a brief presentation on a new approach to poverty alleviation in South Africa. Building new communities and creating a gift economy

1. Building Community
The creation of the gift economy.
Changing from the inside out …
The power in in our collective hands…..
Michael Raal Johannesburg April 2014

2. Outline
 This document serves a basic manifesto of a new approach to the
current problems facing our society and the world at large.
 It challenges key concepts we have around our own collective and
individual ability to determine and create the future we have all
dreamed of.
 It provides an approach within the overall context of self
determination.
 it is intended to provide a new pathway out of the seemingly
unsolvable issues of our time.
 It is written with love for all and with full responsibility for my own
part in the creation of a better future.

3. Outline- What is community?
 What is Community? The definitions we have for community are as
follows :
 a social group of any size whose members reside in a specific locality,
share government, and often have a common cultural and historical
heritage.
 a locality inhabited by such a group.
 a social, religious, occupational, or other group sharing common
characteristics or interests and perceived or perceiving itself as distinct
in some respect from the larger society within which it exists
 a group of associated nations sharing common interests or a common
heritage:
 a group of men or women leading a common life
according to a rule.

4. Outline- what is community?
 Notwithstanding the previous definition’s the description I really
subscribe to is the following: ( From Peter Block Community the
structure of belonging)
 Community is about the experience of belonging. To be related to
something and be a part of something. ( The opposite would be to be feel
isolated and better off somewhere else).
 To belong to a community also means to be a co –creator and co owner of
that community ie emotional ownership and accountability.
 Community is the container within which our longing to be is fulfilled.

5. Outline- The break down of community
 The break down of community and our social fabric is one of the
fundamental causes of the poverty we see in the world today. The
underlying principle of this is the concept of the separate self.
 The separate self says that I am autonomous and discrete from
everyone else. Ie Each person is separate and thus is required to fight
for survival and the basic needs to live. It creates a society based on
self interest and disassociates ourselves from each other and from
everything else such as Nature etc
 Separation thinking then creates the following consequences :
 The thinking that the world has scarce resources and thus I need to
maximise what I can get before someone else gets it.
 A money system based on the constant need to grow which creates
inequality and accumulation of wealth in the hands of the few.
 The need for ownership and protection of wealth.
 The creating of social unrest and war.

6. Self Determination- Dictionary Definitions
What is self determination ?
 The power or ability to make a decision for oneself without influence
from outside
 Determination of one's own fate or course of action without
compulsion.
 Freedom of the people of a given area to determine their own future
independence
 To be internally referenced for your own identity, meaning and
responsibility to determine your future

7. The power is in our hands
 One of the major fixed beliefs that has kept our society stuck is that we
do not have the power to effect change.
 That is that change has to be done through an outside agency that has
all the power as we are individually and collectively powerless
 Other major limiting beliefs that characterise out times are that we are
inherently beings of self interest and that trust cannot develop
between strangers.
 Further the limiting belief that the world does not have the resources
to solve our current problems. Ie Scarcity is our natural state therefore
we all have to compete for resources to survive.
 The definition of insanity is doing the same thing an then expecting a
different result ( Einstein) . Thus we need to challenge and change our
thinking

8. Definitions of true power
 Power is not force but is characterised by equality, integrity and
authenticity.
 It does not dominate nor subjugate.
 It creates freedom and does not create bondage of any form such as
racial, financial, societal and gender.
 Power is inclusive and not exclusive.
 Power unifies where as force segregates.
 Power serves while force takes.

9. Context
 We live in a world defined by “power and powerlessness. “
 In this society we have individually and collectively given away our
power to so many things and this has left us feeling powerlessness.
 Some of the main areas ( beliefs) we have given our power away to are
as follows :
 The Government ( it knows what is best for me and will provide me what I
cannot do for myself!)
 Money and Capitalism
 Societal and cultural norms around Money, self determination, gender
beliefs, resources.
 What other people think of us .
 Our beliefs around our who we are and our ability to effect change

10. Context around Money
 The following are some of our current beliefs around money that keep
us stuck:
 Money equals power
 Need money to make money
 We have no resources available
 There are no other ways to get money besides taking a job even if I don’t
like the job.
 Money is the source of everything in life
 Men need to make money while women are not good at making money.
 Money can be made.

11. Context
 This has created a society in which we are continually searching to regain
our power through a set of actions designed to make us powerful.
 These actions always leads us to search for external ( outside of our true
power base) power sources . This in itself creates the exact circumstances
for a paradigm of power and powerlessness.
 How can we look to solve the problem through the exact thinking that gave
rise to the problem in the first place ?
 Thus our society has alternating roles that we play of being in power(
tyrant) and being out of power( victim).
 We give our power away and then criticise and blame the very entities we
gave our power away to.
 We play victim of the circumstances we actually create.
 The communities are no different.

12. Self Determination Pre- suppositions:
These are principles that will guide our way through to self determination.
 We all have the individual power for full self determination.
 The power we seek exists internally in our truth, creative self expression
, our abilities and resources we have.
 We are fully and collectively responsible for everything we have in our
lives, what we create and also what we have inherited.
 The power of one aligned intent can exponentially increase our combined
power.
 The current paradigm and our own part in it’s creation is not wrong but it
creates the suffering and chaos we see today.
 We are all here to serve in the best way we know how.
 Everything we do affects everyone including our self as we are all brother
and sisters in one family.
 There are no victims

13. The New paradigm
 We are collectively moving into a new paradigm. The majority of people
are blind to this due to the long established conditioning of accepting the
way things are will always be the way they are.
 You cannot see what you do not want to see.
 The new paradigm is characterised as follows :
 The recognition that we are all one and are not separate entities in competition
for limited resources.
 Sharing and gifting of resources, skills and abilities.
 Being in service of your fellow man.
 Living in the Natural flow of life rather than trying to manipulate or dominate.
 The incredible power of attunement to our innate goodness that is our true
state of being,.

14. The New paradigm: The Gift Economy
 The new paradigm is the gift economy. The gift economy is characterised as follows : (
From Sacred Economics : Charles Eisenstein)
The gift
Economy
Development
of local
community
Social
dividend
The true cost
of things
being
internalised
Elimination
of economic
rents
Economic
degrowth
Gift Culture
and P2P
economics
Negative
Interest
currency

15. The Gift Economy: a brief description
 Negative Interest Currency : Money that loses value over time
stimulating an economy of flow. It enables prosperity without growth
and encourages the equitable distribution of wealth.
 Elimination of economic rents: People profiting from the mere fact
that they own something without producing anything or contributing
to society. Ie the owners of land, property and money . This creates
the polarisation of wealth.
 The true costs of things being internalised. Currently we abuse the
earths resources with the view that they are infinite and we are the
owners of these resources. Thus the true environmental cost and
social costs are not included in the price of goods and services.

16. The Gift Economy: a brief description
 The social dividend ; The earth is a great gift to all and thus all should
share in it’s rich abundance. Thus the social dividend would provide
the basic necessities to all.
 Economic degrowth : we have chosen to consume more rather than to
work less. Thus we are slaves to growth. Economic degrowth will allow
us to work less for money .

17. The Gift Economy: a brief description
 The development of local communities: this is the trend to local
economy borne out of need to reconnect with community. Global
community production puts localities in competition with each other
and creates separation and the break down of the ties that bind us
together.
 Gift culture and P2P Economics Today most interactions are based on a
paid service and we are left independent , alienated and miserable.
Hence the rise of the gift economy and to person to person
collaboration.
 The two points above are crucial to the overall context of this
document.

18. The Community Vision
 The vision is one where the communities are empowered societies all
pulling together in the common goal of each others well being in the
community.
 A culture of serving each other with heart centred gratitude.
 Financial inclusivity of all members of society based on the premise of
creating abundance for all.
 A society where authentic self expression is the most prized endeavour
and focus.
 A society where the principle of guardianship is entrenched as
compared to ownership.
 A society with the reverence for al life in all its forms including mother
earth.

19. The New Paradigm Community model
 The model makes the community solely responsible for the provision
of its own needs.
 The community looks to develop and mange all its Equity resources for
the benefit of everyone.
 It accepts assistance from all outside entities ( such as Government,
Corporations , individuals) as long as the assistance is not dependant
on relinquishing its own power or creating co- dependency.
 The creation of a gift community and culture
 The recreation of the social fabric that brings everyone together .

20. Current Model
Government
Resources
Society
Community
Business
Ngo’s
Observations:
o Government and big business has all the resources
o Government redistributes income via
taxes into grants and infrastructure.
o The community looks for support from
Society, Business and NGO’S.
o The Community is dependant on these
providers for Healthcare , social
development and Education.
o Business pursues profit that creates inequality
and then puts a little back by way of donation etc.
o The community receives but does not
give as it believes it has nothing to give.

21. Proposed Model
Community
Society
Government
Business
Ngo’s
Observations:
o The community accepts that it is
responsible for its own self determination.
o It seeks then to develop itself through
initiatives designed to build a social and
financial base.
o The Government continues to provide
Services and infrastructure.
o The community also continues to accept
support from Society, Business and NGO’S.
o The Communities goal is to become independent
on providers for Healthcare , social
development and Education.
o The community builds a giving and sharing culture
for the benefit of all.

22. The key contextual shift required in
community self determination.
( From Peter Block Community the structure of belonging.)
 We are a community of possibilities , not a community of problems
 Community exists for the sake of belonging and takes its identity form
the gifts, generosity and accountability of it’s citizens. It is not defined
by it’s fears, its isolation, or its penchant for retribution.
 We currently have all the capacity, expertise, programs, leaders,
regulations, and wealth required to end unnecessary suffering and
create an alternative future.

23. Principles of a strategy for community
transformation.
( From Peter Block Community the structure of belonging.)
 Building of social fabric for its own sake and also to enable chosen
accountability( when citizens care for each other become accountable
to each other)
 Strong associational life is essential and central ( how citizens chose to
build connections)
 Citizens who use their power to convene other citizens are what
creates an alternative future. ( organic and emergent change efforts)
 The small group is the unit of transformation.
 All transformation is linguistic , which means that we can think of
community as essentially a conversation.

24. Community Development
 One of the key shifts to be made here is around thinking of the
possibilities that exist in the community and not the problems.
 In this regard what resources exist in the community that could be
utilised to build the community ?
 Further are there any self evident resources existing opportunities that
could be leveraged to support these initiatives ?

25. Community
Equity
Financial
Equity
Talent
Equity
Natural
Equity
Service
Equity
Social
fabric
Equity
The Community Equity Model

26. Community Resources
 Talent equity
 Skills and capabilities of all community members.
 Service Equity
 Collective Man hours in serving each other
 Natural Equity
 Land and natural resources ( rain, sunlight, soil etc..)
 Financial equity
 Purchasing and collective buying power
 Social fabric Equity
 This is the degree to which we care for each other and thus are
accountable to each other.

27. Financial self determination
 How can the community develop its own resources as listed on the
previous slide ?
 How can it also be achieved without an initial radical change of
Community behaviour ?( a shift in consciousness or values is required
before behaviour changes permanently and this can take time!)
 What is the key portal that can be opened effortlessly through which
the power of the community can be unlocked ?
 What context for current behaviour can be shifted that will make all
the difference ?

28. Point of Entry: Developing Community resources
 The point of entry into this model is through the current purchasing of
Insurance policies and more specifically funeral and credit life
insurance policies.
 Currently due to cultural beliefs , Funeral Insurance is incredibly
widespread in South Africa.
 This there is an existing Financial Equity that is currently not being
developed for the community benefit.
 This is combination with an approach to develop the Talent and
Service Equity is the two prong approach that forms the opening of
new possibilities

29. Funeral Insurance in South Africa
 South African is home to 23.7m lives covered through Funeral Insurance .( The
Landscape of Micro Insurance In Africa 2012) .
 This is over 54 % penetration of the total population. .
 The Finscope report 2010 estimates that 40.3 % of SA adults i n LSM 1-7 have funeral
cover. IE 9.9m lives.
 This is split into informal funeral cover providers ( Burial societies, funeral parlours
etc) and formal funeral providers ( Insurers ). The trend indicates that the move is
into more formal providers.
 The market is largely unregistered and unregulated.
 Estimated 3000 to 5000 funeral parlours.
 80 000 to 100 000 burial societies.
 Premium in excess of R5bn.
 Premiums range between R20 to R100 per month.
 Cover provided is between 5000 and 100 000.

30. Funeral Insurance in South Africa
 A report in the Saturday star on 30th November 2013 had a headline as
follows:
 “ Class action against funeral assurers just a matter of time”
 The following three main practices against policyholders were listed as
illegal:
 No cash benefit ( a cash benefit must be provided on request in lieu of the
funeral)
 No underwriting by a registered -Long term insurer.
 Payment of benefits to the wrong person. Many policies pay benefits to
directly to third parties such as undertakers where they should be paid to
nominated beneficiaries.

31. Funeral Insurance in South Africa
 Thus the key rationale for using funeral insurance as an point of entry
are:
 No significant altering of existing buying behaviour.
 The sheer scale and size of the market and it’s financial muscle.
 A cultural relevant point of entry.
 Existing infrastructure ( no need to rebuild everything from scratch )
 Relative short entry time into this area.
 Current state of the funeral market 9 illegal and unregulated etc)
 The new proposed Micro- Insurance act of South Africa ( see later slides)

32. Financial Equity : Reinvestment Model.
Community Funeral and other
Insurance Covers
Community owned
Funeral provider and
administrator
Food
security
Health
care
Educu
ation

33. Community Financial Equity
 The purchasing power of funeral insurance creates Community profits .
These profits are then utilised to provide a base for developing the
Community Equity and resources.
 One of the keys here is that Financial equity exists as a flow of Capital
through continual Re- investment back into the community. This
creates a cycle of abundance that is exponential.
 Imagine a community investment fund that is created through this
model that finances community projects in which the profits of those
initiatives are reinvested back into the community equity fund.
 A true cycle of exponential abundance. Happy days !

34. Financial Equity Reinvestment Model
 The potential profits that can be generated from this model is substantial
with full community support. This is vital as Insurance does require the law
of large numbers to be effective.
 Further it represents one of the best sources of Community financing that
does not require any encumbrance or unsustainable investment source. It
is sustainable.
 For example : 200 000 policy holders paying R 55 per month = R22m.
 Profit margin after expenses and claims of 35 % = 7.7m per annum.
 This excludes intermediary / agent employment costs of 2.2.m which
would flow into the community.
 Thus an initial 10m per annum financial equity could be developed just for
this product.
 This represents R50 equity for every person!

35. The Microinsurance Framework in South Africa
 The Microinsurance Regulatory framework was released in 2011 for
comment.
 The aim of the legislation is to provide a framework within which low
income households would have access to good-value insurance products to
support financial inclusion.
 Key aspects are :
 Reduce barriers to entry for the new companies.
 Simplify the products and offerings to policyholders.
 Lower the capital requirements for Micro Insurers.
 Reduce the cost of regulation and hence the overall cost of products to low
income consumers.
 Offer composite license options for lower capital requirements.
 This framework is expected potentially to be presented to parliament in
2014.

36. Mutual Insurance Provider
 The community forms a Co operative in which community leaders are elected to
form the board of Trustees.
 The Co operative then forms an Insurance provider.
 Ideally the Trust would form a fully fledged Insurer under the new Microinsurance
legislation but until that is passed then a cell captive structure remains the optimal
approach.
 Regulatory capital is provided in the form of either Reinsurance or borrowed from
the License provider.
 Operational Capital requirements are not substantial but can be financed by Social
Investment loans or grants.
 Administration is crucial in this model as operational efficiencies would need to be
established in order to reduce the product cost.
 The Insurance provider should ideally own the administration ability / system or rent
it for a nominal fee per life covered.

37. Mutual Insurance Structure
Policyholders
Co- operative
Community Mutual
Insurer
Cell Captive
license
provider
T.P.A

38. Roles and Responsibilities
Provider Role
Policyholders Community members
Co- operative Co-op set up to provide guardianship and stewardship
of the Communities resources
Mutual Insurer Insurance vehicle that is owned by the Trust. This is
envisaged to be a full license provider under the new
Microinsurance act
Cell Captive provider Used as a temporary vehicle for the underwriting of the
risk until full license secured.
Third Party
Administrator
Set up to provide technology and administration for the
scheme. This includes enrolment, premium collection,
claims handling and financial accounting.

39. Product Development
 The products can be grouped into the following categories :
 Life and Funeral
 Short term
 Agricultural
 Initially the products envisaged are as follows:
 Funeral cover with an investment savings portion
 Credit life
 Personal accident policy.
 Research in the community would need to be done to ascertain the most beneficial
products.
 In the longer term, the products would be extended to cover short terms assets such
as Contents, house Insurance.
 The provision of Agricultural Insurance is a key priority ( for food security) but it is an
extensive project and will require it’s own full business plan and implementation.

40. Distribution
 Product distribution will be via the following channels :
 Community events launches
 Trained Community agents
 Community centres such as schools and other centres.
 Kiosks
 Retail partners
 Current service providers

41. Building Community Affiliation
Accornhoek Community Debit Card
Mthethwa T.T

42. Third Party Administration
 It is envisioned that the community should be self sufficient as much
as possible around the whole product offering.
 This includes administration. However initially the skills do not exist in
the community.
 Efficient and robust Administration is crucial to the success of this
model and thus it will be outsourced.

43. Third Party Administration
 The TPA will operate from one central location being Johannesburg.
 The partner provider will be KM Dastur ( pty) which currently has a
bespoke TPA business in India for Micro Insurance. The local KMD Office
will replicate the current capabilities.
 It will provide the following services to the scheme:
 Enrolment using laptops and Bio metrics scanners
 Post enrolment policy management
 Premium collection
 Claims management
 Management information for Insurers
 Sales agent training
 Web based IT system for real time access on enrolment and claims
 Call centre for queries
 SMS technology for Customer relationship management
 Data for Affinity programme role out.

44. Process flow
 A robust process flow model is currently been designed. This will be
tested against the current technology available and the most optimal
process will be selected.
 A example of this is as per the attached presentation form the DHS
India .

45. Premium Collection of cash.
 Depending on the distribution channel utilised the premium collection
will be matched vigorously to each policy issued.
 The optimal premium collection model will need to be established.
This is crucial in minimising fraud and matching premiums to
Policyholders.
 Point of sale collection points remain a potential basis for
consideration from a control and management perspective but
alternative technological options will be investigated.
 Cash to be deposited be deposited into the bank account as frequently
as possible.
 A receipt to be issued with all premium collected. This to be captured
on the Biometric card and on the central IT system.

46. Funding
 The overall funding required for this project is as per the attached
spreadsheet. This is split as follows :
 Operational Capital
 Set up costs
 Operational infrastructure
 Employment costs
 Running costs
 Training costs
 Solvency Capital
 Insurance Capital
 Insurance Operational costs
 The sources of funding are currently been considered.

47. Co- operative Trustees
 These will be sourced through a democratic process of election.
 However candidates for office will be reviewed to meet certain skills
and ethic based standards.
 It is not envisioned that it should follow the current Tribal leadership
framework although there will be full consultation with all
stakeholders to ensure buy in.
 These posts will be reviewed every three years.
 The principle managing trustee will only be on a rotation basis.
 External Trustees will be a pre- requisite. Potential make up:
 Community Social worker
 Auditor or head of Remuneration and compliance chair.

48. Reinvestment method and basis.
 A charter will be drafted by the community to determine on what basis
and to which project the distribution be made.
 Key criteria for project selection and management of these projects
will be covered in the charter.
 Vigorous compliance with King 2 standards of corporate governance
will be adhered to.

49. Talent and Service Capital
 The overall long term success of this project will not be successful if the
fundamental consciousness ( awareness of self and others) of the
community is not raised.
 Currently the current dual systems of Capitalism and reliance on
government means that every child who passes through this system
becomes a part of the system and thus a self sustaining prophecy is
created.
 Every child who finishes school (or not) tries to go out and make money or
get a job that will provide money. This immediately plays into the current
Capitalist system as the key motivation becomes making money which in
turn will results in poverty for others.
 Their focus is on improving current financial conditions rather than on what
unique skills or talents they do have and really what they are passionate
about.
 The majority of the people in jobs today do so because they require the
money to live rather than following their passion and dreams.

50. Talent and Service Capital
 Thus a key component of this new approach is to get the new potential
entrants to the system to by-pass the current system straight into the new
paradigm.
 Implementation
 This will be implemented via robust educational teaching and mentoring.
 Individuals who purchase the financial products will be introduced to free
educational mentoring and coaching.
 This will be done by trained consultants who in turn will “train the trainer..”
 All community members will also be offered free educational mentoring
around a number of key themes:
 Unlocking your individual purpose, talents and passions
 The Community Reinvestment model (Cycle investment model )
 Principles of the new paradigm such as gifting, sharing etc.
 Every individual who becomes part of the Reinvestment model will have be
given appropriate responsibility and will offer community service.

51. Cycle Investment Model
 This model is one where individuals are mentored to find their true
purpose and passion. Following this the inspiration generated will
result in creative ideas around manifesting this purpose.
 A Community investment fund will be established in which the
financial assistance will be provided to aligned projects within the new
principles as identified.
 Projects will be mentored at every step of the way.
 All recipitants will be required to reinvestment into other aligned
projects partly out of the profit realised from their own projects.
 Thus “paying in forward “ in a beautiful cycle of common unity.

52. Cycle Investment Model
Talent, Passion
and skills
identification
Ideas incubation
Project Investment
Profits from
Investment
reinvested back
into the CIF
Community
Investment Fund
CIF

53. Phase Approach
Phase 1
Set up of Community framework
Community Insurer Operational
Develop Community Investment fund
Begin Talent and Service Capital expansion
Begin Affinity programme
Phase 2
Reinvestment process commences into
Community needs
Cycle investment model commences
Expansion of Insurance products and services
Food security project ( Agri Insurance)
Phase 3
Community healthcare project
Community Micro finance
Infrastructure Investment
New Educational model along side
current model rolled out.
Natural Equity security project

54. The world as we know it is about to
change.
We are all the agents who will create that
change.
What world will we create ?

55. Questions ?
In gratitude
Michael Raal
Mike@service2others.co.za
+2782 4111668