Investors who take huge loans to buy matatus in the hope of cashing in on the lucrative industry are quickly brought down to earth by harsh realities on the ground.
They find their earnings milked by an “extortion network”, whose tentacles are spread through organised criminal gangs, rogue traffic police officers, county askaris, route marshals and touts, collectively costing the industry Sh50 billion a year.
At the Railways terminus and Haile Selassie-Moi Avenue roundabout, for instance, police have strategically placed agents who collect fees from every matatu, while trying not to attract public attention.
“Nowadays they start collecting bribes as early as 5am. Between that time and 9am, their main work is to collect money before they embark on their daily duties,” a stage manager told the Star.
Collecting agents deliver the cash to respective officers every evening, either by M-Pesa or by cash. Every route has an agent who knows all the vehicles and collects the money from each of them.
For fear of being tracked by the Johnston Kavuludi-led National Police Service Commission and the anti-graft agency, the Star established that once this money is received by respective officers, they hand it over to their small chamas.
“Nowadays these officers are operating on a higher level. They have their small chamas and in a day contribute like Sh10,000 or at least Sh5,000. So instead of them taking the money, we agents run the chamas for them,” one agent said.
He said since the NPSC and EACC track their M-Pesa transactions, the officers prefer to be handed the money in cash, where they will divert it to projects named under family members.
Some of the amount is banked in private accounts owned by the officers in collaboration with these touts, who enjoy protection from the same officers.
Star's leads established that the touts are untouchable and can harass any matatu crew, and whoever takes the matter forward lands themselves in trouble. This makes it difficult for NPSC and EACC to crack down on the cartel.
The agent told the Star another squad of youth is stationed in the stages, whose work is to call on passengers to board at a fee.
Some of them sit in the matatus, posing as passengers to lure other people to board, but as the matatu gets filled, they alight one by one and collect their share before the matatu leaves.
One such agent, Kennedy, told the Star the high level of unemployment is what drives them to look for an alternative way of earning a living.
“I come here every day so that at least I can have something for my family. I am paid 20 bob on every matatu, so the more matatus come for me to pose as a passenger, the more I will earn on that day,” Kennedy said.
Once full, the buses leave to different routes, where the stage touts wait for their cut. A crew of two is always stationed near estate routes to take over the bus as the driver and conductor take a break.
KBS MD Edwins Mukabanah says due to such activities, many matatu owners are left with no option but to try other means that will help them remain in business.
Many operators have ended up undercutting each other. It is a business that needs no education with rules. It is free entry as long as you can dance to the tune, he said.
“Imagine someone takes a loan of about Sh5 million to buy a matatu with expensive graffiti, music, television and even Wi-Fi, and still operate in such extortive circumstances, if not for the sake of it, then largely in money laundering?” he added.
"I have been in this business for more than 30 years and I can tell you for sure that you cannot invest an extra Sh250,000 to decorate a matatu and make a profit," Mukabanah said.
PASSING THE BUCK
All these allegations are dismissed by police bosses, who say matatu operations are no longer under their docket.
Head of traffic Jacinta Kinyua told the Star matatu operations are a devolved function and the traffic department is no longer in charge.
“Why should we collect such money for work we do not do? I earn good money and I’m contented with it. I do not need kickbacks for any operations,” the traffic boss said.
She said, “This time people should not drag my name into dirty dealings with an intention of spoiling my reputation. I promise I will not let it go. We shall face each other in court.”
Acting head of traffic Nairobi area Kipkemboi Chesang said the traffic department only clears traffic, leaving the NTSA to handle other matatu operations.
“NTSA should be answerable because they are the ones who license and issue TLBs [Transport Licence Board’s road service licences],” he said.
But NTSA director general Francis Meja dismissed the claims that its officers are colluding with the cartels to issues TLBs to vehicles that do not deserve them.
"We have digitised most of our operations and our officers have very minimal contact with clients seeking TLBs," he said.
The EACC said matatu cartels are a big network involving even the seniormost bosses. Agency CEO Micheal Mubea said preliminary investigations have established that drivers, due to fear of blackmail from the officers, are left with no other option but to pay bribes.
“These officers are so daring, they come fully armed with guns, and whoever does not cooperate will likely be pushed out of business,” he said.
“Why should a traffic police officer arm themselves, unless protecting their masters?”
The anti-graft boss told the Star the commission arrested 150 officers in two years, 76 per cent of whom had been successfully convicted and dismissed from the service.
He said their M-Pesa tractions of between two to three months ranged from Sh1.6 million to Sh6.8 million, money believed to be collected from bribes.
Kavuludi said the NPSC had noted the high rate of corruption cases among traffic officers. He said during the first round of vetting of senior traffic police officers, about 13.2 per cent were dismissed. Some 957 officers were vetted, with 127 removed due to corruption.
In the second round, 2,200 officers were vetted and 218 officers dismissed, making it a total of about 345 traffic police officers dismissed from the service.
He said some 81 senior officers refused to present themselves before the vetting panel and are also out of the service.
SEARCH FOR SOLUTIONS
Mubea said the commission had supported the idea of instant fines for drivers arrested breaking rules, instead of being taken to court. “But cartels moved to court and filed a judicial review application, with interim orders issued that took us to zero,” he said.
NTSA boss Meja said the only way these cartels can be eliminated is to remove cash from matatus and adopt an electronic payment system.
On December 1, 2014, then Transport CS Michael Kamau and KCB Group CEO Joshua Oigara launched a commuter card called Pepea to much pomp at the Kencom Stage, Nairobi. However, it was short-lived.
MOA chairman Simon Kimutai said the industry spent about Sh2 billion to purchase gadgets that were to help transition to cashless payment.
Every vehicle paid Sh20,000 to get these gadgets, plus an extra fee for certificate, but the NTSA came in as the regulator, making banks fight to have the money on their accounts.
“This was our baby. We had hopes it would end corruption in the sector. We spent billions and now the gadgets are lying in the stores. In fact, we are contemplating if we should sue the ministry for forcing us into a system that terribly failed,” he said.
NTSA blamed cartels for the failure. “It is unfortunate the cashless system that had been introduced was frustrated by the same cartels and the infighting between banks, which wanted to have a monopoly over the systems,” Meja said.
“However, we have learnt from past mistakes and where we failed. We are currently working on a government switch that will play a key role in relaunching the cashless system.”
Mukabanah said the government should get an agent to create one loop card that can provide a neutral switch to the cashless system.
“The Transport ministry has no building capacity for its people. Other ministries have professional government institutes to train, for example, nurses, doctors and extension officers, but the Transport ministry has no institution for public road training and creating careers in that line,” he said.
The KBS boss said the current regulations have no scientific backing, which increases the gap between actual regulations and implementation.
He said the government has turned its back on the sector, leaving it to be solely controlled by private dealers.
“Such a compromised system denies vehicles service, leaving drivers overworked and underpaid, forcing them to break rules as they try to recover what they have given away as bribes,” he said.
Kimutai said the current static police roadblocks should be removed and replaced with patrols. He said the sector has tried to partner with NTSA and EACC to crack down on the officers soliciting bribes, but the courts have let them down.
The chairman said judges are often compromised and compelled to issue orders reinstating rogue officers to their positions.
“The IG should tell us why he has allowed traffic police officers to mount roadblocks fully armed with AK-47s and pistols, because to us this is a deliberate move to sabotage efforts to fight corruption in the sector,” Kimutai said.
The National Assembly has been urged create laws to bar senior civil servants from owning PSVs to instil sanity on the roads.
Matatu Welfare Association chairman Dickson Mbugua told the Parliamentary Committee on Transport the traffic police department has been unable to crack down on rogue drivers who operate vehicles owned by influential government officials.
“This idea of senior civil servants owning PSVs in this country sets a bad precedent because of the Big Man syndrome. The drivers harass other motorists, but traffic officers are unable to take disciplinary action against them because of fear of losing their jobs,” he said.
Mbugua called on Parliament to scrap the Ndegwa Commission report of the 1970s that allowed public officers to conduct business with the government.
The National Police Service recently decided to scrap the traffic department to tame corruption, but Meja described this move as “misadvised”.
"There is no single country in this world without a traffic department. If they are taken off the roads, then who is to enforce all the laws that have been put in place? The best remedy to this corruption saga is to strictly hold the officers accountable," he said.
The NTSA boss said the authority is slowly putting saccos to task to account for their crews, amid efforts to restore sanity. It is partnering with other stakeholders to build ownership capacity and educate crews on the importance of dignity in the business.
“All we aim at right now is to help the sector adopt new technology. We have embarked on a rigorous vetting of PSV companies to weed out those not genuinely in the business,” he said.
NYS ENTERS THE FRAY
On Friday, the government introduced 27 buses on various routes through the National Youth Service, amid efforts to alleviate the commuter crisis. NYS director general Richard Ndubai said the service had further lowered the commuter prices from the initial Sh50 to a flat rate of Sh20 regardless of distance covered. He said the decision was arrived at following a plea from members of the public.
However, the matatu industry is up in arms, terming it unfair competition. Mbugua said the NYS will have undue advantage since it will not be subjected to taxation like PSV owners. Kimutai added that the NYS must make an application to the NTSA on routes to cover as part of compliance.
"The NTSA announced that it had stopped enrolling new players in the business so what criteria did the NYS use to get into the business?" Kimutai said.
But the Competition Authority of Kenya has backed the deployment of the buses. CAK director general Francis Wang’ombe said the government is only buffering a shortage.
Speaking to the Star, he said no complaint has been filed, but the NYS has not breached any competition laws, as alleged by Kimutai.
The matatu industry is estimated to rake in over Sh150 billion annually, which could be motivation for government to sink its teeth into the enterprise.