The pro’s and con’s of Investing in the Matatu Industry.

{This article has been re-posted to answer some important questions raised by readers and those interested on venturing in to the passenger transport business. see questions and answers on the comments section.}

Matatu business is one of the most profitable transport investments that have escaped foreign investors for many years; this can only be said to have been attributed to/ by the risks involved in running the business; among them corruption and cartels. I had an -off the record- chat with one senior police officer and he told a story about how he had seen a business opportunity and went for it. Back then; he was two steps below the rank he currently holds, meaning; he had more spare time to manage a side business and still be able to provide- service to all- as the police slogan indicates.

He took a loan from a Sacco within the force and took another loan from his bank; with the money he bought a 14 seater matatu. It was a step in the right direction for the officer of law and four years later, he owned seven 14 seater Matatus. His success in the transport business seemed to go hand in hand with his job performance and at the prime of building his business empire, he was called by the state to serve in a more demanding position. His new position took most of his time and as much as he would have liked to continue running things in the matatu business, he could not find the time.

He hired a manager to run thing for him and in less than a year he had sold the last of his seven vehicles. Although my friend the police officer did not make a loss considering the amount of money he had invested and how much he had in his account at the time of wading up; it was not his desire to close the business. Would he put his money in the matatu industry if he was sure the manager would do his job? His answer was yes. He still dreams of owning a transport company with a fleet of more than thirty vehicles. His story is one of many that have tried their hand in the business and ripped the fruits.

 The chairman of familiar transporters  is another success story. He has been in the matatu business for over 15yrs.  started his business in kikuyu town in the early 90s where he owned two Mitsubishi colts T120. He sold his two mini Matatus popularly known as Tung’othi and bought a new Nissan matatu. He moved his investment from the village and came to the city where he managed to build an empire and a trademark that still sells today. He personally hires staff and manages his fleet on a daily basis.

A prominent Nairobi lawyer is also a beneficially of the transport business; he started with one bus not very long time ago and has managed to build one of the most respected transport service provider in Rongai town. The chairman of Premier transport services has succeeded where many have failed because of his understanding of the laws and a dedicated manager. Mr. Mbugua is probably one of the most despised managers Route 125 has ever seen. He is hated by many and mostly discussed in the jobless corners but this has not stopped him from earning his position as the most successful matatu manager ever seen in the sector. He came in the picture when the lawyer bought his first bus and today he commands over ten buses and over 30 employees. His success is plainly attributed to his dedication to his job and a no nonsense approach to corruption and the rule of law.

  There is another upcoming management team of ex-matatu drivers that has taken the matatu market by surprise;- Rongai matatu welfare. agency is a new entry in the business and for the first time in Kenya; it has attracted foreign investment from our brothers in the new republic of Sudan. The company took over the management of two buses belonging to a Sudanese investor after he terminated a contract with city hopper complaining of not making any profit after several months. Two years later the young entrepreneurs have turned the investor’s dreams of making money in the transport sector into a reality; he has added two more buses and there is talk in the industry that more are coming with two already with the body builders.

It is not the same story with some of the investors as we have seen very many would have been successful business men go under because of poor management. Cardinal transporters was quite a big name in Roingai town. The private investor from Nakuru came to the busy town with a fleet of over ten Toyota 14 seater’s Matatus. He was in for a rude shock after the people he had hired to manage his investment turned to have merry with his earning and became popular at the local bars as the biggest spenders in beer and nyama choma. His investment was in the break of going under when he fired the managers and relocated to another .town.

related post, https://wambururu.wordpress.com/2014/02/16/what-you-need-to-know-before-you-invest-in-the-matatu-industry/
see also; https://wambururu.wordpress.com/2012/12/15/commonly-asked-questions-about-investing-in-the-matatu-industry/