24 January 2013

Kenya: Trust Is the Currency of the Social Economy


If there is ever a maligned group of people in Kenya, the people referred to as fundis rank right up there. The word fundi describes  any artisan whether they be tailors, mechanics or plumbers.

Their ill reputation in Kenya comes from a history of unreliability, broken  promises and bad workmanship among other ills. The mechanic, cobbler, plumber and the electrician are particularly affected. Like any  average tray of eggs there are some good ones among the many, the challenge is however that of determining which among them is bad or  good before you contract. This challenge has been resolved in other parts of the world by technology.

Social platforms have created a new currency to news and trade -Trust. People who do not know each other become friends and share  information freely. Rachel Botsman a social media researcher puts it thus " Reputation will be the currency of the new economy ." She  describes a situation where people will relate to each other and trade based on the reputation they have created on-line.

A social task sharing site called Task Rabbit demonstrates this clearly. People post tasks or things they want done and what they are  willing to pay for these tasks, a pool of people referred to as rabbits then pitches to do the tasks at various prices and depending  on their reputation, the service buyer then chooses one from among them. Once the task is done the person contracting them provides open reviews of the rabbit and posts them for all to see. Dodgy rabbits are weeded from the pool while good reviews earn the rabbit a new  rating and allows them to charge a slight premium. That way employment has been created with minimal risk of dealing with strangers.

Social platforms have also created what is referred to as collaborative consumption. The vast networks of people on social networks have spawned relationships that allow consumers to offload "excess domestic capacity". Airbnb a website that facilitates the rental of home space to people seeking hotel space is one such place. It works rather simply, after years of paying a mortgage for that 5 bedroom in Karen, the kids go off to school and the couple is left with a house whose four bedrooms are empty 11 months each year. To reduce this waste they post this space on a website and people in search of bed space then buy it from them based on their reputation.

The bed customers will then write reviews to let the world know what sort of experience they had and create even more customers for the  home owners. This same principle applies to car pooling and pet sharing among other things that people have to spare. In 2012,  around 2 billion dollars was lent to people via social sites in these emerging trustosphere. Think about it, the average saver in Europe  will be lucky to get more than 3 per cent for their 1000 Euro, lend this to 30 African women intent on keeping beehives at 20 per cent and do good while earning a better return It is happening as we speak.

The ability to know and trust has thus become a core driver to social business. In Kenya, how we harness this may create a new dimension  to our economy, given that we are a country already fully wired on mobile money. The greatest limitation as many m-commerce and  e-commerce startups in Kenya will tell you is trust. Consumers in Kenya rarely want to pay and receive delivery afterwards. Solving  this problem will create a new economy.

Frank is lead consultant at FMC and CEO at Mobile agency Sponge.

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