A business owner and resident of the Mombasa ghetto called Bangladesh holds up notes of local alternative currency called 'Bangla-Pesa.' Photo Credit: Christian Science Monitor/Jason Patinkin

How a Community Currency is Driving Kenya’s Rural Economy

A growing number of local community residents in rural Kenya can now pay for goods and services, including their children’s school fees and church offerings, with the use of a widely accepted community currency, Sarafu-Credit.

The Sarafu-Credit(s) which are five in all – Kangemi-Pesa, Gatina-Pesa, Lindi-Pesa (Kibera, Nairobi), Ng’ombeni-Pesa and Bangla-Pesa (Mombasa), is a “complimentary currency” in form of a printed voucher which serves as a promissory note (IOU) within a reciprocatory exchange system in which exchange of goods and services is made possible among other network members.

Although it is virtually a relatively new monetary concept in many parts of Africa, community currencies has been adopted by thousands globally. In Brazil, we have the likes of “CDD,” a nickname for the Brazilian favela, in Britain, there is the Brixton, Spice Time Credits and Bristol Pounds and in Germany, there is the “chiemgauer” which is arguably referred to as the world’s most successful alternative currency. According to the Complementary Currency Resource Center, the number of organisations issuing these alternative tenders across the world rose from 20 in 1992 to 224 in 2011.

Like other community currencies globally, the Sarafu-credit creates an inter-connecting network of business and provides a way of keeping the money generated and earned within the coffers of the community. It supports the informal sector in local communities by ensuring that money circulates back into local businesses, thereby boosting the local economy.

Will Ruddick, the Founder and Technical Director of Grassroots Economics Foundation. Photo Credit: Grassroots Economics

Will Ruddick, the Founder and Technical Director of Grassroots Economics Foundation. Photo Credit: Grassroots Economics

The Sarafu-Credit is issued in different denominations notes ranging from 5-200 notes – at parity of 1:1 with the Kenyan Shilling. It does not replace the official money as community members still have to use the Kenyan shilling if they want to save, import goods or send their children to school outside the community.

“They (the community currencies) are 100% backed by the guarantee of goods and services of the members who issue them,” says Will Ruddick, the founder and director of Grassroots Economics, a non-profit foundation that seeks to empower marginalised communities to take charge of their own livelihood and economic future.

Grassroots Economics, which believes that prospering economies are built by thriving communities, is the champion behind the Sarafu-Credit. The organisation works directly with local businesses to increase the ability of residents to afford their goods and services within their community when Kenyan Shillings are scarce. In each of the community it operates, it works with local organisations that anyone can be part of.

Ruddick says the Sarafu-Credit have helped increase local business sales by 20-50 percent. “We see over 100,000 USD of trade yearly and an increase to Kenyan Shilling sales and market stability. Hundreds of kids are able to pay for school tuition because their parents can use Sarafu-Credit.”


How the Sarafu-Credit works Photo Credit: Grassroots Economics

How the Sarafu-Credit works Photo Credit: Grassroots Economics

A broad rule dictates that Sarafu-Credit users have to be located in the area and businesses using the currency must go through a screening process. For instance, businesses in Bangladesh, a rural community in Kenya, are brought together and registered as a legal Community Based Organisation. Each business member is endorsed by four other members of the scheme before being accepted and issued an initial amount of credit. No one is allowed to have more than 400 Bangla-Pesa at a given time.

The Sarafu-Credits have a 1 year expiration date and members pay each year to be advertised as part of the program.  “Members pay as little as 50Ksh monthly for various services. Grassroots Economics develop business plans, help them with marketing and also provide credit clearing services,” Ruddick says.

Today, there are about 1,200 businesses and 20 schools members across six impoverished communities in Kenya using the Sarafu-credit.


The idea of a community currency in marginalised rural Kenya is the brain child of Will Ruddick, a physicist and community development specialist who initially came to Kenya as a Peace Corp volunteer to teach maths and science. However, he could not ignore the social tragedy going on around him. He saw unemployment and lack of opportunity as a major barrier to youth and community development. Others have no clear direction of where to put their energy.

In local communities, he discovered there is a huge gap between demand and supply. There were those who have goods but do not have enough consumers to purchase their products (leading to waste of resources). On the other hand, there were those who could not make a better life for themselves because there was no money.

Ruddick wasn’t pleased with the vast amount of wasted human resources which is affecting local economies. Most businesses in the slums are informal. Residents mostly live from hand to mouth. They depend on their daily earning to feed and buy groceries. As a physicist, Ruddick’s training has equipped him to break things down into systems. In the case of Kenya, one of the things he noticed was that lack of credit and legal tender (money) is a major cause of unemployment and poverty, especially the slums. He envisaged that there could be a way to marry both the waste and the lack of opportunity to create a sustainable economy that could turn the lives of locals around for good.

After a year, he quits his job as a teacher and decides to look for a sustainable way to help undeveloped local communities.

His solution to the envisaged economic problem was to create a new form of money (community currency) that could be used in local shops and businesses. With the currency, members of a particular community can trade in goods and services from participating shops or establishments.

In 2010, Ruddick and his team launched the first pilot programs of the project in Mombasa and Nairobi. The scheme was quite successful. In the first year, 10 percent of the local trade were using it. This represents about 10-20 percent of the local economy trade.

In May 2013, the Bangla-Pesa was officially launched in Bangladesh, one of Mombasa’s worst slums. The scheme was accepted and the network expanded based on trust. However, the acceptance wasn’t without resistance –not from the local community, but from the government.



In May 2013, a local newspaper published a front-page story on Ruddick’s community currency, terming it an illegal business that is going rife in Kenya slums. This drew the attention of the national authorities. Ruddick and five of his associates were arrested and charged to court for forgery –an offence that could earn them 7 years in maximum prison. The defendants were arraigned in the Mombasa law court and prosecuted by the Central Bank’s fraud department. Ruddick and his associates had to make the case that the Bangla-Pesa was not meant to challenge the state nor destroy the Kenyan shilling; rather it was devised as a means to help the poor.

After months of postponed trials, the charges were dropped and since then, the project has received support from local leaders and some government officials.

The Bangla-pesa, its most successful community currency, has been a subject of several Masters and PhD thesis from Universities worldwide. Last year, it was a research subject of the United Nations Research Institute for Social Development (this was co-authored by Ruddick). To measure its impact on the community it serves, Grassroots Economics conducts its own in-house field monitoring through surveys and checking business records.

Ruddick says several governments in Africa, such as South Africa and Uganda have shown interest in the community currency programs.  Grassroots Economics is also working with someone in Nigeria.

In 2015, Ruddick with support from the South African Treasury helped to setup two currencies in South Africa – the Bergrivier (The Brand or Bergrivier-Rand) and Kokstad community currency. He hopes to launch a pilot programme in Uganda in 2017.

Will Ruddick and a Bangla-pesa user Photo Credit: Will Ruddick

Will Ruddick and a Bangla-pesa user Photo Credit: Will Ruddick

MOVING FORWARD                      

There are still more rivers to cross.

Could the community currency in any way create inflation in the long run? Ruddick doesn’t think so. According to him, “The current National Currency system (really the global monetary system) is inflationary. The money supply is growing beyond trillions of dollars and continues to – with no relationship to reality and especially local production. The systems we develop are tied to local production levels and collateralise with local guarantee, liquid and physical assets. So no – inflation is not something we can create – it is rather something national currencies do each day by increasing the money supply beyond the world’s GDP.”

Although Ruddick says the biggest struggle is often just helping people to understand how the current monetary system creates inequality, he admits that his organisation is “still struggling to get any support or recognition from Government in Kenya, and have had a lot of resistance from the Central Bank.”

In all, Ruddick remain dedicated to his cause of empowering the rural poor. When asked what has been the single most valuable lesson learnt since he started working in rural communities, he says, “Build a solid foundation and let communities use it, create more with it and run with it.”

Busayo Sotunde is a prolific writer with special focus on Business, Entrepreneurship, Reproductive Health and other development issues in Africa. Her articles have been published by different outlets including Investing Port and Ventures-Africa.com. She has a penchant for reading and sustainable development. Follow Busayo on Twitter @BusayomiSotunde

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