Director,
T.E.(Terry)
Manning,
Schoener 50,
1771 ED
Wieringerwerf,
The
Tel:
0031-227-604128
Homepage:
http://www.flowman.nl
E-mail:
(nameatendofline)@xs4all.nl : bakensverzet
and
"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,
“Poverty is created scarcity”
Wahu Kaara, point 8 of the Global Call to Action Against Poverty, 58th
annual NGO Conference, United Nations,
6.21
Circulation of funds.
One of the main challenges facing the execution of development projects
throughout the world is the elimination of corruption and fraud. This is also
true for projects in developing countries where it is particularly important
that formal money seed funds be used for the purposes for which they are
intended and that they actually reach their destination for the benefit of the
people in the project area.
For
this project a detailed plan for the payment of the project funds has been prepared.
Chart showing bank structures.
Chart showing auditing structures.
Formal
money seed funds in Euro are paid into a Euro account with a leading
international bank in the name of the local NGO
Project New Horizons for Kiogoro and strictly tied to the project. Foreign funds payments for the project are
made directly from this account following the authorisation and auditing
procedures illustrated in the cash-flow
and bank-structures charts.
Formal
money funds required for payments in the (currency of the host country) are
paid and converted from the Euro account with the leading international
bank into a
Funds
for smaller Kenya Shillings payments are transferred from the Kenya
Shillings executive account with a leading national bank to a Kenya
Shillings executive account strictly tied to the name of the project with a
local bank in the project area. This executive account is directly accessible by
the project coordination team.
The
above scheme means that:
a)
Small everyday payments for up to €
b)
Payments between € 5.000 and €
c)
Larger payments for over €
d)
Foreign payments in Euros are made out of the Euro capital account with a leading
international bank in the name of the
local NGO, linked to the project. These payments are made on the request
of the project coordination team. For payments up to Euro 15.000 authorisations
must be co-signed by the Chairman of the NGO Project New Horizons for Kiogoro.
Payments for amounts over Euro 15.000 are made on the request of the project
coordination team and are subject to express authorisation by the Board of
Directors of the the NGO Project New Horizons for Kiogoro.
No
payment for the project can be made by the local NGO Project New Horizons for
Kiogoro without the request of the project-coordination team.
The
activities of on-going project monitoring board are carried out by an auditing
commission nominated by the Board of the NGO Project New Horizons for Kiogoro.
The activities of the auditing commission are subject to control by the
independent auditor.
The
Cooperative Local Development Fund.
The
people in the project area are poor and plagued by lack of formal means (money)
necessary for the transfer of productive goods and services . The initial
formal money seed capital (usually less than Euro 100 per person) will
therefore has come from donors (in the form of a grant, in the form of an
interest-free loan repayable over a period of ten years).
The
users will pay a monthly fee into their own Cooperative Local Development Fund
which they manage themselves through the project structures they create in the
early phases of the project. The monthly contributions are usually between Euro
0,60 and Euro 0,75 per person, or approximately Euro 6 -7.5 per month for an
extended family of ten. The Cooperative
Local Development Fund is set up by the project. The structures are then passed
over to the Cooperative New Horizons for Kiogoro, which is set up during an
early phase of project execution.
Formal
money seed capital can be either by of grant or by way of interest-free loan.
The
difference to the project between initial seed capital by way of grant and initial
seed capital by way of interest-free loan funds becomes apparent only at the
close of the first ten years’ operational cycle. In case of grant,
self-financed project extensions to project structures can be made sooner and/or there is no temporary reduction
in the amount of funds available to finance interest-free micro-credits. In the
case of an interest-free loan, project extensions will take longer to finance
and the funds available for interest-free micro-credit finance will have to
build up again from zero.
The
money in the Cooperative Local Development Fund gradually builds up over the
ten years’ period until it reaches the amount originally granted or loaned
interest-free. This money is re-cycled interest-free for use as micro-credits
to develop local production capacity.
(The
initial seed capital is in the form of an interest-free loan. The loan is paid
back in a single lump sum at the close of the ten years’ period. The capital in
the Fund drops temporarily back to zero. Since users continue to make their
monthly contributions into the Cooperative Local Development Fund, the capital
in the fund builds up again during the second period of ten years, and the
cycle of interest-free micro-credits builds up again as it did in the first
period of ten years. At the close of the second period of ten years, capital
funds are available for the extension or replacement of capital investments.
Since users continue to make their monthly contributions into the Cooperative
Development Fund, the capital in the fund builds up again during the third
period of ten years, and the cycle of interest-free micro-credits builds up
again as it did in the second period of ten years, and the system continues in
a sustainable way indefinitely. )
(or)
(The
initial seed capital is in the form of a grant. The capital collected in the
Cooperative Local Development Fund does not need to be repaid at the close of
the first ten years’ period. The project structures, which are chosen and run
by the people themselves, may at that point choose to use part or all of
the available capital to extend
project structures. They may choose to
maintain a large capital in the Fund to finance interest-free micro-credits.)
The
monthly payments made by users into the
Cooperative Local Development Fund are
used:
-
where the seed funds are in the form of an
interest-free loan, to repay the loan itself at the expiry of the first ten
years’ project period.
-
to pay on-going administration and maintenance costs.
This money pays the monthly fees of the project coordinator and the costs of
fuel and imported materials of maintenance and inspection personnel and the
monthly formal money payments made to the tank commissions. The project
management will, on the advice of the well commissions, apportion the funds.
-
to set up reserves for long term maintenance and
replacement of capital goods. These funds will also be re-cycled for
micro-credits but managed so that the capital is available when it is needed.
Apportionment
by the project management of the formal money income paid by the users each
month will vary from project to project. Normally about 80% will usually be
held in the Cooperative Local Development Fund for capital repayment, where
necessary, and to finance interest-free micro-credit loans. Of the remaining
20%, about 55% of 20% can be expected to
be used to cover formal cost content of administration, maintenance, and spare
parts, 20% of 20% to cover a monthly formal money allowance for the tank
commissions, and 25% of 20% is available to cover loss of or damage to
installations and unforeseen costs.
Formal
money costs of setting up the social and services structures foreseen in each
project application are paid out of the formal money project capital. Formal
money costs of setting up the productive services structures foreseen in each
project application are first paid out of the formal money project capital and
then repaid by the individuals, families and cooperatives involved into the Cooperative Local Development Fund and
recycled for interest-free micro-credits as already described above. The period
for repayment of these interest-free capital
loans will vary substantially from project to project and from case to
case. It must in any case be reasonable. The formal money necessary to repay
the capital is obtained through sale of an agreed part of the production for
formal money outside the project
area until the capital has been repaid.
By
way of example, the formal money cost of the gypsum composite production units
and the mini-briquette production units is usually covered by interest-free
loans repayable over 3-5 years.
Users
should also benefit from large savings in their traditional expenses. Existing
formal money costs of purchasing drinking water, recycling services, petroleum
for lighting, batteries, and especially fuel for cooking will be eliminated.
The savings for cooking fuels will come from using high efficiency stoves made
from gypsum composites and the local production of bio-mass for mini-briquettes
for fuel. Provision of drinking water
under the project will avoid the need to purchase expensive water from vendors
especially in poor urban areas. Waste re-cycling under the project will produce
savings by creating value added from resources currently unused and because
payments for collection and handling of the waste will be kept inside the local
economy.
Formal
money costs of setting up the social and services structures foreseen in each
project application are paid out of the formal money project capital.
The
following drawings and graphs form an integral part of this project proposal.
GRAPH SHOWING DEVELOPMENT OF MICRO-LOANS .
THE INTEREST-FREE LOAN CYCLE .
HOW THE ORIGINAL SEED LOAN MONEY IS USED.
GRAPH SHOWING TYPICAL QUARTERLY EXPENDITURE.
DETAILED TYPICAL EXPENDITURE FIRST QUARTER.
DETAILED TYPICAL EXPENDITURE SECOND QUARTER.
DETAILED TYPICAL EXPENDITURE THIRD QUARTER.
DETAILED TYPICAL EXPENDITURE FOURTH QUARTER.
DETAILED TYPICAL EXPENDITURE FIFTH QUARTER.
DETAILED TYPICAL EXPENDITURE SIXTH QUARTER.
DETAILED TYPICAL EXPENDITURE SEVENTH QUARTER.
DETAILED TYPICAL EXPENDITURE EIGHTH QUARTER.
Next file :
06.22 Creation of the health clubs.
Back to:
06.20 Activities second phase.
