26 – AUTONEWS - AA CLUB OF KENYA MAGAZINE
PUBLIC TRANSPORT
BUSINESS
By Trevor Lamenya
Investing in the Public
Transport Sector
The low down on investing in the ‘matatu’ business
T
he Public Service Vehicle
(PSV) sector has been
a lucrative industry to
invest in over the years.
It is estimated that there are over
500,000 PSVs (commonly referred
to as matatus). These ply our roads
every day, filling in the gap left by
defunct state-owned public trans-
port corporations. Matatus play
a big role in the economy as they
facilitate the movement of people,
goods and services.
Despite the introduction of the
Standard Gauge Railway (SGR)
passenger service and the’ light
rail’ Mass Rapid Transport network
within the city, PSVs will still
provide the ‘last mile’ connectiv-
ity making it a viable business
venture. The question however
is; what should one look out for
before entering the PSV industry?
Type of PSV vehicle
The question of what type of
vehicle is suitable to invest in,
is dependent on your budget and
preferred route. If you want to
invest in a 14-18 seater, it is best
to look at the grey market as the
prices range from KES1.7-2.5
million. Those willing to ply short
haul routes in residential areas
should go for a 14 seater 2.5 litre
turbo-diesel with an average fuel
consumption 10km/l. This guaran-
tees about KES2500 per day, total-
ing to KES15,000 per 6 day week
guaranteeing you KES60,000 per
month (after fuel and crew expens-
es). Return on Investment (ROI)
will subsequently be achieved in
roughly 24 months.
For the bigger PSV vehicles that
seat between 29-37 passengers,
the purchase price ranges between
KES4 and KES5 million, hence
best bought brand new. The ad-
vantages of buying a new vehicle
is a guaranteed mileage warranty,
affordable service package plus a
tropicalized vehicle able to handle
our demanding terrain. On average
it will generate about KES10,000
per day, translating to KES240,000
per month and a ROI of about 2
years as well.
Financing
Since you will have to join a PSV
SACCO, take advantage of their
low interest loans. They negotiate
with banks and other asset financ-
ing institution to lend members at
an affordable rate. If you would
like to finance it on your own
either by raising 10% deposit and
financing 90% via banks then the
leading asset finance institutions
like NIC Bank and KCB will
gladly finance your PSV ownership
dreams to reality. They will give
you flexible terms to service your
loan and if you repay consistently,
your credit score goes up and you
will be able to get another loan
facility with them.
Licensing and regulatory
matters
To get your newly acquired vehicle
on the road, you must comply with
certain regulations that govern the
operations of a PSV in Kenya. It
will have to be inspected by the
National Transport and Safety Au-
thority (NTSA) to ascertain its road
worthy condition and check that
equipment like fire extinguishers,
speed governors, seatbelts are in
place to protect passengers. NTSA
also checks the validity of the
PSV insurance, SACCO member-
ship and most importantly if the
driver and crew have the required
documentation that include a PSV
and valid driver’s Licence plus a
Certificate of Good Conduct from
the Criminal Investigation Depart-
ment). Once this is done get ready
to benefit from your hard earned
investment.