Dec 2 9:00 PM

Kenya slum embraces alternative currency

Badi Twalib, a member of the Kenyan parliament, receives a ceremonial note of the community currency Bangla-Pesa.
Will Ruddick

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.

An enormous waste

A Bangladesh shopkeeper points to the sticker that shows he accepts Bangla-Pesa.
Will Ruddick

Five years ago, Ruddick, then 29, came to Kenya as a math and science teacher with the Peace Corps. But he quit in frustration after a year. “I met the brightest students,” he told America Tonight, “but the chance that they were actually going to get a job in a country like Kenya was slim.”

He was maddened by what he saw as an enormous amount of wasted human capital: the bike taxi drivers, who could manage 30 passengers a day, but got three; the families that are bankrupted by school feels every January, grinding local economies to a halt; the kids who do nothing all day.

In 2008, Kenya’s unemployment rate was 40 percent, according to the CIA, one of the highest in the world. The country's GDP per capita last year was $1,800.

“You first get here, and you’re just overwhelmed by the amount of people who are idle,” Ruddick explained. “There are women who are doing work constantly everyday, supporting huge families. At the same time, you have millions of idle teenage youth, postsecondary youth, who have no idea what to do with their lives.”

As a physicist, Ruddick has been trained to break things down into their most basic parts. And he broke down Kenya’s chronic underemployment and poverty down to credit. The people in the poor communities around the Kenyan capital had plenty of goods and services to give, but lacked the money to buy them from each other.

A local businesswoman who sells samosa for Bangla-Pesa.
Will Ruddick

A missing puzzle piece

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.

A movement

Two Depression-era alternative currencies, or "scrips."

Community currencies have popped up through history in cash-tight times. They ballooned in Japan after the country's crash in 1990. When Argentina's unemployment spiked at over 20 percent in 2002, 7 percent of the population was trading in the homegrown mint créditos, according to a Harvard University analysis.

The Great Depression was the golden age for alternative currencies in the U.S., but the oldest one still in circulation is the Ithaca HOUR, created during the recession of the early 1990s. Its founder Paul Glover was frustrated that so many of his neighbors in Ithaca, N.Y., were underpaid and underemployed, and he hoped to stimulate neighborhood sales.

But Glover also believed a local-money system would be fairer and greener. "We printed our own money because we watched Federal dollars come to town, shake a few hands, then leave to buy rainforest lumber and fight wars," Glover wrote on his website.

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.

A threat to national security

Bangladesh, Mombasa's largest slum.
Will Ruddick

Inspired by the success of the Eco-Pesa, Ruddick decided to think bigger. He selected Bangladesh, Mombasa’s largest slum. The community of around 8,000 people ballooned because of the factories and industries in the area. The residents don’t own their land, the pay is lousy and when those industries need less labor, the men stop bringing shillings home, causing the slum’s whole economy to go into shock.

“Sometimes, I have maybe only 10 shillings, so I just work hard so I can feed these children and take them to school,” Emma Onyango, a 40-year-old widow who supports one biological child and seven orphans in the slum, said in a short documentary Ruddick made about the project. “Sometimes, I find that I don’t have a single shilling to save.”

Ruddick started talking with elders in the slum in December 2012, and the Bangladesh Business Network, a coalition of local enterprises, was soon holding workshops with colored paper in church basements and community centers. On May 11, 2013, the Bangla-Pesa went live, with 200 participating businesses, 75 percent of them owned by women. A local artist drew the pictures for the notes, depicting women doing typical jobs like grinding corn and sewing.

Women in Bangladesh, Kenya discuss designs for the Bangla-Pesa over lunch.
Will Ruddick

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.

Bangladesh community members gather for a workshop on Bangla-Pesa
Will Ruddick

“It was just super traumatic,” Ruddick said. “They lined us up, media cameras everywhere, calling me an American terrorist.”

“It was just like [I was] someone who had killed,” Onyango told a reporter with the Rockefeller Foundation. “They didn’t even tell us the charges.”

Police boss Joseph Muthee for the Changamwe constituency, where the Bangledesh slum lies, told the Kenyan newspaper The Standard in June that police had been pursuing all possible leads, "including a threat to national security." Ultimately, the group was charged with forgery, carrying a potential prison sentence of seven years.

Ruddick protested that the Bangla-Pesa isn’t meant to impersonate or replace shillings, but to simply serve as a complementary currency, for when there aren’t enough shillings around. “People really, really still use Kenyan shillings,” Ruddick said. “The idea is counter-cyclical. When there are lots of Kenyan shillings, they don’t use Bangla-Pesa.”

Community members hold up a sign mapping out the participating businesses.
Will Ruddick

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.

The comeback currency

A member of the Bangla-Pesa business network.
Will Ruddick

But Ruddick had some connections in high places. The President of the International Reciprocal Trade Association and a representative from the United Nations Non-Governmental Liaison Office appealed to the Kenyan authorities to drop the charges. The Hague submitted a petition signed by more than 200 academics, practitioners and policymakers connected to the community currency movement. His plight was even forwarded around the inboxes of Burning Man enthusiasts across the world. (Ruddick is a longtime "burner," and in 2008 started a program to teach street kids around Mombasa how to poi, or fire dance, a mainstay at the Nevada festival.)

It didn't take long for Kenya’s attorney general to intervene, and the country’s director of public prosecutions plucked the case from the local prosecutor and took it straight to the Kenya Revenue Authority. As it turns out, Ruddick’s slum empowerment project was completely legal. The charges were dropped in August.

“At that point, there was a lot of embarrassment,” Ruddick said. “Obviously, we weren’t terrorists in any way.” 

At the Bangla-Pesa relaunch, the chief of police poses with a mock-up of the currency.
Will Ruddick

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.”



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