Mumbuca
a Brazilian virtual social currency for solidarity economy
Solidarity Economy is not a new term in Brazil, as a matter of fact the debate has been going on for decades, and concrete examples of its implementation in the country had proven its value to the point where the government have created different incentives for it. You might be thinking: “oh yeah, fair trade.’ No, this is not fair trade, is actually quite different.
Back in the 70's when a fishermen village was forced to move into the city duo to gentrification of the areas close to the beach in the city of Fortaleza, located in the northeast state of Ceará. The area where this village was forced to move to was called Conjunto Palmeira, and it was completely abandoned. No basic infrastructure for water, power, roads. And besides that, the fishermen had no work anymore because they were far away from the ocean.
In the 80's the community got together and created an association to start improving the neighborhood. And in the late 90's the same association created Bank Palmas — the first community bank of Brazil— to fight unemployment by creating jobs and income opportunities to the community through the values of solidarity economy. In 2000, the bank created a ‘social currency’ called Palmas that was used only in the neighborhood.
Social currencies are used as an alternative to the directly exchange of goods, which is known in Brazil by Escambo. Why do you need currency to exchange goods? Well, Escambo is complicated because if you have a cow and you need corn, flour, milk and clothes. It will be really hard for you to find *the one person* that could exchange all that with your cow. So you need currency, you need to be able to exchange your cow by some currency so you can go on to the different markets or sellers and buy your corn, flour, milk and clothes.
So, why not use the official currency of the country? Why create a new one? Because the local community is poor. They don’t have the country currency to begin with. In other words, a poor community might lack the official currency of a country (like the dollar) but they still have goods to exchange. How do you foster economic development in that way? You create a parallel currency. Its use is restrict, and its circulation benefits the redistribution of resources within the community itself.
The community banks and their social currencies grown since the 90's in Brazil, to the point that nowadays we have 53 community banks and official support from the government. Like the national Bank of Brazil, who created the ‘Brazil Popular Bank’ who focus is to support the community banks and facilitate small loans from $30 to $400 dollars, or the federal bank Caixa Econômica Federal that gives technical support by allowing the community banks to use their infrastructure to manage transactions, payments and other things, and financial help from BNDES (Brazilian Development Bank).
And that takes us to the city of Maricá in Rio de Janeiro. Where the community bank “Banco Comunitário Popular de Maricá’ have created the virtual social currency Mumbuca:
To bootstrap Mumbuca usage in the city, the community have encounter an enormous support from the city government. Translated from their website:
The Social Currency Mumbuca coalesces some key elements for the success of a local development program:
i) Social Control: shall be administered by the Banco Comunitário Popular de Maricá.
ii) Good governance management: the process will occur electronically via a debit / credit control ensuring, computerization of data and transparency.
iii) Robustness (scale / scope): The city of Maricá will give value to the Social Currency Mumbuca through 13,000 bags of food distributed to low-income families (up to 20,000 bags in two years), fully paid using the Social Currency Mumbuca. iv) Public Policy: the city of Maricá sanctioned a law that created a Municipal Fund for the community bank to be use to promote a program of income distribution (through scholarships) and Solidarity Economy that must be administered and paid in social currency through community bank of Maricá.
The last point is very important, because the city is choosing the community bank to manage this fund instead of picking a private bank. This gives legitimacy and recognition to the community bank and its practices.
Another particular information about the city of Maricá, is that it is one of the first to receive an oil platform for extraction of the pre-salt layer oil recently found in the cost of Brazil. This oil reserve is huge (50 billion barrels of oil) and Maricá has royalties since some of this oil is on their coast. And this is where the money to the fund comes from.
Instead of using the money to the normal type of development that we see: building roads, shopping centers etc. The city is using it to finance this fund that will generate income to people who are going to schools/universities. It’s investing it in the low-income communities development. The people development. While giving them income to survive it’s also improving their education and skills.
Since the income will be payed only in the social currency, the beneficiaries will have to spend it locally, within the community. Therefore, they will be fostering a local economic development as well, helping small business.
How it works?
- Every month the city government will give the community bank of Maricá a list with 13k beneficiaries of the scholarship. The city government will deposit in the bank the equivalent money for those scholarships
- The community bank will distribute the credit card of the social currency Mumbuca to each person who go the scholarship, and every month the community bank will add the credit of 70 Mumbucas
- The community bank will give business from the community (who are part of the solidarity economy network of the city) a POS machine to register the shopping done through the Mumbuca credit card
- At the end of the month the community bank will pay the business everything they sold with the social currency with the normal Brazilian currency (Real).
