How Sarafu, a community inclusion currencies is keeping families in Nairobi’s informal settlements afloat

Graffiti depicting the Kayaba Sarafu network

Graffiti depicting the Kayaba Sarafu network

By Edna Laboso

Judith Ndege runs a food business from her house at Mukuru Kayaba informal settlement in Nairobi City.  She cooks vegetarian samosa- a local pastry which can be stuffed with different grains and vegetables.  To make the pastry, she uses baking wheat four, cooking oil and green grams.  All her ingredients have to be bought from different retailers in the area.  A few metres from Judith’s house is Wangari’s retail shop which stocks all kinds of cereals including the grains that Judith needs to cook her pastry.  Both Judith and Wangari are members of a community economic support group called New Maandazi, comprising of women who are mostly small traders.  The groups are known locally as Chamas that thrive on table banking by allowing members to borrow money at repay with interest.

Graffiti depicting the Kayaba Sarafu network
Graffiti depicting the Kayaba Sarafu network

Since 2018, Judith and Wangari together with other women have been using a Community Inclusion Currency called Sarafu as a complimentary medium of exchange to the Kenya shilling in the group and in their businesses as well as for personal use. As business owners, belonging to a group has helped them benefit from using the Sarafu especially in times of scarcity of money.  Judith gets her grains from Wangari using Sarafu and then sells samosas to her clients through the same medium (each for 5 Sarafus) which enables trading and circulation of the token in their network.  Blockchain technology in this case becomes a secure ledger system in which the three nodes in the exchange of goods are linked.

A brainchild of Will Ruddick who arrived in Kenya as a volunteer, Sarafu is a blockchain-based token using mobile technology to stimulate and sustain economic activities in low income areas in Kenya.  “I came here with the Peace Corps as a volunteer schoolteacher and began working in informal settlements. Seeing a lot of people without money – but with goods and services they could be trading – creating a community currency just made sense,” he explains.

He adds: “I had studied similar systems working in Switzerland, US, Japan and Brazil. When I presented what was done in other countries, local businesses chamas and elders understood the concept and designed a way to carry to implement it. This started in 2010.”  Will founded Grassroots Economics Foundation to work with communities through alternative economic models, including Sarafu.

The system uses Unstructured Supplementary Service Data (USSD) to enrol users and complete transactions between them making it available without internet connectivity.  An individual sends the USSD code *384*96# to be registered into the system and gets an initial 50 Sarafus which are equal to Ksh50.  When an individual needs access to a good or service, they send a request to their counterpart through the same code.  Community Inclusion Currencies are regional means of exchange that supplements the national currency system.

Sarafu USSD interface
Sarafu USSD interface

Ruddick notes that, “the use of blockchain technology is all in the backend of the application and an easy user interface. Usage is further made simple because of existing knowledge of using mobile money technology Mpesa in Kenya at all economic levels.”

As a community based currency, Sarafu circulates in close geographical areas as well as individuals who know each other well to create the network of users and traders as well as a sense of trust.  In Wangari’s case as a retailer, it means that she cannot replenish her stock using Sarafu from wholesale stockists of her wares.  Judith on the other instance also has to purchase cooking oil and baking floor from traders out of the networks.  This is a main slowdown to complete use of the token in the community as the wholesalers are not from within, meaning that money has to be used at this point.

In her case, Wangari only accepts 10 per cent payment through Sarafu and 90 per cent through Kenya shillings (One Sarafu token exchanges for one Kenya shilling- approximately 0.0092 USD.)  By doing so, she is able to serve all her customers using both mediums.  She also uses the Sarafu to purchase household foodstuff and water from other members of the community enrolled in the scheme.  “Using both Sarafu and Kenya shillings has been helpful for my business especially during the lockdown when most people were out of work with little or no money to spend on basics.  When someone comes with Sarafu, it means he/she will not sleep hungry and I too will have my business going.” Wangari explained during an interview at her shop. “With others buying using Kenya shillings, it means that I can get more stock from the wholesalers who don’t accept Sarafu,” she adds. Judith must also sell her pastry for both Kenya shillings and Sarafu to strike a balance between the two mediums.

Wangari at her retail shop talking about using Sarafu to trade
Wangari at her retail shop talking about using Sarafu to trade

So far, the initiative operates in Mukuru, Kibera, Kawangware informal settlements in Nairobi and Kisauni in Mombasa.  There is also an organic farmers’ group in Kilifi (Syntropic Agroforestry), using Sarafu for farm inputs, labour, and sale of produce among network members.   At present, there are 56,000 users and trade volume of USD 3 million (approximately 327 million Kenya shillings).  Local cooperative businesses are supported by donors who back the currency with goods and services.  A two per cent holding fee per month for unused tokens is deducted and replenished back to the network through subscriber rewards.  The Kenya and Danish Red Cross organisations used the system to offer COVID-19 relief in the communities and continue to work in partnership with Grassroots Economics to further develop the concept.

Not all traders in the Sarafu networks at Mukuru Kayaba are lucky enough to use the token frequently and consistently in their businesses.  Jennifer, a hair dresser who operates a small salon in the area belongs to a group called Shalom.  She is a subscriber and user of the token but can only use it for her personal basic needs like water and foodstuff sold by other members and users.  The biggest obstacle for her is that all necessities for her work in the salon especially hair extensions and cosmetics are sourced from suppliers completely out of the network. “I rarely charge for my services using Sarafu because it makes it hard to access my stock from wholesalers.  This becomes limiting if a customer only has Sarafu and needs my services but sometimes I offer partly with Kenya Shillings,” she explains during our interview at her business premise.  The same applies to Elvis Odhiambo who runs a barbershop, phone charging and movie shop and leads another group called Afya.  He trades 50 per cent in Sarafu and 50 per cent in Kenya shillings to make sure that he can have money to get necessary supplies for his shop from distributors.

The challenge here is to have distributors and wholesalers join the Sarafu networks so that retailers can source and sell their goods using the same medium. Ben Okoth from Kenya Red Cross said in partnership with Grassroots Economics, they are in discussion with various manufacturers and distributors of Fast-Moving Consumer Goods and other necessary goods for businesses in the Sarafu networks, to support the initiative. This will ensure that retailers can access the goods using Sarafu and also expand the use of the token to more players.  More businesses joining the networks also means that the use of Community Inclusion Currencies can cross the present geographical borders and bring more users into the networks stimulating economic activities especially at low income and informal levels.

Elvis attending to a customer at the barber shop
Elvis attending to a customer at the barber shop

As most crucial services like education require cash money, many people in the communities get sceptical about selling their goods in exchange for Sarafu.  Such issues according to Grassroots Economics still need a lot of sensitisation and support to communities to get ways to entrench the currency as a supplement to the Kenya shilling.

“Seeing a Mama mboga able to pay for school fees and the school able to pay a carpenter and the carpenter able to buy mboga.  These basic trade loops help create a stable market when Shillings are scarce,” said Ruddick.

According to, in 2019, roughly 15 million individuals were engaged in the informal sector in Kenya. This increased from 14.2 million in 2018. Wholesale and retail trade, hotels, and restaurants are activities with more informal employees (around nine million) in the country. Kenya has a large informal sector that covers mainly semi-organised and unregulated activities.  This is the typical scenario in Mukuru Kaiyaba and other informal settlements in Nairobi and other urban areas in the country.  Community Inclusion Currencies like Sarafu and other community focused initiatives like chamas are the lifelines of livelihoods in these areas.  These community groups ensure that members get low interest loans as well as emergency cash and even foodstuff.  In the case of New Maandazi, which Judith and Wangari belong, they also have a kitchen garden with vegetables which one member get at every harvest and pays with Sarafu which go to the group account.  This pool of funds is what sustains the lending kit as well as shared at the end of each year among members.

Shaila shares that, the Community Inclusion Currency initiative has fitted easily in the level of communities they work with because most are already involved in community-based trading and belong to community savings groups (chamas).   “People in these communities are already trading amongst themselves using their own credit systems.  You find a Mama Mboga (grocery lady) exchanging her wares with the cobbler to have her shoe mended and the cobbler eating food in a kibanda (open air restaurant) and pays with his service to mend shoes for the owner,” she said. Shaila gives another example of how during community sensitisation, almost all members would stand up when asked if they owe anyone a debt or if owed as well.  Persistent debt cycles cripple local economies and cause a lot of conflicts in a community.  “Sarafu has bridged the gap by giving these members a way to offer credit without falling into debt,” Shaila emphasises.


As a technological and economic concept, Sarafu and its system has also faced legal and other setbacks in the past and continues to operate in an uncertain regulatory environment in Kenya.    At the initial stages of introducing Community Currencies, there was an instance where the founder and some community members who were working to advance the project were arrested and arraigned in court.  They were charged with money laundering, funding terrorist groups and forgery.  The currency had been initiated in an informal settlement called Bangladesh in Mombasa in the coastal region of Kenya and named Bangla-Pesa.  The case was however dropped since there are no clear laws in Kenya that regulate the use or trading of virtual currencies.

According to a report in the Legal Alert publication, the Central Bank of Kenya issued a warning thus : ‘This  is  to  inform  the  public  that  virtual currencies  such  as  Bitcoin  are  not  legal tender  in  Kenya  and  therefore  no  protection exists  in  the  event  that  the  platform  that exchanges  or  holds  the  virtual  currency  fails or  goes  out  of  business….  The public should therefore desist from transacting in Bitcoin and similar products.’   The report further highlights the uncertainty and lack of clarity in regards to virtual currencies:  “This warning falls short of making trading of virtual currencies illegal, as countries such as China, Bangladesh, Nepal, and Kyrgyzstan have done, but it does not legitimise it either. Notwithstanding this disapproval from the CBK, Kenyans have continued trading and holding cryptocurrencies and the country is now estimated to hold more than KES 163 billion worth of Bitcoin, equating to 2.3% of Kenya’s GDP.”

Similar sentiments are shared by Grassroots Economics founder.  “It is a legal gray area, and because of that it creates a lot of fear – because people don’t know what the government will do in the future,” he said.  But as something that has proved to work so far and assisted many low income communities, he has devised a proposal that he wishes the government and other authorities could cooperate to make the use of the Community Currencies formally entrenched into the economy.  He continues to say that, “the goal is for businesses everywhere to be able to create their own credit systems and build local economies but the challenge is just getting ordinary folks to try it and build their own networks of trade.”

Echoing the sentiments to move the concept from donor funding to include businesses and government, Shaila adds that, it would be a great step if government could, for example, use tokens to distribute services such as school supplies for public schools.  In such instance, the tokens can only be redeemed for books to mitigate misuse or diversion of money which is rampant in the public sector.  In this way, the government plays the part of offering credit for the use of Sarafu by more businesses in this case book sellers and publishers.

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