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


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


Edition 02:06 November, 2009



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]


17. Protection of donors and financing parties.( A least 2 hours )

Integrated development projects incorporate innovative mechanisms for the protection of the interests of funding institutions and for the reduction of financial exposure during the various project phases.

The most effective and innovative protection is given by the order of execution of the various project structures. For full information on this refer to Section 1. Justification of the order of sequence for the creation of the structures of the fourth block: the structures to be created  of the course.


Project execution passes through a series of logical steps in the creation of the project structures. First the social structures are created, then the financial structures, then the productive structures, and finally the service structures. Exposure of investors at any one point of project execution is limited. Work on next following structures does not take place until the preceding structures are in place and in operation.


The new capital content of project structures tends to increase with progress in project execution. The first (the social and financial) structures to be set up have relatively low formal money capital content. The second (the productive) structures have an intermediate level of capital content. The last (the service) structures, and especially the distributed drinking water structures, have the highest level of capital content. By the time the service structures are to be installed, most of the work on them can be done under the local money system, operational costs and formal money reserves for maintenance and long-term replacement are already being collected, and local production of  items necessary for the service structures is already under way.


The graphs in section 7.11 quarterly outgo show how a given structure must be created, according to the point reached in project execution, before the following structures can be set up. They also show that the most important formal money investments, especially the ones for distributed drinking water supply, can only be made once the social, financial and productive structures are in operation.  The exact sequential order for execution of  the various project activities is set out in section  06.01 the annual activity plan.


The formal money investments needed for the creation of the social and financial structures are not very large. Refer to :


Hygiene clubs, items 60101-60203.

Social structures, items 60301-60304.
Local money systems, items 60401-60409.
Micro-credit structures, items 60501-60505.


Much of the work for the project is done by the local populations. Until the local money system and the micro-credit system are in operation, it is not possible to proceed beyond the first 15 items of the budget in the activities of the third quarter.


Funding parties never have risk from following investments until the preceding structures  are successfully operating. Total costs of setting up the social and financial structures up amount to about Euro 800.000, of which at least half should be recoverable where necessary through the sale of capital goods.


In the same way,  service structures, the ones with the most formal money capital content, are not set up until the local production structures are in place and in operation.


The total amount at risk at any given moment during the project may not be greater than about Euro 1.000.000, part of which is expressed in capital items part of the cost of which  should be recoverable.

The introduction to the statutes of the NGO responsible for project execution  (see project execution cooperative in the section on the division of tasks of the third block solutions to the problems : «the management of the structures of the project as they are formed  pass to a management Cooperative called [[project name]Cooperative] ”

The decision to deliver structures over to the  Permanent Cooperative for the On-going Management of the Project Structures is made from structure to structure by the Board of Directors of the NGO responsible for Project Execution, on the recommendations of the Project Coordinator.

1. Opinion.

On one page, place the progressive  transfer of control over project structures to the Permanent Cooperative in the context of the interests of financing institutions.

Suppose that initial project financing is by way of a ten-year interest-free loan. That would mean that the amount collected in the Cooperative Local Development Fund over the first ten years of operation  would have to be repaid in a single lump sum at the end of the ten year period. According to the  statutes of the Cooperative for the on-going operation of the project structures (see permanent cooperative for project management  in the section on the division of tasks in the third block solutions to the problems) the Central Committee must (amongst other things):


“- [Hold] Ownership on behalf of the inhabitants in the project area of all real and personal property connected with the structures and their management

-Deliberate individually on every decision connected with real property owned by the Association.
-Deliberate individually on every purchase and/or investment and/or sale of personal property of the association for a value equal to or greater than [ (example) Euro 15.000]. ”


2. Opinion.


On one page give your opinion on the relationship between these tasks and the protection of financing institutions for the investments they have made. Which other agreements for the defence of investors’ interests do you think are necessary ?


3. Opinion.


Make a two-page comparison between the way integrated development try to protect investors’ interests and the measures to this effect taken in the three most important traditional development projects in your chosen area (if necessary, in your country). Begin with a short introduction. Then make a brief summary of the method followed by the Model. Then compare that i turn with each of the three projects chosen. End with your conclusion.


Read the following sections of the Model carefully :


4.16 The effects of inflation on repayment of loan money by the Cooperative Local Development Fund and gift content

4.17 A forfeit insurance aspects : gift in case of loss of project structures.


4. Opinion.


You are responsible for the integrated development project in your chosen area. On one page,  present the issues raised in sections  04.16 and 04.17 to your donors and funding institutions, with clear proposals for their solution. On the basis of your personal experience, how do you think they would react ?


 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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