A Kenyan community’s currency, Bangla-Pesa faces trouble
Few places on earth embody income inequality quite like Bangladesh, a great dusty slum on the outskirts of Mombasa. Home to 26,000 people, it sits atop an ascetic crossroads about 5km from the five-star resorts studding the Kenyan coast.
Some people are prostitutes; others are thieves. If they use this project then they can lift up their lives
The main, winding mud track through town is clogged, and many people cannot afford the KSh20 ($0.20) ride into the city. It was the perfect place, argued economist Will Ruddick, to start an alternative or complementary currency (CC).
But after less than a month the government shut down the newly launched Bangla-Pesa scheme in late May and jailed him and his collaborators on charges of forgery.
CC systems, of which there are around 4,500 worldwide, are commonplace in Europe, Asia and particularly South America, where systems in Brazil and Venezuela have led the way.
But aside from the Doole project launched by a women’s group and a non-governmental organisation in Dakar in 1998, and Cape Town’s Community Exchange System – which has no physical currency and is a system of exchanging goods and services – Africa has lagged behind other regions.
This is chiefly because of the interventions of central banks and a continued demand for microfinance.
Ruddick is a former United States Peace Corps volunteer and an economic development expert. He worked alongside Koru Kenya, a Mombasa-based charity, to implement Bangla-Pesa.
The currency is based on a system of multilateral reciprocal exchange.
Starting on 11 May of this year, 109 businesses in Bangladesh signed up to the scheme by contributing KSh400 each, which acted as mutual credit. Of that, KSh200 was retained to be spent in the community on projects such as drainage systems and schooling.
There were 1,000 tokens circulating in denominations of 5, 10, 20 and 50. Within a fortnight, local trade was up 22%. More than 83% of users reported increased sales.
Koru Kenya had other experience with alternate currencies after working on a pilot project, Eco-Pesa, in the Kongowea region of Mombasa in 2010 and 2011.
Eco-Pesa used vouchers as a means to strengthen local businesses and to encourage participation in donor-backed health and environment programmes.
The backers reported that three-quarters of the businesses in the Bangla-Pesa network are operated by women, many of whom live in extreme poverty.
Mildred saw a big increase in trade at her shop after the launch of Bangla-Pesa. She exchanged her excess goods for Bangla-Pesa.
Because the system was mutual, on Mondays – the slowest day for trade in Bangladesh – those who could not afford eggs used Bangla-Pesa to buy them from Mildred, preventing them from languishing in the shop and going bad.
WASTE NOT, WANT NOT
Paul, a greengrocer who has lived in Bangladesh his whole life, normally buys a box of tomatoes for KSh500. If he sells all of them, he could make KSh700 profit.
But frequently he could not, which meant that if Paul needed supplies or a ride across town, he might have to sacrifice a meal or two.
“Before it was only survival,” he says. “We were doing good business, but there was no money.”
With Bangla-Pesa, Paul could trade excess tomatoes for Bangla-Pesa instead of shillings, which were at a premium on some days due to remittances or the payment of school fees.
But on 29 May, the authorities, tipped off by a journalist, banned Bangla-Pesa and threw Ruddick and five others from Koru Kenya in jail – first on charges of treason, then later forgery.
The case remains open and all six are facing the possibility of seven-year sentences. The next hearing is planned for 22 August.
The Bangla-Pesa team included members of Alpha and Omega, a community group headed by Alfred Sigo.
“I am one of the ones who could be going to jail,” he said, at the group’s tiny office. “The government has got this all wrong.”
Bangla-Pesa supporters argued the government felt threatened by anything that supported a strong local identity due to the presence of the separatist Mombasa Republican Council.
Kenya’s central bank also does not support CC systems that challenge its dominance atop the national economy. The central bank did not respond to The Africa Report‘s requests for comment.
“The transactions were actually around KSh100 per day [per person],” says Ruddick. “This wasn’t a replacement for shillings. In fact, people were just selling their excess capacity. The shillings stayed the same.”
Ruddick and Koru Kenya had planned to create a system that would allow for the exchange of Bangla-Pesa via mobile telephones before the end of the year, but any new developments will now depend on the outcome of the court case.
“As we already know, the roots of poverty are a lack of education, skills training, opportunities for production and distribution, and access to money and credit,” explains Stephen De Meulenaere, founder of the Complementary Currency Resource Center.
“If we can find an integrated solution that deals efficiently with each of those roots,” he says, “then we can say that the Bangla-Pesa and thousands of other currencies like it are a very necessary vehicle for people to put poverty behind them.”
Meanwhile, the community of Bangladesh is waiting for the central bank’s next move. Many have since stashed their notes away.
Paul is frustrated that the government is missing a chance to transform the lives of some of its most disenfranchised citizens.
“We lack jobs here,” he said. “Some people are prostitutes; others are thieves. If they use this project then they can lift up their lives. When the government knows that this brings a profit to our people, then we will be good,” added Paul.
“We are low value. We are not hurting anyone in the government.”●