18 May 2015: The community hall in Kokstad has been filling up with a crowd of the curious, murmuring and simmering like a pot coming to the boil. They’re here to hear Will Ruddick, a bearded American with close-cut hair, help the FLOW team to explain a strange new concept: a currency that will belong to Kokstad alone, a complementary currency. Helping Will with the translation is Aphinda Ndlobeni, affectionately known as AP, because most of the audience is Xhosa-speaking. Four women and a man have volunteered for an evening of currency simulation, where they will play a fun game that explains how complementary currencies work.
But Will is confident; he’s done this before, with people in Kenya.
‘Let’s say you want to trade chickens for vegetables,’ he says. ‘How would you do that? ’The crowd gets involved as a robust round of trading follows, where the volunteers discover that fixing a value for a chicken is not so easy. Now Will hands each volunteer vouchers, each of which has a specific value.
‘First they bartered; then they used [the vouchers], and they saw how much easier it actually is to use currency instead of bartering,’ John Ziniades, FLOW co-creator and implementer, explains. ‘Once the rules had been explained, there was a sudden frenzied burst of excited conversation and activity as the group traded vouchers onstage. Will, of course, couldn’t understand a word and just had to step back and surrender to the process.’
This May evening in Kokstad was the first of several preparing the local community for the July launch of the K’Mali, Kokstad’s very own complementary currency (‘imali’ means ‘money’ in Xhosa, the most common indigenous language spoken in Kokstad). A parallel process had already entrenched the concept in the Bergrivier region of the Western Cape, where the launch of the BRAND currency (‘B’ for Bergrivier, coupled with the South African Rand) was just days away.
Complementary currencies, which sit alongside national currencies, have emerged in different contexts to address objectives that traditional money cannot. In particular, community or local currencies (which are a subset of complementary currencies) are introduced and used by a designated community within a particular geographical area. A surprising number across the world (the Complementary Currency Research Group estimates the total number to be over 3,800) are meeting a number of diverse needs in countries such as Brazil, Germany, UK, France, Japan, Switzerland and the USA. These currencies can be paper-based or digital and are used as a medium of exchange. Instead of offering a direct trade – ‘my plumbing expertise for your sourdough loaves’, for example – the currency becomes a placeholder for the trade: ‘Take this voucher for your loaves and you can exchange it for some other goods or services from a participating member when you need it.’
Because complementary currencies only operate in a clearly defined and quite small area, they keep value circulating within the local economy, instead of letting it leak away to major economic hubs.
The K’Mali and the BRAND were the key ingredients in FLOW’s recipe, which was designed to knit communities more closely, boost local trade, amp up a sense of community pride and power, and nurture an ability to ‘bounce’ – to cope better with challenges and to thrive.
Local money, local power
‘We were not complementary currency experts, but I was very inspired by the papers Will Ruddick had written,’ says John. Will had designed and implemented a community currency in Kenya, called the Eco-Pesa, where people were paid in Eco-Pesa for collecting waste, planting trees and other things that helped their environment. They could then spend it with local businesses who had signed up. ‘He was on the path that we were on, aligning good behaviour with this currency.’
The currency aspect of the initial FLOW funding proposal was based on the Eco-Pesa design – a donor-backed currency, where a donor provides funding in national currency as backing for vouchers, which are then used to fund specific desired activities such as environmental restoration (through waste collection, for example) and health activities. These vouchers circulate in the local business network and are eventually exchanged back in return for national currency.
Will’s next iteration of his currency in Kenya is a mutual credit-based design, backed by the goods and services of participating business network members. When Will joined the FLOW team, he felt that this design was more suitable for the local context and application.
Complementary currencies enable people without enough of the national currency – because they don’t have a formal job, perhaps – to have a way of exchanging value. A complementary currency can also be a way of encouraging certain desirable behaviours, such as caring for the elderly, vaccinating babies and recycling (this was the drive behind the Eco-Pesa, for example). In Kansas City, as Gwendolyn Hallsmith and Bernard Lietaer describe in Creating Wealth: Growing Local Economies with Local Currencies, students at the University of Missouri have to earn Buckaroos by doing community service in order to pay university fees.
Another example is a plan to develop a currency called the Saber (‘knowledge’ in Portuguese) to increase literacy in Brazil. The currency would be used by school children to pay for mentoring and tutoring from older children, trickling up until learners graduated, and could use their Sabers in part payment for university fees.
The conventional money system is set up in such a way that it concentrates wealth, and this works to destroy social capital, as Emeritus Professor Dennis Meadows with the Club of Rome notes in his foreword to Money and Sustainability: The Missing Link (2012). He adds that it inevitably sets up ‘boom and bust’ cycles. Creating and using complementary currencies offers societies an invaluable tool for resilience.
Having additional currencies available with which to conduct business has proven crucial in situations where the national currency is under stress. Based in Zurich, the Swiss WIR was founded in 1934 as a direct response to the Great Depression, and is the most successful example of a complementary currency that helps buffer local economies from external shocks. Research has shown that the WIR has a counter-cyclical effect – when the Swiss economy is stressed and there is limited circulation of the Swiss Franc, more people use the WIR, and vice versa when the economy is strong.
The FLOW core team saw these as positive possibilities that could be regenerative, building social cohesion, a sense of personal agency. It was also recognised that with targeted interventions, it could play a part in reconnecting people, not only with each other, but also with the systems and sources of the things that make urban life possible: water supply, food supply, energy provision and sanitation. Perhaps most importantly, people who learn to reimagine their currency – one of the bedrock facets of life – would have acquired a precious skill: to be able to ask ‘Why does it have to be this way?’
The speed with which people in both towns embraced the concept of the complementary currency amazed the team. ‘I was quite disappointed in the first currency evening in Piketberg,’ says Ian Schaffers, FLOW project co-ordinator in Berg-rivier. ‘But the second one blew me away – people grasped the idea very quickly and were quite willing to raise their concerns.’
The BRAND launched on 30 May 2015, followed by the K’Mali on 18 July, with a ceremony during which interested businesses and key individuals signed on, agreeing to use the currencies and to accept a proportion of payments in the local currency (usually ten percent).
In the months that followed, the currencies developed differently in the two regions. In Bergrivier, municipal officials quickly got the idea that this tool could circulate value through their region, and became involved in on-going conversations with the FLOW team about how best to integrate the BRAND into the local economy. Ian notes that their interest was not purely altruistic: ‘They needed to be seen to be doing something for the community’.
In Kokstad, on the other hand, the local municipality was largely uninvolved, but FLOW’s Kokstad project co-ordinator Piet Bosman had a web of contacts throughout the town, and that worked in the programme’s favour. Piet was able to get big business on board, and soon key local retailers like Pick n Pay and Spar (both of them major national supermarket chains), the Link pharmacy (always a hive of activity) and Kokstad Copiers, were displaying K’Mali-branded posters indicating that they accepted K’Mali. For them it was also not a purely altruistic decision – many saw it as a corporate social responsibility programme, a commitment to the community, which would impress customers, John Ziniades notes.
The end of the beginning
The next 11 months were a roller-coaster ride that showed the team the bottlenecks that hampered the currency in each region. For example, in Kokstad the large trusted national retailers such as Pick n Pay tended to accumulate K’Mali and the smaller downstream business barely traded in K’Mali at all: the money was piling up, rather like river debris snagging on a rock, instead of moving freely through the town. In addition, the communities naturally needed time to build trust in this very new concept.
‘With hindsight, we should have spent more time on designing currency systems that were tailor-made for the features of each community, rather than importing a ready-made design from elsewhere,’ says John.
And as June 2016 drew to a close, both currencies seemed to be in the doldrums. The team were feeling a little despondent. But then they made a trip to Kokstad for an event that would wrap up their work in the town.
On a wintry afternoon, the restaurant at the upmarket Imbali Guest House (a K’Mali supporter), is darkened so the audience can see John’s PowerPoint presentation about the K’Mali. He formally hands over the K’Mali to Piet Bosman, who will carry the currency forward under the banner of the Mount Currie Community Development Organisation (MCCDO).
And then a woman who’s new to the idea of a complementary currency raises her hand to ask a question. She’s wearing a jacket of vivid colours, and a stylish iteration of the African doek (headscarf) swirls around her head. She wants to know about using the K’Mali as a means to support the exchange of food specifically. She is full of brilliant ideas, which set off a rustle of interest in the audience. Piet urges her to join the MCCDO.
The room is full of important people who are at the core of retailing in Kokstad: the municipal manager is here; so is one of the Christodolou brothers who own the Spar franchise in Kokstad; and sitting quietly to one side is a member of management from the large retail chain, Pick n Pay. There’s interest from a young woman who has only recently come to live in Kokstad; there are others here who are clearly new to the concept, but excited by it. It’s a clear sign that the idea of the K’Mali is percolating slowly through the town.
A couple of weeks later, in Bergrivier, another sign of the currency concept taking hold at a deep level surfaces: the Bergrivier municipality, where public transport is a major issue, is proposing a solar-powered ‘Tuk-Tuk’ service (‘Tuk-Tuks’ are golf cart-style vehicles), which would accept only BRANDs in payment. In fact, the name being mooted for the service is the B5, the ‘five BRAND route.’
Complementary currencies never take off instantly or achieve universal adoption, John points out. Some necessary tweaking will happen along the long road to a sturdy currency. ‘It’s a lot harder to get people to change than we think,’ he says. ‘And people’s habits of use, particularly in terms of money, are among the hardest of all to change. And that long road means that it’s too early to judge whether the currencies have succeeded or failed. But recent developments are reason for hope.’
The Kokstad Q&A session comes to an end. The lights come on and the group breaks up into little groups, drifting towards the back of the room to sample Imbali’s fragrant scones with jam. At the front of the room, Piet Bosman is engaged in a deep exchange with one of the audience who still has some questions. At the back, around the tea table, overheard fragments of conversation reveal that several people are engaged in discussions about the currency’s viability. The K’Mali, like the BRAND, is plainly developing a life of its own.