Kenya’s private sector warns trust deficit in public, private institutions is driving up cost of doing business

Kenya’s private sector has warned that declining trust in public institutions and unpredictable policy environments are raising the cost of doing business and undermining the country’s competitiveness.

Business leaders, policymakers and other stakeholders made the case at a high-level Private Sector Roundtable in Nairobi on Tuesday.

Themed “Trust as an Economic Asset: Strengthening Public-Private Dialogue, Regional Economic Cooperation and Digital Trust for Market Resilience and Sustainable Growth, the roundtable, convened by the Konrad-Adenauer-Stiftung (KAS) Kenya and the Institute of Public Finance (IPF), brought together representatives from government, the private sector, financial institutions, professional bodies, academia, civil society and regional organisations.

The discussions were premised on a broader understanding of trust, not simply as a governance issue, but as an economic asset that influences investment decisions, regulatory compliance, innovation, access to finance and long-term competitiveness.

The summit concept notes that trust is fundamental to functioning markets, resilient economies and sustainable development.

Speakers argued that weak institutional trust carries a direct financial cost. Research cited at the event estimates that African countries pay about $75 billion a year in additional interest charges because of risk premiums associated with perceptions of weak governance and institutions. Low-income countries, meanwhile, attract less than one per cent of global foreign direct investment despite significant demand for capital.

Prof. XN Iraki of the University of Nairobi’s Faculty of Business and Management Science said low trust forces companies to spend more on contracts, audits and security.

“When trust breaks down, everyone pays for it: higher interest rates, more red tape, slower growth,” he said.

He added that trust should be viewed as a long-term economic asset whose value extends across generations.

Trust deficit extends beyond government

Recent surveys underscore the challenge. The 2025 Edelman Trust Barometer found that only 38 per cent of Kenyans trust government to do what is right, a four-point decline from the previous year. Business, by contrast, was trusted by 72 per cent of respondents, NGOs by 76 per cent and the media by 66 per cent.

The 2026 Edelman data show some overall improvement in institutional trust, although a clear income divide remains, with the Trust Index standing at 73 per cent among high-income Kenyans and 66 per cent among low-income groups.

Afrobarometer findings released last year similarly show declining confidence in key public institutions, with trust in the President at 45 per cent, Parliament at 44 per cent, the courts at 50 per cent, and both the police and the Independent Electoral and Boundaries Commission at 36 per cent.

The roundtable, however, broadened the conversation beyond government-citizen relations. Its framework identifies trust gaps across several relationships, including government and business, businesses and consumers, private-sector actors themselves, county and national governments, and public-private partnerships.

This wider approach reflects growing recognition that economic trust must operate across the entire market ecosystem.

Predictability key to investment

Mathias Kamp, Country Director of the Konrad-Adenauer-Stiftung Kenya and a co-convener of the Summit, said infrastructure spending alone cannot deliver sustainable economic growth without trusted institutions. “Trust is a prerequisite for investment and economic growth,” he told the roundtable.

Businesses require predictable policies, transparent institutions and effective regulatory systems to invest and expand, while citizens expect accountable governance, quality public services and meaningful participation in decision-making.

The concept note also stresses the importance of ethical leadership and responsible corporate governance within the private sector itself.

Investors increasingly cite policy unpredictability as a major concern in Kenya, ahead of tax incentives. While the country attracted a record $3.2 billion in foreign direct investment in 2025, sustained investor confidence will depend on stable rules, transparent regulation and credible institutions.

Trust and regional trade

The roundtable also linked institutional trust to Kenya’s ambitions to remain a competitive regional economic hub.

Frameworks including the East African Community (EAC), Common Market for Eastern and Southern Africa (COMESA), African Continental Free Trade Area (AfCFTA), African Growth and Opportunity Act (AGOA) and partnerships with institutions such as the African Development Bank offer opportunities to expand trade, strengthen regional value chains and attract investment.

But participants cautioned that these opportunities cannot be fully realised without trusted institutions, predictable policies and effective collaboration across national and regional borders.

Francis Kisirinya of the COMESA Business Council said cross-border investment can itself strengthen trust between countries by creating greater economic interdependence, provided institutions are viewed as reliable.

Digital economy creates a new trust challenge

The discussions also highlighted a growing dimension of economic trust: the digital economy.

As e-commerce, digital finance and technology-driven businesses expand, confidence in digital systems is increasingly important to innovation and economic participation.

The roundtable’s digital trust pillar focuses on cybersecurity, information integrity, responsible artificial intelligence, data protection and inclusive digital transformation.

Lucy Muchoki, Partnership Director at the Kenya National Chamber of Commerce and Industry, said the conversation must therefore move from diagnosing the trust deficit to developing practical solutions.

She presented the Chamber’s e-commerce Trust Seal, a digitally verifiable mark for verified sellers, as one tool for strengthening consumer confidence, particularly among micro, small and medium enterprises trading online and across borders.

“Trust is not simply about reputation; it has direct economic value,” she said.

PPPs require confidence on both sides

Daniel Ndirangu, chief executive of the Institute of Public Finance, stressed that public-private partnerships can only deliver sustainable outcomes when they are supported by transparent procurement, predictable regulation and clear risk-sharing arrangements.

“PPPs are not free money,” he said.

The roundtable’s framework similarly identifies transparency and accountability in PPPs as central to building market confidence and mobilising investment.

From diagnosis to commitments

Mustafa Ibrahim, Deputy Director-General at the State Department for Foreign Affairs, speaking on behalf of Principal Secretary Dr Korir Sing’Oei, said governments and businesses share responsibility for restoring confidence.

Governments must create stable and predictable policy environments, he said, while businesses must uphold strong governance, ethical leadership and responsible business practices.

That emphasis on shared responsibility is central to the Global Trust Summit process. The roundtable was designed not simply to identify trust gaps, but to develop practical reforms, partnerships, policy actions and stakeholder commitments.

Participants were organised around three broad areas: public-private dialogue, institutional trust and market confidence; international and regional economic cooperation; and digital trust, information integrity and innovation.

The discussions are expected to feed into a consolidated private-sector position paper and ultimately contribute to the Nairobi Statement on Global Trust.

Other expected outcomes include recommendations on regulatory predictability, investor confidence, regional trade competitiveness and digital trust, as well as a network of public- and private-sector champions committed to advancing trust-building initiatives beyond the summit.

Summit seeks measurable outcomes

Organisers say the October summit is expected to produce concrete outcomes, including a Nairobi Statement on Global Trust, a public Trust Index dashboard, a monitoring secretariat and specific policy recommendations backed by accountability mechanisms.

The private sector’s message from Tuesday’s roundtable was clear: Kenya’s trust deficit is not only a political or governance concern. It has tangible consequences for investment, trade, innovation, competitiveness and the everyday cost of doing business.

For a country seeking to position itself as a regional economic hub, rebuilding trust may therefore be less about restoring confidence as an abstract ideal and more about creating the institutional conditions under which businesses invest, consumers participate, capital flows and economies grow.

Trust, participants argued, is no longer simply a social value. It is economic infrastructure.