Why trust should be the seventh factor of production

Trust: the missing link in Kenya’s economic growth. [AI-Generated]

Traditional marketing had four Ps (product, price, place and promotion). We now have nine Ps, including people, process, physical evidence, personalisation, and partnership.

The increase in Ps shows the dynamism in this field. Curiously, marketing used to be one of the most popular options in Bachelor of Commerce programmes in the 1990s and 2000s - perhaps riding on the liberalisation of the Kenyan economy. Looking at the recent graduation lists, marketing has lost its lustre despite the rising competition in the market driven by digitalisation and globalisation.

One possible explanation for the fall of marketing is its association with selling or hawking and the rise of new and sexy areas like data science and IT-related courses.

Enough on marketing. Why has economics not expanded its factors or Fs of production? The four have been there for too long: land, capital, labour and entrepreneurship.

We recently added management, love and today we bodily add trust. I will leave it to you to decide if love and trust should be combined.

Entrepreneurs creatively combine the other traditional three factors to produce goods and services.  How do they combine the factors in, say, Toyota, Safaricom or in a kiosk?

Why is trust the seventh factor of production?  Any Kenyan entrepreneur will quickly agree that trust is the missing link in economic growth. We have plenty of land, which you can buy or lease.

Never mind the rising prices in urban areas because of the shortage; we are not creating any more land. Capital is available, again at elevated interest rates attributable to risk. Labour is a plentiful factor, too plentiful. In Africa, we tend to be more “productive than in other continents. We even export labour to other continents; we can debate its quality later. Curiously, it’s easier to export low-end labour than high-end labour like doctors and engineers.

Entrepreneurship is plentiful in Kenya when cross-pollinated with innovation. From M-Pesa to recycling and the use of online services, Kenya has been at the forefront of entrepreneurship. Banking, fintech and renewable energy are stars.

The fifth factor, management, is plentiful, but quality can be debated. The sixth factor, love, is sentimental but has grown cold even among couples. Noted the falling stigma over divorces? Maybe trust could make it a more effective factor.

Mistrust is blunting entrepreneurial culture in our no-longer-young country. Talk to any entrepreneur; whether it’s MSMEs, corporate or public sector, trust is the missing link.

Who can be trusted with the other factors of production? Land stays there, capital too; it’s the human factor that needs management.

One quiet reason foreigners are getting jobs in Kenya, from homes to construction sites, is because they can be trusted to do the job well, cheaply and are less likely to steal or collude. 

Lack of trust has led to corruption, theft, working smart, fraud, forging documents, and ghost workers.  Why are court cases piling up? Why all the CCTVs, supervisors, rubber stamps, background checks and surveillance?

Think of how we would significantly reduce the cost of production with more trust. How many jobs in a typical organisation are focused on ensuring trust? Think of the work of managers, supervisors, compliance officers, risk managers, among others, all trying to enforce trust. Add judiciary, lawyers, police, and defence forces for external trust. Corruption is about eroded trust.

One major difference between developed and developing countries is the level of trust. If trust were higher, we would lower the cost of production and become more competitive, even beyond the borders. That is how Chinese, Japanese and Koreans conquered the global market.

Can you trust their products? Think of what you buy.  It’s about trust.  You never take your car, beer or hotel food to the lab; you trust the manufacturer or brand name.

You trust M-Pesa will deliver the money and trust the doctor and pharmacist. You trust your lawyer, accountant, hairdresser, your boss, co-workers, and hopefully spouse. Trust is the golden route to 360-degree progress, beyond money into peace and self-fulfilment.

One perplexing thing in Kenya and I guess other countries, is that more education doesn’t seem to translate into more trust. Check around; most corruption or fraud cases are not perpetrated by illiterate men and women.

Unfortunately, trust is built over time, right from childhood and through institutions like families, schools, religion and government. The trust deficit can be explained by our institutional failure. Rebuilding trust is hard and takes time. 

We even tried to legislate trust in Chapter Six of the 2010 Constitution. How successful have we been? We are now trying to use force to enforce trust.

Check the new laws with their hefty fines and long prison sentences. Trust is soft; it needs a soft approach to build. Think of successful marriages.

We should start early in our lives and make trust part of our lives.  How has trust made your life easy or hard, both as a citizen and as an entrepreneur? Talk to us!