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## MODEL FOR SUSTAINABLE SELF-FINANCING INTEGRATED RURAL AND POOR URBAN DEVELOPMENT FOR THE WORLD'S POOR

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 12: 02 November 2006

(EN FRANÇAIS)

#### 04.16 INSURANCE AND FORFEIT IN THE FORM OF GIFT IN CASE OF LOSS OR DAMAGE TO CAPITAL STRUCTURES

The political situation in the project area is (very stable, fairly stable, unstable). Long-term political stability at least over the first ten years’ operational period necessary for integrated development (and interest-free loan repayment) cannot be guaranteed.

(While the capital structures installed are 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. The cost of insurance against such risks 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 the project is designed to stop. )

What happens in case of loss of or damage to the capital project structures (where applicable, before repayment of the interest-free seed loan after ten years) must therefore be clearly addressed during project funding.

The beneficiaries of this project 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 the project. The external funding agency (has, has not) access to forms of insurance available to cover funds at risk in projects in developing countries. It (has, has not) undertaken to ensure, at its own cost and by way of gift, that funds for this project are insured.

(Where applicable : Since insurance is not available, the external funding agency has accepted 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 (contributed funds, paid a part of the loan) into the Cooperative Local Development Fund. The money which has already been collected in the Cooperative Local Development Fund 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. )

Forward: Circulation of funds.

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