The revolving fund system in sustainable community development

Abstract

Revolving funds have been used as a means of providing a sustainable source of capital investment for many decades. There are many examples of their use at a regional, national and global scale. Revolving funds have also been implemented at a community and individual scale as a means of driving rural development in many countries. Perhaps the best known examples of these are the thriving micro-credit schemes that operate in many developing countries. Despite their many successes there have been some criticisms of micro-credit schemes, particularly in relation to their strict regulatory and bureaucratic nature and the fact that in many cases the poorest members of many societies are excluded from the cash economy. For these reasons the Ørskov Foundation, a rural development charity based in Scotland, has built on and utilised an adaptation of the revolving fund paradigm so that any initial capital investment it makes in community development projects takes the form of tangible investments, such as livestock, that rural people are familiar with. The return on the initial investment takes the form of offspring from the original livestock provided and these in turn help the benefits to spread to other people in a system that can potentially “revolve” indefinitely. Examples of projects from a number of countries where revolving funds have been used in this way
are described.