Nigerians do not trust one another. This is not news for those of us who have paid a year's rent in advance because landlords don't trust monthly payments or anyone who has been asked to provide an unreasonable number of references to open a simple current account. These are just a few examples of how Nigerians pay, with time and money, for the trust deficit in our society. We miss out on the benefits of trust such as reductions in transaction costs, facilitating credit, stronger democracies and a decrease in crime and corruption.
The low level of trust in Nigeria is hardly surprising considering our weak, corrupt, and inefficient justice system. After all, it's difficult to trust a stranger will act honourably when the only thing that might discourage them from cheating on you is their moral code. However, there are a few examples in Nigeria where trust is enabling business. What can we learn from them?
Islands of Trust In a Sea of Distrust
Nigerians buy goods and services on Instagram - a transaction that involves sending money to people they have never met and trusting that these strangers will send them the products they have paid for in return. This is especially surprising, considering that Instagram isn't an e-commerce platform like Amazon where a third party guarantees order fulfilment. On Instagram, if the vendor fails to deliver the goods as promised, the customer typically has no obvious channel to reclaim their money.
Nigerians can place their trust in Instapreneurs for two major reasons. First, the customer knows that the vendor has an incentive to act honourably if they want a future business relationship. If a customer has a good experience with a vendor on social media, they are likely to conduct repeat business with that vendor and possibly recommend the vendor to people they know - one post with the product is free advertising to all the customer's followers. Secondly, and most importantly, if a customer is cheated, they can share their grievances on social media where other current and prospective customers might see it and decide not to do business with that vendor. The power of social media that allows vendors to reach millions of customers with minimal advertising can also enable an aggrieved customer to severely damage a vendor's reputation in a way that is not immediately possible with traditional businesses.
Instagram comments and posts create a small community in a big world. A community where the punishment for cheating someone is enough to establish trust. Similarly, neighbourhood stores are often able to trust their regular customers in a way that larger chain stores are unable to - mallams can allow customers to buy goods on credit if the customers are temporarily broke or just forgot to bring their wallets. You can visit Shoprite every day for years but will never be able to buy goods on credit. It is only possible at neighbourhood stalls because of the strong business or personal relationship that often develops between the customer and the store owner. Proximity is key here. The customer's house is closeby in the event of any wrongdoing. Further, the customer's reputation within the close neighbourhood would be at risk.
Bringing Instagram trust to mechanics
In the same way that social media allows us to trust strangers selling goods on Instagram, creating other virtual communities can enable trust in other spheres in Nigeria.
Contrast Instagram services with mechanics. Nigerians typically have to consult multiple mechanics about a single problem to ensure their mechanic is not cheating them. Here, the threat of a cheating mechanic losing repeat business is not as potent because a dishonest mechanic is unlikely to suffer much reputational damage since each customer is unlikely to know more than a handful of potential customers (not hundreds of followers). The customer may not find out the dishonesty, and if he or she does, losing one customer is worth the risk. The punishments for cheating on Instagram or in a neighbourhood are not as easy in this case.
However, like the two examples showed us, having an online platform, which brings about the neighbourhood style community from physical to digital can bring about trust and honest transactions.
An online community where car owners can rate their interactions with mechanics will amplify the threat of reputational damage, and car owners will be more likely to switch mechanics since they will have better information with which to choose a new, trustworthy one. The bad mechanics get poorly rated and angry comments for all to see while the few good mechanics will get 5-star ratings. This can be implemented for craftsmen, builders, plumbers etc. This review system is vital in the restaurant industry and acts as a competition mechanism for both price and quality service.
While Instagram teaches us a way to bypass the lack of trust in Nigeria, we cannot ignore the necessity to reform our justice system to bring trust into the society. But combating the entrenched corruption in Nigeria's justice system will not be achieved in a day. In the meantime, Nigerians should consider developing a world where the threat of a scathing review and a one-star rating discourages dishonest mechanics from cheating them.