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
Presented
at the 17th European Photovoltaic Solar Energy Conference, Munich 22-26 October
2001
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 and in particular, PV,
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
amongst those 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 multiple 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
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.
Fig. 2 : Layout of a typical tank installation
The Model foresees PV lighting for
study purposes at tank commission level, usually involving about 200 users or
40 families, provided a suitable study room is available or has been built for
the purposes 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 of
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 3: Drawing of a typical high efficiency
gypsum composite 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 4: Drawing of a gypsum composite
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 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. 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
funds for project applications 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 the 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 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 using 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. 5 shows a typical LETS structure
Fig. 6 shows 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. 7 shows the cycle for the interest-free
purchase of capital goods for productivity purposes
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. 8 : micro-loan investment during
the first ten years
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 (full sized) 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.
