CHALLENGES FACING OUR OPERATION
Though we were starting to get happy that support was creeping in regarding the franchising concept, setting up of rules required to manage unfair and wasteful competition is slow. Licensing of Operator's is yet to be adopted to give a legal framework that will regulate the public transport industry.
The state of world economy, political temperatures associated with the coming elections, the vulnerable Kenyan currency against the US Dollar, high fuel costs, unstable inflationary trends, inability to pay by our would be passengers and fluctuating interest rates are some of the reasons that have contributed in limiting growth of our franchisees and reducing their profitability.
Our competitors, who have understood the power of franchising and operating under a brand or management, seem to be headed in the same direction as we. The coming in of the Saccos that are now offering cheaper credit compared to Banks have made us see a reduction of numbers of investors entering our franchise.
The fact that these Savings and Credit Co-operative Society – Saccos - (Operators) continue to operate informally, means that they may not be subjected to strict rules of entry into the industry and therefore their cost base is likely to be low. They probably do not pay statutory deductions and taxes, such as, Withholding Tax, VAT or Turnover Tax, PAYE and Corporation Tax. Their vehicle owners most likely get away with payments such as Advance Tax. They are therefore able to undercut us on commission chargeable and could easily apply predatory pricing on route fares. They then could use the surplus money to buy City Council Askaris and Police to harass our buses. This is unfair competition. Non pay of statutory payments is tantamount to a state subsidy.
We did a complaint letter to PS Transport, PS Finance and Commissioner General complaining about this unfair, selective and unconstitutional treatment we are getting in the PSV industry. We are yet to get any positive response. With elections around, we are unlikely to get one soon.
Police and City Council Askaris' harassment worsened in the recent past. Our records indicate that they extort about 7% of franchisees' revenue. Recently the whole matatu fraternity in Nairobi went on a strike to protest against City Council Askaris' harassment. We have since seen a slight drop of such harassments. Cartels however continue collect an additional 3%. We still experience sporadic attacks on our crew from Sacco members. Saccos want to zone areas for exclusive operations. If Kenya Railways operator on Syokimau route will not be subjected the similar conditionalities in the same operating environment, it may be necessary for us to seek redress as per our Constitution.
This is because our complaint letters to PS Transport, Traffic Police Commandant and the Town Clerk seeking their urgent intervention on the above matter have yielded no fruits. We have also been to see Ministry of Transport officials and the Traffic Commandant to raise our concerns.
However we do hope that the Parliamentarians will save us by urgently passing the Integrated National Transport Sessional Paper No. 2 and the National Transport and Safety Authority.