Are NYS buses in unfair competition with matatu operators?

A National Youth service bus in traffic along Racecourse road where Githurai residents board their passenger buses. The youth buses are offering cheap fare during peak hours which is a move by the government to tame the rogue industry that hikes fare unnecessary and to also curb shortage. 23/3/2018 George Njunge /standard

Is the government’s move to introduce subsidised buses undercutting matatu owners? This is the claim put forward by Matatu Owners Association (MOA) last week when the State rolled out the new service through the National Youth Service (NYS).

The buses ply key routes across the city and have capped charges at between Sh20 and Sh50 for off-peak and peak hours respectively. MOA Chairman Simon Kimutai now claims this will muscle out struggling matatu operators.

“These buses will traverse the city which is not fair to matatu operators who are restricted on how far they can operate,” said Mr Kimutai. “People have taken loans to run their business and the undercutting from the government will make it impossible for them to survive.”

Mr Kimutai complained that the exemption of the NYS buses from expenses borne by public transport vehicles such as taxes, inspection fees and loan repayments drastically reduces operational costs, allowing the buses to charge much lower fares and still break even.

However, the notion that the buses will undermine operations by other PSVs is overstated.

Sacco management of the sector has removed much of the costs that in the past raised the cost of doing business for matatu operators.

For example, individual operators today pay a flat fee to a prescribed Sacco when a new vehicle starts operations.

This is cheaper and less cumbersome compared to the past where operators had to deal directly with the National Transport and Safety Authority and the Kenya Revenue Authority for each vehicle.  

Daniel, a matatu driver working for Umoinner Sacco that plies the Umoja route, explains that the government-subsidised buses can operate harmoniously alongside Sacco PSVs as long as route planning is done strategically.

“If the NYS buses are put on the routes that are heavily populated such as Umoja, Embakasi and Kasarani, then both can run efficiently because there is sufficient demand in these routes,” he explained. In addition to this, phased introduction of the buses would provide Sacco operators who recently invested into the matatu business adequate time to recoup their investment and adjust their pricing and frequency as per changing demands. This will be of direct benefit to passengers who often complain about unpredictable pricing in the sector.

Mr Kimutai’s claim that the NYS buses will undercutSaccos is thus overstated.