Sarafu-Credit is an interest-free community based credit system used by over 1,200 businesses and 20 schools (in 2017). Several local currencies in Kenya, such as Bangla-Pesa, Lindi-Pesa and Gatina-Pesa, belong to the system.
These currencies are used exlusively in specific localities. They are complementary to the national currency, forming a stable medium of exchange when the Kenyan Shilling (wiki ) is lacking, which is often the case in the respective neighborhoods where the currencies are used. All of them are located in informal settlements or slum areas.
The full name is: Sarafu-Credit, Grassroots Economics’ Kenyan Community Currency program. Sarafu means 'currency' in Kiswahili.
# Aspirational Goals The goals described are somehow contradictory: - improve living standards and help the local economy by - creating stable markets based on local development and trust - provide access to interest-free credits - providing a mechanism for communities to "mobilize under-used resources" for satisfying basic needs such as accessing food and paying school fees, financing basic environmental and health services - become more resilient to changes in the market and other risks
# When did they start? Sarafu-Credit has been developed by a Kenyan-based foundation called Grassroots Economics (html ) and is being implemented since 2010. In 2017 five local currencies were participating
# How does it work?
A network of businesses, schools, self-employed and informal sector workers issue their own vouchers for social and environmental services and to give interest-free credit to the network members. These vouchers circulate in the community and can be used at any shop, school, clinic or cooperative businesses.
Peer-Governance wise it is a network model, they Rely on Distributed Structures.
1. Local goods and service providers are brought together into a network and are legally registered as a Community Based Organization (Chama) or Cooperative (SACCO).
2. This cooperative develops or acquires a shared businesses, such as a factory, wholesale shop or bus.
3. Inventory and profits from these cooperative businesses form the basis for a voucher issued as a Community Currency. Each member is guaranteed by other members for an initial amount of credit and the community currency is also used for social service work – like tree planting, employing local youth for waste collection and road maintenance.
4. Business owners within the network trade both in Kenya Shillings and Sarafu-Credit. The community currency circulates around the community helping to connect local supply and demand for people who lack regular access to national currency.
Credit acts as a strong buffer to market instability even during the worst economic times, Grassroots Economics
5. Community Currency holders may also use any excess to purchase cooperative business inventory.
For example, a mother without sufficient Kenyan Shillings can pay for her child's education, by getting a credit based on what she offers in Community Currency. A school receiving the credit can use it to help pay for school fees and increase teacher’s salaries. The teachers can use the vouchers to pay for cleaning services from the mother or any goods and services in the network and it can keep flowing in a virtuous cycle.
Community Currencies are central to the global commons movement. With long-term social and financial impacts for low income communities. They are distinct from the wider field of complementary currencies because they have the collateral of cooperative assets of the communities that use them. Grassroots Economics
# Provisioning in Commons
Sarafu Credit systems haven't been designed to Keep Commoning & Commerce Distinct, to Relationalize Property or to Finance Commons Provisioning. They are there to set up a local market to make people more independent from the formal economy.
One can think about them as a way to enable poor people to Trade with Price-Sovereignty and to Protect & Extend Value Sovereignty in communities and . On the one hand, because services provided and simple local products made by the poorest are valued and secondly, because the currency emitted by the communities represent community assets.
For instance, the bills above go into circulation first in a rural area near Mombasa, Kenia, with up to 4000 farms, 10 schools and 30 local shops. They represent a maize mill as well as a community market place.
The graphic below gives an idea how the currency has the effect to Set Semi Permeable Boundaries. The Community Currency Vouchers issued for mutual credit (2.) enter the Local Circulation of Currency sphere (3.). This circulation takes place exclusively INSIDE this sphere, within the communities' boundary.
Adequate community involvement is key for the success and sustainability of local complementary currencies. 'Community Involvement' is therefore one of the categories of the Community Currency Standard html . The self-monitoring process based on these standards is basically a process that invites the communities to Reflect on Your Peer Governance.
Questions such as the following form part of the reflection: - At what stage is the greater community involved? - Are all parts of the community represented? - Are community members an integral part of the creation and maintenance of the program? - Can the impacts of the program be felt by the greater community? - Is there adequate local administrative skills, and do these administrators have the backing of the community? - How involved is the community in the decision making process? Assure Commoners' Consent in Decisionmaking:
Economic Viability - How much local vs non-local goods and services are part of the network? How dependent is the community on imports and exports. How dependent is the community currency on official money? - Is there a critical mass in number and type of goods and services being offered for fluid transactions to take place? - What are all the setup and maintenance costs and how will they be paid for? How much of these costs can be paid in the community currency vs the National Currency?
Honor Transparency in a Sphere of Trust: Transaction and Information Security - How secure is private
Members of the network Ritualize Togetherness and Share Knowledge Often & Widely, as there is not only an increased customers and stock turnover. Members are also invited to events facilitated by the networks, such as trainings, community market days or networking events.
Grassroots Economics provides a 5 days Certificate Course with a focus on practical implementation and management of community currencies including grounding in Community Currency theory, implementation and management with a focus on practical understanding and skills.
Self-Monitor & Apply Graduated Sanctions: Grassroot Economics provides yearly auditing, renewal and certification of the community vouchers based on these Community Currency Standards html . "Loss of trust, buy-outs by collectors, hoarding" form part of the types of disasters and worst case scenarios identified by the network.
Emulate & Then Federate. Sarafu Credits are designed to be emulated, as they are bounded by the boundaries of a neighborhood. But all neighborhoods are encouraged to design there own currency, therefore, communities have to ask themselves "If a neighboring community starts a program in your region will the two currencies be exchangeable? Will they have the same value?" By 2017, in South-Africa, two community currencies have taken inspiration from the Sarafu-Credit model: the K'Mali and the Berg-Rand.
# See also