Investigating the impact of complementary currencies on business growth in informal economies: Case of lindi-pesa in lindi, Kibera slum, Nairobi County

Abstract

This study sought to investigate the role of complementary currencies in promoting business growth in an informal area, the case of Lindi-Pesa in Lindi Location, Kibera Slum, Nairobi County. The methodology that was undertaken to address the objectives was a Census Survey study. Three research instruments, namely; questionnaire, interview schedule and observation were used. The number of people that participated in the study was: one hundred and twenty three traders and twelve informants. With respect to the role Lindi-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. The traders were able to gain financial assistance through merry-go-rounds. The LBN also introduced some of their members to banks and microfinance institutions for funding. All the traders agreed that the program had been able to increase their sales and profitability, thereby boosting their business growth. All the participants viewed Lindi i-Pesa as a sustainable program, mostly due to the aspect of promoting community cohesiveness. A Pearson Con-elation Coefficient Matrix was carried out to identify the strength of relationships between the dependent and independent variables. It revealed that there exists a strong positive relationship between business growth and the dimensions that promote trade and business support services. The study concludes that promotion of trade and the enhancement of business support significantly increased business growth whereas the contribution of Lind i-Pesa to access to finance had no significant effect on business growth in the area. The study recommends further research to find the price formation/setting mechanisms that apply in community currency systems.