Fourteen- seater Transport SACCOs - The Co

Report
An Analysis of Socio-Economic Impact of the New Integrated
National Transport Policy
: The Case of Fourteen- seater Transport SACCOs in Kenya
A Research Paper Presentation to Transport Stakeholders during
Transport Workshop
At The City Royal Resort Hotel, Kampala
On 23nd November 2011
By
MR. WANJOHI MIGWI
CO-OPERATIVE UNIVERSITY COLLEGE OF KENYA
P.O BOX 24814 -00502
KAREN, NAIROBI-KENYA
TEL: (254) (020) 2430127, 2679456
A 14 –seater matatu
1.1 Background to the study
Paratransit, going by the name “matatus” in Kenya, form the main
public transport in Kenya, estimated to control 80% of the public
transport. A “matatu” is a public service vehicle (PSV) having a
seating capacity of not more than 25 passengers (The Traffic Act
Cap403 (1963)).
Background cont…
“Matatus” play a very important role in the social- economic
development of a country as they provide incomes to the owners,
informal and formal employees, insurance companies, associated
businesses and taxes to the Central and Local governments. Directly
and indirectly, the “matatu” industry provides 80,000 and 80,000 jobs
respectively..This implies that the fourteen seater “matatus” provide
directly and indirectly 56,000 and 56,000 jobs respectively.
The fourteen- seaters “matatus” are individually owned and managed.
However, some owners are members of Savings and Credit Cooperative
Societies (SACCOs) where they save and borrow money and access
transport routes commonly controlled by the SACCOs.
1.2 Statement of the problem
The “matatus” business in Kenya is controlled by The Traffic
Act Cap 403(1993). However, most of the legal provisions of
the Act were not complied with prior to 2003 due to bad
governance, corruption and general disregard of the rule of
law. The effect of this was increase in fatal accidents due to
overloading, disregard of traffic regulations, poor vehicles’
maintenance, careless driving, lack of standards and stiff
competition. This called for regulation of “matatu” industry
through introduction of Legal Notice NO.161 of 2003 which
gave birth to the Integrated National Transport Policy which
aimed at efficient, affordable and safe transport services. The
policy was unveiled for implementation in November 2010
According to the policy, among many measures, is a
Statement of problem cont..
shift to higher capacity vehicles with explicit instruction of not
licensing any new fourteen –seater vehicle for public transport with
effect from 1st January2011 and those in operation are to operate and
phased out through natural attrition. In addition to this, all
operating “matatus” must join existing or form SACCOs or
companies. This was followed by “mushrooming” of hurriedly
registered PSVs SACCOs. Phasing out of the fourteen- seaters
means phasing out of the SACCOs which do not have capacity to
acquire high capacity vehicles.
In response to the posing uncertainty of the 14-seaters PSVs
SACCOs,astudy was commissioned by the college in March 2011.
This study was to investigate the implications of the new transport
policy on the survival of the fourteen –seaters transport SACCOs
and employment levels in the SACCOs. It was also to propose
actions to be taken by individual owners, SACCOs, Ministry of
Cooperatives Development and Marketing and other stakeholders
1.3 Objectives of the study
The study was to establish:
1. The number of the registered 14-seaters PSVs SACCOs in the
country and in the main towns in the provinces.
2. The level of compliance with the new transport policy in term of
transport SACCOs registration.
3. The level of membership and gender representation in the
registered 14-seaters PSVs SACCOs in the main towns in the
provinces
4. The strength of the registered 14-seaters PSVs SACCOs in the main
towns in the provinces in terms of members’ capital and loan to
members.
Objectives cont…
5. The strength of the registered 14-seater PSVs SACCOs in the main
towns in the provinces in terms of members’ capital and loan to
members.
6. The strength of the registered 14-seater PSVs SACCOs in terms of
routes and vehicles they managed.
7. The level of employment in the registered 14-seater PSVs SACCOs in
the main towns in the provinces
8. The business plans in place to be able to comply with the new
transport policy.
9. The level of awareness of the new transport policy implications to the
14-seater PSVs SACCOs and members in the main towns in the
provinces
10. The training gaps of the members and management board
Research Questions
1. How many registered 14-seater PSVs SACCOs were there in the
country and in the main towns?
2. How many 14-seater PSVs SACCOs had been registered since 1st
January 2011 in the main towns?
3 .What was the level of membership and gender representation in the
registered 14-seater PSVs SACCOs in the main towns?
4. What was the level of share capital and share capital contribution of
the members in the registered 14-seater PSVs SACCOs in the main
towns?
5. What was the level of loan to members in the registered 14-seater
PSVs SACCOs in the main towns?
Research Questions cont….
6. How many employees were employed in the registered 14-seater
PSVs SACCOs in the main towns?
7. What were the new policy implications on the registered 14-seater
PSVs SACCOs?
8. What was the qualification and experience of the board members in
the registered 14-seater PSVs SACCOs in the main towns?
9. Had pre-cooperative education been offered to board members of
the registered 14- seater PSVs SACCOs in the main towns in the
provinces?
10. What business strategy was in place to comply with the new
transport policy?
Research Questions
 1.4 Research Questions
 1. How many registered 14-seater PSVs SACCOs were there in the
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

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country and in the main towns?
2. How many 14-seater PSVs SACCOs had been registered since
1st January
2011 in the main towns?
3 .What was the level of membership and gender representation
in the registered 14-seater PSVs SACCOs in the main towns?
4. What was the level of share capital and share capital
contribution of the members in the registered 14-seater PSVs
SACCOs in the main towns?
5. What was the level of loan to members in the registered 14seater PSVs SACCOs
in the main towns?
1.5 Methodology
The investigation was carried out through descriptive survey
and random and purposeful sampling was used.
Secondary and primary data were collected during the end of the month
of June 2011 through two open –ended questionnaires
targeting DCOs and SACCOs as respondents.
The primary data was collected from 78 SACCOs and 15 DCOs
in the main towns –
Nairobi,Thika,Muranga,Nyahururu,Nyeri,Nakuru,Kericho,Eldoret,
Kisumu,Kakamega,Embu,Meru,Kitui, Machakos and Mombasa) of
the seven provinces in Kenya and analyzed through Statistical
Packages for Social Sciences while findings were presented using
charts, graph and percentages.
Methodology cont..
A validation workshop was held at the college on 15th-16th August
2011.The workshop was attended by mainly the board members of the
low capacity (fourteen –seater) and a few board members of high
capacity PSV SACCOs from whom the data was collected .In
attendance were also the stakeholders in the co-operative movement,
media and transport industry such as CIC, Co-operative Bank of Kenya,
KUSCCO, Transport licensing Board and officials from the ministry of
MoCDM. The purpose of the workshop was to validate the finding
Summary of findings
1
In the seven provinces, majority of the SACCOs were
registered in 2010 and 2011 as shown by the increased number
of SACCOs registered.
2
On the number of board members in the SACCOs, it was
found that majority of the SACCOs had six to twelve board
members while a few had four to six members .
It was also established that women were not adequately
represented in the board
as in some of the SACCOs, there were very few or no women,
which is contrary to the mandatory rule of one third
representation of women in all public offices.
The membership in the SACCOs was low as majority had
slightly above twenty members while a few had fifteen to
twenty.
3
4
Findings continued…
5. It was also found that in majority of the SACCOs, there were very
few or no women members. However, in a few of the SACCOs, the
number of women was high.
6. Majority of the SACCOs were weak in terms of loan granted and
capital base while a few were strong. For instance, some SACCOs
had not granted any loans to members while a few had granted
loans to the tune of millions in Kenya shillings. However, many
SACCOs had experienced high monthly members’ share
contributions while a few had experienced low monthly share
contribution.
.
Summary of findings cont..
7. Many SACCOs were managing very few PSVs and routes.
8. Many SACCOs had few employees employed to work in the offices
as many had only one employee. However, a few had more than one
employee while others did not have any. At the bus parks, many
SACCOs had slightly more than one employee.
9. Majority of the SACCOs had chairmen of the board with one to two
years experience in cooperative management while a few had none
with any experience. Majority of the SACCOs had vice chairmen and
treasurers with no cooperative management experience while a few
had some with one to two years experience.
10. It was found out that majority of the SACCOs had board members
with pre-cooperative education while a few had none.
11.Majority of the board members of the SACCOs were aware of the
new transport policy and had sensitized the members. However, a
few had board members who were not aware of the policy and had
not sensitized the members
Summary of findings cont..
12. On average, SACCOs had business plans of moving to higher
capacity vehicles while others did have any plan.
13. Majority of the SACCOs agreed that if the policy was implemented
as it is, many
SACCOS would wind up. However, a few disagreed with that
assertion.
14. To comply, majority of the SACCOs wanted more education to be
offered especially in the area of cooperative management while
others wanted to be assisted with loans to enable them buy higher
capacity vehicles.
15. It was found out that many SACCOs had invested elsewhere
especially in shares,
insurance agencies and in petrol stations. A few had not invested
elsewhere hence, were only depending on the income from the 14seaters PSVs core business.
Findings cont…
16.Lastly, it was found out that, a few SACCOs had few managers with
form four, degree, diplomas and CPA certificates, while others had
not employed the managers. Few SACCOs had accountants with
qualifications such as CPA, while others had not employed any.
Many SACCOs had no credit officers and those who had, the credit
officers had form four certificates. Majority of the SACCOs had not
employed other staff, while those who had, the staff had form four
certificates.
Conclusion.
1. More registration of the SACCOs in 2010/2011 does not shows an
attitude change of the investors towards complying with the new
transport policy that requires investors in the industry either join or
form SACCOs or companies.
2.The number of board members within the SACCOs is within the
threshold stipulated in the Cooperative Act Cap 490. Low women
representation in the board may be attributed to the fact that there
were few women investors in the industry because of many
compliance requirements, harassment from police and “gangs”, stiff
competition, high operational risks, high capital requirements and
disorganized manner the players manage the business.
3.Low membership in the SACCOs may be attributed to many
compliance requirements, harassment from police and “gangs”, stiff
competition, high operational risks, high capital requirements and
disorganized manner the players manage the business .These
factors may have scared away both women and men investors.
4.Weak capital base and low loan granted to members in majority of
the SACCOs may be attributed to the fact that majority of the
SACCOs were newly registered hence low membership and capital
contribution.
Conclusion cont..
5.High monthly members’ share contribution may be attributed to
increasing need of fast capital formation to enable the members’
access loans from the SACCOs.
6.Low number of PSVs and routes managed by the SACCOs may be
due to low membership due to low number of investors in the
industry because of many compliance requirements, harassment
from police and “gangs”, stiff competition, high operational risks, high
capital requirements and disorganized manner the players manage
the business. In addition to this, there is lack of need to expand the
routes outside the region the SACCOs are based hence opening the
business to stiff competition.
7.Low employment level in the offices may be attributed to the fact that
majority of the SACCCOs were new with no functional offices. During
data collection, it was observed that many SACCOs had “make-shift”
offices at the bus parks simply for compliance sake. Some do not
have furniture and records (ref: Kericho Town)
8.Many vice chairmen, treasurer and a few chairmen lacked experience
in cooperative management. This may be attributed to the fact that
majority of the SACCOs were recently registered and may not have
attracted people with experience.
Conclusion cont…..
9.A few SACCOs had not had pre-cooperative education. This may be
attributed to the fact that many of these SACCOs were formed in a
hurry to beat the registration deadline.
10.Although some SACCOs had business plans while others did not
have, the business plans were not backed by financial ability as the
SACCOs had weak capital base which could only attract very few
financiers. This poses survival threat to the SACCOs as the new
transport policy is fast beckoning. This means one by one the 14seaters PSVs may be put out of business through natural attrition,
and with the common bond gone, the SACCOs may definitely
collapse leaving traces of loss of employment for drivers, conductors
and SACCOs staff in addition to high loss of income to the investors.
11.The fact that many SACCOs have invested in alternative businesses
does not caution them from eminent collapse as their survival
depends on the membership which depends on the common bond
and with the common bond gone, members will automatically
withdraw from the SACCOs
12.Lastly, the fact that SACCOs had only few qualified managers,
accountants, credit officers and other staff, while some did not have
any, means they may not have been attractive enough to the
professionals of high qualifications. This may be attributed to fact that
these SACCOs were new .
Recommendations
1. On composition of the board, affirmative action should be taken by
having by-laws that include all gender representation. In addition to
this, more entrepreneurial training should be offered to the women to
influence their attitude towards investing in the “matatu” industry.
2. Low membership, low loan and capital/deposits base in the SACCOs
may be solved through aggressive recruitment of the members by
the board. More capacity building in business and co-operative
education by the board, MoCDM and other stake holders could also
go a long way in improving members’ recruitment. The SACCOS
should also improve on their performance through effective and
efficient management in addition to aggressive marketing. The board
of the SACCOs should also look for strategies to diversify their
routes to attract more members hence attracting more PSVs
vehicles.The board of the SACCOs should look for strategies to
diversify their routes hence attracting more members and PSVs
vehicles.
3. It is critical for any organization to have an operating office so as to
serve the members in an effective and efficient way. Physical office is
one of the requirements during the registration of any cooperative,
hence any SACCO without an operating office should operationalize
the office and the MoCDM should ensure this is done.
Recommendations contd….
5. To strengthen the SACCOs’ management, more capacity building in
cooperative management by accredited organizations should be
offered to the board and staff. In the area of capacity building we call
upon the donor community and stakeholders to come on board to
assist by provision of resources.
6.The SACCOs should come up with concrete business plan backed by
financial capabilities. For instant, to move to high capacity vehicle,
aggressive capitalization of the SACCOs by the members is
required. Alternatively, the SACCOs should go for loans from banks
or other financial institutions. The SACCOs could merge to
strengthen the capital base. This means the board should be ready
to sacrifice their leadership positions in the merging SACCOs
Recommendations cont….
7. Majority of the SACCOs agreed that if the policy was implemented
as it is, many SACCOS would wind up. However, a few disagreed
with that assertion.Many SACCOs saw the policy as a threat to their
business because the 14-seaters matatus are being phased out by
ensuring no new registration.To move to high capacity vehicles, the
following strategies may be undertaken by the SACCOs:
1. Aggressive capitalization by the members.
2. Go for loans from banks or other financial institutions.
3. The SACCOs could merge to strengthen the capital base. This
means the board should be ready to sacrifice their leadership
positions in the merging SACCOs.
Recommendations cont…
4. Form Transport Co-operatives
The uneconomical transport SACCOs should be encouraged to form
transport co-operatives. It is worthwhile to note that this model of
transport cooperatives is rare in Kenya .One SACCO (2NK) has
attempted it by operating high capacity buses parallel to the core
model of managing the 14-seaters vehicles. According to the
Chairman (ref validation workshop 15th-16th august) managing
buses, for a co-operative, is a tall order. However, elsewhere in the
world ,transport cooperatives have thrived. In Israel, Egged Transport
Cooperative Society ltd, the largest bus co-operative, government
subsidized, formed in 1933 through merging of small bus
cooperatives and subsequent merging in 1942, 1951 and 1961,
control about 55% of the public transport services and is a big
employer. The cooperative also operate in Bulgaria, Poland and has
formalized entry into Netherland by December 2011
Recommendations cont…..
8. The policy should be amendment to allow the fourteen seater
“matatu” to operate, but outside the Central Business District of the
major cities and in the rural areas .This would save fourteen-seater “
matatu” SACCOs from collapsing hence making membership
meaningful.
9. It is important for any business to have core staff for it to run
effectively and efficiently therefore, the SACCOs without
managers, accountants, credit officers and other staff should recruit
them, but when the need arises.
10. The newly registered SACCOs should be vetted afresh in order to
identify the “Shell” SACCOs and weed them out.
11. The Government agency (TLB) to conduct fair and impartial safety
operations, since constant and continuous checks affect the incomes
of the SACCOs.
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The Traffic Act Cap 403 (1963) .Legal Notice NO.161 of 2003
The Standard Newspaper (2011, Feb23, pg26-27)
The International Co-operative Alliance (1995): Statement on Co-op Identity
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Ed).Boston
List of Sample Transport SACCOs and DCOs
Kakamega SACCOs
Kzbu Sacco
Nile perch
Kujho
Ahero trans
Manchester
No
5
Muranga SACCOS
MTN Respondent (Ann Wangari)
Namukika Respondent (Elizabeth Wairimu Kiarie)
Muna Respondent (Boniface Njoroge)
3
NAIROBI SACCOs
Umoja –Intercore Respondent (Joseph Nyangaya)
Forward Traveller Respondent (Easter Waithira)
Donkaka Commuter services
3
Meru SACCOs
Menya Services Respondent (Abraham Karithi)
Menany Services
2
List of Simple Transport SACCOs and DCOs cont…
Nyahururu SACCOs
Nyawinda Respondent (Martha M. Kagarie)
Four NTE Respondent (Peter Muchiri)
Maina Travellers
Thika SACCOs
Thika Town Services Respondent (Michael Kamande)
Mataara T. Respondent (Samuel M. Kamau)
Chania Travellers
Nyeri SACCOS
Nyesuma Saccos Respondent (Joseph M. Muhindi)
Nyenya Respondent (Charles T. Muhinyo)
Nim Sacco Respondent (Justus G. Ndegwa)
2NK Respondent (Anne Nyawira)
2MGIN Respondent (Joyce Wairimu)
Nyena Sacco Respondent (Paul G. Macharia)
3
3
6
Starehe SACCOs
 Meru Nissan Operators Sacco Society Ltd Respondent
(Murimi)
 Ganaki MP Respondent (Alex N. Njenga)
 Embassava Respondent (Silviri Owino)
 Walakana (MP)Coop. Soc. Respondent (Loise Njeri)
 Eastleigh Route Respondent (Elizabeth Waweru)
 Nawaku SACCO Society
 Eldoret SACCOs6
 MU 84 Sacco Respondent (Joseph Samuel)
 Eldokaps Respondent (David Kiplimo)
 Human Matmu Respondent (Peter K. Ngobu
 Eldoret Shuttle Respondent (Chumba Westey)
 Sixty four Travellers Respondent (Solomon Too)
 Burnt Forest Travellers Respondent (Silas Arusei)
 Langas Matatu Respondent (Francis Ndungu)
 Twenty Minibus Respondent (David Kariuki)
 Chepkoilel Matatu Respondent (Hillary Juma)
 Eldomoc Respondent (Henry Baraiywo)
10
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Kericho SACCOs
Kebona Respondent (Patrick Kipkemoi)
Sondo Team Respondent (Hillary Cherviyot)
Finlay line sacco Respondent (Eric K. Yegon
Keki line Respondent (Evans K. Ongeki)
Buni sacco Respondent (Robert Koech)
Wareng Line Respondent (Jackson Cheruiyot)
6
Nairobi SACCO
Kani Transporters Respondent (Harons N. Magetu)
Utawala By-pass Respondent (George O. Omariba)
2
Machakos SACCOs
Maika Coop. Respondent (Nimrod Muraguri)
Umowa Respondent (Moses Ndangili)
Manatwa Sacco Respondent (Lyddah Mutisya)
3
Nakuru SACCOs
Kanustreet Travellers Respondent (Lydiah Kerubo)
Smart line Respondent (Joseph Onsongo)
Mau-Narok Nissan Respondent ( David N. Kimani)
Phase II lakeview Travellers Respondent (Richard O. Obuya)
4
Uthiru SACCOs
Ngumu link Respondent (Kiarie Julius)
Pakin Auca Respondent (Caroline Mugo)
Dakika Matatu owner Respondent (Zachary Kamange)
Nguso travelers Respondent (Mbuku )
Kiragi Respondent (John Awind
5
Kitui SACCOs
Mbikisa Respondent (Nyerere Munsya)
Kinatwa Respondent (Bernard Munymoki)
Kitui Wendo Travellers Respondent (Benson M. Wambua)
3
Kisumu SACCO
Lakebelt Sacco Respondent (Odnol)
Mamboline sacco Respondent (Micheal Oyier)
River Yala sacco Respondent ( Masese)
Equator Prime sacco Respondent (Oduor)
4
Mombasa SACCOs
5
Total
DCOs
Muranga
Respondent (John Nderu)
73
DCOs
Nyeri Central
Respondent (Rose Kingara
DCOs
Kericho
Respondent(Ayub I. Kiplimo)
DCOs
Machakos
Respondent(Peter M. Makuli)
DCOs
Kitui
Respondent( Rosa M. Kimotho)
DCOs
Nairobi East
Respondent(Eliud Njuguna)
DCOs
Nyadarua North
Respondent( Hellen Gichuri)
DCOs
Imenti North
Respondent(Ann W. Kimani
DCOs
Dagoretti
Respondent(David Kahuthu)
DCOs
Nairobi starehe
Respondent(Kunajz)
DCOs
Thika West
Respondent (Mary M. Kariuki)
DCOs
Nakuru
Respondent(Daniel Onyango)
DCOs
Eldoret West
Respondent (Leonard Out)
DCOs
Kisumu
Respondent (Vincent M. Kenyariri)
Total
14
END

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