Firms seek to plug traffic jam losses

Heavy traffic jam on University Way, Nairobi. - FILE PHOTO | NMG

What you need to know:

  • A deficient transportation infrastructure system, due to years of underinvestment, has meant residents of Nairobi take an hour, on average, to travel to their workplaces during peak hours.
  • This overload has seen the country’s companies move to investing millions of shillings in programmes designed to cut unnecessary travel
  • Corporate carpooling offers motorists the option of sharing expenses

Kenyan traffic congestion is costing companies heavily, prompting a surge in corporate investment in new ways of doing business, and working, that limit travel, commuting and delivery costs.

A deficient transportation infrastructure system, due to years of underinvestment, has meant residents of Nairobi take an hour, on average, to travel to their workplaces during peak hours, even in private cars, according to the World Bank Group’s Africa’s Cities: Opening Doors to the World study published on February 9.

The situation is worse for those using public transport, with the study finding that only a fifth of the city’s residents can access their jobs within an hour using public service vehicles in the morning, leaving many employees already tired and pressured as they arrive to start work in the morning, when productivity levels should be at their peak.

“Heavy congestion, high rates of walking, informal collective transportation, and the spatial distribution of jobs and residents lead to low employment accessibility in Nairobi and the misallocation of labour,” the World Bank reported.

This overload has seen the country’s companies move to investing millions of shillings in programmes designed to cut unnecessary travel on the road through strategies such as carpooling for employees, e-conferencing and e-commerce.

Fuel costs

Companies that are now embracing programmes that see employees headed in the same direction riding in the same car - mirroring the trend already entrenched in most developed countries – are reporting a sharp fall in fuel costs as well as reduced carbon emissions.

With the cost of driving on major highways set to rise on the looming introduction of tolls – adding to the Sh18 per litre that motorists already pay for the use of roads – corporate carpooling offers motorists the option of sharing expenses.

Carpooling also helps in team building for employees, making friends, establishing new contacts and creating more time to work, as somebody else drives, according to the Motorists Association of Kenya’s website.

“At traffic jam [have you] ever wondered why there is only one person in most of the cars?” MAK, which champions the rights of drivers who drive their own vehicles, says.

“Company carpooling is the best way to minimise traffic jam besides making huge economic sense.”

Slashed costs

Internet connectivity firm Liquid Telecom Kenya, one of the companies with a carpooling scheme for staff, reported in January that it had slashed the cost of transport by 28.46 per cent to Sh9.3 million in six months ended June 2016 compared to a year earlier.

“More individuals using the same route to work and companies taking up carpooling makes for a win-win and effective initiative in achieving a greener, healthier world,” said the Liquid Telecom chief executive at the time, Ben Roberts.

“Taking a few cars off the road may not have an immediate impact on traffic congestion, but as more companies and individuals take up carpooling, overall traffic congestion will decrease, and real savings can be made.”

KCB Group, #ticker:KCB the largest lender in the region, has also embraced vehicle sharing, with the launch of its own shuttle services in June.

The shuttle service takes staff throughout the day between Kencom House in Nairobi’s Central Business District and KCB Towers in Upper Hill.

KCB’s head of corporate and regulatory affairs Judith Sidi Odhiambo said the service was designed to suit staff’s schedules.

“This, we believe, highly reduces the cost of transport for every individual during the various times of the day and eventually the amount of carbon emission attributable to the bank,” she said via email.

“Additionally, staff are not allowed to order transport to venues within a two-kilometre radius and they are, therefore, encouraged to walk to the venue and back.”

The rising uptake of carpooling, especially at corporate levels, has also created jobs for techpreneurs, who are developing apps for shared rides, including Travel Buddy and Carrambee.

Online transactions

The proportion of companies moving transactions online that formerly required travel is also growing.

The Enterprise ICT Report 2016, produced jointly by the Kenya National Bureau of Statistics and the Communications Authority of Kenya between February and May 2016 and released on April 26, 2017, reported that about 39 per cent of surveyed companies were now engaged in either purchasing or selling over the Internet using automated systems.

Some 47.5 per cent reported that they had invested in e-commerce platforms in 2015.

“The highest proportion of enterprises that engaged in online purchases was large firms at 43.9 per cent. About one quarter of micro enterprises engaged in online purchases,” the report states. “Large and medium sized enterprises had the largest proportion of firms selling online at 31.8 per cent and 31.7 per cent, respectively.”

But perhaps the biggest revolution in e-commerce has been witnessed in the financial services sector, where most instructions have shifted online, cutting the cost of brick-and-mortar operations that came with travel costs.

Banks have invested heavily in mobile and internet banking systems in a bid to cut costs.

Equity Bank, #ticker:EQTY for example, has even started phasing out automated teller machines (ATMs), in favour of digital platforms like mobile banking.

“As financial institutions work ever more closely with innovators, consumers will begin to feel the benefits,” said PricewaterhouseCoopers financial services leader for East Africa Richard Njoroge, in a statement on June following the release of FinTech report 2017.

Bank interactions

“The costs and frustrations customers often encounter when interacting with their bank, insurer or fund manager will hopefully begin to subside as they feel the benefit of streamlined, efficient businesses producing more tailored, customer centric products.”

Other travel-saving strategies increasingly being embraced by corporates include e-conferences, especially at the board level.

Firms have also cut costs related to filing and paying tax, through i-Tax, as required by the Kenya Revenue Authority.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.