Trust Remains One of Kenya’s Most Undervalued Potential Economic Assets
Kenya’s Economic Performance is Wanting
The question of why Kenya’s economy has failed to reach middle-income status has become a topic of discussion at many development forums. This discussion is usually compared with the “East Asian Tigers,” which had socio-economic indicators similar to Kenya’s at independence but have all transformed into highly developed economies.
In this conversation, attention largely focuses on governance and policy-related challenges, such as political instability, corruption, and infrastructure and fiscal policies. Little or no attention is given to the cultural environment which underpins the economy.
Traditional economic theory has long identified four primary factors of production – Entrepreneurship, Land, Labour and Capital, with capital defined as the man-made resources that are used to produce other goods and services. However, in recent years, development economists have identified Social Capital as a critical contributor to economic success at both the firm and national levels.
Social Capital is defined as “the networks of relationships among people who live and work in a particular society, enabling that society to function effectively”. With this definition, we can deduce that a society with a high degree of trust will have more social capital than a society characterised by mistrust.
Is Kenya a High-Trust Society?
Trust is defined as a “firm belief in the truth, reliability or ability of someone”. With this definition, we can rephrase the question: “Do Kenyans view one another as truthful and reliable?” The definition also indicates that trust depends on the level of honesty in daily interactions.
Almost every Kenyan has had a painful experience with dishonesty in their day-to-day interactions. From the shopkeeper who sells expired goods, the mechanic who bills for fictitious parts, to the butcher who uses a rigged weighing scale, dishonesty is a daily experience for many people. It is no surprise that survey data consistently show that most Kenyans expect deception in ordinary transactions.
When two parties trust each other, they can trade and collaborate without elaborate verification mechanisms. Conversely, dishonesty triggers loss of trust, and repeated deception spreads mistrust through communities.
This cultural environment creates severe economic inefficiencies.
Barrier to Pooling of Resources
Pooling resources is one of the most effective tools that disadvantaged groups can use to build wealth. Yet in Kenya, resource pooling is severely constrained by the fear of dishonesty. We have all heard stories of chamas and investment groups that collapsed due to misappropriation of funds. These incidents discourage cooperation, causing people to rely on individual strategies, even when collective ventures would be far more cost-effective.
The economic consequences are substantial. A good example is the phenomenon of hundreds of traders travelling individually to China, each purchasing a small quantity of merchandise. If ten traders pooled their resources, they could lower overhead costs by as much as 50%.
This pattern repeats itself across the economy. Economic players lose opportunities to collaborate; not because they do not understand the benefits, but because dishonesty makes it risky.
Barrier to Entrepreneurship and Innovation
Many aspiring entrepreneurs face difficulties obtaining credit from formal financial institutions. This leaves them dependent on family and friends for support. However, if relatives and friends operate from a predisposition to mistrust, they are unlikely to invest, regardless of the idea’s potential.
Innovation also thrives when people share ideas freely. But where mistrust exists, individuals guard knowledge fiercely. In the Jua Kali sector, for instance, artisans jealously guard their techniques, fearing that peers will copy their ideas without reciprocity. This lack of knowledge-sharing prevents technological advancement and keeps the sector reliant on basic tools and methods.
The visible outcome of these barriers is an economy dominated by numerous micro-enterprises operating with rudimentary methods. Many of them are struggling to survive and cannot provide any gainful employment.
Higher Business Operating Costs
Dishonesty increases operating costs for businesses. Dishonest employees may take advantage of their employers in various ways, e.g., by stealing goods. For example, a chef might bring some foodstuffs to his family every day.
Such losses often push start-up businesses below their breakeven point. Consider a small retail store with a thin 5% profit margin. If employee theft consumes more than that percentage of sales, the business will collapse, even though its economic fundamentals are sound.
In response to employee dishonesty, employers tighten rules and invest in surveillance systems. While these measures reduce fraud, they also increase costs and reduce productivity. Ultimately, businesses pass their increased costs on to consumers.
Historical and Cultural Roots of Dishonesty in Kenya
It is clear from the foregoing that any strategic intervention to put Kenya’s economy on the right trajectory must address the trust deficit as a priority. But before we can devise an effective strategy, we need to understand the roots of the dishonesty we see today.
Dishonesty in Kenya has been shaped by historical trends, stretching from pre-colonial social structures through colonial systems of exploitation, to the inequalities and injustices of today.
Before colonialism, Kenyan societies were organised primarily around kinship groups. These formations encouraged cooperation and trust within their limited circles. Elders were able to enforce social norms because every member was keen to maintain their place within the clan. For the same reason, social sanctions were very effective. However, when dealing with members of other clans or ethnic groups, trust was cautious and often shaped by stereotypes.
However, the most powerful roots of today’s dishonesty lie in the colonial period. Colonial rule introduced a system of administration which was designed for control and exploitation. Out of expediency, the colonial state actively sought out and empowered unprincipled characters who were ready to betray their communities in return for personal gain. This created a cultural legacy which has survived the end of colonialism.
Unfortunately, the newly independent state failed to redress the injustices of colonialism. Instead, it became a theatre of unequal competition for resources, where powerful politicians distributed goodies based on political loyalty. This further entrenches a culture that devalues honesty.
Rural-urban migration also accelerated, bringing people from diverse communities to live side by side, without the traditional institutions that help to enforce social norms in the village. In this anonymous environment, many urban residents adopted opportunistic behaviour.
Rebuilding Trust
Since the causes of this unfortunate state of affairs are known, it follows that measures can be devised to counteract and reverse these trends, thereby re-establishing honesty as a core value of our society.
While rebuilding trust is not impossible, it is by no means easy. Like all social engineering endeavours, it requires consistent messaging and reinforcement across many social avenues over a long period.
An article like this does not contain enough room for a detailed discussion of how this objective can be achieved. However, we can identify the key organs of society through which we can pass this message and suggest measures that would be effective for each.
What Ordinary Kenyans Can Do
Every Kenyan can contribute to this mission by resolving to practice personal honesty in all their interactions. Equally important is distancing oneself from dishonest individuals. Normalising honesty within one’s social circle will strengthen moral standards and enhance accountability. However, for this change of behaviour to occur, the whole population needs to be fully sensitised regarding the huge economic cost of a dishonest culture. This article is a small step in that direction.
The Role of Family & Kinship Groups
For most people, the nuclear family is the primary socialising unit. Parents, therefore, play a pivotal role in shaping their children’s worldview. Children need to be taught early that cheating and lying are unacceptable. Even minor dishonest acts should be corrected consistently, since early experiences shape lifelong character.
Families also create bonds which enable members to influence one another’s behaviour over a lifetime. Encouraging honesty, holding each other accountable, and celebrating integrity within family groups will go a long way to shift attitudes collectively.
The Role of Opinion Leaders and Influencers
Opinion leaders are persons who have significant influence on the attitudes, behaviours, and decisions of others. In Kenya, these may include religious leaders, teachers, writers, business leaders, youth mentors, and community elders. These people have a unique capacity to shift societal norms by modelling behaviour and reinforcing positive values. Deliberate steps must be taken to identify these social influencers and to incorporate them as key drivers in the transformation program. Unfortunately, we may have to leave out politicians because their cultural influence has proven to be mostly negative.
Conclusion
Trust remains one of Kenya’s most undervalued potential economic assets. Restoring trust would unlock prosperity by lowering costs and enabling both long-term and short-term partnerships.
The time to act is now, and we must start by acknowledging that the Trust Deficit is the single most important constraint to our economic development.
CPA Peter Karori Amos; Director at Gatuku Consulting Partners and former Head of Finance at Banki Kuu Sacco (2016–2024), with experience in ERP implementation, strategy, and digital finance. An Economics graduate, ICPAK member, and MBA candidate at Kenyatta University.
Email: [email protected]
