Kenya's elite middlemen, popularly known as brokers, rake in billions each year from one of the most cutthroat jobs in the country.
On May 20, 2020, a ruling by the Competition Tribunal went unnoticed by most. The body had been tasked with the approval of a move aimed at stopping brokers at the Mombasa Tea Auction from price-fixing antics.
The court overturned a decision by the Competition Authority of Kenya (CAK) and allowed East Africa Tea Traders Association (EATTA), which runs the auction, to continue fixing the Ksh1.4 billion fee for brokers. Usually, farmers partly pay brokerage fees.
The story is the same across various other industries, but agriculture has been the most adversely affected. Speaking to Kenyans.co.ke Fredrick Murithi, a farmer based in Nkubu, Meru revealed how he was forced to abandon his venture due to the middleman effect.
"I had several acres of cabbages which the middlemen used to buy at Ksh5 per head. However, one day I got to travel to Wakulima market in Nairobi and found out that they resold them at Ksh80 per head. That's when I abandoned that particular venture," he explained.
"The people making money from farming sector in Kenya are not farmers. They are either selling stuff to farmers or buying stuff from farmers. Farmers are caught in the middle - the true 'middlemen' - and they are not making money from farming," another Kenyan opined.
Gikomba market faces a similar challenge. A group of traders discovered the billions ripe for the taking at the famous market.
The brokers are unregistered and unregulated middlemen plying their trade in unregulated and informal markets.
They are neither traders nor customers, they add no value to the products, all they do is take the middle-ground and act as a link to the end user thereby making a sizable chunk of money in the process
“When a trader opens a bale of clothes I take it and go find a market for it. The owner of the bale will only need Ksh1,000 from every bale. However, I can sell it for about Ksh1,500,” said broker based in Gikomba while speaking to the media, adding that he can sell as many as 10 bales, earning Ksh5,000 in a day, while each trader along this line earns his Ksh1,000.
In their defense brokers go out of their way to market whatever ware they chose to broker. Despite mostly putting in zero cash into the product, sweat capital is their line of defense.
The real estate industry hasn't been spared either. If you have ever tried looking for a house to rent in some of the estates in the country or land to buy, then you might have been asked to pay viewing fees by people who claim to be agents of the owners of the property you’re eyeing.
Whether or not the tenant opts to move in, the fee is non-negotiable. With the number of people moving into new houses in Nairobi alone, one can easily understand how these group of smooth operators make bread.
The matatu sector hasn't been spared either. Some brokers have created bus stops, and claimed ownership. They charge matatu operators every time they make a stop to pick up passengers who have no idea about the underlying economics that results in spiking fares.
However, most of the stories regarding middlemen have had negative connotations with farmers often venting about being on the losing end.
In May 2019, Kenya National Chamber of Commerce and Industry (KNCCI) President Richard Ngatia said the middlemen must be eliminated to save the poultry industry in Kenya.
Since 2018, farmers and entrepreneurs in the sector have been protesting over the the influx of cheap eggs from Uganda, complaining they are struggling to break even due to the high cost of feed and low returns.
In Busia, sugarcane farmers had to start holding regular training sessions just to try and get rid of the middlemen in their industry.
"Sugar cane farmers in the County are losing millions of shillings by involving middlemen in their businesses and by educating them they will be able to directly deal with millers," Geoffrey Omoding a leader in the area told the media.
From real estate, to housewares, to agriculture, the middlemen often end up raking in millions purely from sweat capital, which is why they have been often branded as villains.
