Venezuela’s Currencies Promote Cooperation Not Competition

The global economic crisis has spread around the world and is bringing many problems in its wake.  As global currency markets gyrate wildly, and people find they can go from having wealth to being poor almost overnight, the question is being asked: “is there another way?”

The global economy is slowing rapidly. Even Iceland – a country recently named as having the best quality of life in the world (Human Development Index) (HDI) – has gone broke, and many other nations around the world will face serious economic crises. People will need to protect themselves from the worst effects of the fallout from various economic bubbles bursting.

Runaway inflation, as is occurring in Zimbabwe – reaching 231 million percent in October, 2008 according to official sources – shows faith in a country’s currency can be sorely tested. But do people and the poor in particular, need to be prisoners of the economy managed by a national currency?

The ‘prosumer’ movement (http://en.wikipedia.org/wiki/Prosumer), where consumers take an active role in re-shaping markets and economies to their benefit, around the world is looking for ways to bypass national currencies and make food, goods and services more affordable and stable, improving the lives of the poor. One way this is done is through alternative currencies (http://en.wikipedia.org/wiki/Alternative_currency).

Cimarrones, or the Cimarron, joins 10 other alternative currencies currently in operation across Venezuela. They are circular cardboard tokens with a picture of a runaway slave on them.

Supported by Hugo Chavez, the country’s president, the new currencies are aimed at tackling poverty and establishing new economies. The currencies can’t be exchanged for the Venezuelan currency, the bolivar.

It works like this: to be a prosumer, you must first bring something to sell before you can buy anything. The range of products for sale at prosumer markets is not vast, but that isn’t the point.

“It’s magic,” Pablo Mayayo, an Argentinian advising Venezuela on prosumer schemes, told The Economist. “ When you take away money, which is the cause of almost all the great evils in the world, people relate to each other in a different way, by cooperating, not competing.”

Argentina pioneered so-called “barter markets” in response to its economic crises, helping people avoid starvation, looting and perhaps a revolution. By the end of 2002, there were 4,500 barter markets being used by half a million people producing 600 million credits.

“They were organized geographically around church halls, car parks and baseball courts,” recalled Peter North, a Liverpool University geographer. “They offered a wide range of products and services, supplied by professionals, trades people and farmers, as well as housewives and the unemployed. Stalls attracted ‘prosumers’ in their thousands, who paid with credit coupons issued by one or more barter markets. Everyone involved was both a prosumer and a producer, since you couldn’t purchase credits or exchange them for pesos.”

In Rio Chico, a small town in the Venezuelan coastal region of Barlovento, the prosumer currency market has people happy with the prices.

“I grow coconuts,” said Angenia Hernandez. “In the shops they cost 3.5 bolivares each (US $1.63) at the official exchange rate), but we we’re going to sell them at [the equivalent of] 1.5.” She calls it an end to “commercial fascism.”

Because of global currency speculation and investment flows, national currencies are not entirely at the control of national governments. High inflation seriously hurts the poor and low-waged, and national currencies can hurt the rural poor, who become prisoners to high interest rates charged by urban lenders.

Turning to a local, alternative currency has many advantages: it stops currency speculation, stops the flow of wealth to urban areas, preserves purchasing power, keeps trading local. Avoiding the draining away of wealth to middlemen, it addresses currency scarcity, and fosters greater awareness of how economies function and the mechanisms of trade

Criticism of these schemes say it is just a re-run of regressive company currencies and feudal tokens that were used in the past to control people and force them to only buy products from the landowner or boss.

In Papua New Guinea , shells are used for money and are called Tabu.  It is an ancient currency system used by the Tolai people of East New Britain Island . Stephen Demeulenaere (www.network-economies.com), who has worked on alternative currencies around the world and helped with the re-introduction of the Tabu in Papua New Guinea , sees it playing a key role in the local economy.

“Tabu was very effective at addressing poverty,” he said, “because anything could be purchased with it, from a handful of peanuts up to a piece of land or even a car, without needing national currency.  Tabu is produced traditionally by women, so theoretically nobody would suffer from a lack of it.  The advantage over the national currency is that it has a very long history of use, and people trust it more than the national currency.

“Tabu builds wealth by facilitating the exchange of locally-produced goods and services which may not circulate in a ‘national-currency only’ economy, and values activities that may not be considered to be economically viable if the use of national currency was the only option.  In the west we see this where ‘mother’s work’, hobbies, mutual-aid and other traditional under-valued but economically important activities are not valued monetarily.

“By encouraging the exchange of locally-produced goods and services, wealth is built in the community from the ground up.”

Over 75,000 people now use the shells, usually traded in great rings.

Getting the introduction of an alternative currency right is critical. In Argentina, such currencies were criticised for being manipulated by criminal gangs and political forces.

“The main advice I have is to study the community closely, and our website at http://www.complementarycurrency.org, provides free resources for people wishing to start their system,” Demeulenaere said.

“The system must be transparent so that people trust it and participate in maintaining its health and stability; democratic, so that it can not be abused by those in power; appropriate, so that it achieves general social and economic goals and aspirations of the community; and to be complementary to the regular economy so that the system helps its members to improve their lives economically.”

At the Jai Marketplace in Thailand , all of the goods in the market can be bought entirely in the local currency called “Jai’. Jai is convertible to Thai Baht or to organic, locally made cow fertilizer, and is designed to improve the local economy and the climate for micro, small and medium enterprises through the local exchange network.

By David South, Development Challenges, South-South Solutions

Published: January 2009

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Clay Filters are Simple Solution for Clean Water

Access to clean water is critical to good health. It is a basic human need that when met, leads to the biggest improvements in health and well-being. Dirty water causes diarrhoea (http://en.wikipedia.org/wiki/Diarrhea), cholera and typhoid. Diseases caused by dirty drinking water kill almost 5,000 children a day around the world (WHO).

But millions have benefited from a simple solution using clay filters invented and pioneered in Central America, and now manufactured by 28 small factories in 23 countries – the largest in Ghana and Cambodia. Each factory makes up to several thousand filters a day. They offer an ingenious solution that also creates local jobs and skills.

Looking like 30 centimetre-high flowerpots, the filters designed by Guatemalan chemist Fernando Mazariegos blend local clay and plant husks to create a filter capable of killing 98 percent of the contaminants that cause diarrhoea. The husks are burnt away when the filters are fired in a kiln, creating tiny holes that filter out harmful organisms. A coating of colloidal silver (http://en.wikipedia.org/wiki/Colloidal_silver) is painted on the filters after they have been fired in the kiln.

“Each filter can support a family of six,” said Kaira Wagoner, Coordinator of Ceramic Water Filter Projects with the NGO Potters for Peace (www.pottersforpeace.org). Founded in Nicaragua but now US-based, Potters for Peace has popularized the filters and helps with all the training and support required to establish the workshops and market the filters.

The first filter-making workshop was set up in Managua, Nicaragua after Hurricane Mitch in 1999 (http://en.wikipedia.org/wiki/Hurricane_Mitch). That workshop has made and distributed 40,000 filters through the Red Cross and NGOs such as Medecins Sans Frontieres/Doctors Without Borders. Potters for Peace has now stopped running workshops and factories themselves, and provides others with the training and advice necessary to produce clay filters.

To work, the filters are placed in a plastic bucket, a spigot added, and a cover put on top to prevent contamination. The filters are capable of filtering four litres of water an hour.

The genius behind the filters is the fact they can be made by small, local workshops – making access to clean water available anywhere, and creating jobs. Just three to four people can produce up to 50 filters a day. According to tests by the Family Foundation of the Americas, a Guatemalan NGO, the filters halve the incidence of diarrhoea in households that use them.

“The cost of establishing a workshop varies largely,” said Wagoner, “depending on the factory’s location, desired production – from 50 per day to 1000 per day – and on the equipment already available in the potter’s workshop. Potters for Peace generally tries to work with potters who already have some of the needed equipment, such as a hammer mill and clay mixer.

“Filters are distributed hand in hand with health and sanitation information which highlights practices such as hand washing,” said Wagoner. “Since many individuals would otherwise boil their water, the filter significantly reduces the time many women would spend gathering firewood. This gives them time for other things such as school and income generating activities, and is better for the environment, especially in locations where problems with deforestation are significant.”

Experience has found marketing is key to the successful adoption of the filters by communities.

“It is very difficult to create a market in a region of poverty,” said Beverly Pillars, also from Potters for Peace, “and to gain acceptance of a new product that the community will want to purchase to keep a workshop sustainable. NGOs may distribute the ceramic water filters, but for the community to fully accept the idea of seeking out clean, safe drinking water on their own, we urge the local owners of the factory to be innovative in marketing.

“Our best approach has been to select partners in developing areas that have some experience such as a potter or brick maker, and help them to find methods that work in their communities to distribute as many of the ceramic water filters as possible, such as a distribution link through local health centres and small corner markets, adds in Yellow Pages, road signs.”

To get a workshop up and running, they need to have a machine to press the clay filters, a kiln to fire them, and a pyrometer (http://en.wikipedia.org/wiki/Pyrometer) to measure the temperature of the kiln. It usually takes between three and six weeks of training to become proficient at making the filters. Trainers help with acquiring the proper equipment, building the kiln, the clay filter formula, quality control procedures, and marketing techniques and materials.

“My advice to people wanting to start making filters is to look for local craftspeople to partner with,” said Pillars. “Look at local access to brick, clay and sawdust. Be prepared for hard and rewarding work to bring safe, clean drinking water to developing populations.

“Every location is a best location, because the demand for safe, clean drinking water worldwide is so great. The beauty of the ceramic water filter technology is that it uses very few resources: clay, sawdust or other burnout material available and bricks for a kiln. We have found these resources to be present worldwide.”

The filter has been cited by the United Nations’ Appropriate Technology Handbook, and is used by the International Red Cross and the Nobel Prize winning medical relief organization Doctors Without Borders. There are plans to start more filter factories in Cote d’Ivoire, Bolivia and Somaliland.

By David South, Development Challenges, South-South Solutions

Published: December 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Model Indian Villages to Keep Rural Relevant

 

The world’s rush to urban centres is the great challenge of the 21st century. In 2007, the world became a majority urban place. The consequences of this shift can be seen in the blight of urban poverty, with its slums and squalor, environmental degradation, and rising social tensions. But there are people working on keeping rural areas relevant and pleasant places to live. These rural advocates see a vibrant countryside as part of the solution to the world’s plethora of crises.

In India, a pioneering initiative is reviving impoverished rural villages. Drawing on self-organizing methods used in India since 1200 BC, the Model Village India (www.modelvillageindia.org.in) is based around India’s democratic system of Panchayats: a village assembly of people stemming back to pre-colonial times.

“Decentralizing is necessary if development is to reach the grassroots,” said the concept’s founder, Rangeswamy Elango, a head of the village of Kuthampakkam, 20 kilometres (12 miles) from the bustling city of Chennai, and one of the 12,600 Panchayats in the Indian state of Tamil Nadu.

While all villages have the ability to use the Panchayat system to improve their lives, few are making the most of this system. The model villages are about showing other villages the true power they have at their disposal. And that with a plan and determination, they can increase their income and improve their quality of life, attracting more money from government and other sources to do so.

The concept has now expanded to 30 model villages. At its core it is about being positive, eschewing griping about problems and instead getting down to work to solve them.

“We demonstrate the basic infrastructure, sustainable housing, food security,” said Elango. “If the government is not bothering, maybe through the local people’s efforts, we can try to demonstrate a variety of development models.”

As India’s economy has boomed, its small towns and villages have withered. Home to the majority of the country’s population, they are in crisis, with declining populations and high suicide rates. India’s urban slums are where people are going – they are growing 250 percent faster than the country’s population. India is a country in danger of neither having a viable rural economy, nor viable cities, but just vast tracts of slums.

Originally left out of the first draft of India’s constitution, Panchayats became legitimized in 1992. They are now elected in every one of the 260,000 villages in India. If they use them, the local Panchayats have extensive powers to transform the destiny of a village, with control of budgets, and decision-making power on how services are to be delivered. This ranges from the provision of clean water, to burying the dead and building roads. The trick is in getting people to realize the power they wield over their destiny and how it can transform their economic situation.

“The village-level local governments are constitutionally important bodies,” said Elango, “but the way it is implemented is not good. The system is unable to deliver the goods to the people.”

The model village approach has revived once-declining villages plagued with high unemployment, chronic alcohol abuse, and domestic violence. The residents are involved in the building of new and healthier homes, providing clean drinking water, waste facilities, education services – including an academy dedicated to teaching the skills and lessons leaned by the villagers to other villages – and even trying to break down the barriers between people because of India’s caste social hierarchy.

“Instead of having a big college, this is a practical people’s model,” Elango said. “It is not done by an academic but by a layman. The learning is spontaneous and emotional.”

Elango is driven by making his village a model that works, and in turn, becoming a magnet for others wishing to improve their lives and their villages.

Elango’s village was not able to support itself with its two crop harvests a year and the villagers resorted to illegal alcohol production instead to make a living. Despite being well connected by highway with nearby Chennai, the village was socially and economically dying.

Like a spreading ink spot, the concept is to create a network of like-minded villages that act as self-reinforcing positive role models, spreading the prosperity and stability outwards. The “Network Growth Economy Model” is a direct challenge to the “special economic zones that benefit only capitalist owners,” said Elango.

Ambitious, Elango is hoping to draw in 2,000 villages over the next 10 years, until a tipping point is reached, and the model explodes across India.

A native of the village, Elango became saddened by the community’s decline, including widespread domestic violence against women. The booming city of Chennai’s prosperity had not rippled out to the village, and it was still lacking good infrastructure and sanitation. A trained chemical engineer, he was elected the President of the Kuthambakkam Panchayat in 1996, and set about using his engineer’s perspective to draft the village’s five-year plan from 1996 to 2001.

But the budget was tight. And he had to turn to innovative solutions: recycling building materials, conserving water and reducing electricity consumption. But the resourcefulness paid off, and the state of Tamil Nadu provided the money to upgrade roads, drains, build a community centre, child care facilities, 200 low cost toilets, and work sheds for the village’s industries. By the end of 2001, most basic needs were being met. He then turned to providing good quality housing for the villagers still living in thatch huts.

He has used the “Network Growth Economy Model” to tackle the unemployment and low incomes. It works like this: rather than buying food and other products from outside the village, the villages band together to establish industries to provide those products to each other. This creates jobs and increases income by keeping the wealth within the network of villages, rather than it benefiting far-away companies. The new businesses include Thoor dhal processing, dairies, soap making, bakeries, ground nut oil production, and leather making.

“India was strong when this model was in place – we had strong villages,” said Elango. “Globalization’s trickle down is not working for India.”

By David South, Development Challenges, South-South Solutions

Published: November 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Connoisseur Chocolate from the South Gets a Higher Price

Like coffee beans, cocoa beans are grown around the world and are a major commodity, highly prized in wealthy countries. West Africa accounts for 70 percent of the world’s output, with the rest grown either in Indonesia and Brazil (20 percent), or on a smaller scale in countries across the South, from Belize to Madagascar.

Global sales of cocoa beans have grown by an average of 3.7 percent a year since 2001, and the World Cocoa Foundation estimates 40-50 million people depend on cocoa for their livelihood.

But harvesting cocoa comes at a price to the farmers and those who work on the farms. It is estimated that 284,000 children in West Africa work under abusive conditions to harvest the beans. Cocoa farmers usually only benefit from the price of cocoa in the harvest season between October and February. In Ghana, the second largest producer of beans, child slavery allegations have plagued the cocoa plantations, along with too-low prices paid to farmers. Fluctuating global market prices constantly put small-scale farmers at risk of losing everything they have worked for.

But consumers are developing ever-more sophisticated tastes for chocolate, paying more attention to the quality and origin of the beans. Savvy cocoa producers are using this greater awareness to increase prices for farmers and improve conditions for those who work on the farms.

Maturing consumers’ palates are now picking chocolate and other food products from the South in much the same way as connoisseurs pick wines. In the United Kingdom alone, sales of Fairtrade-branded goods (www.fairtrade.org.uk)- a scheme that offers guaranteed prices and better trading conditions to farmers – have reached £560 million (US$1.1 billion) a year. A survey of consumers in six countries found awareness of fairly traded chocolate was highest in the UK, with 43 percent of people having tried it (http://www.barry-callebaut.com).

British consumers willing to pay more for ethical products are at the forefront of a global surge in fair trade. Hans Vriens, chief innovation officer with Belgian chocolate makers Barry Callebaut, told The Independent newspaper: “Nowadays, chocolate consumption is coming to resemble the way we enjoy wine: we sample and compare different tastes.”

The world’s appetite for chocolate is voracious: For example by 2007, volume sales of chocolate confectionery increased from 1998 by 30 percent in Eastern Europe, and by 40 percent in the Asia Pacific region. Europeans devour 35 percent of the world’s cocoa.

In order to be classed as Fair Trade, a producer must meet a strict set of criteria governing how people and the environment are treated. The Fair Trade scheme pays farmers a higher price for cocoa beans, calculated on the basis of world market prices, plus fair trade premiums. The Fair Trade premium for standard quality cocoa is US$150 per tonne. The minimum price for Fair Trade standard quality cocoa, including the premium, is US$1,750 per tonne. Fair Trade ensures a minimum price of 80 US cents a pound under long-term contracts, with access to credit, and prohibits abusive child labour and forced labour.

At the Chuao Plantation in Venezuela, the local Chuao Empresa Campesina cooperative, representing 100 farmers, is reaping the benefits of developing an exclusive relationship with an Italian chocolate company. Chocolatier Alessio Tessieri was willing to pay a lot more for the beans if high standards were maintained. His sister Cecilia was struck by the aroma of the rare Criollo bean grown by the farmers: it is the least productive in terms of output, but prized for its flavour.

“We found an aroma that was greatly reminiscent of ripe red fruit and plum preserves, with an extremely delicate aftertaste,” she said. “A highly complex and sophisticated aroma lacking any trace of acidity.”

Located in Parque Nacional Henri Pittier, a road and sea trip from the capital Caracas, the town of Chuao, population 1,500, has ideal growing conditions because of its high humidity. In the village, the women take care of the drying process. Throughout the town the cocoa beans lay out in the open on verandas. In the warehouses the enormous “masorche” – the fruit of the cocoa trees, looking like big red melons – are split in half and the pulp is removed, revealing the super-sweet white-coated beans inside.

Alessio struck a good deal with the farmers in recognition of the exclusivity of the beans. He pays US$4 per kilogram against the US$1.30 per kilo paid by the local merchants. He also took on the farmers’ debts with the merchants. But most importantly, he ensured that one of his agronomists would stay behind and supervise the plantation and increase its production, from the current level of 120-130 kilos per hectare to a projected 250-300 kilos.

The Toledo Hills Cacao Cooperative in Belize, South America has developed a relationship with one of the UK’s pioneers in fair trade chocolate, Green & Blacks. The Mayan Indians who farm the cocoa live a traditional life more or less as they have done for centuries. They also live in one of the poorest areas of Belize. The profits made are ploughed back into buying machetes, or rubber boots to protect against snake bites. The cocoa harvest helps supplement their traditional way of life.

Green & Blacks has been buying organic cocoa from the farmers’ co-operative since 1994 and paying a guaranteed price above the world cocoa price. In 2003, they extended their activities with the cocoa farmers and started the Belize Programme to provide even more support. With an investment of £225,000 (US$443,350) over three years, the investment was used to help improve management and farming practices, rehabilitate hurricane-damaged crops, plant more cocoa trees, and train farmers in better growing methods. Green & Blacks continues to provide technical advice and support to the farmers. The business relationship with Green & Blacks has been so successful that other farmers in Belize are now interested in cocoa farming.

The pattern is being repeated elsewhere in Latin America. In San Martin, Peru, rice farmers have moved into cocoa to reap the rewards of the higher prices. Alvis Valles Sajami and Alberto Inou Amasifuen are both graduates of the Peru Farmer Field School. Sajami uses a plant nursery as an extra source of income by selling cocoa plants to other farmers. “I already have 4,000 plants, he said. “This (the nursery) will be so important to increase my cocoa area. I can sell planting material to other farmers in order to have a new source of income for my family.”

Amasifuen has already increased his own cocoa production from two hectares to five, and has also established a nursery to produce cocoa and timber tree seedlings to sell to area farmers.

“We have an increase in demand for cocoa plants in San Martín,” he said. “We expect to provide seedlings not only to our farm, but also to other farmers in expanding their production area.”

By David South, Development Challenges, South-South Solutions

Published: June 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Agricultural Waste Generating Electricity

Agriculture around the world produces a great deal of waste as a by-product. It can be animal faeces, or the discarded plant husks thrown away when rice, grains or maize are harvested. When this waste meets the urgent need for electricity, something special can happen.

The number of people still without electricity in the South is vast. The failure of major electricity generating power stations to reach so many people has spurred entrepreneurs to come to the rescue. Power is critical to so many things: small businesses need it, anyone wanting access to computers and the Internet needs it, and modern appliances like refrigerators run on it. During the past 25 years, electricity supplies have been extended to 1.3 billion people living in developing countries. Yet despite these advances, roughly 1.6 billion people, a quarter of the global population, still have no access to electricity and some 2.4 billion people rely on traditional biomass fuels, including wood, agricultural residues and dung, for cooking and heating. More than 99 percent of people without electricity live in developing regions, and four out of five live in rural areas of South Asia and sub-Saharan Africa (International Energy Agency, IEA).

Power outages in Africa are a serious and frequent problem and a significant force holding back development. With global oil prices on the rise, turning to diesel generators is an expensive option.

According to the IEA, the lack of electricity leaves poor countries “trapped in a vicious circle of poverty, social instability and underdevelopment.”

In India, 80,000 of the country’s half a million villages lack electricity. Two students, Charles Ransler and Manoj Sinha, have started a business providing electricity to some of these villages by turning rice husks – a by-product of rice milling – into gas that then powers an electricity generator.

Already, two of their rice-burning generators are providing electricity to 10,000 rural Indians. The hope is to rapidly expand the business to hundreds of small village power plants.

The business, Husk Power Systems, was started while the two were at the University of Virginia’s Darden School of Business.

While the generator burns the rice husks to make a gas to produce electricity, it also leaves behind a waste product of ash that is sold as an ingredient in cement.

This technology can provide off-grid power to rural Indian villages of 200 to 500 households. Using the husk-powered mini power plant, the team plans to offset close to 200 tons of carbon emissions per village, per year in India.

The idea for the rice husk generators was originally conceived by Sinha and Gyanesh Pandey, the third partner in Husk Power, who left an engineering career in Los Angeles to return to India and oversee the rice husk project. Sinha and Pandey went to college together in India and both come from rural Indian villages that struggle with a lack of electricity.

“We grew up in those areas,” said Sinha. “Our relatives still do not have electricity. We wanted to give back to those areas.” Originally they envisioned refining the generator concept and raising enough money to donate rice-husk generators for two or three villages near where they grew up, said Sinha.

But instead, after some research, they realised it could be a financially viable business expandable to hundreds of villages. There are 480 million Indians with no power and 350 million of them live in rural villages, concentrated in eastern India’s “Rice Belt,” where the villagers are “rice rich and power poor,” said Ransler.

The project has already won a fistful of prizes, including US$50,000 from the Social Innovation Competition at the University of Texas.

They think that each rice husk generator is to break even in about two and a half years.

And they like to think this is the Starbucks of off-grid electricity generation, potentially as successful as the globe-spanning US coffee shop chain. “You can put one of these in 125,000 locations, hire local people, and turn a raw material into money – just substitute rice husks for coffee beans,” said Ransler.

Another maker of biomass mini power plants in India is Decentralised Energy Systems India (DESI power). It is a New Delhi-based non-profit company specialising in building a decentralised power network for rural India. It was formed by Development Alternatives, India’s largest sustainable development NGO. It is able to provide a megawatt of electricity to a village for the cost of 44 million rupees, rather than 57 million rupees from the central grid.

By David South, Development Challenges, South-South Solutions

Published: June 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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