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How African Digital Currency Innovation Found Roots in a Village

In Kenya, East Africa, a village digital currency is a hallmark of innovative digital finance coming out of Africa.

Michael KimanibyMichael Kimani
February 5, 2022
in Blockchain & Digital Currencies, Editorial, Technology
Reading Time: 8 mins read
Digital - Kongowea Village Mombasa

Kongowea Village Mombasa


Sarafu, a network of community-governed digital currencies running on a public, non-profit University led decentralised ledger system called BloxBerg (an EVM Ethereum blockchain), is cushioning communities in the face of corona recession as an alternative currency of settlement for the trade of community goods and services.

Since the first case of Corona, 18 months ago that preceded a post- corona economic household and micro-business cash crunch, Sarafu’s community currency network has reported growth, totalling USD 3 million in trade for 58,600 users across Kenya.

In the process, Sarafu or generally Community Inclusion Currencies have drawn the attention of humanitarian organisations like the Red Cross, WFP and UNICEF as partners to test community currencies and regenerative networks as a viable alternative to cash transfers and other poverty eradication tactics.

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Getting there, however, was no walk in the park. 

It took the strong will of a passionate outsider, a mzungu, working with a local community to take on systemic patterns of cyclical poverty and harsh critics with an off the wall approach.

Now, Grassroots Economics Foundation finds itself at the frontier of inclusive digital currency innovation in Africa as a role model for inclusive digital finance.

The Story of Will

As an ex physics graduate from the University of Colorado Boulder, Will Ruddick was trained to break complex systems into their smallest units. After teaching at Ribe Boys High School as a Peace Corps volunteer, he ended up in the informal settlements behind Kongowea market, one of Kenya’s slum communities. In Mombasa’s Kongowea district, Will witnessed first-hand the cyclical patterns of cash poverty and resource abundance. 

Every year, over 10,000 people and hundreds of micro-entrepreneurs underwent an economic shock that brought markets to a grinding halt because of a sudden drying up of the circulation of the national currency, Kenyan shillings, sometimes due to industry closure, crisis, or seasonality.

Almost as if choking and gasping for air, when there was not enough Kenya shilling notes or coins to circulate in the business network, the deficit of national currency choked the trade in the community rendering the community and its micro-entrepreneurs unable to exchange goods and services.

On occasion, traders who shared a history of trust turned to verbal promises as a means to settle the payment at a future date. These oral IOU credits worked fine between two traders, but word of mouth fell short and did not scale very well beyond two people.

“What would it take for a slum community like Kongowea to issue credit for its members on paper or digital ledger ?” Will pondered to himself.

The Pilot

So in 2010, Will gathered like-minded local leaders like Deborah Achieng, a local volunteer and approached the elders of the Kongowea community with a radical proposal to create a paper voucher to be used as a community inclusion currency for seasonal fluctuations.

The team recruited members from local enterprises to form a trading network, a self-governing community of micro-businesses who accepted to trade with each other using Eco-Pesa vouchers.

Seventy micro-businesses, 75% owned by women, agreed to sign up and accept the currency named Eco-Pesa, starting with 50 Eco-Pesa each. To qualify to join the network, a business owner had to invite four other businesses to guarantee a slot and payback if they would stop accepting Eco-Pesa.

Each Eco-Pesa voucher was backed by a cash pool of funds donated by the Green World Campaign, which fronted the initial reserves of the community currency. Every month, the business community organised events where the people would be paid in vouchers for public service work like waste collection or tree planting.

After redeeming all the vouchers for Kenya shilling in 2011, Eco-Pesa was piloted again in 2012 in the informal settlement of Bangladesh, still within Kongowea. 

Later that year, the coalition of local enterprises huddled into held workshops in the churches and community centres with coloured paper, pen and crayons depicting local landmarks on their newly minted voucher currency, Bangla pesa, available in 5/bp, 10/bp, 20/bp, and 50/bp denominations. 

Unlike Ecopesa, Bangla Pesa and subsequent currencies had no cash reserves. The Bangla Pesa were vouchers only backed by the goods and services of the members.

When the project went live in early 2013, there was a noticeable increase in everyone’s resources and ability to spend suddenly.

After a six month review, 83% of participants saw an increase in their total sales due to the vouchers. Bangla-Pesa represented an average increase of 22% of total daily sales over a baseline level, compared to no increase in sales using Kenyan shillings. This increase might not have materialised without the program.

Bangla Pesa allowed people to keep daily spending within the community and save their national currency for transactions outside the local community like transport fare, school fees and larger businesses or government bodies.

It wasn’t long before word of their success landed on the wrong ears. 

Police authorities had got wind of the project from a journalist after Taifa Leo, a local newspaper, ran their story, mistakenly affiliating them with cessation terrorist groups to replace the national currency.

Police arrested Will, and five of his associates hurled them in jail on treason charges and later forgery.

It took the intervention of the business, donors and international community to get the prosecutor to review the case file after three months of a mysterious disappearance of their file.

Director of Public Prosecutions Keriako Tobiko moved to dismiss the charges, saying from the facts of the case, there was no offence under the Kenya Revenue Authority or Central Bank of Kenya Act. Tobiko argued for the court to throw out the issue.

Incredible as it was, the damage to Bangla Pesa’s public perception was irreparable, and Bangla Pesa had no choice but to rebrand to Sarafu.

Since 2010, over a dozen communities have incorporated Sarafu as a paper voucher under the Grassroots Economics (GE), a non-profit foundation directed by Shaila Agha, a native Kenyan.

From running its programs, GE found that Community Inclusion Currencies (CICs) worked at a scale of 100 to 200 businesses but had trouble expanding beyond design constraints such as racking up printing costs and inability to cross-exchange local currencies from different communities. 

GE ran a pilot in 2018 to switch from paper to feature phones with no internet. Using Sarafu, GE put the digital ledger on a public blockchain – instead of paper – for what was, at the time, 1,000 businesses and 20 schools across Kenya.

As a result, today, over 50,000 people across Kenya have adopted Sarafu to trade their basic needs with each other. The model is also widely used in Nairobi’s slums and even in refugee camps like Kakuma. 

Since the first reported case of Corona in May 2020, when Kenya’s economy turned, Sarafu’s network has reported growth, totalling USD 3 million in trade for 50,000 users across Kenya.

The Sarafu success story has inspired humanitarian organisations like the World Food Program, UNICEF, GIZ and Red Cross to leverage the use of alternative currencies as a viable alternative to cash transfers. 

Encouragingly, it is clear that African digital currency innovators seeking inspiration for launching Web3 projects need to look no further than home. 

The opinion editorial is part of a Web3 education content series curated by African Tech Roundup, resourced by the Celo Community Fund. Opinions expressed by the author do not necessarily reflect the views of the African Tech Roundup or the Celo Community Fund.

About Michael Kimani

Michael Kimani is a Kenyan blockchain enthusiast, data wrangler and entrepreneur based in Nairobi. Michael has advised numerous Africa-focused blockchain projects and is currently co-founder at airtime digital money marketplace, Fonbnk, where he spearheads growth for African markets. Follow Michael on Twitter @pesa_africa.

ALSO READ; Opinion: Why Facebook’s New Cryptocurrency Is a threat to Mpesa and Safaricom


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