The Sarafu Network: Using Blockchain in Development

Sarafu Network is a Community Inclusion Currency (CIC) from Kenya that is used by the Kenyan Red Cross as part of its basic income program.

There are underserved communities worldwide that exist in a situation where their national currency does not circulate as widely in their locality. To be precise, these communities suffer from a lack of liquidity. Every community has individuals that possess different skillsets. For example, a community will have individuals that are farmers, shopkeepers, builders, tailors and so forth.

For a local economy to flourish, such community members need to exchange their goods and services with each other, and this exchange typically requires the use of national currency as an intermediary. Low liquidity in a community causes internal trade to seize up and for the local market to become unstable. If there is little national currency available, the market will stagnate. Furthermore, the community is denied the growth opportunities that would arise from the smooth exchange of goods and services within that community.

Faced with this issue, aid agencies have increasingly turned to direct cash payments to community members. However, the sustainability of this approach has been called into question because these cash injections do not circulate for long in the targeted community. CICs propose to solve this problem by operating as a medium of exchange that can only be used within a certain community or network. In addition, they are designed with certain incentive structures that encourage holders to spend the currency instead of hoarding it.

Sarafu Network is a Community Inclusion Currency (CIC) that was created in Kenya. It is the outcome of eleven years of research and development by Grassroots Economics. As of writing, the network currently has over 58,000 users, roughly 50% of which are rural.

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