Microfinance Without the Finance: The Possibility of Scrip-based Development Funding

This paper examines the feasibility of a scrip-based microfinance scheme. It draws on the experience of scrip use during the Great Depression, and that of more recent forms of monetary substitutes, to explore the possibility of using a community currency as the medium for a microfinance project. One way of capturing the benefits of microfinance while ensuring that value remains within a community would be to use a community currency or scrip. Sustainable business development is more likely if it is harder to use these funds directly for goods and services from outside the community. Study results suggest that scrip schemes have the potential to build social capital, if certain conditions are met. These include:

• High level of trust in the scheme;
• Community commitment to support the scheme;
• Implementation of the project through a credible institution, which would stand ready to redeem the scrip.