If you asked around, many students and graduates would recall that one moment when they were so broke, they had to borrow money from a friend. Being in school without money for upkeep can be a frustrating experience that could potentially affect one’s academic performance.
Life in university was not any different for Paul Mugenda. When he joined Technical University of Kenya in 2014 to study actuarial science, his parents would send him money, but just enough to get by. To liberate himself from this occasional brokeness, Paul, 23, started hawking tea leaves at Githurai bus stop after school.
“I would buy tea in bulk from Kangari in Murang’a County where I come from. I would then repackage it for sale, earning about Sh300 in profits every evening. My customers were mostly people returning home from work,” he recounts.
But even this money was not enough to pay his school fees and cater for his needs, being a privately-sponsored student at the university.
In-between his hustles, Paul met an insurance broker in Nairobi who introduced him to the world of insurance. With the promise of an attractive commission upon sale of policies, Paul stopped selling tea leaves and went into insurance, hoping to rake in money. He was wrong.
“Selling insurance policies is not easy. It involves walking from one office to another and talking to people hoping to sign them up. There are times I would go for days without closing any deal,” he says.
Soon, Paul gave up. At around the same time, he met another friend who asked him to try his hand at forex (foreign exchange).
“My friend lent me Sh30,000 to start me off, but with no knowledge of the risks involved, I blew it up within days. Devastated, I went back to my friend, who was kind enough to lend me an additional Sh50,000 to restart,” he narrates.
He goes on, “He mentored me and trained me on the intricacies of forex, including risk management. Soon, I learnt my way around it and several months later, I started earning good money.”
This would mark the genesis of Paul’s forays into forex before his eventual breakthrough. Three years on, Paul continues to get better, and today, he has his own forex company, Paris FX. With a net worth running into tens of millions of shillings, his financial woes are well behind him now.
“Paying my bills does not bother me anymore. I also support my family with ease, including paying school fees for my younger siblings. As my way of giving back, I organise mentorship seminars for young people in my home county,” he says.
So, what is forex and how does it work?
“Forex is the act of buying and selling currencies online. Players in this type of trade include financial institutions, corporations, investors and individual traders, who exchange world currencies to balance markets, to facilitate international trade and to make a profit.”
Transactions involve the simultaneous buying and selling of two currencies, he says.
“As a trader, you may use Kenyan Shillings to buy US dollars. In such a transaction, the two currencies are called currency pairs. You buy one currency and sell it at a profit depending on the prevailing forex market situation,” he adds.
To get started in forex, a trader has to deposit a certain amount of money with a certified forex broker, depending on the amount one wants to trade. Some brokers accept as low as Sh1,000. It is then that one is allowed to trade. Libertex, Avatrade and FBS are some of the brokers in Kenya.
Are there risks involved in this type of business? Paul says forex is a risky business, especially for starters.
“This trade is delicately dependent on stability in the world. Events and politics in the biggest economies influence how the market operates. Foreign currencies fluctuate in value by the minute,” he explains, and adds, “Forex is currently unregulated in Kenya. As a trader, all you need to do is to understand the trading dynamics and to conduct proper analysis of the market to avoid losses.”
Unlike in online jobs where more players translate to less money for those seeking jobs, Paul says that the more the participants in forex, the better the returns.
“Forex thrives on volatility. In currency trade, the more the players, the more money there is in circulation, hence the higher probability for profits for traders. Young Kenyans should consider going into forex trading. You may lose money when you start, but once you get the hang of it, you will enjoy profits,” Paul notes.
To get to where he is, he has made monumental losses.
“Forex is not about hard work. It is more like betting. There are days when you make good profits and other times when you lose your money. I have lost as much as Sh3million in a single trading episode. It is the way the trade is,” he says.
To flourish in in this field, patience, grit and fiscal discipline are paramount, Paul says.
He adds, “When the demand for certain currencies is low, you are likely to go for weeks without selling anything, which leads to losses because you still have to pay ‘hosting’ fees to your broker. You just have to dust yourself up and hope for better days.”
Paul uses his platform Paris FX to train new traders about the forex market and providing trading signals, for which they pay a one-off fee of Sh30,000.
So far, he has expanded his business setup to include a registered insurance agency, three coffee shops and real estate.
Through forex, Paul has created permanent jobs for five other young people - an office clerk, an IT expert, a finance officer, a marketer and an operations manager. His cafés employ tens of others on temporary basis.
Yet he wants more.
“In 10 years, I want to be among the top youngest entrepreneurs in the country. In future, I hope to contribute to the establishment of a forex institute in Kenya in future,” he says.