#### ÇSTICHTING BAKENS VERZET

#### 1018 AM AMSTERDAM, THE NETHERLANDS

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

## 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

(EN FRANÇAIS)

Edition 09: 04 August 2006

### A VERY SHORT PRESENTATION OF THE CONCEPTS BEHIND THE MODEL

####

#### 1.0 SUMMARY OF CONTENT

This paper includes:

An introduction to sustainable, self-financing, integrated development concepts.
A short discussion of poverty.
The Model’s innovative economic structures.
The financial and social structures to be created.
Some recommended technologies.

#### 2.0 INTRODUCTION TO SUSTAINABLE SELF-FINANCING INTEGRATED DEVELOPMENT CONCEPTS

An innovative Model for self-financing integrated development covering a complete package of basic services for sustainable economic and social development in beneficiary communities is presented. It includes hygiene education, the provision of sustainable drinking water and ecological sanitation services, PV lighting for study, PV lighting and refrigeration in clinics, a complete waste removal and recycling system, rain-water harvesting, and the local production and use of high-efficiency stoves and biomass to fuel them. The Model provides a strong thrust for on-going local sustainable financial and economic development, productivity, and employment. It contains many decentralised renewable energy applications and lays the bases for a high quality of life for all of the inhabitants in the project areas.

The Model is strongly demand response oriented. It provides innovative practical working solutions for sustainable integrated development in rural and poor urban areas and covers all major development priorities. It integrates in a simple, practical and feasible manner policy, finance, technology and human capacity building to offer long-term sustainable solutions to development. Project structures are designed with, executed, run, maintained, owned and paid for by the people themselves.

With two limitations, project applications under the Model are self-financing, subject to an interest-free seed loan repayable in 10 years. They are structured for communities of 10000 households (50000 users) but can be adapted to smaller and larger rural or poor urban project areas as required. The typical amount of the initial interest-free seed loan is Euro 3.000.000 or Euro 60 per user, sufficient to cover the total package of basic services offered.

There are two elements of gift incorporated in the proposals. The first is the interest which would otherwise be payable on the seed loan. The second involves certain insurance aspects described in detail in the Model.

Project applications typically require 75% seed loan financing by an External Support Agency. Regional or state authorities in the beneficiary countries are expected to supply the remaining 25%.

Project applications are self-financing because they allow the recipient communities to fully exploit a network of integrated sustainable development activities using:
(a) The interest-free seed loan itself.
(b) LETS-type local money systems set up to run in parallel with the existing formal money economies.
(c) Multiple re-cycled interest-free micro-credits for productivity development. They are generated by on-going recycling of interest-free loan repayments and some reserves during the interest-free loan term.

#### 3.0 POVERTY

3.1 AN ATTEMPTED DEFINITION

Poverty may be defined as a state in which one's perceived quality of life is lower than is felt to be needed for survival and reproduction, or than is desired.

3.2 SOME IMPORTANT FACTORS INFLUENCING QUALITY OF LIFE

The following list covering some economic aspects, water shortage and quality, food shortage, health aspects with sanitation, and housing, is not intended to be all- inclusive. Other factors, including social factors, health care and education systems also play an important role.

3.2.1 Economic

Economic comparisons are often developed by western economists who fail to take the non-monetised part of economies into account. Only a relatively small part of the world's global economy is "monetised". In some developing countries this part may be as small as 10%. The costs in time, use of infrastructure, fuel consumption, and equipment write-off of a western commuter who loses four hours a day in queues going to and returning home from work are monetised though they tend to have a negative weighting on our quality of life. Benefits accruing to an African who spends the same four hours a day in the shade of a tree discussing philosophy with his friends are not monetised. Yet which of them has the better quality of life at least during those four hours? How do the parties perceive their quality of life during those four hours? How far is their quality of life directly influenced by money in such cases?

Where, exactly, is the value added in a can of peas? An African buys a kilo of fresh peas from his neighbour. The neighbour gets a fair price for them or perhaps they swap products. Assume the same kilo of peas were to be bought from the neighbour, transported (using energy) in a truck (the construction of which is energy intensive) to a factory (built and operated using energy), cooked (using equipment and energy) canned (using equipment and energy), labelled (using equipment and energy) transported to a storage depot (more energy) and from there distributed (using energy) to a shop from which the, first African, consumer buys the can of peas at one-half to three times the price he would have paid his neighbour directly for them. In the case of direct consumption, the transactions relating to the peas are probably not monetised. In the second case, the entire process of "producing" the can of peas is fully monetised while the peas in the can are not even fresh! What does the kilo of peas in each case tell us about the quality of life of the consumer? Canning peas may have storage benefits and allow delay of consumption. On the other hand traditional ways, such as drying, of storing peas also exist and can be carried out at local level.

If industrial processing of food does not necessarily imply either value added or a better quality of life, the question arises what it does imply. The answer to this question is presumably related to exponentially increasing on-going financial leakage from production areas and to centralisation of control over production processes by ever fewer (non-elected) operators. This on-going financial leakage restricts the already limited amount of formal money in circulation in poor rural and urban areas and nations, to the point where transfer of goods and services there is blocked. Today, financial leakage has already reached serious levels even in rural areas of the richer nations.

If poverty alleviation projects are to succeed, financial leakage from individual project areas has to be reduced and preferably stopped altogether and a substitute to missing formal money introduced to enable transfer of goods and services at local level to take place. This does not imply closure of project areas to the outside world. It implies that the balance expressed in formal currency of transactions for goods and services imported into and exported from individual project areas must tend to zero to avoid financial movement from one area for the benefit of another.

Some important factors causing financial leakage are energy imports including electricity, import of industrial goods and services, including medicines and some health services, and above all, interest. The cumulative interest content of a typical western industrial product is thought to be anything up to 40% of the cost to the end user. This interest normally exits promptly from project areas never to return. Little, if any, of the purchasing price is recycled locally. Commonly not even local savings are invested locally for local development.

Innovative sustainable technologies using local renewable energy sources such as human muscle energy, local biomass, PV and wind energy, and locally recycled waste products together with appropriate interest-free formal money financial instruments help create and encourage open competition and free enterprise at local level within the framework of a cooperative and non profit-making global financial structure. As the Model shows, sustainable, self-financing integrated development is then able to flourish.

3.2.2 Notes on water shortage and quality

How much water do we really need?
Control quantity by avoiding wastage and recycling grey water,
Use dry composting toilets, collect rainwater, and ensure fair distribution of water
Water quality. Use inherently clean systems and avoid contamination of water sources.

3.2.3 Notes on food shortage or insufficient variation of diet

Put local consumption first.
Create facilities for storage of local products for local consumption
Tune local production to local consumption; some local processing using traditional techniques.
Eliminate mono-cultures.
Use local seed and locally recycled fertilisers such as urine, and soil conditioners such as locally recycled properly composted faeces.

3.2.4 Notes on health aspects and sanitation

Hygiene education for women and in schools.
Varied local food supply
Clean and sufficient water supply.
Sustainable dry composting toilet systems.
Proper drainage.
Proper aeration of dwellings.

3.2.5 Notes on housing

Hygiene education for women and in schools.
Sufficient water within easy reach.
Good sanitation.
Good drainage.
Waste collection with local recycling.
Efficient cooking and aeration.

3.3 SUMMARISING

Achieving poverty alleviation and improving the quality of life of the rural and urban poor depends mostly on avoiding financial leakage from the project area by:
-setting up local money systems to substitute the lack of formal money in project areas so that normal exchange of goods and services can take place there.
-doing as much as possible locally and limiting the import of energy and industrial products into the project area.
-setting up cooperative interest-free formal currency environments.
-stimulating variety in local food production and its storage for local consumption.
-supplying a complete set of fully sustainable basic services covering hygiene education, water supply, ecological sanitation, waste removal and recycling, and efficient means of cooking with improved aeration and elimination of smoke hazards.

#### 4.0 THE INNOVATIVE ECONOMIC BASES OF THE MODEL

4.1 IN SHORT

The Model uses an innovative combination of three financial instruments. These are :
-an interest-free seed loan for a period of ten years.
-local exchange trading (LETS) systems.
-interest-free formal currency micro-credits for productivity development.

Cooperative, socially responsible means are built into the Model at four levels for the protection of users temporarily or permanently unable to make their (full) contributions to the cooperative development funds set up and/or (fully) participate in the local money systems.

4.2 THE INTEREST FREE SEED LOAN

The basic package of sustainable services included in the Model typically calls for an interest-free loan for Euro 60 per user for a period of ten years. Assuming a typical project application for 50.000 users and 10.000 families, each family of five repays Euro 3 per month into a Cooperative Development Fund. Some of this money is paid into a maintenance fund to cover the formal currency costs of running on-going maintenance services. The costs of the maintenance operators themselves are covered under the local money LETS systems set up.

The interest-free seed loan is invested in equipment and services required for the project structures (especially in the drinking water supply sector) which cannot be produced locally. As the formal money seed loan is repaid by the users into the Cooperative Development Fund at the rate of Euro 0,60 per user on a monthly basis, it is immediately recycled in the form of interest-free micro loans for productivity development.

At the close of the ten-year loan period the seed capital is repaid. However, since the users continue to pay their monthly quota into the Cooperative Development Fund set up, a capital is formed during the second period of ten years at the end of which users will be able to replace capital items and/or extend their services.

Fig 1: the capital investment cycle.

THE INTEREST-FREE LOAN CYCLE .

4.3 LETS (LOCAL EXCHANGE TRADING SYSTEMS)

In principle, several LETS currency systems may be set up in each project area, according to clearly definable operating areas. All adults within a system should be registered as members, but use of the system, with exceptions for goods and services necessary for the project itself, would be voluntary. Members may usually freely choose whether to conduct a particular transaction within the local money system or within the formal currency system. The local money and the formal money systems co-exist in parallel though the local money systems are expected to gradually take over a dominating role.

Each local money group would typically have some 7,500 - 15,000 registered adult members, though the number is not critical. The groups must be large enough to allow for a wide variety of goods and services, and small enough for members to associate with the group and participate in its structures if they so wish. Children under school leaving age are not registered as they are not, under the international convention on the rights of children, allowed to work. They become registered members of their local system upon reaching the required age. The members of each group are coded so that their tank- and well commission areas can be identified and the cost of more local, optional, initiatives such as PV lighting for study purposes debited to the members directly involved.

All the local LETS currencies within the project will have the same reference value, which will be decided with the local populations so that they can be transferable from one to another. It is expected the reference value will usually be the perceived value of an hour's work. Not all goods and services will be transferable amongst different systems, as this could lead to drainage of resources from one system to another. Local money systems work best when their financial resources remain balanced. The LETS coordinators and members will decide which goods and services are "exportable". Metal products made in group A, for instance, could be exportable to group "B". Cloth made in group "B" may be exportable to group A. Crops and vegetables not grown in one group could be imported from the others.

Assume that a product is sold by a group A member to a group B member. The transaction would be in local currency A. The producer would be credited in local currency A. The coordinator of group A would advise his counterpart in group B of the debit for the group B member. He would credit the group A account with group B with the same amount in group B currency. The group B coordinator would debit the group B buyer in local currency B and debit the group B account with group A with the same amount in group A currency. Goods and services supplied by group B to group A would be registered the other way round. The group A and B coordinators then simply eliminate the respective debits and credits by pairing value units one for one.

It is a key to the success of the system that the imports and exports of each group remain balanced, their sum tending to zero.

There will be an elected local LETS co-ordinator in each tank commission area, typically representing 40-60 families with 200-300 users. The LETS co-ordinator will need to be literate and will be responsible to the general LETS systems co-ordinator. The local co-ordinators will help those members unable to write/sign their cheques (or deal with other methods of payment), arrange distribution of chequebooks (or other payment forms)to the LETS users, collect the used cheques (or equivalent) deposited in the LETS POST box near the local water tank and take them to the general LETS systems co-ordinator for registration. The local co-ordinators will also display the monthly or weekly reports on the LETS NOTICE BOARD near or above the LETS POST box, advise illiterate members of their LETS balances, call a fortnightly or monthly meeting where the users can discuss the operation of their LETS system, make special requests (such as, for example, increasing the debt limit for sick members or for those making special purchases), and discuss ways to use the goods and services of those with high debts so as to help balance their trading accounts. The local co-ordinators will also discuss with the members selected proposals for allowing export and import of goods and services into the local LETS system and report back to the general LETS co-ordinator.

Payments for LETS services provided by members to their communities are debited to a special LETS code for the community. This may take place at Tank Commission, Well Commission, or Project Level. It can also take place within any other tribal or social grouping, including sports clubs, villages, commonly owned land interests. When the community debt reaches one LETS currency unit (or other agreed amount) for each member, each member is debited with that amount. The community LETS code will then be credited by the same total amount. This system allows purchase or sale of collective communal property to be involved in the LETS transactions. For example, the sale of wood from communal land can be registered as a credit to the LETS group involved, and then transferred from there to individual group members.

Fig 2: A typical structure for administering LETS systems in a given project area.

DRAWING OF LETS STRUCTURES.

Social security for sick, handicapped, and the aged is guaranteed:

a) first, by distribution of their debits amongst children and/or family members and/or friends .

b) secondly, by distribution of their debits amongst voluntary groups set up for that purpose.

b) thirdly, in case of failure of a) and b) by distribution of their debits at tank commission level.

c) thirdly, in case of failure of a) b) and c) by distribution of the debits at project level.

4.4 INNOVATIVE INTEREST-FREE MICRO-CREDITS IN FORMAL CURRENCY FOR LOCAL PRODUCTIVITY

Multiple re-cycled interest-free micro-credits provide interest-free 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 interest-free 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 represented by the monthly contributions (about Euro 0.60 per person) paid by users into the Cooperative Local Development Fund.
c) Micro-credit repayments, being the periodic repayments made by loan beneficiaries into the Cooperative Development Fund.
d) The long term formal currency maintenance fund and other formal currency reserves.
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 is made available to her in the form of a cooperative interest-free micro credit. Initially, she must be able to sell outside the local LETS system for formal currency 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.

Conservatively assuming an average pay-back time of two years for each micro-credit loan, the system generates more than Euro 16.000.000, or Euro 1500 interest-free loans on an average to each family for productivity development during the first ten year period. Funds for micro-loans build up in an identical way during the second, and successive periods of 10 years in an ongoing sustainable way.

Fig 3: shows how the amounts invested each quarter in cooperative interest-free micro-loans develop over the ten year period. In the 40th quarter, the original formal currency seed loan is paid back. However, users continue to make their monthly payments into the Cooperative Development Fund, so the funds for micro-credit loans build up again during the next following period of ten years, as shown in fig. 3. At the end of the second period, the community has funds for replacement, where needed, of the capital investments made under the project. In practice, most of the interest-free micro-credit loans will have a shorter pay-back time, and the amount available for recycling should be considerably greater than that foreseen in the Model.

CHART ILLUSTRATING MICRO-LOANS SCHEME

#### 5.0 COOPERATIVE SUSTAINABLE POVERTY ALLEVIATION STRUCTURES

5.1 THE BASIC PACKAGE TYPICALLY COVERED BY PROJECT APPLICATIONS INCLUDES:

Health clubs for hygiene education courses for women, and hygiene education courses in schools.
A complete sustainable ecological sanitation system, including schools, clinics, and public places.
A sustainable drinking water system, including schools, clinics, and public places.
Rainwater harvesting at individual, micro level.
Recycling of urine, faeces and other organic waste at household and local level, including schools and clinics.
Non-organic waste disposal and recycling.
PV lighting for study purposes at tank commission level.
PV lighting for evening classes in schools.
PV lighting and refrigeration in clinics. Elimination of stagnant waters and drainage of public places. Efficient stoves for cooking ensuring improved aeration and elimination of smoke hazards in homes.
Bio mass production for mini-briquettes for the stoves.

Additional services commonly requested include local radio stations and small-scale bio-mass energy facilities.

5.2 COOPERATIVE INSTITUTIONAL STRUCTURES

Fig 4 : a typical institutional structure

DRAWING OF COOPERATIVE INSTITUTIONAL STRUCTURES.

5.3 INNOVATIVE FINANCIAL STRUCTURES

Fig 5 : a typical financial structure

CASH FLOW DIAGRAM.

5.4 TANK COMMISSIONS, THE BASIC ADMINISTRATIVE UNIT.

Fig. 6: the duties of the tank commissions, the basic administrative level for project structures.

TANK COMMISSIONS-THE KEY STRUCTURES.

5.5 WELL COMMISSIONS

Fig 7 : the duties of the well commissions

WELL COMMISSIONS

5.6 WASTE DISPOSAL STRUCTURES

Fig 8 : how all wastes are collected and recycled within the local LETS system

DRAWING OF WASTE DISPOSAL STRUCTURES

5.7 PROJECT AUDITING STRUCTURES

Fig 9: On going project auditing

#### DRAWING OF RECEOMMENDED AUDITING STRUCTURES

####

#### 6.0 TECHNOLOGIES RECOMMENDED

For space reasons, recommended technologies are summarily listed. More information can be obtained by referring to the complete edition of the Model.

6.1 HYGIENE EDUCATION THROUGH HEALTH CLUBS AND COURSES IN SCHOOLS

6.2 BEOSITE (r) TECHNOLOGY

This is fundamental to the success of the projects as it enables ecological sanitary products to be made in low cost labour-intensive local production units with 100% local value added.

Some examples are:

- Well linings
- Water tanks
- Drinking water containers
- Urine and excreta tanks
- Support structures
- Platforms and washing places
- Toilets and urinals
- Vertical gardens
- High efficiency stoves
- Pumps

The technology is based on cheap gypsum (CaSO4 + H2O) or anhydrite (CaSO4 + = H2O) which should be available in or near any given project area. The technology is made available by Stichting Bakens Verzet free of charge for bona fide poverty alleviation purposes within the framework of a project application under the Model. Mixed with locally systematically available waste products it is possible to attain strengths up to half those of steel. Products can be given a hygienic finish where necessary.

More information on GYPSUM COMPOSITE PRODUCTS.

Homepage

Complete index of the Model.

List of drawings and graphs.
Typical list of maps.
List of abbreviations used.
List of key words.
Documents for fuunding applications.