A planned phasing out of 14-seater matatus has been shelved in favour of a system where the public service vehicles will only be allowed to ply rural and peri-urban routes.
The policy shift by the government follows protests from the industry that there was no effective financial arrangement for individual operators to acquire higher capacity buses. (Related: New vehicle dealers get a big boost as rules push bus sales)
“New 14-seaters will continue being registered,” said Transport minister Amos Kimunya. “We have listened to the concerns of the operators and we are still open for discussions on the best way to phase them out.”
The Transport Licensing Board (TLB), issued a notice last year stopping the licensing of the 14-seater matatus but new matatus join the fleet on Kenyan roads everyday.
The initial plan by the Ministry of Transport was to stop further registration of new 14-seater matatu by January 2011 and re-assign the existing ones out of the main urban areas. “The transport Licensing Board is the one to decide what routes to allocate them, but not inside the main urban areas,” said the chairman of the Matatu Welfare Association, Mr Dickson Mbugua.
In the case of Nairobi that would mean that matatus can operate along routes that do not require picking of or dropping off passengers within the Central Business District. The TLB also directed the formation of matatu Saccos in the hope they would help operators pool resources to buy the buses but many, having been formed just to comply with the directive, lack structures and the critical mass that could appeal to asset financiers.
So far, the government has registered about 700 matatu Saccos but the ministry has only certified 450 as having met the conditions to operate as public transport vehicles. (See related: PSV reforms now target peer pressure to instil order)
Matatu operators said there were issues of Sacco organisation and management that must be agreed upon by members before a common investment plan could be drawn.
Co-operatives Development Minister Joseph Nyagah had advised Saccos to merge in order to increase their capital base, qualify for financing from banks and afford qualified back office personnel.
The shift would puncture the demand for locally assembled buses that had picked up in the past two quarters of the year. It may also adversely affect sales of new motor vehicles and body building services.
Dodi Autotech Limited, a vehicle assembling company, told the Business Daily early this month that it processes 50 bus orders a month compared to an average of 20 a month last year.
New motor vehicle dealers sold 938 buses in the seven months to April 2011 from 738 buses in a similar period last year, representing a 21 per cent growth, data from the Kenya Motor Industry Association shows.
According to 2011 Economic Survey, the number of registered 14-seater matatus declined by 19 per cent over the year in response to government change of policy.