYCLING OF FUNDS FOR MICRO-LOANS

GRAPH SHOWING DEVELOPMENT OF MICRO-LOANS
THE INTEREST-FREE LOAN CYCLE
HOW THE ORIGINAL SEED LOAN MONEY IS USED

The funds recycled during the first period of 10 years are approximately 19.380.000 Euro. They are made up of:

a) Monthly contributions by users. These are shown as horizontal lines at the bottom of the micro-loans graph. They are constant. The total capital in the Development Fund will drop as shown in the micro-loans graph when replacements of the original capital goods are made or the system services extended. It will then build up again to cover further collective capital investments and so on for so long as the users continue making their monthly contributions.

b) Certain capital sums (eg repayments for the Beosite (R) factories) and 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.