Blockchain Community Currency Doubles Economic Impact in Tanzanian Pilot

The Encointer initiative has released new insights from its pilot project in the Nyota community of Dar es Salaam, Tanzania, demonstrating how blockchain-based systems combined with local cultural practices and targeted cash transfers can boost local trade and strengthen community resilience. The pilot shows that combining cash transfers with Encointer's local community currencies multiplied the economic impact of the cash transfers by 240%, significantly enhancing the effectiveness of development aid approaches.

Launched in late 2023 as a collaboration between Encointer and local NGO Jukumu, the Nyota community currency has grown organically within a district with more than 100 participants now active in this emerging local economy. The initiative has enabled community members to co-create innovative ways to strengthen livelihoods, with tangible results including business expansion for local entrepreneurs. For example, Aisha, who runs MoZa Cosmetics, expanded her customer base from around 15 to over 40 clients per month through participation in the Nyota community currency system.

The Nyota pilot combines two innovative methods to strengthen local economies, both starting with direct cash transfers using blockchain systems. In the first approach, donations go directly to individuals who then pool their small cash transfers using Mchezo, the region's traditional rotating savings and credit system. With the pooled resources, they fund small local businesses in areas such as tailoring, food production, and retail. The second approach uses cash transfers to fill a reserve that secures the issuance of the local digital currency, allowing the community currency to be exchanged for national currency when needed while keeping the digital currency circulating within the community.

The demonstrated impact includes strengthened community relationships and economic benefits for participants. Alinagwe Mwaselela reflects on the transformation, noting that the use of Nyota currency has increased savings and reduced the cost of getting good products and services. Project documentation available at https://encointer.org illustrates how the Nyota community uses the Encointer system to grow small businesses, strengthen social ties, and stimulate local trade. Additional visual documentation of the pilot's success can be seen in the project video at https://youtu.be/4_u7J64MFaE.

Building on these successes, Encointer is preparing to scale its model while conducting deeper impact assessments through community surveys and transaction analysis. The team is integrating savings groups and community-backed microloan mechanisms directly into the smartphone application, making tools pioneered in the Nyota pilot accessible to new communities. Expansion efforts are already underway, with the first successes visible in Nigeria where a new community has adopted the Encointer system and begun building its own local economy based on the same principles that proved effective in Tanzania.