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Local economies running on digital currency?: A Kenyan village leads the way

Sarafu is a community inclusion currency (CIC), which is intended to be used alongside government-issued money to make payments at a local level. The idea is that CICs can bolster small businesses by keeping daily spending within the community, which allows people to save their national currency for transactions with larger businesses or government bodies.

Sarafu was created by Grassroots Economics (GE), a Kenyan nonprofit. GE experimented with paper currencies at first, but found that printing costs were limiting their use. In 2018, they went digital with blockchain technology.

Previous attempts at financial innovation to benefit poor communities have not always been successful. In fact, they were often counterproductive, and ended up hurting the very people they are meant to benefit by pitting debtors against each other.

What sets Sarafu apart is that it depends on trust and strong community ties. How it works is by individual members of the community being part of a local savings group.

Cryptocurrency’s revolutionary potential, its proponents say, lies in its ability to provide an alternative to traditional banking. For the many Kenyans for whom credit is not easily accessible — or when it is, offered under predatory conditions — CICs are a way for people to access and issue credit while avoiding banks altogether.

The parallels with India are striking. More than 83% Kenyans work in the informal sector, depending largely on daily wages and having little to no savings. In this Kenyan community, CICs proved to be especially useful during the pandemic-induced lockdown. Small-time businesses continued production but had few takers for their goods, and therefore, little cash in hand. CICs, a blockchain based solution and a digital currency, have been game-changers for them.

“One of the most significant strengths of these blockchain-based digital currencies is that they can be adapted to ‘value’ essential workers who often go unseen, at least in economic terms,” says Will Ruddick, founder of GE. Read the full article at to learn how CICs work.


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