On Trust

When we established our maiden fund in November 2017, our guiding principle was to invest in technology-enabled "Trust, Collaboration, and Innovation" infrastructure. These platforms orchestrate and integrate value chains and markets while creating systems that incentivize positive behavior, enhance transparency, predictability, and set high standards for transactions. They also ensure that the value created by participants is equitably distributed according to each player's risk and reward. Many marketplaces exemplify this approach through rule-setting, infrastructure and technology provision for participants, and mechanisms for customer feedback and continuous improvement. In effect, these platforms establish the truth and make it clear to everyone. Truth is the foundation of trust.

Observing Africa, a continent striving to balance its traditional economic systems with Western norms, underscores the critical need for such platforms. Many nations and communities are in a transitional phase, moving away from traditional trust mechanisms without successfully establishing systems that cultivate widespread trust in a formal economy. This gap, exacerbated by poverty and a strong desire for success, fosters detrimental behaviors. Individuals collaborating or co-creating often seize all value for themselves, disregarding those who contributed. This practice dominates value chains where the distribution side retains most of the value, leaving crumbs for those downstream. This impedes the scalability of downstream entities and leads to constant turnover among SMEs. Alarmingly, some large companies refuse to pay SMEs for delivered goods or services, exploiting the lack of timely consequences. It is difficult for SMEs to scale if the value chain is not well integrated, is unpredictable, and value isn't received for energy expended.

Imagine the potential savings if people could collaborate based on a simple handshake or straightforward formal agreements. However, even when agreements are complex, many treat them as mere suggestions, often concealing their true essence. Collaboration becomes even more challenging when individuals claim your freshly shared ideas as their own or use your strategies for personal gain without proper acknowledgment. The worst offenders mislead you to exploit your plans opportunistically, and, unfortunately, society often rewards such behavior. To protect yourself, ensure you safeguard your interests and trust your instincts—they often provide the first warnings.

These actions cumulatively shape a society where trust is rare and envy is rampant. In less developed countries, one can observe a low trust environment alongside poor systems and organization; these go hand in hand and significantly impede progress. The former can cause the other and vice versa. Adequate trust-enabling systems can improve the trust quotient in a society. The absence of trust incurs substantial costs to health, societal development, and overall well-being.

As Charles Munger aptly noted, "The highest form of civilization is a seamless web of deserved trust—not much procedure, just reliable people trusting each other."

Societies that prioritize trust-enabling systems excel in collaboration, crucial for fostering innovation and productivity. Where there is trust, innovation and productivity naturally thrive. African countries need to build systems that incentivize trust, including strong legal systems that deliver justice swiftly and a public square that supports virtuous actions.

A deficit in trust directly translates into a deficit in prosperity. Trust is social capital, one of the pillars of a nation's prosperity alongside human capital, digital infrastructure, real assets, and access to finance. Trust in the financial system is as critical as the heart’s function in the body, essential for healthy economic circulation and overall economic health.

Let’s strive to do better individually and collectively. We urge governments to create the right incentives and strong legal frameworks so we can build a more trustworthy and collaborative world.

PS - Some innovative startups are hard at work enabling and formalizing trust. These include marketplaces such as AFEX, Filmmakers Mart, Omnibiz, and Tripesa; payment and credit infrastructure like Moniepoint and Pezesha; verification infrastructure like VerifyMe and Youverify; and authentication, ToNote (Gettonote).