Regulating the public service transport (PSV) system, particularly the matatu sector in Kenya, which is a quasi-formal sector has been problematic. A case in point is the well documented resistance of the Legal Notice No. 161 of October 2003 rules and regulation (Often referred to as Michuki rules 2003). The policy objective of this regulations was to institute improved organization of the sector through SACCOs by among things phasing out 14-seater matatus in preference to bigger capacity matatus.
Fast forward to mid-March 2020, after the outbreak of COVID pandemic, the government intervened in regulating the PSV sector, in the fight in reducing transmission of COVID given its importance and the role it plays in enabling mobility of people. To this end, supportive policies to enable it to assist in curbing the spread of the pandemic were then put in place. In particular, the COVID-19 regulations anticipate that every matatu should provide hand-sanitizers for all passengers before boarding the vehicle. In addition to this, the vehicles need to be cleaned twice a day and long-distance operators are required to keep a detailed list of all their passengers. Furthermore, to prevent contamination, Kenyan officials have stated that 14-seater matatus will carry only eight passengers, and vehicles that carry more than 30 passengers will carry not more than 60 percent of their capacity. These are guidelines that hoped that as the matatu industry ferries thousands of people every day from one destination to the other, these people will be protected.
Market Failures
The policy however seemed to have been rushed without diagnosing the past set policies, the operational nature of the industry as characterized by long hours on the road braving traffic jams, corrupt traffic police officers and extortionist gangs, and now the night-time curfew. And if truly the government considered all these factors, it then hoped that this time it will be different and that the matatu owners and operators will comply, and once again it has been proved wrong. The main problem then when it comes to regulations in this industry lies with its policy formulation and implementation. However, these new rules for the objective they hoped to achieve are good but have been poorly implemented: while some elements of the rules such as the provision of sanitizers being expensive but necessary. Addressing these issues requires exposure to relevant knowledge, including policy-relevant research.
It is reported that the PSV sector loses close to Ksh 30 million daily as a result of corruption which escalates its operational costs.[1] The implementation and compliance of the COVID-19 rules in public service vehicles appears to be mandated to the police force. However, cases of breaches and non-compliance have bred rent seeking or corruption where some policemen opt for bribes as opposed to taking the offender through the proper prosecution channels. Such instances may arise when a matatu operator has flouted the rules such as operating outside the curfew time or full capacity.
A second cause of failure is the costs of the regulatory policies put in place are higher than anticipated. Often this leads to unintended consequences such as shutting down of businesses since the said businesses become less lucrative for the owner to operate. Besides lack of full information regarding that market then creates monitoring problems as is the case in the COVID-19 measures in the public service transport system in Kenya, particularly in the matatu sector.
In the case of matatu sector, their revenues were affected due to the additional expenses such as purchasing of hand sanitizers, temperature scanners and cashless systems to enable consumers to pay via mobile money which led to them incurring additional costs in the form of withdrawal fees.
Therefore, in a bid to cut expenses and still appear as if they are meeting the regulations put in place matatu operators found ways to flout the rules. Some matatu touts are sprinkling soapy water on passengers instead of sanitizers. This is easy to do as there is no mechanism put in place by the government to ensure the authenticity of the sanitizers. In some occurrences, some would have disinfectants heavily diluted in water to serve as their sanitizers. This has deteriorated with most vehicles allowing consumers to board without the provision of sanitizers.
Revenues have also been affected by the reduction in operating time due to the curfew that starts at 10 pm and ends at 4 am. It is thus not profitable for most bus companies to operate especially when it comes to the long-distance travels. Furthermore, the government of Kenya expects the matatu owners to still pay taxes of Ksh.720 per seat annually. This means that for a 14-seater matatu, they are still expected to pay Ksh.10, 080 annually on top of the other licenses for example, the vehicle inspection license.
Everyone in a public place is expected to wear a mask, a directive that also touches on the transport system. Today it is not uncommon to find matatu conductors without masks or even allowing a passenger to board the matatu without a mask on. Most of them unless made aware of a roadblock, tend to operate the matatu at full capacity. Measuring body temperature is now rarely being done. Despite the government giving a directive that fares should not be hiked, some matatu owners went ahead and did so and this has not seen a reduction to date. The bus fare is hard to observe as the fares fluctuate due to various reasons such as off-peak when people are not rushing to work.
The Difference in Aviation
The air transport sector is the complete opposite of the PSV sector. Today, if you take a trip to any destination using an airplane, there are several posters plastered on walls advising you and the rest to maintain social distancing at all times. The airport further designates certain sitting areas where one is expected to sit in anticipation to embark on their destination. Yet, this is not the case once in the airplane because the plane operates in full capacity. In the plane one is expected to have a mask on at all times, the flight attendants have protective gears over their uniforms and there are proper ventilation and airflow in the planes. In addition to this, the planes are required to take details of every passenger such as their phone numbers, email addresses, and where one is from in the case of foreigners. With all these measures adhered to, it is easy for the regulations put in place in the airline industry to be monitored without difficulty.
Key Points to Note
In conclusion, Regulation is important for any sector since an uncontrolled marketplace cannot produce behaviour or results following the public interest. Further, government interventions can fail because the government does not have full information on how certain industries work, and if they do, they decide to ignore those facts. In turn, the intent of those interventions is not achieved. For the role that the matatu sector plays in the economy, the government has to set up simple actions that can be undertaken to make implementation of the regulations more effective and address gaps including unintended consequences and the high cost of implementing the regulations as mentioned above. All the below are not standalone measures and should be implemented as a comprehensive package of measures.
Permanent Social Distancing
This can be achieved by altering the look of matatus and minibuses. Some matatus have done this voluntarily where they have three rows of seats in order to ensure physical distancing. This has two advantages. One, it adheres to the common rules that physical distancing help curb the spread of the disease and two limits the operators from overcapacity which in turn prevents bribes to policemen that are caused by not adhering to the half capacity. Additionally, it also allows matatus owners to pay for the number of seats without paying for extra seats whilst getting their licenses.
Improve Natural Ventilation
Ensuring that all matatus have top windows to improve ventilation. Kenyans generally are not inclined towards opening windows in Public Service Vehicles, therefore having the top windows that will not be shut at any given time ensures that there is recirculation of fresh air and it is a cheaper way compared to setting up of air-cons. Consumers generally do not like opening the windows, therefore having a natural ventilation system in place of that kind ensures that matatu operators have the top windows open at all that. The top windows ensure that air coming in from one window moves across the room and exits from another window.
Hand Washing Stations
County governments can provide washing stations at different bus stages. This is similar to when one goes into a shopping mall and they are required to wash their hands. This transfers the burden from the matatu operators to ensure that they have sanitizers for consumers.
The spread of COVID-19 occurs most often when an infected person is in close or direct contact with another person. The risk of the spread of the virus is higher in crowded and poorly ventilated spaces where people spend long periods together close. Therefore, by ensuring that people’s hands are clean, they are masked and the vehicle they are using for transportation is properly ventilated and the seats are maintaining a particular distance then all these can reduce the risk of the virus in spreading such spaces.
The World Trade Report 2024 was launched at the start of the WTO Public Forum 2024 in Geneva titled “Trade and Inclusiveness: How to Make Trade Work for All”[1], and this blog will seek to highlight some of the most profound insights. The report delves into the crucial relationship between international trade and inclusive economic […]
The Price Control Act of 2011, with its imposition of price ceilings on essential goods, represents a significant intervention in the natural forces of supply and demand that govern a free market. The Act empowers the Minister to control the prices of essential goods, preventing them from becoming unaffordable. The Act outlines a specific mechanism […]
The earliest proposition of fiscal consolidation can be traced back to the Keynesian theory which argues that fiscal austerity measures reduce growth and increases unemployment through aggregate demand effects. According to this theory, government undertaking contractionary fiscal policies of either reducing government spending or increasing tax rates, will eventually suffer a reduction in aggregate demand […]
We recommended (“And then, Floods”) that the Central Bank of Kenya policy rate should be lowered by 300 basis points, from 13 to 10 percent, from August 6. Instead, a reduction of just 25 basis points, from 13 to 12¾, was made on that date. Someone is wrong. Who? In explaining the 25bp decision, it […]
There has been a misconception that when the Finance Bill 2024 was formally withdrawn, all government operations would stop because revenues would not be raised. To understand this misconception, we need to understand what a finance bill is, what revenue-raising measures are, and how that is related to the tax code. A Finance bill is […]
Post date: Mon, Apr 26, 2021 |
Category: General |
By: Fiona Okadia, |
Regulating the public service transport (PSV) system, particularly the matatu sector in Kenya, which is a quasi-formal sector has been problematic. A case in point is the well documented resistance of the Legal Notice No. 161 of October 2003 rules and regulation (Often referred to as Michuki rules 2003). The policy objective of this regulations was to institute improved organization of the sector through SACCOs by among things phasing out 14-seater matatus in preference to bigger capacity matatus.
Fast forward to mid-March 2020, after the outbreak of COVID pandemic, the government intervened in regulating the PSV sector, in the fight in reducing transmission of COVID given its importance and the role it plays in enabling mobility of people. To this end, supportive policies to enable it to assist in curbing the spread of the pandemic were then put in place. In particular, the COVID-19 regulations anticipate that every matatu should provide hand-sanitizers for all passengers before boarding the vehicle. In addition to this, the vehicles need to be cleaned twice a day and long-distance operators are required to keep a detailed list of all their passengers. Furthermore, to prevent contamination, Kenyan officials have stated that 14-seater matatus will carry only eight passengers, and vehicles that carry more than 30 passengers will carry not more than 60 percent of their capacity. These are guidelines that hoped that as the matatu industry ferries thousands of people every day from one destination to the other, these people will be protected.
Market Failures
The policy however seemed to have been rushed without diagnosing the past set policies, the operational nature of the industry as characterized by long hours on the road braving traffic jams, corrupt traffic police officers and extortionist gangs, and now the night-time curfew. And if truly the government considered all these factors, it then hoped that this time it will be different and that the matatu owners and operators will comply, and once again it has been proved wrong. The main problem then when it comes to regulations in this industry lies with its policy formulation and implementation. However, these new rules for the objective they hoped to achieve are good but have been poorly implemented: while some elements of the rules such as the provision of sanitizers being expensive but necessary. Addressing these issues requires exposure to relevant knowledge, including policy-relevant research.
It is reported that the PSV sector loses close to Ksh 30 million daily as a result of corruption which escalates its operational costs.[1] The implementation and compliance of the COVID-19 rules in public service vehicles appears to be mandated to the police force. However, cases of breaches and non-compliance have bred rent seeking or corruption where some policemen opt for bribes as opposed to taking the offender through the proper prosecution channels. Such instances may arise when a matatu operator has flouted the rules such as operating outside the curfew time or full capacity.
A second cause of failure is the costs of the regulatory policies put in place are higher than anticipated. Often this leads to unintended consequences such as shutting down of businesses since the said businesses become less lucrative for the owner to operate. Besides lack of full information regarding that market then creates monitoring problems as is the case in the COVID-19 measures in the public service transport system in Kenya, particularly in the matatu sector.
In the case of matatu sector, their revenues were affected due to the additional expenses such as purchasing of hand sanitizers, temperature scanners and cashless systems to enable consumers to pay via mobile money which led to them incurring additional costs in the form of withdrawal fees.
Therefore, in a bid to cut expenses and still appear as if they are meeting the regulations put in place matatu operators found ways to flout the rules. Some matatu touts are sprinkling soapy water on passengers instead of sanitizers. This is easy to do as there is no mechanism put in place by the government to ensure the authenticity of the sanitizers. In some occurrences, some would have disinfectants heavily diluted in water to serve as their sanitizers. This has deteriorated with most vehicles allowing consumers to board without the provision of sanitizers.
Revenues have also been affected by the reduction in operating time due to the curfew that starts at 10 pm and ends at 4 am. It is thus not profitable for most bus companies to operate especially when it comes to the long-distance travels. Furthermore, the government of Kenya expects the matatu owners to still pay taxes of Ksh.720 per seat annually. This means that for a 14-seater matatu, they are still expected to pay Ksh.10, 080 annually on top of the other licenses for example, the vehicle inspection license.
Everyone in a public place is expected to wear a mask, a directive that also touches on the transport system. Today it is not uncommon to find matatu conductors without masks or even allowing a passenger to board the matatu without a mask on. Most of them unless made aware of a roadblock, tend to operate the matatu at full capacity. Measuring body temperature is now rarely being done. Despite the government giving a directive that fares should not be hiked, some matatu owners went ahead and did so and this has not seen a reduction to date. The bus fare is hard to observe as the fares fluctuate due to various reasons such as off-peak when people are not rushing to work.
The Difference in Aviation
The air transport sector is the complete opposite of the PSV sector. Today, if you take a trip to any destination using an airplane, there are several posters plastered on walls advising you and the rest to maintain social distancing at all times. The airport further designates certain sitting areas where one is expected to sit in anticipation to embark on their destination. Yet, this is not the case once in the airplane because the plane operates in full capacity. In the plane one is expected to have a mask on at all times, the flight attendants have protective gears over their uniforms and there are proper ventilation and airflow in the planes. In addition to this, the planes are required to take details of every passenger such as their phone numbers, email addresses, and where one is from in the case of foreigners. With all these measures adhered to, it is easy for the regulations put in place in the airline industry to be monitored without difficulty.
Key Points to Note
In conclusion, Regulation is important for any sector since an uncontrolled marketplace cannot produce behaviour or results following the public interest. Further, government interventions can fail because the government does not have full information on how certain industries work, and if they do, they decide to ignore those facts. In turn, the intent of those interventions is not achieved. For the role that the matatu sector plays in the economy, the government has to set up simple actions that can be undertaken to make implementation of the regulations more effective and address gaps including unintended consequences and the high cost of implementing the regulations as mentioned above. All the below are not standalone measures and should be implemented as a comprehensive package of measures.
Permanent Social Distancing
This can be achieved by altering the look of matatus and minibuses. Some matatus have done this voluntarily where they have three rows of seats in order to ensure physical distancing. This has two advantages. One, it adheres to the common rules that physical distancing help curb the spread of the disease and two limits the operators from overcapacity which in turn prevents bribes to policemen that are caused by not adhering to the half capacity. Additionally, it also allows matatus owners to pay for the number of seats without paying for extra seats whilst getting their licenses.
Improve Natural Ventilation
Ensuring that all matatus have top windows to improve ventilation. Kenyans generally are not inclined towards opening windows in Public Service Vehicles, therefore having the top windows that will not be shut at any given time ensures that there is recirculation of fresh air and it is a cheaper way compared to setting up of air-cons. Consumers generally do not like opening the windows, therefore having a natural ventilation system in place of that kind ensures that matatu operators have the top windows open at all that. The top windows ensure that air coming in from one window moves across the room and exits from another window.
Hand Washing Stations
County governments can provide washing stations at different bus stages. This is similar to when one goes into a shopping mall and they are required to wash their hands. This transfers the burden from the matatu operators to ensure that they have sanitizers for consumers.
The spread of COVID-19 occurs most often when an infected person is in close or direct contact with another person. The risk of the spread of the virus is higher in crowded and poorly ventilated spaces where people spend long periods together close. Therefore, by ensuring that people’s hands are clean, they are masked and the vehicle they are using for transportation is properly ventilated and the seats are maintaining a particular distance then all these can reduce the risk of the virus in spreading such spaces.
The World Trade Report 2024 was launched at the start of the WTO Public Forum 2024 in Geneva titled “Trade and Inclusiveness: How to Make Trade Work for All”[1], and this blog will seek to highlight some of the most profound insights. The report delves into the crucial relationship between international trade and inclusive economic […]
The Price Control Act of 2011, with its imposition of price ceilings on essential goods, represents a significant intervention in the natural forces of supply and demand that govern a free market. The Act empowers the Minister to control the prices of essential goods, preventing them from becoming unaffordable. The Act outlines a specific mechanism […]
The earliest proposition of fiscal consolidation can be traced back to the Keynesian theory which argues that fiscal austerity measures reduce growth and increases unemployment through aggregate demand effects. According to this theory, government undertaking contractionary fiscal policies of either reducing government spending or increasing tax rates, will eventually suffer a reduction in aggregate demand […]
We recommended (“And then, Floods”) that the Central Bank of Kenya policy rate should be lowered by 300 basis points, from 13 to 10 percent, from August 6. Instead, a reduction of just 25 basis points, from 13 to 12¾, was made on that date. Someone is wrong. Who? In explaining the 25bp decision, it […]
There has been a misconception that when the Finance Bill 2024 was formally withdrawn, all government operations would stop because revenues would not be raised. To understand this misconception, we need to understand what a finance bill is, what revenue-raising measures are, and how that is related to the tax code. A Finance bill is […]