A recently written article about Kiribati "commerce"

Learning to Bank on your Neighbours (The Toronto Star)

Feb 03, 2007 04:30 AM

Cleo Paskal

Butaritari, Kiribati–Sometimes we get so far ahead of ourselves, what looks like innovation is actually just reinventing one of those round objects used for propelling vehicles.

Let me tell you what I mean.

In the middle of the Pacific, around where the international dateline meets the equator, is the scattering of atolls that makes up the country of Kiribati (pronounced Ki-ri-bas – the local pronunciation for the old British colonial name of the islands, the Gilberts.)

Now, atolls are one of the most beautiful geological formations on Earth.

Usually, they form when an extinct island volcano collapses in on its hollow centre, leaving just an outer ring of protective barrier islands.

Inside the ring is the pale turquoise of the shallow, warm, lagoon. Outside is the steely dark of the open ocean.

Between the two, the atoll's islands and islets stretch, long and thin, sketching out a rough circle in white coralline sand and fragile green vegetation.

Incredibly, around 95,000 people live here, on these delicate islands in heart of the Pacific.

They likely came from Asia, descendents of intrepid seafarers, and are people of the ocean still.

Their mythology is full of flying canoes and talking dolphins. And foreign ships travelling these routes consider themselves lucky to have an I-Kiribati on board.

It was on one of these outer atolls that I first heard of a revolutionary "new" banking system.

Butaritari is largely a no-cash economy. There is limited electricity (first you need the generator to work, and then you need to fly in fuel). Without refrigeration, fresh crops and fish can't be kept for long.

So a fisherman comes back with a boat full of fish and informally barters it among family and friends for work on his home, crops, coconut toddy, whatever is going.

But there are still things that need cash, like penicillin, pens and paper.

And a small amount trickles in, mostly through remittances from family members working overseas, often on ships.

But sometimes a local entrepreneur needs a relative fortune for a new piece of equipment, like a sewing machine to make clothes and sails.

And that amount is just out of their reach, which is where the village council comes in.

On these islands, the village council runs the show.

The central government usually doesn't even bother sending out police for even the most serious crime. The community, for better or worse, sorts itself out.

Local elder Winnie Powell explained to me how it works. There are regular village meetings, and everyone is expected to attend.

Grievances are aired, conflicts are smoothed over.

Tiny fines can be levied, a penny for being late, a fee for encroaching on a neighbour's land. The fines are unofficially `income linked'.

This is, after all, a place where as Winnie says, "everyone knows what is cooking is everyone else's pot."

Even tourists are linked into the system. I was invited to stay free at the council's guest hut, I was fed free, and the council spent days preparing a village-wide performance for me (being a good host is heavily ingrained here). In return, it was quietly suggested that I make a donation, along the lines of $30, to the village coffers. Which I appropriately doubled.

So where does all the money go? The council uses it for, yes, microcredit to villagers, allowing them to borrow for emergencies and to build businesses. A small interest is charged and, as the money is paid back, it is farmed out to other villagers.

Recipients report their progress at the villages' meetings, and those that can't pay their debts have to sit there and endure the taunts of their neighbours – a darn good motivator to repay. They have been using this system for decades.

And it's exactly the sort of system that Muhammad Yunus won his Nobel Peace Prize for a few months ago. Sometimes you have to go to the ends of the Earth to find the cutting edge.