President Uhuru Kenyatta’s directive to the National Transport and Safety Authority (NTSA) to target public service vehicle (PSV) operators who have increased fares in the wake of the recent increase in petroleum tax is worrying.
Mr Kenyatta has argued that his fiat arose from utter concern that local transporters are taking advantage of the new fuel levy to disproportionately increase fares, making life difficult for ordinary folks.
To this end, the President warned that any public transport operators found charging fares beyond the recommended levels will lose their PSV licences.
This order is problematic for a number of reasons. First, there is no specific guide as to what constitutes “overcharging passengers”, making the directive vague and opening transporters to abuse by overzealous officers.
Besides, matatu operators say the fares displayed inside their motor vehicles are only a guide meant for passengers and are not legally binding to the extent that NTSA can enforce as the President has directed.
Second, and perhaps more importantly, Mr Kenyatta’s order is not backed or anchored in any law – raising the question as to his commitment to the rule of law. Without a clear legal mandate, our conclusion can only be that such directives are solely driven by populism that lacks a grounding in the economics of situation.
The only source of comfort is that because the NTSA is not legally mandated to set fares for PSVs, the order is unlikely to ever be enforced.
Yet this has not prevented the uproar that Mr Kenyatta’s utterances has caused in the public transport sector.
It must be stated that the dictates of the free market economy in which we operate demand that market forces determine the cost of goods and services – including ticket prices.
While a degree of government intervention exists in nearly all free-market economies, ticket prices in Kenya’s mostly private-run transport sector must be left to the forces of competition.
That is because profit is the ultimate reward for the investor who undertakes risk. An economic environment where the State has shown that it could interfere either on the basis of populism or arbitrarily collection of higher taxes has the effect of making potential investors jittery and spooking the system.
That must not be allowed to happen.
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