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Advances in Social Sciences Research Journal – Vol. 8, No. 7
Publication Date: July 25, 2021
DOI:10.14738/assrj.87.10484. Boundja, C. (2021). Modeling of the Solidarity Banking System in Congo: Towards Human Development Based on Traditional African
Values. Advances in Social Sciences Research Journal, 8(7). 127-139.
Services for Science and Education – United Kingdom
Modeling of the Solidarity Banking System in Congo: Towards
Human Development Based on Traditional African Values
Claver BOUNDJA
Governance and Development Laboratory
Marien N'GOUABI University, Congo
ABSTACT
Among the institutional instruments likely to participate in the economic
development of a country, banks occupy a crucial place, as their role affects means
of payment, exchanges, credit, financial transactions and advice. The analysis of
paradigms and mechanisms of the banking system makes it possible to intervene in
the heart of the economic system. Congo's banking system, like that of almost all
African countries, is characterized by half a century of failure, several bankruptcies,
endemic corruption, the embezzlement and exclusion of so-called poor populations
and rural. This article proposes a model of the endogenous financing of the real
economy through solidarity banks. Our objective is to formulate a decision-making
tool for economic and financial governance, in terms of financing local
development. We propose to explain the importance of monetary policy and the
renovated banking system on endogenous bases, according to traditional African
values.
Keywords: Central bank, solidarity banks, development human, monetary policy,
traditional African values
INTRODUCTION
The debate on global economic justice is currently underway excitement in the field of
monetary economics. It is of an increasingly important major issue, in increasingly globalized
economy, and more and more connected. The following fundamental question arises: monetary
policies of a dominant central bank should they care and take into account the negative
consequences of their measures on citizens and institutions of peripheral nations? A catch inn
developing country account argues for the idea that reserve money central banks should design
their monetary policies in order to avoid, as much as possible, the price volatility and the
consequent damage it causes worldwide. The trend is therefore to promote banks power
stations and for each country, with a monetary policy oriented towards the financing of the
endogenous economy. In addition, the economic development of African states is widely
discussed by several researchers (CUA/OCDE, 2018).
In general, economic development is articulated, in policy, by setting up theoretical instruments
or institutions that allow the result to be oriented either on enigmatic growth that has no basis
but simple calculations economic, or towards a transformation of the quality of life of the
community and its betterment. Among the institutional instruments likely to participate in the
economic development of country, banks occupy a capital place, as their role affects the means
of payment, trading, credit, financial transactions and counseling. The banking system of Congo,
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like that of the quasi all African countries, is characterized by a half-century of failure, several
bankruptcies, endemic corruption, embezzlement and the exclusion of the so-called poor and
rural populations. In his work entitled MBONGUI (2020, p.137), Mfumu Amaya
ANDELYYBEEVE writes: The proactive policy of encouraging business creation must match with
the creation of solidarity banks. Indeed, Congolese banks current ones are presented as sight
deposit banks or simple agencies internal and external transfer of the CFA franc. They do not
constitute development levers. They have erected almost insurmountable obstacles to Congos
citizens who want to create and develop businesses. The author proposes a monetary policy
based on the crossroads of the creation of solidarity banks and businesses by citizens. This
article proposes a model of this monetary policy.
Our objective is to formulate a decision support tool for economic and financial governance, in
terms of financing local development. We propose to explain the importance monetary policy
and the banking system renovated on the basis endogenous, as part of an African economy. We
study the main aspects of monetary policy; we analyze the forms of the local development
financing system by the central banks of the current CFA zone; we make the diagnosis of the
Congolese banking system and its impact on local development.
METHOD
The method used in this research is to analyze data from central banks in Africa. This analysis
is confronted with the economic and financial system Mbûla, proposed by our author. This
choice is explained by the fact that we are concerned with achieving our goal and mastering the
outlines of our research subject, taking into account the real data of the functioning of central
banks in Africa. Analysis of the results of this documentary survey will lead to proposing a
schematic model of monetary demand, which should govern the functioning of the popular
banks. Money is a means of payment accepted by all, within of a given geographical space,
directly usable to carry out regulations in the markets for goods and services or to settle
definitely all debts within a given monetary space. The study of the circulation of money obliges
us to delimit the scope of our investigations.
We are in a monetary economy, an economy where there is circulation of money. The currency
has what is called an immediate and general liberating power. The money has no private utility,
but a social utility. His use is in fact only collective. Money is an indivisible good (its
consumption by any individual does not decrease by consuming others) who traded on a
market. It is therefore offered and requested on the Money Market.
The currency market is organized and structured. We are talking generally banking system,
banking law, central bank and commercial banks. The existence of money is based on trust. This
is linked to the official guarantee which is affixed to any currency in the form of a mark, image,
emblem. Warranty given by an authority representing the community, allows the use by the
biggest number. The money market must coexist with other markets (goods and services
market, financial market and labor market). These 4 markets are interdependent, so that the
imbalance of a market often leads to imbalance in other markets. The money market and the
financial market are very volatile, price adjustments are very rapid. The labor market and the
markets for goods and services are more rigid (adjustments are longer). Money and the money
market should be analyzed in terms of taking into account the historical, geographical and
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Boundja, C. (2021). Modeling of the Solidarity Banking System in Congo: Towards Human Development Based on Traditional African Values.
Advances in Social Sciences Research Journal, 8(7). 127-139.
URL: http://dx.doi.org/10.14738/assrj.87.10484
temporal context. The use and circulation of money refers to the question of financing the
economy, that is to say finance direct (financial market) and indirect (banking intermediation).
RESULTS
Monetary policy
The central bank is an institution that helps the state apply the economic policy, in particular
its monetary fraction. it must not mean the restriction of his independent position. The goal is
a better coordination of government tax policy and central bank monetary policy. In the
scientific literature on monetary policy, Piovarčiová (1998, p.374) mentions that a form of
politics economic oriented on the control of the volume of money in circulation and the interest
rate with the aim of influencing decisive macroeconomic magnitudes are called monetary
policy. Lukáčik (2006, p.166-167) considers monetary policy to be an important tool of
economic policy which belongs to key monetary stimulators of economic growth. In the sense
broad, monetary policy is a conscious activity of an agent who aims to regulate the volume of
money in circulation through monetary instruments in order to achieve a certain target.
Revenda (2001, p.79) also defines monetary policy in the broad sense as the conscious activity
of a certain agent which aims to regulate the volume of currency in circulation through
instruments monetary policy in order to achieve certain targets. For him, the target principal is
the monetary stability that exists in the economy when the real volume of money equals volume
economically necessary, and when the money supply (OM) is equal to its demand (DM). KliNová
and Kotlán (2003, p.149) characterize it as a process where the creator of monetary policy (the
central bank) aims to achieve objectives targeted in advance.
The key target of the monetary policy is the reduction and stabilization of inflation and the
stabilization of the exchange rate. Monetary policy regulates both money and credit to influence
macroeconomic performance; with the credit policy, they are state-oriented activities control
of the volume of money in economics, rate regulation interest rate and credit terms. Monetary
policy is the regulation of the operational objective by the central bank, by the through
monetary policy instruments, in order to achieve the intermediate objective, and the final
target. For the purposes of this article, monetary policy can be defined as a conscious activity
of the monetary authority (of the central bank) which strives, through instruments, to achieve
the targeted objectives. It applies the monetary instruments: rate of foreign exchange, discount
instruments, financial instruments, instruments administratively restricted, local business
financing, etc.).
Since 2001, monetary policy has formed as one of the economic policy alternatives in order to
achieve certain macroeconomic targets such as, for example, price stability, sufficient economic
growth, an unemployment rate close to natural unemployment rate, a balanced balance of
payments, a stable exchange rate, etc. Monetary policy is not currently possible in Congo,
because there were no conditions economically suitable, no transmission channels in action,
and even fewer monetary instruments. Finally, even the targeting of monetary objectives would
have been useless, because the problems macroeconomics that are ubiquitous in countries
developed as well as in developing countries officially did not appear in the countries of the
planned. In the working document of the French Senate (2009), the policy monetary policy is
an instrument of general economic policy likely to contribute, cumulatively or alternately, to
the achievement of three main objectives: price stability; the economic growth and full
employment, external balance.
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The Note Eco in Brief of the Banque de France in November (2016) stipulates that monetary
policy is one of the elements of economic policy, but it is not the only one, fiscal policy and
“structural” policies are also important levers. The monetary policy is the responsibility of
central banks, which must both promote economic prosperity through their action money, and
watch over monetary and financial stability, but without acting on laws, public investments,
taxation, the organization of work, which is the domain of the State. For Iordachioaia (2011),
monetary policy is the process by which the government, central bank or authority of a country
controls the supply of money, the availability of money and the cost of money or interest rate
to achieve a set of objectives oriented towards growth. Monetary theory gives an overview of
how to create monetary policy. Monetary policy is based on the relationship between interest
rates in economy. It is the price at which money can be borrowed, and the total supply of money.
Monetary policy uses various tools to control one or other of these elements, or both, to
influence outcomes such as economic growth, inflation, rates of exchange with other currencies
and unemployment. When the currency is under an issuing monopoly, or when there is a
regulated system of issuing money through banks linked to a central bank, the monetary
authority has the capacity to modify the money supply and therefore to influence the interest
rate (to achieve political objectives).
Monetary policy of banks in the CFA zone
For there to be monetary policy, we need an economic and monetary zone. This is why we are
going to focus on the CFA Franc Zone, in which the Congo is located.
In the Information Report of the French Senate (2020) it is noted that the Franc Zone associates
France and fifteen sub-Saharan African States, namely the Comoros and fourteen countries
grouped together in two distinct monetary unions, namely the Western Monetary African Union
(UMOA) and the Economic and Monetary Community of Central Africa (CEMAC). The Franc
Zone is also 183.4 million inhabitants, for a GDP of approximately 241.7 billion dollars in 2019
”, the Franc Zone therefore designates three currency zones and three different currencies,
which are the franc of the African Financial Community for West Africa, the Financial
Cooperation franc for Central Africa and the Comorian franc. And its operation is based on four
fundamental principles common to Comoros, CEMAC and UEMOA:
• The fixed parity with the euro, originally at the French franc, at a rate unchanged since
1994. The change from the French franc to the euro was not accompanied by a change
in the parity, which automatically resulted from the rate irrevocable conversion
between the euro and the French franc. Since 1999, one euro is therefore worth 655.957
CFA francs (XOF or XAF) and 491.968 Comorian francs (KMF).
• The guarantee of unlimited and unconditional convertibility of CFA and Comorian francs
into euros. This guarantee is granted by France to central banks. In the event of depletion
of foreign exchange reserves, the Central Bank of West African States (BCEAO), the
Central Bank of Central African States (BEAC) and the Central Bank of the Comoros
(BCC) can obtain euros with France. Mobilized on several occasions in the 1980s, the
guarantee has not been used since the beginning of the 1990s. Monetary cooperation
agreements therefore result in a budgetary commitment.
• Pooling of foreign exchange reserves. In return for the convertibility guarantee, the
countries of the Franc Zone must centralize all of their official foreign exchange reserves
with their central bank which, in return, must deposit a percentage of these foreign
currency assets in an open operations account. from the French Treasury (50% for the
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Boundja, C. (2021). Modeling of the Solidarity Banking System in Congo: Towards Human Development Based on Traditional African Values.
Advances in Social Sciences Research Journal, 8(7). 127-139.
URL: http://dx.doi.org/10.14738/assrj.87.10484
BCEAO and the BEAC, 65% for the BCC). These reserves are freely accessible and
remunerated for the portion of the reserves that must be deposited (currently at the
floor rate of 0.75% for the BCEAO and the BEAC, 2.5% for the BCC).
• Freedom of transactions and movements of capital within each of the monetary zones.
The central banks of each of the zones can impose an exchange control for transactions
with countries that are not members of their monetary zone and the currencies of the
franc zone are not freely convertible between them.
As a party to international monetary agreements and as guarantor, France appoints
representatives to the three technical bodies of the BCEAO and the BEAC: the boards of
directors of central banks, monetary policy committees and banking commissions of monetary
unions. . There is no representative in political bodies. In the BCC, France is present on the board
of directors, which assumes the tasks devolved in the UMOA and CEMAC to the monetary policy
committee and the banking supervision college. In the CFA zone, it is therefore the central banks
of the two respective zones UEMOA and CEMAC, which are responsible for the issue of
monetary policy. We can, without ambiguity, confirm it, on reading the Statutes of the Bank of
Central African States, that the mission of the Central Bank is to define and conduct the
monetary policy of the Union.
This monetary policy, in the case of the BEAC, is steered by a so-called "Monetary Policy"
committee, which is the decision-making body in the matter, with the following missions:
- define and conduct the monetary policy of the Union;
- issue banknotes and metallic coins which are legal tender and discharging power in the
Monetary Union;
- conduct the Union's exchange rate policy;
- hold and manage the official foreign exchange reserves of the Member States;
- promote the proper functioning of payment and settlement systems.
The Banque de France's Annual Report on the Franc Zone (2019, p.73) provides us with
information on the reality of the monetary policy conducted by the Bank of Central African
States in the CEMAC zone:
“The ultimate objective of the BEAC's monetary policy, stipulated in its statutes
(Article 1), is currency stability. For the BEAC, this means a low inflation rate, lower
than the multilateral surveillance criterion of 3% (internal stability of the
currency) and the maintenance of the fixed parity with the euro (external stability
of the currency). "
In 2018, this stability required the reconstitution of external assets, which would be useful in
reducing the risk of a rise in inflation, and which would also have the effect of causing a
mechanical increase in bank liquidity which must be managed by the Central bank.
The activities of CEMAC banks are still limited, given the GDP of the sub-region. Since February
28, 2019, CEMAC has 52 national banks or subsidiaries of foreign banks. They are distributed
as follows: fifteen banks in Cameroon, four in the Central African Republic, eleven in Congo,
eight in Gabon, five in Equatorial Guinea and nine in Chad.
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In 2018, this stability required the reconstitution of external assets, which would be useful in
reducing the risk of a rise in inflation, and which would also have the effect of causing a
mechanical increase in bank liquidity which must be managed by the Central bank.
The activities of CEMAC banks are still limited, given the GDP of the sub-region. Since February
28, 2019, CEMAC has 52 national banks or subsidiaries of foreign banks. They are distributed
as follows: fifteen banks in Cameroon, four in the Central African Republic, eleven in Congo,
eight in Gabon, five in Equatorial Guinea and nine in Chad.
At the end of 2018, the aggregate total of bank balance sheets stood at 13,476 billion, or just
under 25% of GDP. This total is nevertheless up significantly by 6.2% compared to its level
reached a year earlier, in a context of economic recovery in 2018 (real growth of + 1.6%). This
increase more than compensates for the fall in balance sheets observed in 2017 (- 3.0%), which
came after the severe recession observed in 2016 and the slight recovery in 2017 (real growth
of - 1.5% and + 0 , 6% respectively for 2016 and 2017). This increase in balance sheets in
nominal terms is observed in all banking centers, with the exception of the Congo, which
recorded a decline of around 2.5%. The strongest increases are observed in Cameroon (+
10.0%) and the Central African Republic (+ 12.5%). (France zone report 2018, Banque de
France). Financial inclusion in CEMAC and Congo is largely insufficient. In 2017, the average
level of financial inclusion of CEMAC was around 35%, up sharply compared to 2014 (18%),
thus catching up somewhat behind the level of sub-Saharan Africa, in the past. from 34% to
43% over the same period (World Bank, Global Findex, see graph on next page).
In the case of Congo, there is a gap between the banks and the population, as less than 30% of
the population participate in the banking system. Deposits collected amounted to 9,878 billion
(73.3% of the balance sheet total) at the end of 2018, a marked increase compared to the end
of 2017, on the other hand it is the decrease in Congo, this is due to the evolution economy of
the country which is not brilliant.
Banks are unable to finance the economy as the granting of credit deemed too risky is hardly
any more on the commercial agenda and worse, it is quite simply replaced by the collection of
bank commissions guaranteeing them comfortable incomes which do not create any wealth
under the shadow of the BEAC thus confirming that the microeconomic situation is clearly not
a concern of monetary policy. Indeed, by analyzing in more detail the structure of the profit and
loss accounts of CEMAC banks, we observe a continued evolution of the banks' economic model,
already mentioned in the Annual Report of the Franc Zone 2017, towards the collection of
commissions, eg currency exchange. More specifically, between the end of December 2017 and
the end of December 2018, the margins on transactions with customers (intermediation
margins) fell by 7.4%, even more sharply than in 2017 when the decline was limited to 2.4% .
On the contrary, those on various transactions jumped 22.1% in 2018, after an increase of 5.5%
in 2017. Credit activities are often considered too risky by banks, due to a business
environment. difficile (Franc zone report 2018, Banque de France).
If monetary creation passes exclusively through bank credit, the difficulty encountered by
banks should be the priority of the BEAC, because this has a direct impact on the volume of
money present in the economic circuit. Without sufficient volume of money, how can the
economic structure be kept alive? How can we claim to create sufficient wealth to satisfy our
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Boundja, C. (2021). Modeling of the Solidarity Banking System in Congo: Towards Human Development Based on Traditional African Values.
Advances in Social Sciences Research Journal, 8(7). 127-139.
URL: http://dx.doi.org/10.14738/assrj.87.10484
populations? The analysis of the structure of the sub-regional money supply between
December 2017 and December 2018 highlights a decline in the relative share of bank money in
Congo (- 4.0%). A negative development that has taken hold since 2016 as shown in the table
below:
BEAC Annual Report 2018:
Table 8: evolution of the money supply December 2016-December 2018
(https://www.beac.int/wp-content/uploads/2020/01/Rapport-Annuel-BEAC-2018.pdf)
DISCUSSION
The problem of endogenous business financing in the CFA zone and the Mbûla system
The analysis of the functioning of the CEMAC zone that we have just carried out shows that
there is a lack of monetary policy in this zone. Indeed, the only current objective is its
attachment to maintaining monetary stability, without worrying about the impact of this
stability on the real economy and, in particular, on the peoples who live in the Congo. As a result,
the Mbûla (Andely-Beeve 2020), as a new economic and financial system, intends to provide a
profound response to systematic problems of the economy and finances in Congo. "
The author proposes that the State and the Nation be conceived in terms of Mbongui or
Common Case, this supposes that the well-being together is based on the sharing of knowledge
and assets and that individual well-being resides in the giving and the economic logic Mbûla
evoked in this work is the key principle of its economic action and its development. Inspired by
the Bantu-indigenous world, Mbûla is originally an agricultural practice which is defined as an
ingenious association of the efforts of Bantu women in the hard work of cultivating cassava
fields and other foods, to cope with their responsibilities and the painful effort to allow their
families to survive materially.
The "Mbûla" system turns the whole economic situation upside down by inventing two
fundamental data:
Vital capital, which today represents Mbongui Congo and aims to meet the basic needs of every
citizen:
The "better-living" capital which presents itself as the projection of the evolution of the well- being of citizens and of better living together in Mbongui Congo.
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This system, as far as monetary policy is concerned, depicts a revolution in terms of monetary
policy, with the creation of an institution called the High Authority of Finance, whose first
mission is the execution of monetary policy, and the second concerns the management of the
banking area of Mbongui Congo.
A new banking policy will have to be redefined to satisfy the vital capital of the Congos and
contribute to the best living of Mbongui Congo. It should highlight the value of solidarity. The
new policy, to be more effective, will have to be harmonized with that of other Central African
nations.
The operation of the Congolese banking sector is reserved first for the Congos, then for
nationals of Central Africa.
This assertion of the author introduces, here, the notion of solidarity, which is the key to the
definition of the monetary policy itself of Mbûla, and this materializes, in the microeconomics,
by the action of the "solidarity banks" which will actively participate in the proactive policy that
encourages MBONGUI CONGO to start a business.
Solidarity banks are characterized by:
- their various facilities for the creation and development of national businesses with
priority for hiring Congo citizens,
- their low-interest loans,
- their structure adapted to the purpose of national solidarity,
- the integration of these banks into the various investment programs promoted by the
state.
Modeling solidarity banks
Living in the Common House requires sustained attention for families, for the weakest and the
most disadvantaged. The nation organizes public services to meet the primary social needs of
its citizens.
Mbongui Congo will have to pay very close attention to the Congo family. Any stay-at-home
mother (in a legal marriage) will benefit from family allowances for each minor child. In this
way, Mbongui Congo will work for its population and therefore for its survival.
By minimizing the economic role of households, the Congo has impoverished the Congo family
and thus rendered its domestic market sluggish. Through energetic and healthy measures, we
will restore dynamism and capacity to the Congo market.
The establishment and permanent management of the “Family Solidarity” allowance policy
should be decided upon and harmonized with the positive level of the economy and the levels
of production of the three specific national resources, namely petroleum, timber. and water.
Each village center must be equipped with modern structures, namely: a health center, a school,
a market, a mbongui (meeting place for citizen Mbongui and a real cultural center, built in the
center of the village), administrative housing for teachers and nurses, water boreholes. These
structures will have solar powered lighting. In this area, Mbongui Congo is aiming for a real
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Boundja, C. (2021). Modeling of the Solidarity Banking System in Congo: Towards Human Development Based on Traditional African Values.
Advances in Social Sciences Research Journal, 8(7). 127-139.
URL: http://dx.doi.org/10.14738/assrj.87.10484
revolution, that of solar modernity. All of rural life will need to be transformed, from household
and street lighting to cooking ovens to drying food and even transportation.
The quality of service for the development of the bomotu: "Quality Plus" and the duty to
innovate.
The development of the Congo necessarily passes through that of the bomotu of each Congo. As
the creative source and humanity-wisdom of man, the bomotu will only develop through the
ever-increasing quality of his behavioral being and the ever-increasing quality of his action.
At work and through work the bomotu of each individual is affirmed. Indeed, it is in the service
that the being and the actions of each person are best reflected.
Mbongui Congo must ensure the muntu Congo the best arrangements for its development
through work, to create an environment suitable for the deployment and development of its
bomotu (essence of man and the fabric of his life in Bantu civilization).
To this end, the Mbongui Congo must organize or force to organize rationally "the workspace",
starting with its own public workspace. The disharmony and the concussion which prevail in
the public administration are a serious obstacle to national development.
It is therefore necessary to draw inspiration from the most efficient public administrations in
the world to renew the Congo public administration, both in its structure and in its functioning
and to restore letters of nobility to the virtues of competence and probity.
The muntu (human being) in a situation develops his bomuntu through the ever-improving
quality of his being and his action: quality of being, welcome and availability, knowing how to
be in this Bantu-indigenous world of traditions and customs, currently in crisis, the Mbongui
Congo will have to encourage the Congolese muntu to work innovatively. Innovative work
breaks with habits, survival, the picking economy to firmly enter the culture of development.
This innovation will focus on key areas, namely: family, social life, work, governance.
Monetary Authority, request for monetary liquidity and the financing of solidarity banks.
Keynes (1942) explains that the demand for monetary liquidity is through the liquidity
preference. Economic agents prefer liquidity because of the transaction motive, the
precautionary motive and the speculative motive. However, the first two motives depend
mostly on income and only the speculative motive for the demand for money depends on the
interest rate. The supply of money depends on the central bank, which can influence it by
regulating the monetary base; however, it cannot determine it exclusively and absolutely. The
money supply is also the result of the creation of credit by second-tier banks.
Since, according to Keynes, the motives for creating savings and investing are different and do
not depend on each other, the economy should not easily come to equilibrium only through self- regulation. Therefore, state intervention is, he said, necessary. State interventions can take two
basic forms:
a) the State can apply a monetary policy centered on the regulation of the interest rate, in
order to balance savings and investment,
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b) government spending - tax policy should be used if entrepreneurs' expectations are so
pessimistic that influencing the interest rate is not enough to stimulate investment.
Therefore, Keynes preferred this form of state intervention. Fiscal policy can directly
influence aggregate demand and, as a result, the macroeconomic outcome tends to emerge
more quickly.
It is therefore necessary to underline the possible failures of monetary policy. Reducing interest
rates by increasing the volume of money in circulation has its limits. If the interest rate is too
low and the demand for money is perfectly elastic, economic agents anticipate future growth in
the interest rate. This is the reason why they are starting to increase their speculative demand
for money.
The central bank cannot reduce the interest rate even if it makes another influx of money into
circulation; therefore, it will fail to stimulate investment. For a certain period, the phenomenon
of “liquidity trap” was only considered at the theoretical level. However, several current
empirical studies confirm its real existence, as for example in the case of Japan in the 1990s.
In addition, lowering the interest rate does not always have to lead to increased investment.
This is also the reason why expansionary monetary policy generally does not have the desired
result.
It is therefore understandable that the solidarity banking system refutes the effectiveness of
expansionary monetary policy in combating unemployment. Solidarity banks, unlike
traditional banks, do not give money a neutral influence on economic activity, but a decisive
influence. At the same time, they do not take money for an ordinary, current asset. Solidarity
banks emphasize the character of money through the demand function. The goal of economic
agents, in this context, is the creation of well-being.
In this, the demand for financing depends on the planned needs of households, businesses and
communities. Companies do not need any prior savings, they need liquidity and obtain it from
solidarity banks. Thus, money is a credit currency, it is created through the granting of credits
or solidarity aid, and is therefore not collected beforehand through deposits.
At the first stage of liquidity creation, the granting of loans to companies takes place allowing
them to cover their production costs and / or to households in the form of solidarity aid.
Between banks (creditors) and companies (debtors), the creation of liquidity is based on an
anticipation of future revenues and supposes the mutual trust of contractors.
The second stage is the financing of production, regardless of the sector (consumer or
investment goods). To be more precise, companies can have recourse to two sources of finance:
bank loans and investments of securities on the financial markets. Once the wages are paid, the
entrepreneurs become the debtors of the banks for a sum representing the total of the credits
obtained, and at the same time, the employees become the creditors of the banks for the same
sum representing the total of their deposits.
At the third stage appears the final financing, that is to say the moment of the collection of funds
by the companies, allowing them to repay their debt to the banks, and which can come only
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Advances in Social Sciences Research Journal, 8(7). 127-139.
URL: http://dx.doi.org/10.14738/assrj.87.10484
from the distributed income, recovered by the sale of goods or of financial securities. During
this phase, employee spending provides businesses with the means to repay part of their debt.
As for the part of income not consumed, that is to say savings, it can have two destinations: the
purchase of securities (stocks, bonds) on the financial markets in return for liquidity which
returns to companies allow them to repay another part of their debt; monetary investments in
banks involving corporate debt of the same amount.
At the end of this presentation of the financing model of solidarity banks, we can therefore
retain that they are conceived, from a theoretical point of view, according to the Keynesian
model. Indeed, JM Keynes writes: “the total demand for money is divided into two parts: the
demand for idle cash [speculation and precaution] and the demand for active cash determined
by the level of activity established by the decisions of the entrepreneurs. . The demand for active
cash in turn can be broken down into two: the demand due to the delay between the origin and
the execution of decisions by entrepreneurs, and the part due to the delay between the receipt
and use of the income by the public. and also between the receipt by entrepreneurs of the
products of their sales and the payment by them of wages ”(p 224).
We can adapt these ideas of Keynes by proposing the modeling of the financing of the local
economy, through solidarity banks, summarized by the following diagram:
Formally, this diagram shows that:
- The investment (I) is the sum of the interest rate (IR) and the marginal capital revenue (MCR):
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Advances in Social Sciences Research Journal (ASSRJ) Vol. 8, Issue 7, July-2021
Services for Science and Education – United Kingdom
I = IR + RMC (1)
- The demand for money (DM) is the sum of investment (I), jobs to be created (J), production or
output (O), solidarity with households (SH) and consumption (C):
DM = I + J + O + SH + C. (2)
- The total volume of money to be created by solidarity banks (VM) is the function of demand
for money:
VM = f (DM). (3)
Taking into account formulas (1), (2) and (3), the volume of money to be created by solidarity
banks is written as follows:
�� = $���
�
�$�
With k ∊{1, ... ,5}
And I=1 ; J=2 ; O=3 ; SH=4 ; C=5
Definition
Let 5 be an integer and VM a part of R& .
A function f of 5 variables is a process which has every quintuple (�',..., �&) of VM associates a
unique real number.
This is noted as follows: f: VM
R
(��,..., ��)
f (��,...,��)
VM is the domain of definition of f.
CONCLUSION
The creation of businesses at the local level, through the financing of popular banks, is one of
the major concerns of the Mbûla economic system. This establishes the rules so that,
henceforth, the primary needs of each citizen are taken into account, and that their own needs
for the creation and financing of businesses, and the evolution of the economy, are projected by
the people themselves.
In order to meet these needs, various principles and rules govern economic activity, while
tending to develop and support the capacity for entrepreneurship. From this point of view, the
ambition defined by this Mbongui system is great and noble, insofar as it aims for the political,
economic and socio-cultural renewal of the Congo Nation and, therefore, of all of Africa.
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Boundja, C. (2021). Modeling of the Solidarity Banking System in Congo: Towards Human Development Based on Traditional African Values.
Advances in Social Sciences Research Journal, 8(7). 127-139.
URL: http://dx.doi.org/10.14738/assrj.87.10484
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