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Kenyan Businesswomen Transforming Slum Economies through Complementary Currencies

24 Jul 2013

Kenyan Businesswomen Transforming Slum Economies through Complementary Currencies
This is part of a series of think pieces by scholars and practitioners working on a broad range of issues within the field of Social and Solidarity Economy. The series is being published in conjunction with the UNRISD conference “Potential and Limits of Social and Solidarity Economy”. The conference took place on 6-8 May 2013 in collaboration with the International Labour Organization and the UN Non-Governmental Liaison Service.

Are complementary currencies the next step in building the Social and Solidarity Economy and could Kenyan women be demonstrating a new development model for a failing global monetary system? This think-piece examines the case of the Bangladesh community, an informal settlement in Kenya, using a complementary currency system which enables female business owners to build resilience, avoid economic downturns and juggle family care and business profits. After promising initial outcomes, the Central Bank of Kenya initiated charges for forgery in May 2013.

William O. Ruddick is an associate scholar at the Institute for Leadership and Sustainability (IFLAS) at the University of Cumbria, specializing in complementary currency research and implementation in sustainable development programmes.

Morgan A. Richards is a sociologist from the University Oklahoma focusing on women's business development in Kenya.

According to UN Habitat, over 50% of urban populations in developing nations live in informal settlements (slums), with this figure rising to as much as 70% in Kenya. This trend is increasing rapidly all over the world as environmental damage and the search for jobs push people out of rural areas. Informal settlements are densely populated areas where residents have few or no property rights and often occupy the bottom economic tier of society. According to a Habitat study (2003: Table B.2), the annual urban population growth rate in Kenya will be 3.14 percent over the next 8 years, with the number of city dwellers reaching 21 million by 2020. Due to their size and rapid expansion, a major focus in sustainable development should be directed toward informal settlements.

In a first survey organized by Koru-Kenya, a community based organization officially launched on 11 May 2013 after nearly six months of community planning, preliminary findings indicate that approximately 75% of small businesses are owned and operated by women. While women make up the bulk of the businesses and labour, male business owners earn more profit from their enterprises. Compounding this gender inequality, women experience a “double burden”or “second shift” by performing a disproportionate amount of household work, such as taking care of children and the elderly. Faith Atieno, one businesswoman who epitomizes this trend, sells porridge and flat bread to support her three children while working five hours a day on household chores. So while they represent the majority of the workforce, business ownership and unpaid labour, these women earn less income than their male counterparts.

Kenyan business owners practising trading at a complementary currency workshop.
Photograph courtesy of Koru-Kenya.

Key pieces of information led Koru-Kenya, a community based organization in Mikindani Kenya, to see complementary currencies as a promising part of the solution to both gender inequality and economic instability in a Kenyan slum known as Bangladesh. Koru-Kenya found that:
  • Of women’s household expenditures, the vast majority is used for purchases from fellow businesses within the same community;
  • On regular months of the year and certain days of the week, sales reduce to a bare minimum because of lack of hard currency in the community.

These characteristics—dense local business trading, currency scarcity and an overall underutilized capacity for trade—make the Bangladesh community a prime environment for the introduction of a complementary currency. Further, the use of complementary currencies to support local businesses in this way is not a novel concept. The WIR bank in Switzerland, started in 1934, had over 60,000 registered businesses in 2010, all of which trade with a complementary currency. In this way, they support one another and are protected from monetary fluctuations. The WIR has been identified as one of the key tools keeping part of Switzerland's business community stable (Studer 1998).

If local businesses in informal settlements could band together to create and guarantee an alternative means of exchange similar to the WIR, it would allow trades of goods and services to take place without scarce national currency. Inspired by this idea, Koru-Kenya developed a means of exchange called the Bangla-Pesa to strengthen and stabilize the local economy among a network of local businesses called the Bangladesh Business Network (BBN).

Bangla-Pesa are issued in the form of paper vouchers that pass from hand to hand as payment for goods and services. Any business in the community that is guaranteed by four other businesses in the network can receive a credit line of Bangla-Pesa at no interest. This means that if a BBN member spends his or her credits at other stores and then refuses to accept a minimal level of Bangla-Pesa in his or her own store, the guarantors must resolve the issue, accept those credits at their own businesses or lose membership. The businesses also pay a membership fee to the network in Bangla-Pesa, which is used for administration, marketing and community programmes. In baseline data collection, Koru-Kenya found that 400 Bangla-Pesa (~3.5 Euro) would suffice for daily local trading. Hence 400 Bangla-Pesa was allocated to each member to facilitate local transactions.

This currency forms a buffer against fluctuations in the money supply due to remittances, weather, holidays, sending children to school, political turmoil and so on. The fundamental driver of this economic stability and increase in trade is due to BBN members’ ability to trade their excess capacity. For instance a bicycle operator may have the capacity for 20 customers, but in general only has 10. Now he can give rides to other businesses in exchange for goods and services they have in excess, such as a woman who has extra tomatoes to sell.

The BBN has a board of directors consisting of representatives of the following groups: youths, elders, women business owners, men business owners and community health workers. These directors have the task of accounting, administration, registration, networking, care taking and organizing community service work. Koru-Kenya holds a non-voting advisory role on the board. Thus, the Bangla-Pesa is a unit of credit within what can be described as a mutual credit clearing system (or multilateral reciprocal exchange) which provides a means of payment complementary to official money. As such, it helps stabilize the local economy in the face of monetary volatility by allowing network members to trade with each other without using the national currency. Moreover, it provides a mechanism for community development.

For example, in a typical day of exchanges Faith Atieno buys water from another woman for 10 Kenyan Shillings. The water seller then uses the 10 shillings to purchase charcoal for cooking. The charcoal seller then goes to buy flat bread from Faith, completing a full cycle. In this situation, if Faith or anyone in the chain has no money, the following exchanges also prevent the local economy from stalling. The Bangla-Pesa circumvents such bottlenecks by providing a means of exchange which can be used even when national currency is scarce, as it often is.

In addition, because most Bangladesh Business Network members work several jobs and still make just enough to support their families’ most basic needs, they struggle to save money and pay additional medical and education costs. If businesses could use a complementary currency barter exchange between them, it would allow them to use their business profits more for education, health and savings. This becomes especially important for women. Because businesswomen in the Bangladesh community earn less than their male counterparts, their spending is more constrained. They struggle more to balance caring for their families, running their businesses, and saving for the future, and they use a greater portion of their earnings to care for their family’s basic needs. The use of Bangla-Pesa to pay for basic needs locally frees their Kenyan Shillings for reinvestment in their businesses and themselves and their families. This gives them more freedom to choose what to do with their business profits, a freedom most men already enjoy.

Flow of Bangla-Pesa.
Diagram courtesy of Koru-Kenya.

Initial outcomes of the programme support this powerful development potential. With an initial intake of 200 businesses wanting to join the programme, by 29 May 2013 a total of 109 members had completed the registration process, been guaranteed by other community businesses, and begun using the Bangla-Pesa on a daily basis. An average amount of 70 Bangla-Pesa was being used by each business member every day—which represents around 22% of their daily sales, according to baseline survey data. At the very least, then, businesses were doing around 22% of their trade in Bangla-Pesa. However, since most people reported an increase in their daily sales, this number likely represented additional sales which might not have happened without this means of exchange (Ruddick, Richards, Bendell 2013). Thus, programme monitoring suggests the Bangla-Pesa increased local trading within only a few weeks of operation and very minimal programme expenditure. And, because most of these businesses are owned and operated by women, these sales increases demonstrate the potential for complementary currencies to address gender inequalities by boosting the income of women.

However, while it seemed that the community of Bangladesh was poised for sustainable and self-driven economic and social resilience, the Central Bank of Kenyan prevented the continuation and expansion of the programme. On 29 May 2013, the government of Kenya declared the programme to be a threat to national security and placed five community members as well as Will Ruddick, the programme founder and author of this think piece, in jail. When officials found no link to terrorism, the group was charged by the Central Bank’s fraud department with holding forged papers under the Kenyan Penal code 267(e), although Bangla-Pesa vouchers look nothing like Kenyan Shillings and are clearly labelled as vouchers. The international community immediately refuted these charges. The head of Kenya’s stock exchange, Jimnah Mbaru declared promissory notes, such as Bangla-Pesa, legal and many Kenyan and international media outlets have supported the community based programme, such as the Huffington Post, in which Ellen Brown states, “The successful Kenyan experiment quickly earned endorsements from the United Nations, the Hague1 and the International Reciprocal Trade Association. Indeed, no other poverty alleviation programme can compete with the cost-effectiveness of this approach, which is easily replicable in poor communities across Africa. The plan was to expand it to other villages in a democratic grassroots fashion so that it could provide a local medium of exchange for people throughout the continent. This would be done via mobile phones with a system provided by Community Forge, an organization based in Geneva that supports the development of community currencies worldwide.” Despite this support, the group, though released on bail, still awaits a trail as their case is currently being reviewed by Kenya’s Director of Public Prosecutions.

Although this misunderstanding with local authorities has so far limited the scope of the Bangla-Pesa’s success, initial programme outcomes suggest that:
  • Sustainable poverty reduction and community benefits are possible and cost-effective through complementary currencies.
  • These positive impacts can be targeted at vulnerable groups, such as women, to reduce inequality in development by enabling women to care for their families without using up their business profits.
  • Complementary currencies have become a global movement, as indicated by the swift and international response to the arrest of programme implementers and participants.
  • There is an acute need for an authoritative body to offer technical assistance to governments and engage with development actors if complementary currencies are to reach their full potential.


Brown, Ellen. 2013. The Crime of Alleviating Poverty— A Local Community Currenccy Battles the Central Bank of Kenya. The Huffington Post: The Blog.7 Jan 2013. http://www.huffingtonpost.com/ellen-brown/the-crime-of-alleviating-_b_3519858.html, accessed 24 July 2013.

Habitat, U. N. 2003. The Challenge of Slums: Global Report on Human Settlements 2003. London: Earthscan.

Koru Kenya. 2013. 'Bangla-Pesa'. http://koru.or.ke/bangla, accessed 24 July 2013.

Ruddick, Richards, Bendell. 2013. ‘Complementary Currencies for Sustainable Development’ University of Rotterdam ISS – CCS Conference paper. http://www.iss.nl/fileadmin/ASSETS/iss/Research_and_projects/Conferences/CCS_June_2013/Papers/Will_Ruddick.pdf, accessed 24 July 2013.

Studer, T. 1998. WIR and the Swiss National Economy. The WIR Bank, Basel.

1 By the Hague, the author is referring to a petition in support of the Bangla-Pesa programme started by the organizers and participants of the Second International Conference on Complementary Currency Systems held in the Hague by the International Institute of Social Studies of the Erasmus University, Rotterdam.


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This article reflects the views of the author(s) and does not necessarily represent those of the United Nations Research Institute for Social Development.