Municipal and County Finances

Without going into debt or relying on national allotments how can local governments fund local development?

Local governments typically loose over 50% of their potential tax revenue through informal business activities. Community Currencies offer a way for local government to work together with the informal and formal sectors. Grassroots Economics pulls together hundreds to thousands of informal businesses in an area under the umbrella of a business network.

This business network monetizes the excess capacity of the community in the form of a rotating voucher or community currency that is backed by local production. This community currency facilitates trade when national currency is scarce and can increase sales revenues by more than 25% in only a few months of implementation. The business network also collects a membership fee in the community currency which acts as a community fund. This fund is dedicated toward community and municipal services and is a key tool for local governments.

The local business network can create large sums of community currency vouchers, which can be used to purchase anything in the community. The municipal government could use these resources to fund local labor for a myriad of purposes. Similar to social impact bonds, community currencies allow a local government to have access to the capital needed for local development. The ability of these programs to vitalize regional economies has put them in the spotlight as a key tool for social and economic development.

By creating a circulating credit, backed by local goods and services, municipalities can reduce unemployment, increase the tax base and increase trade.

Local goods and service providers in regional districts are brought together into a registered business network. Each business member is guaranteed by other members for an initial amount of credit. These credits are printed as vouchers for goods and services and usable at any member of the network. Businesses are encouraged to accept the credits as a percentage of their sales in shillings. A percentage of these credits are collected by the municipality for social service work – like employing local youth for waste collection and road maintenance. The credits rotate around the community helping to connect excess supply and demand for people who lack access to shillings.

In 2010 Grassroots Economics' founders implemented their first complementary currency project in Kenya, which accomplished health and environmental aid objectives in a Kenyan slum, collecting 20 tonnes of trash and planting thousands of trees. The pilot program confirmed that health, environmental and economic issues could be addressed simultaneously and successfully through the introduction of a complementary currency.

For more information or a consulting visit to your municipality or local government Contact Us.