A letter in the Mail & Guardian of October 22 requires a response. In it Steward Spencer asks: “How can it be that Orania has its own currency? Do the national police have access to and jurisdiction over this self-created land?”
The important point is Orania’s local currency, the “ora”. The settlement’s status within South Africa is a different, complex issue clouded by emotion.
Orania’s creation of a community currency is the first demonstration of a “localisation” strategy that half of all South Africans, still trapped as economic prisoners in the marginalised township and rural areas, desperately need.
The idea of local currencies is not new and not unpatriotic. Local currencies correct the great weakness of our marginalised areas — their non-working local economies.
In particular, the rand does not stay to circulate and work in marginalised areas. The rand is a global currency: it is traded globally and is always rushing back to the “globalised” parts of the South African economy, like Sandton.
Orania — with just 600 people, nearly half are children — has a model community bank registered under the Savings and Credit Cooperative League of South Africa. As a highly innovative community, they sought advice on how best to develop themselves and add to regional economic growth. They understand that in our dual economy, the rand is no longer a working local currency.
There is a large international movement that promotes local currencies as a necessary response to globalisation. The Orania model is capable of replication throughout our marginalised areas.
The model used is lawful and without prejudice to others. It in no way harms the rand. And by helping to build strong local economies, it builds the national economy.
Local economic development is the touchstone by which South Africa will sink or swim in the next decade. The government’s own 10-Year Review called for, but did not name, a “major new intervention”. This may be it.
The ora is printed in the equivalent of R100, R50 and R20 notes. These are purchased with equivalent rands, which are placed in savings accounts — the interest from which helps cover the costs of running the local currency. Ora can be exchanged for rands.
Unlike the rand, which leaves poor areas within days, the ora stays to work. If the government or a donor allowed social or development grants to buy the ora, or another local currency in Soweto, the Transkei or wherever, that money would stay and work up to three or four times compared to today’s pathetic local multiplier of about 1,4 times.
It would help if all state bodies would accept local currencies as payment for rates, telephones and school fees, and spend that income back into the community to cover rents, wages and part of salaries.
As monthly grants continued to arrive and purchased the local currency, so the amount of “effective local demand” in each region would rise month by month and would “multiply”, rewarding local production and service provision.
Soweto, for instance, would become a vibrant city within four or five years as residents engaged each other economically in a “working local economy” nearly three times bigger than today.
The ora will quickly become a regional local currency to the great benefit of one of the poorest regions in South Africa.
We should wish it well, and ask that the authorities and the Reserve Bank partner it as a regional local currency — irrespective of who started it.
Norman Reynolds is a development economist who has consulted for the government