Middlemen: Facilitators or price hikers in markets, real estate?

Dar es Salaam. Middlemen have become a defining feature in both the bustling markets and real estate sectors of Dar es Salaam, playing an essential but often controversial role in shaping pricing.

While their involvement brings convenience by connecting buyers and sellers, it also inflates prices, placing an additional financial burden on consumers.

Middlemen leverage their extensive market knowledge to guide buyers to specific shops or properties. They negotiate prices with sellers, incorporating their commission into the final cost, which results in higher expenses for buyers.

A survey in Dar es Salaam markets such as Kariakoo, Karume, Ilala-Boma, where middlemen approach potential customers and offer to assist them in finding what they need, revealed complex findings on the tendency.

As the intermediaries defend their position, potential customers are divided on whether the middlemen are facilitators or price hikers in the markets and real estate.

Renting a room in the city may become a cumbersome job unless one uses the middlemen who are familiar with most streets in their localities.

While this service can be convenient for those unfamiliar with the market, it often means buyers end up paying more than the actual value of the product.

A seasoned middleman in Kariakoo with seven years of experience, Mr Salehe Juma Salehe, exemplifies the essential role these intermediaries play. “I know this market like the back of my hand. I can direct you to any product and tell you the price. For this service, I charge a fee, which is usually added to the product price,” he says.

Another middleman, Mr Salim Kassim, known as Kiroboto from Ilala Boma, adds that the practice is widespread because it benefits both parties involved.

“Most shop owners appreciate us because we bring them customers. In return, we get our cut, and they make their sales. It’s a system that has been in place for years, and everyone understands how it works,” he explains.

In the realm of real estate, middlemen also have a significant impact. Mr Bakari Sabuni, a real estate agent specializing in renting houses, describes his role.

“I know the local rental market very well. I help landlords find tenants and vice versa. My fee is usually a percentage of the rental price, which can sometimes lead to higher costs for tenants. But this is how I make a living,” he notes.

A middleman, Mr Josephat Baraka, 63, known as Mzee Jose wa Mipango in Sinza, Dar es Salaam, deals with both residential and commercial properties.

He offers insight into his approach. “My fee is a percentage of the transaction, which can increase the cost for buyers or renters. However, I provide valuable market insights and negotiation skills. I always stick to my client’s side.

If my client is a property owner, then the other side must be strong enough to negotiate and pay less. Conversely, if the other party is a property owner, they might end up paying more, as we all need to earn money,” he explains.

For shop owners, middlemen are often viewed as an integral part of their business model. These intermediaries bring a steady stream of customers, helping shops increase sales without extensive marketing efforts.

An electronic shop owner in Ilala Boma, Ms Melisa Justine, highlights the benefits of this arrangement.

“These guys help boost my sales. They bring in customers, and in return, I sell more products. Even though the final price may be higher, I get my profit, and the middleman earns his share,” she says.

Another shop owner in Kariakoo, Khalid Reginald, appreciates the efficiency that middlemen bring.

“They know the market and understand what customers want. Instead of waiting for people to walk in, middlemen bring them directly to us. It keeps the business flowing,” he says.

For her part, Ms Celine Anuel, who runs a textile shop in Karume Market, acknowledges the advantages but also points out some drawbacks.

“Sometimes, the middlemen set prices too high, which can turn customers away. But overall, they help us reach more people, especially those who might not have found our shop on their own,” she says.

From the consumer's perspective, the role of middlemen presents a more complex picture. Some appreciate the time and effort saved by relying on these intermediaries, while others are frustrated by the inflated prices.

A frequent buyer in Kariakoo, Mr Julius Emmanuel, values the convenience.

“As a business owner, I don’t have time to go from shop to shop looking for the best prices. They know where to go, and even though I might pay a little more, it saves me time and effort,” he shares.

Another buyer in Kariakoo, Ms Elizabeth Paschal, echoes a similar sentiment. “I don’t mind paying a bit more if it means I get what I need quickly.

The middlemen know the market better than I do, and they help me find what I’m looking for without much hassle. I think it is something they deserve to get more than we even do,” she says.

However, not all consumers are supporting these middlemen.

A regular shopper in Karume Market, Ms Joyce Lymo, voices her dissatisfaction.

“It’s frustrating. I know most products shouldn’t cost this much, but because of the middlemen, the prices go up. In the end, it’s the consumers who suffer because we have to pay more than the actual value of the product,” she says.

Another buyer, Samuel Reuben feels similarly exploited.

“Middlemen take advantage of people who don’t know the actual prices. It’s not fair, especially for those of us who are trying to save every shilling. This practice makes everything more expensive. It’s not fair for us consumers,” he says.

However, the influence of middlemen extends beyond market stalls to real estate transactions. Real estate agents play a similar intermediary role, facilitating deals between property owners and buyers. Their involvement often results in increased costs for both parties due to their commission fees.

A notable example involves a land sale in Mbezi Msumi. The land, valued at Sh56 million, was subjected to a pricing dispute when three middlemen found a buyer willing to pay Sh104 million.

The middlemen suggested that the seller accept his Sh56 million and leave the remaining Sh48 million to them.

The seller, Mr Abdulrahman Said Said, refused, choosing not to sell the land rather than compromise on such a significant portion of the proceeds.

“I refused. It is my land, not their property, but they wanted a bigger share as if they were part of my family. I think they should find a better way to balance their greed with the service they provide. It seems like they are too greedy and dishonest,” he explains.