Kenya slum dwellers battle COVID-19 downturn with virtual currency

NAIROBI, Jan 20 (Thomson Reuters Basis) – Sitting down on a small bench at her shop in a Nairobi slum, Grace Wangari sifted as a result of a handful of grains that a ready purchaser experienced just requested.

As she poured them into a browsing bag, the consumer scrolled through her cell phone to pay out for the purchase.



KIBERA SLUMS, NAIROBI, KENYA - 2021/01/11: Beatrice Kakau, a 28-year-old mother with her child stands outside her small Wines and Spirits shop made with recycled Polypropylene sacks in Kibera slums.


© Donwilson Odhiambo/SOPA Pictures/LightRocket through Getty Images
KIBERA SLUMS, NAIROBI, KENYA – 2021/01/11: Beatrice Kakau, a 28-yr-old mom with her kid stands outside the house her smaller Wines and Spirits shop produced with recycled Polypropylene sacks in Kibera slums.


Generally, Wangari would have been paid out in shilling notes, Kenya’s tough forex, but in some ways she most well-liked the electronic payment that was right away transferred to her mobile phone.

“I am pleased with this transaction because there is no possibility of losing my stock to conmen or men and women who have come to take items on credit,” stated Wangari, a center-aged trader in Mukuru Kayiaba, 1 of the city’s poorest slums.

The transaction took place by Sarafu, a blockchain-centered neighborhood forex that is encouraging countless numbers of Kenyan slum dwellers pay for foodstuff, water and sanitary objects as they fight via the COVID-19 economic downturn.

Every 7 days, family members are issued with virtual vouchers well worth 400 Kenyan shillings ($4), which they can use to buy important items, said Roy Odhiambo, an innovation officer at Kenya Crimson Cross Culture (KRCS), one of the teams guiding the project.

Suppliers can then ship the vouchers to Grassroots Economics, the Nairobi-based mostly social business that co-developed Sarafu (“coins” in English) with U.S.-based mostly engineering organization BlockScience, and redeem them for funds.

Odhiambo said a lot more than a 3rd of the sellers in Mukuru are currently signed up to the venture, which launched in 2019 with the aim of assisting battling people get keep of everyday essentials without having worrying about obtaining income on hand.

Now the undertaking is furnishing a lifeline for family members making an attempt to cope with the financial ache of the pandemic, he observed.

Antony Ngoka, a discipline coordinator with Grassroots Economics, explained countless numbers of slum people, who are mostly informal staff, have dropped their jobs through the pandemic.

Not able to get financial loans from traditional banks, many become quick prey for personal loan sharks, he additional.

But, blockchain can assistance poor Kenyans keep away from economic exploitation, said Nelson Ochieng’, a rights activist and social worker in Kibera, Nairobi’s premier slum.

“Blockchain can foster regional trade by tapping resources that are overlooked by mainstream organizations. It also improves degrees of rely on amid battling communities,” he stated.

Protected AND Transparent

In Mukuru Kayiaba slum, about 5.5 miles (9 kilometres) absent from Nairobi town centre, some 4,000 residents have registered with Sarafu, in accordance to Odhiambo of KRCS.

Created with funding from global authorities donors, the platform can make an common of up to 1 million Kenyan shillings ($9,0000) in day-to-day transactions, Odhiambo said.

Not like funds help, which can be spent on everything, Sarafu can only be used to pay back for essentials these kinds of as foodstuff, well being materials and academic methods, he described.

And, he included, since the platform operates on blockchain, meaning all transactions are tracked and clear, that makes sure folks are paying out the money only on requirements.

Odhiambo reported KRCS is at present performing with the Danish Purple Cross and Innovation Norway, the government’s enterprise enhancement agency, to roll out Sarafu across Kenya.

But, seeing the platform as a threat, financial loan sharks are using political and economic manipulation to lure Kenyans away from it, explained Ochieng’, the rights activist.

Casual lenders recruit people to distribute rumours that blockchain is a Ponzi plan with no backing from neighborhood leaders, a tactic that has properly stifled the uptake of other blockchain-primarily based assignments in the previous, he explained.

“The goal of financial loan sharks is to divert men and women from innovations that are aiding them access fundamental solutions in the slums with no owning to pay curiosity,” Ochieng’ reported.

They also pull in shoppers by giving a lot increased sums than they can get through Sarafu, with exorbitant curiosity premiums, he additional.

Violet Muraya, who sells water in Mukuru slum, said casual lenders can offer financial loans up to 10 moments greater than nearly anything offered as a result of the neighborhood currency.

“When persons have emergencies and want big amounts of funds, they simply cannot use Sarafu. So, they go to loan sharks for assistance and close up being trapped in monetary slavery,” explained Muraya.

Odhiambo claimed the Kenya Red Cross Culture is functioning instruction and consciousness-boosting campaigns in places where by the undertaking has been rolled out, to reassure buyers that the system is harmless and fair.

“At very first there was resistance … mainly because of the propaganda. But the local community has acknowledged this cashless transaction for the reason that they know it is not some style of betting or personal loan facility,” he claimed.

‘NO 1 IS Heading TO Slumber HUNGRY’

At Isaac Makavu’s foods kiosk in Mukuru, shoppers lined up to buy his steaming rolls of baked flat bread, chatting about an impending Premier League soccer game and sharing amusing tales about their day.

Makavu stated Sarafu has helped people in his group stay away from eviction for the duration of the pandemic by making it possible for them to conserve their income.

Some occur alongside one another to pay each individual other’s lease via desk banking, a variety of financial savings scheme wherever a team contributes a set quantity of dollars each and every month and then takes advantage of that money to assistance associates who will need it.

Charities say evictions have been rife in pieces of East Africa in the course of the pandemic. In 1 instance in May possibly 2020, Human Legal rights View claimed extra than 8,000 persons dwelling in two Nairobi slums were being evicted from their households.

“But there have been no evictions in areas wherever Sarafu is being applied by slum communities because they were being ready to pay out their hire on time,” Makavu mentioned.

“No one particular is likely to rest hungry in this article due to the fact they have local community currency.”

($1 = 109.9000 Kenyan shillings) (Reporting by Kagondu Njagi, Enhancing by Jumana Farouky and Zoe Tabary. Make sure you credit rating the Thomson Reuters Basis, the charitable arm of Thomson Reuters, that handles the life of individuals around the planet who struggle to stay freely or pretty. Pay a visit to http://news.believe in.org)