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CAV Case Study - Binguni & Mbele in Kenya

Trapped abundance

There is a community of 400 households in a drought-ridden area in Kenya that has a chronic lack of money, and few commercially valuable exports to the big cities. Sometimes people receive money from humanitarian organizations in the form of CVAs (cash and voucher assistance), or they send their family members to work in the cities so that they can send money back home. The community live at subsistence, unable to build or develop anything and with low cohesion in working together. The community members have excess capacity, they have skills and time and resources.

A community has a chronic lack of money, but human capacity and basic resources that are underutilized

One of the big needs that they have is to grow their own food and increase their local capacity, which takes a lot of labour. Luckily the supply (farm inputs) and the demand (for food) are local. The basic resources are there, but there is an inability to pool them. With effective coordination and utilisation of the local resources and excess capacity, there is potential for a resilient and abundant local market of goods and services.

One of the big hurdles the community faces in starting a farm is the severe erosion of the land from torrential rains and historically bad farming practices. They need to be able to coordinate their capacity to ready the land, collect water and control erosion. After which there are plenty more tasks to complete, such as seed harvesting, mulching, building fences - all requiring human power and labour.

Some community members are overworked, they are stretched for time, and need others to take on some of their load, but are short of national currency in order to pay for that labour.

Simply put, there is land that can be tilled, and people that can farm - there is potential for the production of local food that would be able to support that community from within rather than without.

Within the community there is a group that saves money together, they have a structured chama/tontine/VSLA whereby they provide financial support to the internal members through a collective savings pool. They call themselves ‘Binguni’, and they want a better life for themselves, and their families.

Creating a CAV

Members of the Binguni group have heard of Community Asset Vouchers (CAVs) that help empower marginalized communities to take charge of their own livelihoods and economic future. They connect with a core service provider (CSP) who are prepared to help them through the process. The CSP begins to engage with the community, local government, community elders and leaders to ascertain whether the community has sufficient latent capacity and resources, paired with a demand for the realization of the potential of both.

The community group engages with a Core Service Provider to learn

**A Core Service Provider(CSP) works with Binguni to map the resources and capacity of the community, to gauge latent/potential abundance amongst them and the area. Once mapped, the CSP brings awareness to the community of the available resources and capacity.

The community group is now aware of their potential, but with the local deficit of national currency to create market liquidity. They lack the instrument with which to trade with each other in order to develop an economy around their available resources and capacity. An CSP trains the community group on the value of Community Asset Vouchers.

The community group decides to issue their own Community Inclusion Currency - a tradable Voucher, redeemable for the collective goods and services within the group. The group gathers, and each member presents the quantity of goods or services they have to offer within a month (either as a month’s value, or 12% of a year’s value) and are willing to provide in exchange for the vouchers (CAVs) that they will create. They denominate their offerings in national currency, and there is a collective verification of that value by elders, chiefs, and others.

Joining a Economic Commons

The community group becomes part of an Economic Commons

In order to issue their own CAV, the group needs to enter into three agreements, in this order:

  1. An Economic Commons Agreement: this is an agreement every member has to sign individually, and is effectively a terms and conditions of the full ecosystem.
  2. A Membership Agreement: this agreement exists between the members of the group (Binguni), and ensures that:
    1. They’ve identified and quantified their commitments/offerings to each other, using national currency as the unit of account.
    2. They’ve all been audited and verified on their commitments/offerings, by the chiefs/elders/chairpersons/local governance.
    3. They’ve agreed on the total supply/quantity of vouchers to be issued, matched to their commitments, and have named their voucher.
    4. They’ve agreed to accept the vouchers for their goods and services.
    5. They’ve set limits to how many vouchers they can receive for their goods and services within a day/week/month/year, to ensure that they never receive more than they are able to spend (ensuring movement of vouchers).
    6. They set a group issuance limit on the vouchers, to ensure that the amount of vouchers created matches the redeemable goods and services.
    7. They’ve agreed to, and elected a means of mediation/arbitration in case there is a fault.
    8. They’ve agreed on a gradual expiration of the vouchers to ensure that the voucher is not hoarded, but traded (demurrage). Because groups don't want their vouchers to be lost forever in the hands of collectors/hoarders they ensure that they expire slowly over time at ~2% a month - and return to their group accounts. This means that anyone holding 100 Vouchers will loose 2 of them from their account each month. These amounts in the community funds of the groups can be used for projects and supporting the needy.
    9. They’ve agreed on any savings/voucher-pooling mechanisms within the group, and what that savings will be used for.
  3. A CU Intermember Agreement: this is an agreement with a Core Service Provider around training, arbitration of disputes, instrument creation, data handling and technical platform access & maintenance (access to the core ledger, blockchain, wallet, phone support etc).

Now that they have joined an Economic Commons, and established themselves as a group. Binguni is now considered an association of CU members and anyone holding their Binguni Vouchers is also considered a member through the terms of service.

In this case the Binguni member decide to all commit to the same amount goods and services they will redeem for vouchers, so that the voucher amount created is the same for each member. Auditing should verify that these vouchers are over-collateralized such that there is more production than vouchers, rather than too many vouchers without the resources to match.

  • James, a local farmer, is able to provide 10 kg of seeds in a month to the value of 2500 shillings, calculated as 12% of his yearly offering and receives 2500 Binguni vouchers.
  • Pamela, a local cook, is able to provide daily cakes and potatoes to the value of 2500 shillings over a month and receives 2500 Vouchers.

All 20 Internal Members offer 2500 shillings worth of their monthly goods and services, and agree to a combined commitment of 50,000 shillings worth of value. They present this in their agreement with Grassroots Economics, and 50000 vouchers are issued/minted, connected to the blockchain. They name their voucher “BIGI”.

Each Member of Binguni is issued 2500 BIGIs, and each elect to put 200 of that back into the communal pot. Each member now has 2300 BIGIs, and the communal pot has 4000. This pot could be used as a group savings or loan account, but the group agrees to use the savings for the project of the future farm - a group business that they will all benefit from in the long run. They could have elected to issue vouchers directly to the project, based on the estimated future value of the farm - in which case 2500 would have gone to the project as if it were a member, but the group decided to save communally, rather than risk minting vouchers with an uncertain future production value. Doing it this way has meant that all of the vouchers are more reliably redeemable for goods and services, as they were backed by auditable production of the members prior to issuance.

Using their CAV

Each member now has 2300 BIGIs, and they can begin to trade.

James, the seed farmer, gives Pamela 20 BIGI for this breakfast cakes.

Pamela, now has 2320 BIGIs, she doesn’t need seeds from James, but she uses 200 BIGIs to pay her friend Joyce, another Member, to cook with her for the day so that she has prepared enough fried potatoes for the community meeting that evening. Joyce spent 300 BIGI on water that morning, from John who walks to the spring each day to collect water.

By midday their accounts look like:

  • Pamela: 2120 BIGIs
  • Joyce: 2200
  • John: 2600

At the community meeting, members of Binguni are there, as well as others in the community. Pamela is selling her potatoes at 5 BIGI each, and sells a total of 50 potatoes to Binguni members who have paid with BIGIs. She also sold another 50 in Kenyan shillings to community members who don't wish to take part. She leaves the community meeting with 250 BIGI, and 250 shillings.

Pamela now has 2370 BIGIs in her digital wallet, and can add the 250 shillings she earning to her savings and continue to trade with the BIGIs.

The BINGUNI group gathers to decide on what they need to do to start farming. Within the group they have labour, skills, seeds and access to water, but they lack a few resources. The main thing they lack is a womanpower. A group of local farmers in Mbele, have spare time to do land preparation - but the Binguni group are short of shillings to be able to pay them. BINGUNI members approach the Mbele group, and ask whether he would be willing to receive partial payment in BIGIs. Mbele women agree to accept BIGIs as partial payment, and can now redeem the vouchers for resources they needs, that members within BINGUNI have, namely seeds and water. They also come to the Binguni community meeting, where they taste Pamela’s fried potatoes and loved them, so they plans on using some of their BIGIs to buy from her at the next meeting as well.

More CAVs form

Seeing the success of the Binguni community, the Mbele group decides to issue their own Vouchers. In the same environment region, with slightly different skills and resources, they have different goods and services to offer in exchange for their vouchers. The Mbele group has members that are skilled in water management, which would be of value to the broader community if that capacity were shared. The Mbele voucher is called an MBELE.

A CSP also trains the Binguni and Mbele groups on the methods of syntropic agroforestry, to upskill them and develop more sustainable farming practices within the community. The training is intended to bring a more sustainable income generating activity to the community, using the CAVs as a financial instrument bridge between excess capacity and a thriving local economy. Both groups have a communal savings pot that they have dedicated toward a group business. The groups are trained, and start to use their communal vouchers to pay for labour within their group. Because Mbele and Binguni have different, but complementary goods and services, the groups decide to accept each others’ vouchers.

A Binguni member is paid in MBELEs for his time spent tilling the land on the communal property of the Mbele group. A Mbele member is paid in BIGIs for her time teaching the Binguni group how to manage erosion on their land. Many more trades happen between the communities in service of developing their farms and farming practices.

John, the local farmer with the plough, is now valuable to both groups and decides to accept partial payments in BIGIs and MBELEs. He is now able to redeem those vouchers for goods and services from the two groups (seeds, water management labour, rich soil), and hopes to be able to redeem them in the future for the fresh produce that the new farms will provide.

The vouchers have provided a link between the latent capacity and a circular local trade of goods and services, for the benefit of the community. Through their circulation these vouchers form a Community Inclusion Currency (CAV).

The group members have started to save their Kenyan shillings and are able to use that money for investments into education, infrastructure, housing and resources that are available to them.

Humanitarian Support

A humanitarian organization, wants to support the broader community in this area of Kenya. They have two options to do so:

  1. They can invest in developing more income generating activities within the community. For example, they could buy a maize mill, or provide business training to the group members in order to improve their ability to generate income with their latent capacity. This can increase the amount of CAVs that the community can redeem and hence issue.
  2. They can buy the BIGIs and MBELEs from the groups, either from the communal pots or from the members themselves, and redistribute those vouchers out to the broader community. They are effectively pre-buying the goods and services of the members within the group, and allowing for the broader community to have access to goods and services that they didn’t have money for before. Rather than providing cash, which would quickly leave the community, the vouchers ensure a local circulation of goods and services, and a boost to local trade.

This is similar to a Cash and Voucher Assistance program but with the vouchers coming from the local community. Providing aid in this way, to the communities, has allowed for higher volumes and more sustainable circulation of goods and services through the community, a huge step from basic cash assistance.

Through the implementation of capacity building like syntropic agroforestry, and more importantly, the linkage of Community Asset Vouchers, the communities have bypassed stagnate markets and moved toward a conscious decision and ability to coordinate.

Last update: 2024-07-09
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