The case of Sarafu-credits : Examining how a community currency can contribute to sustainable livelihood in informal settlements

Abstract: Residents of informal settlements (slums) are vulnerable to various disturbances; e.g. diseases spreading and fluctuations in food prices and local access to credits. The lack of credits derives from the continuous outflow of money from communities. This study examines a financial innovation called Sarafu-credits (SC) implemented in Kenyan informal settlements by the organization Grassroots Economics (GE). SC is a community currency (CC), more particularly vouchers only used within a network of micro-businesses, which aim to complement scarcity of conventional money. In addition, GE have initiated community activities, e.g. tree planting, trash collection, food gardens and cultural events, where residents can be paid in SC to improve the community socially and environmentally. This study examines the design and practice of SC, and the activities, using mainly semi-structured interviews with SC-network-members and GE key persons, to understand how a CC can contribute to sustainable livelihood. The concepts specified and general resilience are used to understand the links between SC and the various social-ecological disturbances facing slum-dwellers. The results suggest that SC-members who are actively trading with SC are able to increase their sales, savings and access to basic goods and services thanks to SC. The results also suggest the networks and community activities are strengthening social contacts in the neighbourhood, and constitute examples of how a CC can help finance management of local environmental problems, where SC paid for community services also support local trade. The identified challenges are related to local leadership, where trust, communication and consistency of rules are lacking. In one of the networks, the confidence in the usefulness of the currency is lacking, due to these challenges. GE have experimented with different designs where one successful innovation is the ability to exchange SC to conventional money at certain occasions, which seem to strengthen the confidence in SC.