Moacir Conceição Ramos used to work on private yachts off the coast of Rio de Janeiro. Before the pandemic, he made his living flipping burgers and hot dogs on a grill in a public square in Bananal, a quiet neighborhood in Maricá, where houses with tile roofs and shops with hand-painted signs are tucked among banana palms against the mountains. His customers would stop by on their way home from work doing odd jobs in the stylish houses built for city dwellers to escape to the seaside on Ponta Negra beach, a few kilometers away. 

Increasingly, his customers don’t pay with cash but with a digital currency known as Mumbuca, which they receive as part of the town’s basic income program. With a quick scan of a QR code, using their phones, just over 42,000 of Ramos’s neighbors can pay him in Mumbuca, Brazil’s first big experiment with digital currency. Those without smartphones can pay using a card, which has a scannable barcode.

It took Ramos about ten minutes to sign up for the Mumbuca program. At the makeshift community bank — a room with a handful of tables and clerks sitting behind computers — he added his name to a list of the city’s business owners, showed his national ID and proof of address, and downloaded an app on his phone. To prevent the cash (even if only virtual) from draining away to Rio and other neighboring cities, the Mumbuca is accepted only in town. It’s the largest of scores of such hyperlocal “solidarity currencies” that have gained popularity across Brazil since 2000.

The Mumbuca was developed as part of the city’s basic income program, the Renda Básica da Cidadania (RBC), designed to fund a monthly stipend and other benefits for city residents. It currently covers over a quarter of the town’s population and is one of the largest basic income experiments in the world. 

A left-wing stronghold in the greater Rio de Janeiro metropolitan area, Maricá has plenty of roads with precarious lighting, and many buildings have no connection to the municipal water or sewer systems. But it’s also just inland from one of Brazil’s most productive offshore oil reserves. In 2019, oil revenues funded 70% of the city’s budget, enabling officials to back the Mumbuca one-to-one with Brazilian reais.

On July 9th, 2020 Moacir, a local business owner, is outside his home in the city of Maricá, state of Rio de Janeiro, Brazil. Moacir is registered in the Mumbuca system and accepts orders for food delivery that pay in digital currency. Photography by Leonardo Carrato for Rest of World.

Unlike the Bolsa Família, one of Brazil’s national safety-net programs, Maricá’s RBC doesn’t have many eligibility requirements. Those who can prove they’ve lived in town at least three years and whose households make less than three times the monthly minimum salary, typically receive 130 Mumbucas, or about $25 per person every month. Since the pandemic began, they now receive 300 Mumbucas a month, or $50 per person.

When Covid-19 hit Maricá this year, Mumbucas became a lifeline for the city’s informal workers. Before the city had a single recorded case, City Hall announced that those registered as “microentrepreneurs,” who may be impacted by the pandemic, would receive 1,045 emergency Mumbucas a month to cover eventual financial losses. This enabled informal workers — like hairdressers, construction workers, and food vendors, such as Ramos — to stay home as the virus spread. Once the outbreak officially hit the city, officials upped the monthly regular payments to 300 Mumbucas.

Ramos’s partner, Lilia da Costa Malaquias, works in a store where customers can also pay with Mumbucas. She and their two children are enrolled in the RBC program, which brings the family 900 Mumbucas each month. “It’s helped us save more money than we usually do from our income alone,” Ramos said. “We are planning to buy a car and build a barbecue grill in the backyard.”

Mumbucas don’t run on blockchain. They are effectively Brazilian reais that can be used only within Maricá’s limits.

RBC runs on a digital payments platform called E-dinheiro, which helps towns like Maricá circulate their own currencies — backed by Brazilian reais but accepted only within their own communities. People with smartphones can use the E-dinheiro app to transfer digital credits between themselves and other users of their community currency, make purchases from retailers like Ramos, and pay their utility bills. Those without smartphones can use the service by scanning their cards or asking a friend or family member with the app to conduct a transaction on their behalf. Today, there are more than 40 municipalities across Brazil using the platform.

Unlike other social currency initiatives, E-dinheiro doesn’t run on blockchain or any cryptocurrency technology: Mumbucas are effectively reais that can be used only within Maricá’s limits and can be spent only through the platform’s digital payments system. Those receiving the Mumbucas as part of the basic income program can’t swap them for reais, but business owners can cash them out after a 48-hour waiting period and by paying a 1% fee of the amount to be withdrawn.

According to one of E-dinheiro’s founders, Joaquim de Melo Neto, getting Brazil to buy into solidarity currencies wasn’t easy. For years, he faced scrutiny from the central bank and the legal system, which accused him of operating an outlaw currency. But once he cleared those hurdles, Maricá became the site of the nation’s biggest basic income experiment. Now, with the coronavirus pandemic raging across Brazil, Melo says the Mumbuca has become “like oxygen to the economy.”

A line of people outside a hardware store that accepts Mumbuca in Maricá.

In 1998, when Joaquim Melo founded a community development bank with his neighbors on the outskirts of Fortaleza, in Brazil’s sunny Northeast, he certainly didn’t plan on starting the most widely used digital currency in Brazil. 

Back then, Fortaleza’s Conjunto Palmeiras neighborhood was home to many fishermen. In the 1970s, the city had forced them out of their former homes on the waterfront in the north, to clear the way for high-rise housing developments. Two decades later, as Palmeira also gentrified, residents worried they would face the same challenges and formed a neighborhood association to avoid being pushed out of their homes again. 

For Melo and his neighbors, a key concern was keeping spending inside the community. The neighborhood association conducted a study that found that more than a million reais’ worth of goods were spent by the community each month, but just 20% of that stayed within its limits. They also wanted to be able to offer small, low-cost loans to their neighbors. So they created the Palma: paper bills accepted only in Palmeira, backed by a small endowment that came from loans and donations from various NGOs.

On July 9th, 2020 Joaquim Melo, founder of Mumbuca, stands in his office inside a Mumbuca bank agency located in the city of Maricá, Rio de Janeiro state, Brazil. Photography by Leonardo Carrato for Rest of World.

But in Brazil, entities that call themselves banks must be regulated under the national financial system. After a national magazine ran a story on Palmeira’s new currency in 2003, Brazil’s central bank took Melo and his neighborhood association to court, accusing it of operating a currency parallel to the real. It didn’t matter that his organization stopped referring to itself as a “bank” that year, instead taking the name Instituto Palmas — it still offered loans and circulated paper money. The government pushed Palmas to change its criteria for microloans to require proof of income and credit reports from borrowers. Despite the scrutiny, Instituto Palmas got lucky. Melo won the case and, in 2009, the legal counsel for the Central Bank published a paper explaining why social currencies should be regarded as public policy instruments for local development compatible with monetary policy. 

It took Melo almost 20 years to bring his Palmas experiment to a nationwide digital currency platform.

But a nationwide E-dinheiro digital platform would remain out of reach until a new bill regulating fintechs allowed Instituto Palmas to pivot. “The great leap for solidarity banks was the fintech act in 2013, which allowed digital payments,” Melo said from Maricá, where he’s been quarantining during the Covid-19 outbreak. “We are a digital payment system, and under the law, we are no different than, say, PayPal,” he added.

In 2014, Instituto Palmas rebranded itself as Instituto E-dinheiro. Today, more than 40 community banks run their own currencies using its platform. Some are in small towns like Limoeiro de Anadia, a rural community inland in Alagoas state, while others are in neighborhoods of big cities like Jardim Maria Sampaio in São Paulo. “There’s no connection between the banks, apart from the technological tools,” Melo said. “So, without special authorization, the money in one doesn’t go through any other’s pipes.” 

Though Instituto E-dinheiro doesn’t disclose users’ personal data, they can track how much is spent in each bank within the platform.Melo says about 25.5 million Mumbucas, just under $5 million, were spent in local businesses in Maricá in June alone. Before the Covid-19 outbreak, Maricá’s city government was spending about $1,690 reais, over $300 per person per year, on the program — about 5% of Brazil’s GDP per capita in 2018.

In Maricá, 70% of the city's budget comes from oil revenues, including backing the Mumbuca one-to-one with Brazilian reais.

Last year, Maricá changed the rules for its basic income program, allowing Mumbucas to be dispersed not to families but to individuals. The hope was to reach people who would not normally choose or qualify to receive Mumbucas through the existing RBC.

Today, the community banks in the E-dinheiro system perform many of the microfinance functions that Joaquim Melo and the neighborhood association envisioned way back in Fortaleza. Banco Mumbuca uses the 2% fee that businesses are charged per transaction to give out small loans. There are programs in Maricá that cover the cost of commuting and rent for some college students. Maricá Secretary of Economic Solidarity José Carlos de Azevedo told Rest of World the city also provides additional funds for the roughly 300 members of two native tribes living in the area. 

The city is projected to raise about 4.7 billion reais over the next four years from petroleum revenues. Azevedo said that, even when the oil royalties run out — or if they are reallocated across Brazil, a much-debated proposal — Banco Mumbuca will still be able to operate.

“In Maricá, universality and intentionality is the goal,” said Leandro Ferreira, who heads the Brazilian Basic Income Network (RBRB) and was part of a collaborative effort to get emergency Covid-19 payments passed through Brazil’s legislature in March.

On July 9th, 2020 local residents work on building a house in the Bananal neighborhood, in the city of Maricá, state of Rio de Janeiro, Brazil. After the implementation of Mumbuca, residents who benefit from digital currency now have the chance to build or renovate their own housing. Photography by Leonardo Carrato for Rest of World.

Though Maricá’s basic income program has attracted praise from researchers for demonstrating how a large-scale basic income program can work, basic services like water and sewer service are still lagging. Despite the wide reach of the Mumbuca and the E-dinheiro system, Maricá still lacks basic physical infrastructure. Critics and members of the political opposition have said the program has done nothing to address the city’s employment problems: Just 14% of Maricá’s population is formally employed, and 33% make half or less than the monthly minimum salary. 

Luciana Gonçalves and her husband own a building supply store where customers can pay with Mumbuca, but their neighborhood is waiting on the city to finish building a sewage and water system. Residents must pay to truck in their own drinking water and dig their own septic tanks and wells. 

Economists are starting to wonder if the stimulus payments could be a step toward nationwide basic income. “Basic income is something that was talked about for a long time,” said Eduardo Henrique Diniz, professor in the School of Business Administration of São Paulo (EAESP) at the Getulio Vargas Foundation (FGV). “Since the pandemic started, even very orthodox economists have changed their tune. It changed the level of the discussion about the subject. Now it’s something we have to consider.”