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what you need to know before you invest in the matatu industry.

16 Feb

Many investors are coming to the matatu industry with the wrong attitude and it is sad to see many going back the same way they came, and again, followed by debts. Below are some facts you need to know before you venture in the matatu sector.

1} A Matatu business is an expensive investment.

imax  Most people don’t see a matatu as a rich man’s game- Many associate matatu with the crew who operates them and assume that the ineptness is a sign of cheapness. But to get an edge in this sector, you need not less than half a million Kenyan shillings. This is the list you can start with, and  will take a lot of goodwill and lots of work to start going up the ladder.

With 1/2 a million shillings, you can buy a 7–8yrs old used Toyota. Chances are always 50/50 when it comes to buying a old car; especially one that has been on the Kenyan roads as a matatu for those years. No mechanic can perfectly predict the lifespan of an old engine; Take for instance; if you want to replace the engine of a Toyota 5l. it will cost you not below 350k. Other than that, there are other equally expensive parts like gearbox, complete suspension, differential etc.

Psyco front  For those interested in the minibuses category- the capital goes up to millions of Shillings. The good thing about this class of public service vehicles is that most of them are Brand new and Most banks are will to chip in the finances up-to 70% depending on the prove of ability to pay on the side of the borrower.

A 33 seater minibus complete with seats, governor, safety belts and all the legal requirement is selling at 4.7m at general motors. A further 500k is needed for a comprehensive insurance cover and about 200k for extras- this include, Sacco registration, decorations, advanced music system, trademarks and legal fees like TLB- County Governments parking fees and others. A serious investor in this category will be required to have not less than 5.2 or in-case of financing 2m is the minimum.

2} You need much more than money to succeed.

Many would have been successful matatu investors come to the industry with”joto ya pesa”  This wrong approach of thinking they are wise; is also a ticket that has sent many the way they came if not worse. The fact that you must come up with hundreds of thousands of shilling before you become an investor {as we have seen above to venture into the industry} gives some people the false illusion that they are better off that other small players in the sector. Many make the mistake of ignoring drivers and touts; rather than regarding them as important part of the investment many view them as slaves.

I get many calls from investors and one thing they all have in common is problems with workers. Majority of matatu owners never bothered to employ workers on permanent basis; they mostly relay on casual labor which is widely available at every matatu stage across the country. Casual is cheap as it leaves no string attached, the owner has the control of the vehicle but zero hold/ responsibility on the crew. here, they reach an off record agreement based on targeted income. The problem with this settings is that, no driver will ever agree to shoulder your burden especially in matters to do with police or accidents. Your vehicle will constantly be towed-because the crew took off and left it on the road in case of  police operations, hit and runs or worse hit and run accidents.

3} You are the CEO of your investment.

familiarMany investors lose millions of shillings to fraudster and corrupt government systems that control the matatu business due to their –hands off diplomacy– toward there investments. There is a kikuyu saying that says “kindu no mwene” {only the owner can take care of his property.}

Many people who don’t go far in this sector are those who, learns about the millions laying unclaimed in the passengers transport sector and ‘without’ doing a proper research} rush to make a kill. It doesn’t take much convincing to get somebody to buy a matatu since the demand for public transport in Kenya is obvious, especially in Nairobi due to the rural urban migration we have witnessed in the last 10yrs.The unprecedented hike in fares is an indicator that the demand is going up.

The problem for this “new comers” comes when the car hits the road and the owner starts learning work related vocabularies like, police crackdown, operation, kajo, wire, breakdown, break failure, music copyright, mung’iki, kamjeshi and hundreds of other payable institutions that don’t end up in the work sheet. In an earlier article “{ https://wambururu.wordpress.com/2012/11/27/the-pros-and-cons-of-investing-in-the-matatu-industry/ } I had said that, A matatu investor should be someone who is willing to spend money -legal or otherwise- to get more money. it makes business sense and cents to hire someone to do the dirty work.

4} The make; will make or break you.DSC_0419

The type of vehicle you chose to invest in; will have a lot to do with the success or failing of your investment. There are some brands that have dominated the Kenya public transport sectors for years. Isuzu-Toyota and Nissan have the lions-share in the local market. I have personally handled the three Brands in my many years behind the wheels and each has proven it’s worth.

Isuzu has the title for the most preferred minibus in Kenya’s matatu sector. This is on one hand, because of the availability of new spare parts and reasonable prices but also, because of a long durability record as is evident on our roads. Car makers like Hyudai and Mitsubishi have tried to build cars that can meet the NKR and NQR but they are not there just yet. Even the few ROSA’s we have on our sister routes have their engines replaced with Isuzu 4.3 imports from Uganda.

In the 14 seaters category, Toyota shark is the king of the road. this car has been tested and proven to operate on any road under any weather and ideal for long distance travels. The 5L engine has the power to handle the 14 passengers load with ease and still do long hours of continued driving. the vehicles is fitted with ABS braking system, fuel efficiency and more power as compared to it’s closest competitor the Nissan QD or TD 27. which comes second in passenger transport; the Nissan is easy to maintain and has a reliable backup in terms of spare-parts. It is ideal for short distance urban routes 10–15kilometers} that has less steep hills.

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22 Comments

Posted by on February 16, 2014 in Its life, Matatu matters

 

Tags: , , , , ,

22 responses to “what you need to know before you invest in the matatu industry.

  1. brenda

    February 18, 2014 at 9:01 pm

    very helpful!

     
  2. James

    February 24, 2014 at 7:47 am

    i greatly thank u for ur advise…from since i was young i have always desired n hoped that one day one time i wil have a very big matatu company…thats my dream and that is what am forcussed to achieve…am a second yr in karatina university taking business in tourism management n hopes that before long i wil have a no of matatus on the road..thanx so much may God bless u

     
  3. wambururu

    March 18, 2014 at 11:23 am

    it’s the much i can do to at-least help a brother. Thanks Brenda; it means a lot to know i helped somebody.
    James; keep your dream alive. you have a vision you can make it your mission.

     
    • Wachero Abraham

      February 8, 2016 at 5:20 pm

      My bank said they can’t give me a loan yet I could raise the downpayment. just because they don’t offer loans for PSV matatus unless you have like three logbooks already. Whats your advise My friend I see you have a wealth of vast experience. Please advise

       
      • wambururu

        February 8, 2016 at 10:22 pm

        The best people to approach is a matatu sacco. Most people see them as matatu management associations but in actual sense they are Savings and Credit Cooperative Societies. This is a good way to join the matatu industry since you’ll jointly own the vehicle with your financer until the loan is paid. In most cases, the sacco will manage the vehicle for the duration but you can choose to operate the van/ bus independent. The logbook is kept by the sacco to stands as surety.
        You must be an active member for a certain period ranging from 3–6 months to get 3times your savings @12–18% per annum.

         
  4. simeon

    May 6, 2014 at 9:07 pm

    Hi, have read your very wonderful and great writings. Very informative and full of advise. I would wish to invest in your advise.Kindly let me know how i can reach you for a talk asap

    regards

     
  5. Edward

    June 5, 2014 at 3:54 pm

    May God bless you for this infor and the willingness to continue sharing!

     
  6. Solomon

    August 17, 2014 at 9:42 am

    Would like your advice
    What’s your email address?

     
  7. Lawrence Mutuma

    September 7, 2014 at 4:16 pm

    very insightful articles sir. would you be at a position to help me identify n acquire a shark 5l in good condition for utmost 1.1m?

     
  8. Kepher Ochieng

    October 16, 2014 at 10:11 am

    Is it true I cannot import a new 14 seater Toyota and get TLB license?

     
    • wambururu

      November 29, 2014 at 3:41 pm

      No it is not true; you can import any van as long as it is not over ten years. it is in some city routes that you can’t get a TLB. even this is changing.

       
  9. maureen

    November 8, 2014 at 12:26 am

    thank you for educating on this industry.

     
  10. Sammy

    April 3, 2015 at 12:43 pm

    Good work

     
  11. James

    June 8, 2015 at 8:49 pm

    Great and powerful wisdom . Thanks for sharing. Looking for matatu…to start from small .

     
  12. Tom

    August 25, 2015 at 10:09 pm

    Mr Wamburu asante sana. Does your email still work?

     
  13. McDonald Maina

    October 8, 2015 at 3:54 pm

    Am so much greatful,ave bin so much determined to invest in this sector n uve rili added mo in me..thnx n God bless u.

     
  14. Glider imboywa

    November 4, 2015 at 12:57 am

    Hey guys ! First thanks so much for the articles and the enlightenment of knowledge that u are doing! I’m a young aspiring businessman living in the USA ! But I would really like to finance a brand new matatu or something that has life and can make money for me !

     
  15. John Kabue

    November 5, 2015 at 8:16 am

    Very informative article. Thanks for the insights on the industry. God bless

     
  16. Kamau waithaka

    March 15, 2016 at 7:29 pm

    Wow!,Man U r great.Much thanks Mr n God bless u.Matatu business is all I’ve been thinking of since I can recall n now that am earning as a driver in Saudi am certain God willing I’ll venture in the business n with what I’ve learnt from u am far more wiser n I’ll always be greatful.As a matter of fact i saw ur message while i was searching for a mathree second hand that’s on sale n that I can afford.Rathimwo muno mundu wa nyumba

     
  17. shaka chai

    April 11, 2016 at 11:19 am

    This a very educative article about the industry,meaning we other underlying factors in the industry that don’t come surface.kudos bro

     

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