NGO Another Way (Stichting Bakens Verzet), 1018 AM Amsterdam, Netherlands.


                                                                                    01. E-course : Diploma in Integrated Development (Dip. Int.Dev.)


Edition 01: 08 December, 2009.

Edition 02 : 22 December, 2013.



Tekstvak:         Quarter 3.










Study points : 05 points out of 18

Minimum study time : 125 hours out of 504


The study points are awarded upon passing the consolidated exam  for  Section C : The Model.



Block 8 : Economic aspects.


                            [Study points 03 out of 18]

[Minimum study time: 85 hours out of 504]


The study points are awarded upon passing the consolidated exam  for  Section C : The Model.



Block 8 : Economic aspects.


Section 1 : Project costs.[40 hours]


01.  General introduction. (02 hours)

02. General sketch of the financial structures.(02 hours)

03. Short budget analysis. (02 hours)

04. Budget organisation. (02 hours)

05. Description of the local contributions. (02 hours)

06. Method for calculating local contributions. (02 hours)

07. Relationship between local money and formal money.(02 hours)

08. The budget (02  hours)

09. The budget in a form requested by donors/financing parties. (02 hours )

10. Annual expenses (budgets per year). (02 hours )

11. Quarterly budgets. (02 hours )

12. Excel spreadsheets for the preparation of the budget.(02 hours )

13. The sustainability of the system.(02 hours )

14. Tenders. (02 hours )

15. The bank structures with limitations imposed on the project coordinator.(02 hours )

16. Auditing structures. (02 hours)

17. Protection of donors and financing parties.(02 hours )


Section 1 report :  (06 hours) .




Section 1 : Project costs.[40 hours]



06. Method for calculating local contributions. (At least 02 hours)



A typical budget of an integrated development project provides for a total participation by the local populations to the order of 3.400.000 hours’’ work, or 425.000 8-hour working days. Supposing the adult population in each project area with 50.000 inhabitants is 37.500, the total work contribution foreseen amounts to just 11-12 hours’ work per person over the two-year execution period, of 6 hours a year. This means that what may appear to be an enormous contribution in fact boils down an average contribution of about one minute per person per day over the 24 month period.


The question which arises is which rate of conversion to apply to local labour in order to represent its numeric contribution to the budget in a way which s acceptable to donors and financing parties.


For the typical budget a formula was chosen which allows for a contribution by the local populations of 25% of 100% of the total project amount, being  Euro 1.250.000 out of a total of Euro 5.000.000.


To arrive at a contribution of Euro 1.250.000 for 425.000  8-hour working days, a rate of exchange of about Euro 3 per day has been used.


The Euro 3 a day payment corresponds to an amount considered reasonable in most poor countries..

Table 1 of the Report on Human Development for 2007/2008 prepared by the UNDP shows an average gross domestic product for poor countries of US$ 1.499 a year, currently about Euro 1.070, or  +/-  Euro 2,75 a day.

The reality in rural areas in poor countries is worse still.

See, for example Fast Facts : The Faces of Poverty  (UN Millennium Project.)

“[At the end of 2006] More than one billion people in the world live on less than one dollar a day. In total, 2.7 billion struggle to survive on less than two dollars per day.”

Using a rate of conversion of Euro 3 for each 8-hour working day, a reasonable compromise was sought between what is acceptable at local level and what should seem reasonable to donors and financing parties.

The figure of Euro 3 per day is only one accounting solution. The conversion value indicated in the budget can easily be varied according to the requirement of donors and financing parties. In project reality, once the local money systems have been set up in each project area, the populations are paid under the local money system rules set up during the workshops held for that purpose, which are based on 10 local money units for each hour’s work., or 80 accounting units for each 8-hour working day. For the populations, the conversion value attributed to their work in the budget is entirely irrelevant.

1. Research.

Make a one page report on the available disposable money (in Euro) in your project area. If  possible, try to give the figures for each  decile (10%)  of the population. This is for instance the 10% of the poorest of the poor ; 10%  of the slightly  average poor; and so on up to the 10% wealthiest 10% of the population. In any case, provide information on the distribution of income amongst the different sectors of the population.

2. Research.

You are in charge of the integrated development project in your chosen area. On one page, give a very simple explanation to the populations how they will be paid for their work for the project.

3. Opinion.

Do you think you will have problems getting  donors and financing parties to accept a budget of the type foreseen in the Model ? Provide a one-page opinion.

4. Opinion.

Make a one-page analysis of the psychological effects on the population of the inclusion in the budget of an allowance covering the conversion into formal money of the contributions they make.

5. Opinion.

Section 1 of the budget provides for several drivers. At the beginning of the project they will be paid in formal money because the local money system is not yet in operation. After the creation of the local money system they will be paid under the local money system. On one page state how you would convince the drivers that they would benefit much more from their payment under the local money system than payment under the formal money system. Feel free to express doubts,  refusals, reactions etc.

 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, 58th annual NGO Conference, United Nations, New York 7th September 2005.



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