Director,
T.E.(Terry)
Manning,
Schoener 50,
1771 ED Wieringerwerf,
The Netherlands.
Tel:
0031-227-604128
Homepage:
http://www.flowman.nl
E-mail: (nameatendofline)@xs4all.nl : bakensverzet
Incorporating
innovative social, financial, economic, local administrative and productive
structures, numerous renewable energy applications, with an important role for
women in poverty alleviation in rural and poor urban environments.
"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
Edition 11: 15
August 2006
An
innovative Model Integrated Self-financing Development Project covering a
complete package of basic services for sustainable development in poor rural
and urban areas has been developed. It includes hygiene education, 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 solar
energy applications.
The Model has been placed in the public domain.
The Model is strongly demand response oriented. Project applications
are worked out together with the users who execute, run, maintain, own and pay
for the project structures. The Model provides practical working solutions for
sustainable integrated development 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
sanitations 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.
Project applications are self-financing, subject to an interest-free
seed loan repayable in 10 years. The Model is structured for communities of
10000 households (50000 users) but can be adapted to smaller and larger project
areas as required. The minimum amount of the interest-free seed loans is US$
3.000.000 or US$ 60 per user, which covers the entire basic package of
structures and services, and calls for a monthly payment of US$3 per family of
5 into a Cooperative Development Fund. The Model is structured so that some, if
not all, of these monthly payments can be recovered by savings on the current
expenditure of the families for the (inadequate) structures and services
available to them.
Project applications require 75% financing in the form of a 10 year
interest-free loan by an External Support Agency. Regional or state authorities
in the beneficiary countries are expected to supply the remaining 25%.
The
following PV applications are foreseen under the Model:
Project
applications will decentralise drinking water supply. Large diameter wells and
bore holes will be dug or drilled using wherever possible local labour,
construction methods and materials supplied under the local LETS money systems.
About 6-9 high pressure solar submersible pumps will be installed in
each well or borehole. Each of the pumps will supply water to a dedicated water
tank serving a local community of up to 40 families (200 people). The well is
the hub of the supply system. The water pipelines radiating from it are its
spokes. The water tanks should not be more than 150 meters away from the users'
houses. The distance between the water source and the dedicated water tanks can
be several kilometers.
Adoption of the mulitple pump solution means that fewer wells/boreholes
need to be dug or drilled than would otherwise be the case. Savings on well and
borehole costs may sometimes alone be enough to compensate for the costs of the
solar pumping systems.
Schools will each receive at least one dedicated tank. Clinics, for
further safety, will be served by two tanks each with its own pump.
Wherever practicable, that is, where head is not greater than about 45
meters, each well or borehole will be equipped with locally made triple back-up
handpumps to provide water during unusually long periods of bad weather, when
the water tanks are empty
Fig. 1 Drawing
of water supply systems
DRAWING OF WATER SYSTEM STRUCTURES.
Where culturally appropriate, a communal washing area can be placed
near each well so that women used to doing their washing in groups can continue
to do so. The backup handpumps may also be used to service the washing areas
and in cases of emergency.
The drinking water supply is based on a water consumption of 25 liters
per person per day. Since solar energy will normally be used to pump the water,
bad weather must be taken into account. For that reason, the tanks need to have
a capacity for three days' use. Each tank will supply about 200 people.
Use of the solar submersible horizontal axis piston pump technology is
recommended. Full details on this technology can be found through the homepage
of website www.flowman.nl. The technology enables water to be pumped against
heads up to 150 meters (500 feet) and more, and to be transferred over
kilometers where necessary to the dedicated water tanks as well.
Generalised use of solar pumps for irrigation purposes is not foreseen,
as the cost of PV pumping systems, and in particular of PV panels, is still
such that the application is economically unjustifiable . Where high value cash
crops are to be grown using drip or seepage applications, users can apply to
finance these under the interest-free micro-loans system discussed later in
this paper.
The Model
foresees PV lighting at tank commission level, usually involving about 200
users or 40 families, for study purposes provided a suitable study room is
available or has been built for the purpose by the local community. This
application can be extended to community television systems for study purposes
where security of the equipment can be guaranteed and where suitable programmes
are available in the local language of the users.
The Model
foresees PV lighting for clinics. It also foresees PV lighting for schools
where evening classes are needed, especially for adult education.
PV
refrigeration for vaccines and medicines will be installed in clinics where
necessary.
The Model
foresees the financing of PV lighting and power systems under the interest-free
micro-loans scheme where required for the purposes of productivity increase. It
is a condition of the micro-loans that part of the new production or services
be sold outside the project area for formal currency to enable repayment of the
micro-loan.
Some examples:
-communications
centres
-consultancy services
-home production in the evening
In so far
as they are intended for "comfort" purposes, PV solar home systems
are in principle not covered under the Model. Such investments do not lead to
an increase in the production of goods and services and are therefore not
directly productive. As the financial base of the individual users improves,
centralised cooperative purchase by the Project of solar home systems for
financing by the Local Bank under a separate micro-credit scheme is foreseen.
However, where current outgo for lighting, radios and similar is such
that savings in petroleum, gas, and battery costs would be enough to repay the
cost of an interest-free solar home system over a period not exceeding three
years, project applications will include a separate fund for the installation
of solar home systems.
PV powered
information centres will be set up as business enterprises under the
cooperative interest-free micro-loans scheme foreseen.
There will be four types of information centres:
-Local
consultants who help local people choose crops to grow, instruct on
agricultural methods, give professional advice on productivity questions etc
-Information shops with telephones, faxes, computers.
-Cultural and economic websites ( recent experiments in India), where
individual interest groups make their cultural activities and their wares known
to the outside world, either independently or through the information shops.
- A project level radio station
The far-reaching
effects of project applications under the Model on bio-mass production and use
tend to be more indirect than direct. For instance the Model does not cover
small scale electricity generation from biomass, although there is no reason
why this cannot be included where conisdered appropriate. Operators in India in
particular tend to see this as a possible development.
The qualifying feature of biomass related initiatives under the Model
is that they can usually be entirely financed under the LETS local money
systems, and no formal currency at all is required. This means there is in
principle no limit to the number and nature of the initiatives taken.
Here are some examples:
The Model
foresees the introduction of high efficiency cookers built at project level
from Beosite, using 100% local value added. The cookers will be fuelled by
mini-briquettes made from waste materials and bio-mass using recipes varying
according to the type of basic (waste) materials locally available. The
mini-briquettes will be produced and sold within the local LETS systems, so
that current outgo for traditional cooking fuels such as firewood, charcoal,
and gas can be used for the monthly payments made by each family into the Cooperative
Development Fund. In many cases, savings on cooking costs are expected to pay
for the entire costs of a given project application.
The bio-mass needed for the mini-briquettes will be sourced in the
project area in the form of waste products or purpose grown bio-mass crops.
Care will be taken to ensure that adequate natural fertilisers and soil
conditioners be retained for agricultural purposes.
Use of biomass crops to make mini-briquettes for high efficiency stoves
will help reduce CO2 emissions in the project areas and have an immediate
effect on forest conservation
Fig 2: Drawing
of a typical high efficiency Beosite stove
DRAWING OF TYPICAL HIGH EFFICIENCY GYPSUM
COMPOSITES STOVE.
Local
forests will be automatically protected once wood and charcoal are no longer
required for cooking purposes.
Communities in the project area will be encouraged to proceed with
re-afforestation programmes to be executed under the local money LETS systems.
Re-afforestation initiatives create CO2 sinks, help combat erosion, and with
time create a high value resource for recreation and a sustainably run quality
timber industry.
The Model
foresees sanitation systems involving the separation of urine and faeces and
their re-cycling at household level for productive purposes. Urine
appropriately mixed with water or waste water in a ratio of 1:10 can be used
directly as a high quality fertiliser in home gardens, including vertical roof
gardens where no other garden space is available. Assuming an average family of
five the annual amount of fertiliser available is about 27.5 cubic meters.
Faeces are composted separately in locally built Beosite tanks. The fully
composted faeces are an excellent soil conditioner which can be used in the
home garden or collected under the LETS systems.
Fig 3: Drawing
of a Beosite composting toilet tank
DRAWING OF GYPSUM COMPOSITES COMPOSTING
TOILET TANK.
One of the
most important causes of poverty is on-going financial leakage from poor rural
and urban areas and nations to richer national and international havens. This
financial leakage is caused mostly by interest, which constitutes up to 40% of
the end user cost of a typical western product, and the cost of imported energy
and capital goods.
The Model therefore sets up a cooperative interest-free, inflation free
economic environment and recommends the use of technologies permitting the
construction of most items necessary for development in low cost labour
intensive project level production units with 100% local value added.
Project applications are self-financing because they allow the
recipient communities to fully exploit a network of sustainable development
activities using:
( i)The
interest-free loan itself
( ii)Local Exchange Trading Systems (LETS)
(iii)Multiple re-cycled interest-free micro-credits to be administered by a
local micro-credit institution. They are generated by recycling seed loan
repayments and project reserves during the loan term, and by recycling
repayments of the micro-credit loans themselves.
The
interest-free seed loan enables capital items and services necessary for a
project application but which cannot be built within the project area to be
purchased. The seed loan required to cover the complete package of basic
services foreseen is US$60 per user, or US$ 3.000.000 for a project application
with 50.000 users.
Project applications under this Model will usually be carried out in
countries and areas where political stability over the long term necessary (at
least the period of the ten year interest-free seed loan) for integrated
development cannot be guaranteed. While capital structures installed within the
framework of project applications may, if rarely, be insurable against loss or
damage by Act of God such as lightning, hurricanes, or earthquakes, it is not
possible to insure them against loss or damage deriving from causes such as Act
of Political and Military Authorities, civil war, commotion, rebellion, and
strikes. Even if insurance against such risks were to be available the cost
would be so high that it would constitute a major on-going financial leakage
from the project area, which is just one of the major problems applications
under the Model are designed to stop. What happens in case of loss of or damage
to the capital structures installed under a given project application under
this Model before repayment of the interest-free seed loan after ten years must
therefore be clearly addressed at the time the project application is being
financed.
The beneficiaries of project applications under the Model are by
definition poor and the loss or damage in question derives from causes entirely
beyond their control. To require these poor people to repay a loan after ten
years for capital structures they have lost for reasons beyond their control is
in profound contradiction with the short term and long term goals of project
applications under this Model. In some cases the lending organisations may have
forms of insurance available to cover funds at risk in projects in developing
countries. In such cases they would ensure, at their own cost and by way of
gift, that project applications under the Model are insured by such Funds.
Where, however, such insurance is not available, the lending organisations
should accept that in the case of loss of or damage to project structures
deriving from causes beyond the power and control of the users the interest
free loan be converted into a gift so that users are freed from their
contractual obligations.
Normally, at
the time the (uninsured) loss of or damage to the capital structures occurs,
users will have paid a part of the loan into the Cooperative Development Fund.
Each contract for the financing of project applications under this Model should
state clearly whether the money which has already been collected in the
Cooperative Development Funds at the time the loss of or damage to the capital
structures occurs:
a) Must be used immediately to reinstate (part of) the capital goods lost or
damaged
b) Has to be repaid to the lenders at the end of the original ten years'
interest free loan period.
c) Has to be repaid immediately.
d) Will, subject to analysis of the current political situation, be integrated
by a further loan to enable complete reinstatement of the capital structures so
that the project application can make a re-start.
Local
exchange trading (LETS) systems allow any goods and services supplied locally
usuing local materials to be paid for under the local LETS currency without the
need for any formal currency at all.
The Model is therefore based on technologies, and in particular the
Beosite technology, which allows most items needed for basic services in the
project area to be built or carried out within the LETS systems with 100% local
value added.
Some examples of items which can be supplied this way are:
Well linings
Drinking water tanks
Water harvesting tanks
Water containers
Urine tanks
Faeces tanks
Toilets
High efficiency stoves
LETS systems are operating world wide. However, the concept of incorporating
their use as a fundamental element of integrated self-financing development
projects is thought to be new to the Model presented.
Fig. 4 shows a
typical LETS structure.
DRAWING OF LETS STRUCTURES.
Fig. 5 shows
how a LETS transaction works
HOW A LETS TRANSACTION WORKS.
Multiple
re-cycled interest-free micro-credits provide formal money needed to develop
local production capacity. The rest of the development under project
applications is carried out under local exchange trading (LETS) systems set up
in each project area.
The formal
currency capital available for recycling in the form of micro-credits is made
up of :
a) Part of the initial seed loan money until it is needed for the project
application
b) Seed loan repayments
c) Micro-credit repayments
d) The long term maintenance fund
e) System capital replacement fund which will be built up after the ten years'
seed loan has been fully repaid
For instance, a woman may need a sewing machine to be able to make
clothes. She will need "formal" currency to buy the sewing machine
(and perhaps some cloth), which is presumably not made in the project area
itself. That money will be made available to her in the form of an
interest-free micro credit. She will sell outside the local LETS system some of
the clothes she makes to earn the "formal" money she needs to repay
her loan. The rest of the clothes can be sold within the local currency LETS
system. As she repays her loan, the repaid capital can be promptly recycled for
another interest free micro-credit project, so the available seed money
repeatedly re-circulates within the local economy.
Fig. 6 shows
the cycle for the interest-free purchase of capital goods for productivity
purposes
THE INTEREST-FREE LOAN CYCLE .
Micro-credit
systems within the framework of project applications under the Model will be
set up by local micro-credit institutions.
The proposed micro-credit systems will be different from most of those
formed up till now. Formal currency loan capital repayments and longer term
reserves within the projects themselves will be used to finance the
micro-credit systems. These funds are already available for multiple
re-cycling, interest-free. When, at the close of the ten years' seed loan
repayment period, the original project capital is repaid, the users will continue
to pay their monthly contributions into the Cooperative Development Funds to
build up capital for system extensions and/or to replace system hardware after
20-30 years. These fresh Cooperative Development Funds will become quite large.
They in turn become available for interest-free micro-credits within the
project area until they are needed, so that permanent on-going sustainable
development in ten-yearly cycles is ensured .
Final repayments of blocks of micro-credits will be co-ordinated so
that money for long term capital investment purposes (system replacement and
extensions) will be available when it is needed. An example of this is shown in
columns 37, 38, 39 and 40 of the chart in fig 7, where the higher columns
indicate shorter payback times for the last lots of micro-loans so that the
entire interest-free seed loan capital of US$ 3.000.000 is available for
payment in the 41st quarter.
Money for the interest-free formal currency micro-credits granted is
therefore generated by the users themselves within the framework of the project
applications. The money and the micro-credits belong to the users. They are
interest-free and continue to re-circulate within the local economy. Based very
conservatively on an average payback time of two years, the theoretical average
interest-free micro-credit finance made available during the first ten years to
every family of five persons in a given project area is US$ 1500. If the
average payback time were to be shorter, the interest-free funds available would
be greater still.
The following chart (which has been drafted in Euros) shows a typical
build-up of micro-loan investment over the first period of ten years of a
project application. It shows the amount of new micro-loans actually
(re)invested each quarter during the first period of ten years. The amounts are
net of current outgo for project administration and maintenance of structures,
which have already been deducted.
In the chart, the original interest-free seed loan is paid back in the
41st quarter. The capital available for micro-loans temporarily falls back to
the amount actually being paid into the Cooperative Development Fund each month
by the users. It will then gradually build up again over the next period of ten
years, so that a further amount of at least US$ 1500 can be made available (on
an average) to each family in the form of interest-free micro-loans. This time
the funds accumulated belong to the users themselves, and are available for
renewal and/or extension of project structures when needed.
Fig. 7 :
micro-loan investment during the first ten years
CHART ILLUSTRATING MICRO-LOANS
SCHEME.
The purpose
of the planned Micro-Credit systems is to ensure that individuals or
co-operatives without access to formal currency can get interest-free
micro-credit loans for capital investment for production purposes to boost the
local economy. The interest-free Micro-credit loans are therefore applied
mainly to buy items necessary for production purposes which are made outside
the local currency trading (LETS) systems.
The pay-back time for the interest free loans will vary from case to
case. Some micro-credit investments will generate more goods and services that
can be sold outside the local LETS currency area than others. Some users will
therefore be able to earn formal currency to repay their micro-loans more
quickly than others. The users themselves will decide from case to case during
their monthly meetings on what is acceptable to them.
The possibility of sale of some of the production to consumers from
outside a project area for formal currency will usually be a condition
precedent for the granting of a micro-credit loan. This condition of partial
"export" sale lapses as soon as the micro-loans have been repaid. In
project applications where an export-import cooperative has been set up, the
cooperative may often be able to help the beneficiary of a micro-loan export
part of his or her production in exchange for formal currency.
The rate at which micro-loans in formal currency can reasonably be
recovered will determine the payback period, which could therefore be anything
between a few months and a few years. The rate of the loan repayments must be
realistically possible for the borrowers. The system is co-operative and
interest free and designed to enhance the general welfare within the
beneficiary communities. As with the Grameen bank systems, any person or co-operative
group wanting a Micro-Loan will be expected to produce four friends who agree
to be jointly and severally liable for the periodic loan repayments, and to
make sure they are made on time.
Since the
Micro-credits are essentially self-financed by the communities through their
Cooperative Development Funds, the funding priorities must be left to the
communities themselves. This is especially so where potential conflicts of
interest arise because there is not enough funding immediately available to
meet all requests for assistance. Meetings to discuss members' proposals and
further developments with on-going projects will become a feature of the social
life of the communities at tank commission level. Since it is expected that
many of the beneficiaries under the scheme will be women and women's groups,
women will need to have full representation during such meetings. One of the
basic goals of the formation of the Community Health Clubs foreseen in the
Model Self-financing Integrated Development Project is to use the Health Clubs
as a launching pad to create women's groups. These groups will give women the
chance to discuss their needs, develop their priorities, and make submissions
during the Micro-Credit meetings. The Health Clubs should also be able to
ensure that women participate en bloc at the Micro-Credit meetings.
The Model
Self-financing Integrated Development Project the micro-credit aspects of which
have been discussed in this paper has been placed in the pubic domain and can
be freely accessed and downloaded together with drawings, charts and graphs in
colour from the home page of website :
www.flowman.nl
List of articles on subjects related to the Model.
List of attachments to the Model.
