Matatus and Mobile Money: Bridging the Gaps in Kenya

In the United States, there are some planes, a few trains, and many automobiles. In Kenya, it is all about the matatu.

Though there are other forms of transport, Kenya is best know for the omnipresent and chaotic mass transit system. Larger than vans and smaller than full-size buses, matatus are known to be one of the most utilized and certainly most colorful of Kenya’s transportation systems.


While concentrated around the capital, Nairobi, matatus operate throughout the country, linking urban and rural settlements across a complex network of poorly-maintained roads. In Kenya, such convenience comes at a price, or in the case of matatus, a severe safety risk. In 2010, the World Health Organization estimated over 8,400 traffic-related deaths. And while data from Kenya’s National Transport and Safety Authority (NTSA) indicates that traffic-related fatalities have declined since 2010, Nairobi still ranks as the world’s fourth worst commute according to IBM’s Commuter Pain Index. With over 5,000 matatus serving the greater Nairobi area, it is likely the mini-buses are part of the problem, not the solution.

In June, as part of a series of reforms, the NTSA decided to modernize the matatu system by mandating cashless payment methods for the country’s estimated 20,000 privately owned matatus. Prior to the NTSA mandate, matatu drivers relied on cash transactions. This allowed drivers to set their own fares, negotiate with customers, and keep their own loose records of the number of passengers. As a result, matatu owners may not know how much profit their vehicles make. Matatu drivers, with no incentive to report the proceeds often pay a flat fee to the owners and keep the remaining revenue for themselves.

In an effort to provide a uniform system NTSA is calling for a payment system similar to London’s Oyster card. Matatu patrons have the option of filling cards at various locations throughout Nairobi or using a mobile banking service such as  M-Pesa. With a multitude of payment options, government officials anticipate a streamlining of transportation payments, a decline in corruption, and an increase in tax revenue.


Despite some concerns about cashless payments, the NTSA’s system is tried and true. Last year, Beba Pay, a joint venture between East Africa’s largest bank and Google, announced a cashless payment system that would work for select bus fares throughout Nairobi. With prepaid fare cards, passengers simply tap their card to an onboard card reader, the first system of its kind in Kenya. Though many commuters enjoy the convenience of going cashless, not all bus lines accept the prepaid cards.

While the United Nations still classifies Kenya as “developing,”the country is poised to be Africa’s economic powerhouse. Perhaps the greatest indicator of Kenya’s progress lies in widely available technology. In 2013, a record 70% of Kenyans used cellphones, the fastest cellphone use growth rate in all of Sub-Saharan Africa. With the lowest phone tariffs on the continent and continued deregulation of the telecommunications industry, mobile phone use is expected to continue to grow, perhaps becoming on par with 91% user rate in the United States.

The popularity of mobile phones has also encouraged the growth of mobile banking. Popular programs like M-Pesa allows Kenyans to manage their finances without actually having a bank account. M-Pesa users can transfer money to and from individual accounts with a simple text message, making the service easy to use and more convenient than visiting an actual bank. The program is so widely used that 25% of the country’s GNP is filtered through the service and 60% of Kenyans use their M-Pesa accounts to shop, pay bills, and transfer money to relatives or friends, especially in rural areas where banks are unavailable.

With a cashless payment scheme, the NTSA expects increased tax revenue. In a cash-dominated payment structure, drivers arenot held accountable for reporting the number of passengers or making due payments to matatu owners. . In a cashless payment system, governed by prepaid cards, tax revenue is bound to increase as records become more transparent and more accessible. Currently, matatus and similar mass transit vehicles are taxed by whichever is more of their maximum passenger capacity or a flat fee of 2,400 KES (27.35 USD). With increased tax revenue, the Kenyan government hopes to meet its 2030 plan to build more roads and improve its mass transit system.

Ideally, all of Kenya’s estimated 20,000 matatus will adopt the cashless payment scheme, though the transition will not be simple. Cashless payment methods were supposed to be fully implemented by early July, but only 2,000 matatus have forgone cash-only payments. This is due to the Matatu Owners Association’s calls for extension of the deadline to implement the new payment systems. Further criticism from matatu drivers asserts that new cashless systems will deprive drivers of their “fair share” of wages by forbidding them to adjust prices and negotiate at their own discretion.

Mobile banking and matatus have something in common: they connect people and goods across Kenya. Whether urban or rural, within Nairobi or to its sprawling suburbs, both signify Kenya’s progress as a developing country and regional leader of development. Though the matatu is met with government demands and some backlash from the public, one thing is certain: the matatu is here to stay.


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