In 2013, three men huddled in a room in Ambassadeur Hotel in Nairobi's central business district. Outside the meeting room, matatu horns were blaring and touts were engaged in a shouting match, trying to attract the attention of commuters. It was chaotic, and coincidentally, the reason for their meetup.
The men had years before wadded into the chaotic, but very lucrative Kenya matatu sector, made some fortune as members of different saccos, but felt that with less chaos, their returns would be higher.
To achieve this, they decided to bring corporate governance into the business.
“We wanted to formalise the industry. We started Super Metro Limited with eight buses since we could not meet the threshold set by the regulator (30 buses) for registration as a Sacco,” says Nelson Mwangi, Super Metro Chairman.
Super Metro Chairman Nelson Mwangi during an interview at their offices located in Njegi House, Nairobi on April 26, 2024.
Photo credit: Bonface Bogita | Nation Media Group
What's in a name?
Unlike other matatu owners who coin a name for their saccos by picking initials from the routes their vehicles ply, Mr Mwangi and his two co-founders wanted the names of their firm to encapsulate their vision.
The name Super Metro was coined from the word super as they wanted to be seen as offering superior services and metro from the famous efficiently operated stations in Europe.
Management structure
The co-founders put together a management structure that is led by a General Manager. A 12-member Board of Directors provides oversight on the management.
“Recruitment of drivers was the low hanging fruit. We formed a panel of directors for that task. Those interested were to apply, get interviewed to enable us know their history and whether they were conversant with the matatu business,” says Mr Mwangi.
Right from the recruitment, the chairman says they had to make them understand that they were running a different matatu Sacco and so they had to behave appropriately and adhere to the strict code of conduct.
“We started slowly building our sacco, regulated fares charged by the conductors, and soon established some order. Commuters started queuing for our vehicles due to our quality services,” says Mr Mwangi of the reception from the two initial routes in Juja and Kikuyu towns.
Rough start
But the ride to order was anything but smooth.
Getting the nod from the regulator (National Transport and Safety Authority) and securing licences from the county governments proved difficult as other operators fiercely opposed their entry with some resorting to crude and unorthodox means.
Mr Mwangi notes that old habits die hard and so a good number of their drivers opted to quit unable to cope with the strictness and orderliness demanded of them. Getting their replacements wasn’t easy either, and in some circumstances, they couldn’t get vehicles on the road due to scarcity of drivers.
The other headache they had to contend with, Mr Mwangi says, was harassment and arbitrary arrest of Super Metro staff by traffic police officers due to their refusal to offer bribes despite being fully compliant.
“We refused to get into that trap. Why should you pay bribes if you are complaint?” Mr Mwangi poses.
He says that most matatus or saccos fail primarily due to poor customer services. At Super Metro, he says they are continuously looking to improve their services.
“We can’t claim perfection. We look at it like what can we do to get more customers,” he explains.
The matatu industry veteran explains that drivers and conductors get unruly because most of them don’t consider it as a profession and that the government is partly to blame because there are no formal training centres for conductors.
A profitable venture
Mr Mwangi says matatu business is a profitable venture and the only cost points eating into their profit are high fuel costs and interest rates on loans.
“From 13.3 percent interest rate in 2023 to 22 percent in 2024, loan repayment is almost unaffordable for a new 33-seater bus that goes for Sh6.7 million,” laments Mr Mwangi adding that vehicle maintenance cost has equally gone up.
“Some people believe that matatu industry is a very risky venture but business is about taking risks. We have tried to reduce the risk by taming rogue drivers and conductors,” says the chairman.
Membership
Super Metro currently has a fleet of over 500 buses. An investor wishing to join pays an entry fee of Sh50,000.
Mr Mwangi notes that many corporate professionals silently investing in matatu industry and approach Super Metro to manage their vehicles for a fee, saving them the hassle of overseeing the operations on daily basis.
On average, a 33-seater matatu rakes in Sh 7,500 net per day after deduction of fuel, wages for the driver and conductor of Sh2,000 and Sh1,300 respectively and other charges.
Route selection
Mr Mwangi says that while most matatu saccos pick routes with high passenger traffic, Super Metro prefers to go where passengers lobby, citing an example of JKIA where the management requested for their services.
In Nairobi County, the company pays Sh5,820, Kiambu (Sh3,000), Kajiado (Sh3,000) and Machakos Sh5,600 monthly for the routes.
Building a brand by accident
The Super Metro chairman says that from the onset, their goal was to bring sanity in the industry and had it well figured out but little did they know it would become a trusted brand.
“We realised that through excellent service and consistency, you can build a powerful brand,” says Mwangi adding that Super Metro buses have minimal decoration and little advertisement because they like promoting their own brand.
Mr Mwangi explains that even though Super Metro has over 500 buses in its fleet, the demand is far from being met.
The company plans to expand its fleet by 150 buses this year through their financier, the National Bank of Kenya.
“We are also embracing e-mobility with electric buses. Currently, we are carrying out a survey on carbon emissions from our combustion engine buses to quantify how much carbon one bus emits to the environment,” explains Mr Mwangi.
He adds that after quantifying that, they will decide on whether to get into the carbon credit market.
For now Mr Mwangi says that the only challenge with electric buses is the lack of proper charging infrastructure.
“It can be profitable compared to fossil fuel buses but at the moment, the fossil fuel engines make more money than electric buses,” he concludes.
Data from Kenya National Bureau of Statistics indicates that matatu industry generates over Sh200 billion annually, creating over one million direct and indirect employment to drivers, conductors, mechanics, and graffiti artists, among others.
