For years, the term “broker” often has a negative connotation in Kenyan society. Whether in business, politics, or farming - brokers are often blamed for all problems - real and imagined.
It is no wonder that you will often find a majority of Kenyans putting a caveat (owner selling - no brokers) whenever they are selling a precious item such as a vehicle or land. You will also find similar notices in the large market spaces in Eastleigh, Gikomba, Kamukunji, and the rest.
However, it is not always the case that a broker is a bad person. Indeed, Wall Street, the world-famous financial hub in New York City, is largely composed of brokerage firms - only that they trade with different products.
To understand why brokers in the Kenyan context often have such a bad name, we should start by defining the term. The most basic definition of a broker is an individual or business entity that acts as an intermediary between a buyer and a seller for a fee.
It is a low-entrance job since, in most trades - there are no requirements for a capital deposit. Person A needs a certain product or service. The broker learns about Person A’s demand and happens to know Person B who is selling the same product. The broker could buy the product, add a markup and sell it to Buyer A.
In most cases, the broker does not even need to use their money in buying from A - they could agree to connect the two for a fee or a commission on the sale. For such a straightforward arrangement, you might wonder why Kenyans dislike brokers so much. This article will offer some insights and tips that will guide you to becoming a successful and ethical broker.
A broker does not produce any tangible service. They actually do not need capital in most cases - but they benefit from having information about markets. Market intelligence may appear to be a new phenomenon with the rise of technology and competition for data - but it has always been part of the trade.
In pre-colonial Kenya, when barter trade was booming, you would have goats but need beans - the people who facilitated that meet-up were technically doing what a broker does - but probably without a fee.
To become a successful broker, the best advantage you can have is market intelligence. With a bird’s eye view of the market, you can identify opportunities even when you do not have a starting capital. Along Thika road, one Kenyan has gained nationwide fame for basically trading information on the best routes that matatu operators should use in the morning.
The matatus pay him a small fee to know the fastest route to town during rush hour. The service has become so popular that over 400 matatus rely on his services a day - earning him a fortune in the process - his only cost? Just airtime to get information on the road happenings.
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The reality is that people rarely feel cheated when they have received genuine service. Consider this; you want to purchase a Ksh50,000 television with a specific model in mind. A broker knows a seller selling the exact model you wish to buy at Ksh42,000. If they were to disclose that they can get you what you were looking for a Ksh5,000 commission, then all three parties would walk out happy.
Part of the public relations crisis among brokers is confusing market intelligence with cunning tricks. For instance, in the above example, If I were to get a cheap replica of the model you wished for and convinced you it was the real deal - I would probably be hailed as a talented broker - while in reality, I would just be a scammer.
A broker is an intermediary and this often means they are at the center of two parties - the seller and the buyer. Managing the relationship between the two parties and securing a win-win situation is the hallmark of a good breaker. The rule applies to any business transaction because businesses are about people - behind that logo or cheque - is a person.
Being a good broker goes beyond being nice to the buyers and the sellers. You have to be a people person and cultivate relationships even when there is no immediate business goal. If you are a real estate agent, you will probably get a lot of business opportunities talking to caretakers and security guards.
It probably sounds like a no-brainer but greed can be particularly luring when you are a broker. As a link between a willing buyer and seller, you are in a privileged position to create a fair markup out of the deal. Deciding a fair amount is not always easy because as human beings - we are prone to the emotions of greed which involves wanting excess amounts.
The danger of greed, however, is that they risk the entire success model. With greed, you are likely to push the profit margins to unsustainable levels, become irritational in your decision-making, compromise honesty and accountability, and ultimately push away clients. There is no straight-jacket-remedy to not to be greedy but self-discipline and accountability are necessary to sustain your income as a broker.
A good reputation is priceless when you are a broker. You want people to trust you so that you can connect them to the exact opportunities they need. Cultivating a positive reputation means carefully pondering every business deal you engage in.
It often means that sometimes you have to go beyond the traditional role of a broker in order to build a positive reputation with clients. Consider the example of stock brokers who trade in shares and securities at the Nairobi Securities Exchange (NSE). The routine has been that you walk in with your money and tell them you need to buy shares from Company X and they quickly work on your order without engaging you on your decision.
However, a growing number of brokerage firms are employing investment analysts - trained professionals who engage in detailed market research and send regular briefs to clients on the shares that are likely to perform well or weaken - and the respective reasons. Indeed, when you walk in for a purchase, it is likely that you will have a conversation with the financial analyst or advisor who will explain your options before you can make the final decision.
The same applies to the less formally structured brokerage services - from brokers selling cows, farm produce, or real estate. Beyond going the extra mile, invest in a system of collecting customer feedback and using it to improve your reputation. Further, do not be afraid to monitor and respond to customers who may have something negative to say about your trade - engage them privately and do not be shy to explain your model - whether before or after the sale.
A good broker should be obsessed with protecting his customers. The world’s richest man, Jeff Bezos is credited with the popularity of the term - customer obsession. When Bezos first started Amazon as an online bookseller - he was insistent on his staffers getting the value of customer obsession - always thinking of how to improve a customer’s experience and value.
At the time, Amazon did not publish any books or warehouses. It offered a platform where you could order a book, after which it would work with bookshops and printers to make the delivery. It is a model that any brokers in the Kenyan market can embrace to make a fortune.
However, the model only works if you can protect and guarantee that customers will get their money. This model has been replicated with some of the world’s biggest technology firms - Uber, and Airbnb, among others.
Whether operating in the dusty neighborhoods of Kitengela - helping tenants in their search for houses - or sourcing quality potatoes in the chilly Kinangop weather, there are numerous opportunities if you can protect your customers.
Focusing on areas where there are problems and offering solutions is one of the hallmarks of a successful broker. Naturally, if there are problems, it probably means your competition is not doing a good job and if you can fill that void - you could very well land a windfall. In Kenya, one of the weaknesses among brokers is dishonesty and greed. Thus, this should form part of your strategic positioning.
The weakness is not always about the action or inaction of brokers - but also concerning market gaps. For instance, parts of Nyandarua County have witnessed bumper harvests but their produce is not benefitting them because no one is willing to buy. Indeed, a recent news item showed some of the farmers feeding groceries to their cows - to save them from rotting away. The situation is happening when most parts of the country are ravaged by drought, with the price of cabbage shooting to nearly Ksh100 in Nairobi.
Being a broker may not sound like a prestigious job title in Kenya - but it is a career filled with opportunities. Part of the negative publicity that brokers get relates to the unethical behaviour of scammers posing as brokers.
However, when done ethically, brokerage services play an important role in ensuring market players interact and get value. The barriers to entry are also low since it is not a capital-intensive engagement and could offer a way out for the unemployed Kenyan youth.