Grassroots Financial Innovations for Inclusive Economic Growth (GFIIEG)
Half of humanity lives in cities, with 828 million people in informal settlements. Suffering from
inadequate services, deficient infrastructures (Hardoy et al 2001), and high unemployment
rates (UN, 2016), most slum residents turn to the informal economy and become microentrepreneurs providing critical services, such as waste collection, transportation or food
provision. Knowingly, aid development agencies have in the last years embraced microentrepreneurship as a tool for poverty eradication. Yet, with few assets and no access to
financial institutions (Oldewage-Theron et al. 2006), micro-entrepreneurs often rely on a
subsistence income with little to no savings capacity (Banerjee & Duflo 2012).
As a response, a variety of grassroots initiatives are experimenting with a wealth of approaches. From micro-credits (Yunus 1999), rotating credit associations (Geertz 1962), and development vouchers (Ellerman 2009) to barter networks (Groppa 2013) or creditcooperatives (Huppi & Feder 1990), communities, regarded as non-bankable, are developing bottom-up financial alternatives to give themselves access to funding.
Among these grassroots financial innovations, community currencies have become particularly prominent. From Mexico (Sobrinho et al. 2017) to Argentina (Gomez 2009), from Brazil (Fare et al. 2015) to Kenya (Ruddick 2011; Ruddick et al. 2015), poor communities are developing bottom-up monetary tools that strengthen micro-entrepreneurs, develop local markets, increase local trade and market stability, and create jobs and networks for the incubation of small businesses (Bendell 2017)
Danida Fellowship Centre