NGO "ANOTHER WAY" (STICHTING BAKENS VERZET), NETHERLANDS, SUSTAINABLE INTEGRATED SELF-FINANCING DEVELOPMENT PROJECTS AND ADVANCED DEVELOPMENT TECHNOLOGIES

The financial concepts introduced in this project are innovative. Formal money on-going maintenance costs, essentially for spare parts for certain structures, are covered by the monthly formal money contributions paid by families into the Cooperative Local Development Fund. The operation of this Fund is described in parts 3. The local money systems - introduction and 4. The local money systems – more details in Section 3: Financial structures in block 4 and in the project documentation which also contains a graphic presentation. Maintenance-related labour and administration costs are covered under the local money systems set up. The local money units rotate continuously in the local community. Their value is referred to the perceived value of an hour’ work. Powerful social control exists over the work and the services offered. In principle, the cost of maintenance of structures and services expressed in local money units is not important, as it is in any case recycled locally. To take an improbable example, the cost of a full-time drinking water supply system maintenance cooperative would represent an annual debit amounting to the equivalent of one hour’s work for each of the 35000 adults in the project area. Social insurance aspects protecting the weakest members of the community are described in part 5. Three-tiered social security structure in Section 2: Social structures of block 4 of the course.

The payments made by families into the Cooperative Local Development Fund typically amount to between Euro 3 and Euro 4 per family of five persons per month. The project makes a wide range of services available to the beneficiary families. Savings on their former formal money expenditure for these services should be higher than their monthly contribution to the Fund. Consider for example savings in the cost of drinking water and fire-wood for cooking. Consider the social and financial advantages created by the project and the introduction of interest-free micro-credits.

The budget includes complete details on the financial management of the structures set up. For the complete package of services offered, a monthly contribution of Euro 0,60 per person per month by 50.000 people produces a total annual contribution of Euro 360.000. Only Euro 100.000 in formal money is needed for management and maintenance of the structures. The remaining part of the income is continuously recycled in the form of interest-free micro-credits for productivity increase. For information on the micro-credit systems see parts 5. The interest-free micro-credit systems - introduction and 6. The interest-free micro-credit systems - more details of Section 3: Financial structures in block 4 of the course.

Within ten years the Cooperative Local Development Fund will have accumulated at least Euro 3.000.000, taking repayment of initial loans for productive activities made during the first two years’ execution phase of the project. At the same time, each family will on an average have enjoyed interest-free micro-credit loans for at least Euro 1.500 for the increase of its own productivity.

The relationship between formal money revenues and formal money maintenance and administration costs in integrated development projects can only be positive. Compare this with financial principles traditional adopted for international development projects. In this sense, the Model constitutes a world-wide precedent, as it is inherently permanently sustainable.

Institutional aspects.

The social, financial productive and service structures set up by integrated development projects operate independently of but in full harmony with all the existing political and administrative structures in the project area. They operate freely and voluntarily in parallel with the existing structures but do not substitute them. Except for works and services carried out for the execution of the project itself, users are always free to choose whether a given transaction is to be carried out under the local money system set up or under the traditional formal money system.

The local populations themselves carry out most of the work and services needed for project execution. They manage and maintain the structures. They make the formal money and local money contributions necessary for the management, maintenance and long-term replacement and extension of the structures, which they own. Operation and maintenance are carried out by permanent locally-owned project structures and by local cooperatives and operators.

Economic and financial feasibility.

Description of the resources.

The principles applied follow two main lines.

The first line is that the formal money (Euro - Dollar) funds are almost exclusively destined for the purchase of goods and services which are not locally available. For example, the purchase of solar pumping systems and the solar panels for them. The local populations are responsible for most of the work and services necessary for project execution. The creation of the structures necessary for them to do this takes place during a series of Moraisian capacitation workshops, where the people themselves set the structures up. Information on the workshops can be found in part 2. Moraisian workshops in Section 1.

Justification of the order of sequence for the creation of the structures of block 4 of the course. The people themselves become, as it were, the structures. Their contribution in works and services is estimated to amount to 3.400.000 working hours for each project. The works and services are arried out within the framework of the local money systems set up. These are usually converted into Euro at the rate of Euro 3 for each eight-hour working day, producing a local direct contribution by the populations of about Euro 1.250.000, or about 25% of the total project cost. The budget fully justifies the number of hours worked by the local populations for each budgeted activity. The 3.400.000 hours of work represent a true mobilisation of the local populations, 10% (about 4.000 people) of whom are permanently usefully occupied as a result of each project application.

The second main line of approach is that, with the exception of the very first structures leading to the creation of the local financial structures, the management structures have to be set up before the formal money capital project funds can be spent. Without the presence of the local social and financial structures, no formal money investment, for example investments in drinking water structures, can take place. This is because the local money structures under which the project works have to be paid, have not yet been formed. For example, the installation of solar pumps for the supply of distributed drinking water cannot take place until the water tanks are ready. The water tanks cannot be built until the gypsum composite construction units are in place. The gypsum composite construction units cannot be built until the local money systems have been set up. The local money systems cannot be set up until women’s participation in the structures is assured. Women cannot organise themselves until they are given a platform for the purposes. The formation of the Health Clubs, enables them to do so.

The role of the executive NGO, despite indications often given in the guidelines published by donor organisations, is the permanent on-going monitoring of project execution, which is for a large part carried out by the local populations themselves under the guidance of the project-coordinator and his team. The inhabitants work through the social, financial and productive structures they set up. They follow the indications given to them by a project coordinator and by a general consultant, who for pilot projects may be the author of the concepts, who will work for just the current pro-diem tariff for living costs foreseen by the European Union for expatriates in the host country. In three or four specific areas, the project coordinator will obtain the help of a single specialist, provided the specialist can be found within the time span available. In the absence of a specialist, the general consultant will take his place.

Relationship between the project activities and the expected results.

The whole package of services provided by projects under the Model costs less in formal money terms than any one of its numerous elements following traditional methods of financing and execution. In some cases deep bore-holes have to be drilled throughout the project area. The typical standard budget provides for this. More often, hand-dug wells can be built using the local money systems set up, and the formal money content of the project could be still further reduced.

All of the social financial and productive structures and services made available in each individual project area are permanent. They enable the inhabitants to take on-going action to increase their productivity and improve their quality of life. Apart from an average use of interest-free micro-credits for at least Euro 1500 during the first period of ten years, the local money systems set up make it possible for the populations to do whatever they wish and to strongly reduce if not entirely eliminate unemployment in the project area within a few years.

Poor water quality throughout projects area spreads diseases. The cost of the fighting often deadly water-related diseases takes up a large slice of the family incomes. A goal of integrated development projects is to reduce water-borne disease so medical and financial resources can be re-directed to other health objectives. Resulting diseases also affects the quality of life and the productivity of the people.

Supply of readily accessible clean drinking water for personal and household use should improve the health of the whole population in each project area and ease the pressure of work on women and eliminate all risks currently involved in fetching water over long distances.

The projects include gypsum composite production units whose first job will be to make water storage tanks and well linings for their respective projects. At least 25 litres of distributed clean drinking water per person per day will be supplied at a distance of not more than 150-200 metres from their homes, plus a back-up supply of another 25 litres of clean drinking water at the (+/- 40) well sites, plus up to 25 litres per person per day of non-potable water for personal uses from rain-water harvesting systems placed in users’ houses. Washing places will be supplied at each of the 40 well/borehole sites, or, if preferred, at each of the +/- 200 water points.

Health Club activities will increase awareness for the risks of poor hygiene at household level, and ensure that the clean drinking water delivered to them at tank commission level remains clean when transferred to household water containers and that proper attention is paid to the cleanliness of household utensils, kitchen cutlery and tableware.

Specific financial aspects.

They way the inhabitants participate in the projects and contribute to their cost has been described above. All of the social, financial, and productive structures and services created are independent and managed by the people themselves. The formal money Cooperative Local Development Fund builds up over each ten year project operation cycle to cover future replacement of capital goods and new investments for the extension of services, together with all formal money funds necessary for maintenance purposes. The principles applied in the Model create precedents for integrated development in poor countries. They do not follow any existing political and economic principles except that of honest and responsible management of public goods and interests.

All projects are non-selective. All of the inhabitants in each project area have permanent access to all of the structures and services created there. There are no special categories of beneficiaries or levels of service.

Each inhabitant in each project area will receive at least 25 litres of clean drinking water per day at tank commission level. A hand-pump back-up service covering an extra 25 litres of drinking water per person per day at well-commission level is also provided. The installation of rain-water harvesting structures in each of the 10.000 homes in project areas to supply another 25 litres of non-potable water per person per day for personal uses is also planned. Users’ personal daily water requirements are also reduced through the use of dry composting toilet systems and useful recycling of household grey water.

All of the formal money costs relating to drinking water supply are covered by the monthly contributions made by users into their Cooperative Local Development Fund. All of the costs of systems management and maintenance are covered under the local money systems set up. Everyone in each project area pays the same contribution. Several levels of cooperative social support structures are described in part 5. Three-tiered social security structure in Section 2: Social structures of block 4 of the course. They are set up to help families and individuals who may have temporary or permanent problems in meeting their formal money or local money obligations.

The system has no qualification requirements or connection costs except for bona-fide residence in the project area in question.

Management and maintenance of services at tank commission level is the responsibility of the tank commissions, who own the structures in question. Management and maintenance of services at well commission level is the responsibility of the well commissions, who own the structures in question. Management and maintenance of services at central committee level is the responsibility of the central committee, which owns the structures in question. The role of each institution is carefully defined in the project documentation where it is also graphically illustrated.

Maintenance of all structures installed in the course of the project will usually be in the hands of local cooperatives and local operators trained and organised during the Moraisian water supply structures workshop. These are described in part 4. Installation and maintenance cooperatives in Section 4: Productive structures of block 4 of the course. The formal money costs are paid out of the Cooperative Local Development Fund. Maintenance services are covered under the local money systems set up. Decisions concerning extensions to services and long-terms replacement of capital investments are taken by the central management unit the members of which are elected by the central-committee. However, each tank commission and each well commission is independent. The commissions are free to take any initiatives in their own area they may consider to be in the interests of their members.

,60 and Euro 0,75 per person paid by the families into the Cooperative Local Development Fund. The formal money costs for spare parts imported into the project are subject to inflation. The central management unit of the project, duly elected by the inhabitants themselves through the central committee and the well commissions may propose changes to the monthly contribution of the inhabitants into the Cooperative Local Development Fund. Taking a presumed substantial increase in local productivity and consequently of the general quality of life of the people in the project area over a period of several years, increases to the monthly contribution over the years can be expected. They are also in the interests of the inhabitants themselves, as the amount of money available to them for interest-free micro-credits for productivity development increases proportionally. On the other hand, the cost of management and maintenance services should remain stable over the years, as the local money systems under which payments for them are covered are both interest- and inflation-free.

Sanitation structures, including most of those necessary for waste recycling are supplied, installed, managed and maintained entirely under the local money systems set up. They are therefore interest- and inflation-free. Formal money costs for vehicles and transport for the collection and recycling of non-organic wastes can be incurred by the network of cooperatives and operators set up under the project for this purpose. They are generally expected to cover these costs out of formal income for waste products which cannot be recycled locally and which are “exported” outside the project area against payment in formal money. Their ability to repay their initial formal money investments is expected to be lower than that of other productive activities set up, and will take place over a relatively long term.

1. Opinion.

You are the promoter of an integrated development project for your chosen area. You try to convince the regional and national authorities of the economic advantages integrated development concepts offer. Make a two-page submission to them. After a short introduction choose at least 5 key points and use them to make a comparison with traditional development projects. What, for instance, would be the cost of achieving the Millennium Goals one by one in your area following traditional development concepts ? Compare them then with those of your integrated development project. End the submission with your conclusion. N.B. This exercise is about project execution.

>2. Opinion.

Taking the monthly formal money contributions required and the ability of individual members of he population to participate productively within the framework the local money systems to be set up into account, make a two-page analysis of the use you think would be made of the social security structures in your project area. After a short introduction, analyse the need for formal money contributions to make the monthly payments, and then an analysis of the help that would be needed under the local money system. Close with a short conclusion.

3. Opinion.

A large part of integrated development projects is managed by the local populations under the local money systems set up. The local money systems are free from inflation. Outline on one page the long-term consequences of this for the population. N.B. This exercise is about the permanent on-going management of the project structures..

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◄ Eighth block : Economic aspects.

◄ Eighth block : Project costs.

◄ Main index for the Diploma in Integrated Development (Dip. Int. Dev.)

◄ List of key words.

◄ List of references.

◄ Course chart.

◄ Technical aspects.

◄ Courses available.

◄ Homepage Bakens Verzet

"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.

“Poverty is created scarcity”

Wahu Kaara, point 8 of the Global Call to Action Against Poverty, 58^th annual NGO Conference, United Nations, New York 7^th September 2005.

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