The role of complementary currency in promoting business growth in an informal economy -case of Bangla-Pesa in Bangladesh slum, Mombasa County

Abstract

This study sought to examine the role of complementary currency in promoting business growth in an informal settlement, the case of Bangla-Pesa in Bangladesh Slum, Mombasa County. Noteworthy, is that the Bangla-Pesa program has been dubbed as first of its kind in Africa. The study targeted all the traders of the Bangladesh Business Network. A Census Survey study methodology was undertaken to address these objectives. Three research instruments, namely; questionnaire, interview schedule and observation were used. In total the study was able to gain the participation of one hundred and twenty three (123) traders and twelve (12) key informants. With respect to business support, the study found out that most of the respondents (83.7%) considered training a prerequisite to business growth. When asked the role Bangla-Pesa plays in promoting access to finance, all the respondents indicated that the use and adoption of the program had provided the respondents with an avenue of savings. Through merry-go-rounds, the traders were able to gain financial assistance. The BBN had also been able introduce some of their members to banks and microfinance institutions for funding. In promotion of trade, all the traders agreed that the program had been able to increase their sales and profitability, thereby boosting their business growth. All the participants in this study were of the view that Bangla-Pesa is a sustainable program, especially due to the aspect of promoting community cohesiveness. To identify the strength of relationships between the dependent and independent variables, a Pearson Correlation Coefficient Matrix was carried. It revealed that there exists a strong positive relationship between business growth and the dimensions that promote trade and business support services of magnitude 0.885 and 0.862 respectively, with a significant P value of 0.026 and 0.047 respectively. The study concludes that promotion of trade and enhancing business support significantly increased business growth while Bangla-Pesa contribution to access to financing had no significant effect on business growth in the informal settlement. The study recommends further research to gauge the impact of the adoption and use of complementary currency in Bangladesh Slum.