Business opportunities: brokers – filling the gaping hole in public infrastructure

Yesterday’s Business Daily had a fascinating article by Dr. Laila Macharia on Thriving in the inefficiencies of public institutions. From Nairobi’s “parking brokers” to court process facilitators, she writes that “a good part of Kenyan entrepreneurs rely on these failures for their daily bread”.

This may be the reason that when the government tries to restore order and improve public services, these initiatives are met with great resistance, by the very people who capitalise on dilapidated or lacking facilities.

The broker sector has become a culture. You need a middle man to manoeuvre public processes. For instance, if one goes to the companies, lands or court registries, you have to more or less fight your way to the front of the queue. Brokers have taken precedence and because they have managed to become acquainted with the public officers, they tend to get their work done first.

Then the broking industry is also divided into three strata or levels:

Level 1: operate on the streets of Nairobi CBD. You can usually spot them around Kenyatta Avenue talking loudly on their mobile phones about this or that deal and how so and so in the lands, commercial or registration of persons department is his friend and he can get whatever needs to be done like that (while flicking his fingers just to show whoever cares to listen just how easy it is).

However, don’t feel that there is anything demeaning or entry level-like here. Some old-timer brokers swear that the streets of Nairobi are the best place for business and thus are not interested in moving up to level 2.

Requirements: a mobile phone (airtime is optional – you can also “please call me” with Safaricom if needed) and someone who knows some people in public office (City Hall, Ministries and Parastatals).

Level 2: these operate in restaurants and hotels in Nairobi. They are categorised demographically by an imperceptible but recognized line called Moi Avenue. The ones towards Tom Mboya, Ronald Ngala, River Road are lower in social ranking to the ones who sit in the Laico Grand Regency or sip tea at the New Stanley. A popular in between location is Simmers on Kenyatta Avenue.

However, don’t feel that the broker business in downtown Nairobi is less profitable than the upscale hotel enterprise. Both are on an equal par, they have to operate where they do to reach their clientele. These enterprising brokers practice market segmentation, placing themselves in the locality their clients feel comfortable in. However, profit margins in this level have been affected by restaurant owners and managers becoming wise to this business going on without any rent. They thus have “no idling” signs, meaning that the broker must buy some tea or a soda to remain in situ.

Requirements: mobile phone with some airtime to send text messages, some money for a cup of tea and of course know someone who knows many people.

Level 3: these brokers have offices. However to pay the rent they often have to diversify into other businesses e.g. real estate, cyber café etc. The location once again determines the type of customer.

Requirements: mobile phone, rent money and of course know someone that knows many people in high places.

Yes, there are Kenyan entrepreneurs who make their daily living out of broking, but on the flip side there are also entrepreneurs who can’t afford the services of the broker class and thus have to fight the public system themselves.

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About yipe
Yipe an acronym for the Youth Interactive Portal for Enterprise is an organization that assists entrepreneurs to start up and manage their small businesses.

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