Kenya slum embraces alternative currency

Eight years ago, Will Ruddick was doing graduate work in high energy physics at the University of Colorado-Boulder. In May, he was sleeping on the floor of a jail cell outside Mombasa, Kenya, with human feces everywhere and clouds of mosquitos overhead. Police had accused Ruddick of masterminding a radical secessionist terror plot.  

Ruddick’s actual crime was starting an alternative currency, issuing colorful vouchers to cash-poor businesses in Mombasa’s largest slum. After several months of postponed trials, thousands of dollars in lawyer's fees, a petition from the Hague and an intervention by Kenya’s attorney general, the charges were finally dropped.

And in November, Ruddick relaunched his currency, in partnership with the Kenyan government.

But money is simply an agreement that a particular thing is a medium of exchange. “There’s this monopoly by private banks and credit companies,” said Ruddick, “and it’s taken for granted by the entire world that they’re the only ones allowed to make credit.”

Ruddick thought there was no reason that a community of families and businesses couldn’t agree on something other than the Kenyan shilling. They could get some nonprofit backing, generate a large amount of this new currency, give it to the community and let its value multiply as members spent amongst each other. Productivity would spike, wealth would climb and hunger and hopelessness would fade, he imagined. And all without setting foot in a bank.  

“That’s why we’re in such crap around the world, because the banks have little contact with the people with the goods and services,” Ruddick said. “We want to invert the pyramid.”

In May 2010, Ruddick introduced the “Eco-Pesa” into three villages in Kongowea Location on Mombasa’s north coast. Businesses agreed to trade with the vouchers, and community members could earn extra by taking part in monthly service projects. Every month, people could give the vouchers back to the project’s donor, the Green World Campaign, an anti-poverty, environmentalist group, in exchange for cold, hard, government-sanctioned cash.

“They really got it almost instantly,” Ruddick said. “It was almost like a missing puzzle piece.”

The seven-month experiment was an overwhelming success. Participating businesses saw an average income increase of 22 percent, community members picked up 20 tons of trash and created three tree nurseries, according to Ruddick’s final analysis, published in the International Journal of Community Currency Research. Only $352 worth of Eco-Pesa were distributed, but it resulted in more than $4,000 worth of trading. Adding in supplies, training and implementation, the entire project cost the Green World Campaign less than $4,700.

Alternative currencies have proliferated in the U.S. over the last decade, hand-in-hand with the buy-local food movement. But the 2008 recession took the concept mainstream. As faith in the banking system bottomed out, Utah and Arizona officially recognized gold and silver coins -- the only alternative currency the Constitution permits states to issue -- and more than a dozen states mulled over the idea. Many economists, however, saw this as more of a symbolic indictment against the federal government and its piling debt than as functional day-to-day tender.

Last year, the Greek port city of Velos minted a local alternative for itself, as did Bristol, U.K. There are now more than a half dozen community currencies in California alone. And BerkShares, which have been circulating throughout the Berkshires region of Massachusetts since 2006, have generated international buzz. Last month, a Dutch nonprofit handed the project a $500,000 grant.

In the developing world, there have been a handful of experiments with alternative currencies. Since 1998, a community bank in a slum neighborhood of the Brazilian resort town Fortaleza has issued micro-loans to residents in a local currency. After 10 years, sales by local merchants had increased 30 to 40 percent. By 2012, the model had been replicated at 78 banks across 16 Brazilian states.

Then, on May 29, an article came out in a Swahili newspaper accusing Ruddick and the Bangla-Pesa users of seeking to undermine the Kenyan shilling in service of a secessionist terror group linked to al-Shabaab.

Police threw Ruddick in jail, along with Onyango and four other business owners, including a youth activist and a grandmother. Ruddick tried to give the police a PowerPoint demonstration about the program, but at the third slide -- “Community currencies are ubiquitous in Brazil these days!” -- the police confiscated his laptop as evidence. Ruddick slept on the floor of a cell that night, and the next day they were hauled into court.

In the following months, Ruddick and the community members spent more money on bail, lawyers and fees for bureaucrats to re-find their files, which mysteriously kept getting lost, than the cost of entire Bangla-Pesa program. Ruddick’s passport was confiscated and then disappeared. The trial date was pushed back again and again. Ruddick’s Kenyan wife Jacqualine Kiuwa had also just given birth at time.

“The trying moments have resulted in our six-week-old daughter having little parental care,” she told The Standard.

Since then, Ruddick has been actively courting local politicians and discussing the project with Kenya’s central bank. In late November, the currency was officially relaunched.

At the ceremony, Badi Twalib, a member of the Kenyan parliament, posed for photos, holding a giant Bangla-Pesa mock-up. Community members performed dances and songs and recited poetry. The speaker for the Mombasa county assembly was there, as was the chief of police. Ruddick said he’s received a unanimous request from government representatives to replicate the Bangla-Pesa in other parts of the county.

With a terrorism investigation and the specter of a prison sentence, the last six months have been trying for Ruddick, his wife and newborn child. But at least it’s become much easier to explain the concept of his currency, as he tries to expand it.

“If anyone hadn’t heard of Bangla-Pesa in Kenya,” said Ruddick, “they have now.”