What the Cashless System would have done for the Matatu Industry

I previously wrote about the challenges of implementing the cashless system. Let’s have a look at what it would have done.

I once heard that public service vehicles support up to 14 different people directly, though the correct word here should be “benefit”. Unbelievable as it seems the person discussing it counted them and I’ll try and recollect as follows:

  1. The driver
  2. The conductor
  3. The “squad” guys
  4. The “loading” guys
  5. The owner
  6.  The Bank receiving loan repayments
  7. The Insurer receiving hefty premiums as they are more risky
  8. The mechanic (and all who service the vehicle with parts)
  9. Consumables such as fuel, oil etc.
  10. The city council and all compliance agencies including licencing
  11. The “pimp my ride” team
  12. The police through bribes

I give up at 12, but you get the point. The ultimate aim of the cashless system was to understand the nature of revenues the transport industry makes. From my interaction with some drivers, some make quite a lot in a day while others face tough times. We did, in my disbelief, calculate with a driver how the pimped matatus make up to KES 50,000 a day!!! This is how they are able to afford, literally, impunity. Understanding these revenues would prove beneficial to our society and further a sane business environment. There was an article written by Daily Nation on just how much the industry loses in a day through Cartels. This brings me back to my main point albeit a pipe dream for now.

If it were successfully implemented, a myriad of changes would have taken place within the industry. It was to be the second wave of reinforcing discipline on our roads after the Michuki Rules. The easiest way to analyse the impact of the cashless system is to look at all the possible beneficiaries.

The greatest beneficiary would be the owner who would now know exactly how much money they are making in a day. This would follow a proper remuneration structure for the two employees i.e. the driver and the conductor.
This then brings us to the point why it was important for the government to know the revenues of the industry; taxes. This is the best way to get revenues as a government i.e. ability to capture new tax brackets as opposed to increasing tax burden on already taxed citizens and businesses. A proper remuneration structure provides an opportunity for the driver and conductor to be taxed. And as they are now being paid well, it shouldn’t hurt, though it will.

Why and how would they be paid better? Because the cash leakages would be sealed. There will be no liquid cash to pay off all those non-concerned entities. Okay, the concern here is that some of these non-concerned entities will be out of a job i.e. the squad guys et al. Back to that in a moment. They can’t pay off bribes to the police because again there isn’t liquid cash. This forces the drivers to maintain road discipline as when they get arrested, they will be in it for the long haul, not your usual pay and go.

The jobs, you ask! As the owner is making more cash, they can now invest more and employ more. This is not necessarily back in to the transport industry. Displacement of cash in to other activities still results into usage of cash in other activities that generates employment.

This would have been better for everyone! A plus for the society, a step in the right direction. Unfortunately, it was not implemented the right way.

Related: The not so Patriotic and Loved Matatu Culture

Addendum

After reviews from some of our readers here’s an update. We can now add a major beneficiary to the list i.e. SACCOs, to now reach 13.

With regard to the cashless system benefits, another major beneficiary would be the passenger i.e. the fares would be fixed hence no exploitation or changing of fares suddenly after boarding the matatu. Further, owners would be able to track other expenses in relation to income. This leads to the owner seeking efficiency hence they can now compete based on knowledge they now have. Information would also be readily available for relevant parties. This is through having full driver/conductor details as they are now officially employed hence tracing incidents and compliance would be easier. Being easily traced, the authorities can allow matatus to have flexible routes as well.

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