Act: Inspiration

Cool Currencies – The Kenyan Bangla-Pesa

August 5, 2019

Rapid technological advancements in the developing world can really empower people. For example, the development of smartphones in the west has allowed Africans to leapfrog a need for landline telephone cables.

The Kenyan M-Pesa is an example of how people are using this tech to help the monetary system drastically change their lives. In the third and final of a series of articles on ‘Cool Currencies’ Kester McLennan, UoB Geography student and Bristol Pound Intern takes a look at Slum economics and the Kenyan Bangla-Pesa.

The M-Pesa is a mobile app that gives locals a basic mobile banking service allowing them to send and receive money on their phones. While this sort of rudimentary online banking service is completely taken for granted in the developed world, it is seriously empowering for many Kenyans. Consider a local villager for example. With the M-Pesa, she no longer needs to travel long distances to receive cash payments and will no longer lose large percentages of remittances through expensive service providers. Kenya is considered the Silicon Valley of Africa and is leading the continent in all things tech.

In addition to technology, Kenya is also leading Africa’s alternative currencies movement, being the first African nation to trial a community currency called the Bangla-Pesa. This edition of cool currencies explores its use since 2013 in the Kenyan slum confusingly named “Bangladesh”. The basic idea of the Bangla Pesa is to promote the slum to operate at maximum efficiency, meaning people have the potential to earn more. To understand how it does this, we must first understand how the economics of a slum can be when compared to more affluent places like Bristol.

Urban populations have skyrocketed globally and today represent more than half of the world’s population. A lot of the time in some parts of the developing world this means people migrating from rural settlements to more informal settlements in and around the city, in bids to find work. Unfortunately a lot of the time this leads to slums. Worldwide, at least 860 million people are now living in slums, a number that’s only on the up. In fact, in In sub-Saharan Africa, slum populations are doubling every 15 years

The main difference between slum economics and city economics is the volatility of their business.Sometimes businesses are booming and demand for goods and services is high. This normally coincides with times when workers receive their wages. However, in the same month, times of relative prosperity are often followed by extreme downturns where economic activity slows down. While similar cycles are seen in cities, the fact that there is so much poverty in slums means that there is no buffer and no surplus money to inject into the system to keep its economy moving.

Consider a bike operator who provides transportation services in the slum. Let’s say that in order for him to make enough money for his own subsistence, he’s got to make at least 25 trips a day. However during the part of the monthly cycle when the economy is slow, there may only be enough demand to make up 10 trips a day. What is our bike operator to do? Well, he’s not going to make enough money to buy groceries and put food on the table. In the same slum, there is a grocer facing similar problems of low sales, as people like our bike operator cannot afford their veg. Although she needs the services of the bike operator to transport her goods around the slum, neither do enough business during the slow periods so have to go without certain necessities. During these times of economic instability, the residents still have the goods and services to offer each other, however, nobody can afford to pay for it! This is where the Bangla Pesa comes in. 


The Bangla Pesa was introduced to help residents get the basic necessities during periods of business downturns. They receive the alternative currency as vouchers to meet their excess needs, allowing them to trade with others at a time when things would normally be stagnant. It allows a full circle of trade, where our bike operator can buy his groceries, and the grocer can afford to transport their goods to the market. This increases market efficiency, which basically means that people are operating closer to their full economic potential. People in the slum’s dependency on their national currency and the volatility it brings is lifted, trade increases, and the markets stabilise. People’s needs are taken care of even during the hardest months of the year.

A recent survey done by a Kenyan research institute provides us with some facts. See the full report here. Around 83 per cent of participants in the program reported that their total sales were increasing as a result of the vouchers, with an average of  22% of their sales income being Bangla Pesa. But what’s really cool is that their sales reported through Kenyan shillings have not changed from pre-Bangla Pesa times. This suggests the 22% of daily trade conducted with Bangla Pesa represents the additional sales arising from the local currency, and from their greater market efficiency. Overall, the use of the complementary currency appears to expand market exchanges in the slum. This basically gives people of the slum more spending power. The national currency becomes a tool for savings and investment and gives locals greater opportunities to leave the slum as,  for example, they can now afford to send their kids to school, give them an education and a chance at a better life.


Complementary currencies are a growing phenomenon in developing countries and although these stats lead us to believe that such complementary currencies help ease some of the constraints facing poor people, there are a lot of unanswered questions. Although the scheme appears successful on the local level, we wonder what the impact might be on the broader economy. For example, could such use of a localised currency exclude them from other communities and weaken their links to the wider economy? Especially at a time when slum populations already feel so isolated, outcast, and sometimes unwanted. Do currencies like the Bangla Pesa deepen the divides in our society? Or do they empower people financially and help them move towards a better life.

While local currencies more generally see such vast application and have the potential to help the lives of such diverse groups, there’s evidently a lot of questions still to be answered when it comes to the function of local currencies in slum settings.

Kester McLennan

Kester McLennan, UoB Geography student and Bristol Pound Intern

Tags: building resilient communities, community currencies, local currencies, new economy