The digital Mumbuca alleviates poverty and boosts the local economy

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A reader in Tokyo sent a link, giving the news that the city of Maricá in Rio de Janeiro is celebrating the six-month anniversary of its first state-aid currency, the digital Mumbuca – which is alleviating extreme poverty, while also boosting the local economy.

As over 70 percent of families were earning less than three times the minimum wage the local government decided to put forward an income-distribution program that could provide the citizens with the means to purchase basic goods from local businesses. The program is financed with Maricá’s high oil royalties, and it’s distributed via a monthly stipend.

To manage this fund, local authorities decided to create the People’s Community Bank of Maricá. It is managed by Bank Palmas. Citizens of Maricá pay with Mumbuca through debit cards. Now, after six months, the number of low-income citizens who are receiving this new form of local state aid is 9,507. That is becoming a considerable minority, given a population of just over 125,000.

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At present, each beneficiary receives 85 Mumbucas (US$37) per month, which can only be used to purchase food, medicines, and other basic goods in local, small businesses. Maricá’s mayor explains that this scheme avoids “wasteful spending or its diversion to ‘unconventional’ businesses.” The monthly benefit will gradually increase to 100 in 2014, and up to 300 by 2016.

brazil note comm currencyLocal shops have confirmed that their sales have increased since the Mumbuca program first started.

What people couldn’t afford before with reals, now they can with Mumbucas. So far, 102 businesses in Maricá have joined the program called Social Currency Mumbuca. (Right: Sample of Mumbuca debit card.)

Maricá’s human rights secretary has announced that the program will start offering microcredits for small businesses, with lower interest rates than other Brazilian banks, and flexible instalments.

The community bank gives these citizens their own accounts, something new for most of them. Fifty-five million Brazilians over 18 years old have never had a bank account, according to the Brazilian Institute of Geography and Statistics. Further, Brazil’s Central Bank calculates that over 1,900 municipalities don’t have any bank.

During the launch in December, the mayor of Maricá, Washington QuaQua, explained the purpose of the program: “Our challenge is to guarantee a minimum income to families in need, and also leverage the development of the local economy.”

Double benefit for the individual and businesses: “The more people buy in the city, the more the trade grows, the more it progresses, the more it produces to sell to traders, the more produces and trade, more jobs are created, more people in employment means more consumption, and everything forms a virtuous economic cycle,” Bank Palmas explains on a public statement.

Read more on another site: https://medium.com/free-software-in-latin-america/mumbuca-99fd89b6e9c6

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