Complementary currencies and entrepreneurship: Sustaining micro-entrepreneurs in Kenyan informal settlements

Abstract

With over a billion people inhabiting informal settlements worldwide, micro‐entrepreneurs are vital to local economies. Complementary currencies have emerged as tools to sustain these entrepreneurs, providing alternative trading and payment options. This study explores the daily strategies of micro‐entrepreneurs in Kenyan informal settlements using the digital complementary currency Sarafu. Our findings reveal that complementary currencies act as external enablers, transforming the local economies by enhancing payment systems, influencing supply and demand, and altering pricing structures. Significantly, when integrated with savings groups, they provide financial inclusion and collective purpose, strengthening local business networks. This research enriches our understanding of the mechanisms micro‐entrepreneurs deploy to leverage complementary currencies for growth, emphasizing the need for further exploration into the role of complementary currencies in supporting entrepreneurship.This study explores how a complementary currency called Sarafu benefits micro‐entrepreneurs in Kenyan informal settlements. Sarafu acts as catalysts for entrepreneurship by boosting local markets and empowering community cooperation. Our findings reveal that micro‐entrepreneurs use Sarafu to adapt to the unique challenges of informal economies. They employ smart strategies like flexible pricing and inventory management to keep Sarafu flowing smoothly. Sarafu serves a dual purpose: a means of immediate spending and a tool for saving and growing capital. It also strengthens local business networks and creates a sense of collective purpose. For practitioners, this study suggests using complementary currencies to support local business networks, promote collective savings, and align the issuance of complementary currencies with local assets to foster sustainable entrepreneurship in informal economies.