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Frequently asked questions on matatu investment 2015.

20 Feb

1. >I saw your blog post on matatu business and you mentioned that you were setting up a transport management company. I would like to know if you have achieved this and if so if you have more information for investors?

We are in the final process of registering the transport management company; we have identified most of the challenges facing investors and we have come up with the strategy to address those issues. We are currently working with other saccos within Rongai route as unit managers, we are targeting to meet the recommended 30 units to get a license from the NTSA. So far we have managed to get 14 vehicles which we have fitted with a fleet management system/ GPS tracking and Cashless system. We pay between 3000 and 3500 for a 14 seater van and between 8 and 9000 for a minibus provided it meets the requirement for the current market. email us for more information. guidancetravel@yahoo.com or call James- 0704 606730

2. >Thanx Wambururu for the good work you are doing and the responses you give. Am gonna be direct on this. I am set to join the matatu industry, i have a good manager who i believe will take my business forward . My manager has told me that we should focus on acquiring an ex tour vehicle, probably a DT Dobie Urvan. I have identified several on OLX , but my question is, How do i ensure that the vehicle is in a good mechanical position as the owners claim, what sort of inspection can i subject it to make sure that the engine, chasis and the body are in a good condition?
It is very tricky to get TLB for a 14 seater especially if the vehicle you plan to use has never been a matatu before- EX Tours are thought to be better but that is not a guarantee that they are always in good condition. Furthermore the choice of the make {Nissan /toyota} is very important and differs for different routes. Nissan is better and more efficient for short distance- town service routes while as a Toyota is best for long distance and hills. You need a good mechanic who is specialized in the model you wish to buy and follow his advice. A recently government -inspected van is an advantage.
3. >I have 2M .My home is in Ngong.I have been working outside country as a Mechanic and I am returning home.I can get financier and buy a 33 seater minibus I want the matatu to operate on route 111 or Kiserian route so that I can easily monitor it. I am mechanic and I can manage the repairs myself in my home. Kindly advice on whether my dreams are valid and the challenges I might face, and whether its advice able to take the risk.

You seem like a person who is set for matatu business and I would really encourage you to follow your dreams of owning a matatu or probably a fleet in future- You already have about 2million, a financer and a destined Sacco which is route 111 Ngong—Nairobi.
You also happen to be a skilled mechanic which is necessary and will reduce the maintenance cost; what you need is a crew especially the driver who understands the business and can safely take good care of your vehicles.
You also need a join a Sacco that has a fleet management system- GPS tracking and a cashless system. That way, you will be able to monitor your vehicle- know how many kilometers/ trips it has made- driving behaviors of different drivers etc.
4. >Hi Wambururu, am Kamau and much interested in owning a second hand matatu soon. I want to join a sacco whereby i would be saving 20,000 per month. In 7 months time i will have 140,000 then i would like to take a loan 5 times of my savings for me to have 700,000 to buy a second hand matatu. Now my question is does your matatu sacco offer such kind of services if not can you advice or refer me to any other matatu sacco.
Thanks in advance
Ours is a transport management limited company- we are registered under the registrar of companies act. However I work closely with matatu Sacco’s in Kajiado- Rongai Kiseria and Ngong; I know of one Sacco in particular that has been lending capital to drivers to buy their own vans as long as they remain with the Sacco. You need to first register for membership @ 5000 and then you start saving; they normally give 3 times your savings but I’m sure they can be very helpful in a situation like yours.

5. >I have been a good fan of your blogs. I would like to inquire about investing in the matatu business.
Is it possible for me to start with 00.ksh.. I mean, can I get a loan with the matatu as the security?
Thanks

Nothing is impossible though some things are said to be next to impossible; most banks will not finance a matatu no matter how much you are willing to deposit. Different banks and financial institutions offer different packages on asset finance. The best way to get the facts is to talk to loan managers. I have seen adverts from Equity bank where they claim to finance up to 105%. One thing I know is that you need at least a six months bank statement and in case of financing a matatu, you need to have a very active business account or another matatu already on the road.

6. > Hi,your blog is really helping. Anyway I’m thinking on acquiring 2 brand new 33seater Isuzu from GM and put them through githurai 45 route.
Will the returns be good?
How are the saccos over there?
Please advice
Minibuses are taking over the matatu business though they have to face a stiff competition from the larger capacity buses. Githurai is popular with 51 seater buses and since they are in large supply, they easily handle the flow of passengers to a manageable level which strikes a balance between the price, demand and supply. Since matatu business is a trade like most businesses; where the law of demand and supply applies Githurai route does not offer the best investment opportunity. However tides are changing and passengers are shifting to vehicles with fewer capacity which are quick to fill and more comfortable.

7. >I have been reading these article and comments and just trying to make sense out of everything, what i would like to know is what to include in a proposal for getting a loan from an investor ,i know most of these comments are a bit out of date and probably the market has shifted a bit ,kindly can you advice on these matter as i am interested in getting my claws in these business .thank you for your consideration.
I have tried to cover this in question 5 above; nonetheless, I have to agree with you that the comments are a bit back dated but not much has changed on the ground. You will need to talk with your bank manager and see what they are offering then compare with what Sacco’s are giving.
8. >Thank you for your article, I invested in second hand a 51 seater bus being financed by my sacco but upto date i have not made any profit from it,it have consumed all my money but am optimistic ill make it..my Sacco have been very supportive, they want to restructure the loan n be paying small installment, my question is?
1. my current job is not paying well and am not permanently employed, can i leave it and be going with the bus..am convinced i can get 8k per day.
2. Whats your take on repayment procedure.
You have not said how long you have had the bus and again which route you operate; this is very important and I believe it has a lot to do with your current situation. it is advisable to always keep the supply line open I.E. quitting your job might not be the smartest thing to do for now. There is a reason why your bus is not doing well/ making any profit- this may result from mechanical condition of the bus- crew- or even Sacco management among other factors. I would recommend you get a person you can trust to work with your bus and identify the cause of the problems.
If I got your second question correct- you want to know my take on the repayment procedure- I don’t know how much you owe the Sacco or whether you are paying a fixed interest or in a reducing balance basis. You can email me more details.. Wambururu@gmail.com.

9. > Hi Wambururu, thanks for the great information you are providing on your blog regarding investing in the Matatu industry. I’m 22 yrs managing my own food delivery business in Nairobi, i was a rongai resident before i moved to South c,i save 4500 per day and i want to venture into the 33 seater matatu business by the end of the year. is it possible to approach a bank and what r the requirements..
Congratulation for the good work you are doing and a profitable venture indeed. You have an upper hand in getting financing from most banks if you are operating a business account. With your savings which I would estimate to be over 120,000 per month, you only need a six months bank statement- a deposit of 969.000 Kes, call this number for more info- 0722 140 378 Yvonne Mengo- sales team leader ACMG authorized ISUZU Dealer for GMEA.

10. >I have developed great interest for the matatu industry. And from the previous advise you’ve given other people I have decided to buy a second hand 33 seated instead of taking a loan. My route of interest is githurai 45 and I would like you to manage it for me. How much should I expect per day?
I’m not familiar with Githurai route; so, I can’t promise you how much I can raise in a day and also the condition of the second hand 33 seater minibus. If we estimate that you will get the vehicle at around 1.8M, I can approximate the same to bring home between 5—6,000Kes. This might not be the actual figures, like I said earlier; it will depended on the condition of the bus. Instead of a second hand minibus, I would recommend you buy two 14 seaters approximately 1.6m. They will each give you a minimum of 3500 Kes Daily that is 7000 per day.
11. >. I live in Kisumu and My most burning question is how much does a brand new 33 seater cost visa vis a second hand. I have 1.2M and am spoilt for choices to go for either a 33 seater or 14 seater, that is if am able to acquire the loan from NIC bank.
Secondly, am thinking of kisumu – busia rout (400/= one way, about 120km apart). Please show me some real (not ideal) calculations so as not to raise my hopes so high on profit margins.

Price for NQR 33 seater brand new and payment plan is as follows. The selling price for a 33 seater Isuzu NQR is ksh4,827,000.You are required to pay a deposit of ksh.968,400.The bank finance upto 80% at 8.7 flat rate. The monthly installment is ksh.135,265 for 3years.So the total interest adds up to ksh.1,007,000.
See 16 and 17 below for an actual {not Ideal} breakdown.

12. >Thanks a lot for such informative n educative thread….am planning to venture on matatu business but second hand.
Kindly advice the best matatu, Nissan to buy coz i hear kuna Toyota caravan n shark..And others..Which is best…all in all what one has to check to find if the matatu is good..coz i hear my friend bought one but after had an issue with number plate with kra.
There are two models of 14 seaters that are currently in the market and have been approved by the governing Authority. The Toyota 5Litre engine, diesel and Nissan caravan. Toyota 5L model is the most common even though it is no longer registered. The last of its type was manufactured in 2003 and that is over ten years ago. Our laws on importation of used vehicles limits up to ten years. This model is now replaced by a more modernized Toyota 7L Diesel: and custom made Nissan {box}.
As for issues to do with proof of ownership; you should first do a check/search at NTSA/ KRA- if you have any doubts, don’t buy.
13. >Hi Wambururu! I hve 1m cash and am interested in owning a 33 seater Minibus can i get a finance option frm a bank, which is the best Bank or institution ? Pliz advise.
Yes it is possible to get finance from banks as long as you can assure them that you are able to pay back the loan and also if you can afford the deposit. Most banks finance up to 70%. The tricky part is that you have to have operated a business account for minimum of six months showing deposits equivalent to the monthly installments. What I mean is; for a bank to give you a loan to buy a public service vehicle, you need to have an alternative income that can continue paying the loans in case the matatu breaks down.
14. >Thanks 4 wonderful teaching God bless u.my question it is a good idea to buy 14 seater Toyota second hand about 250k to 300k replace with new egn + gearbox so that i can be on safe side in terms maintenance and how much do i need plz?
A new 5l engine for Toyota shark costs around 350,000 and the gear box costs about 50,000 – 60,000.If you were to give it a fresh coat of paint and probably some interior work, seats covers.\, belts, music system etc, you will need about 60—80,000. In total you will require approximately half a million shillings. Add this to the purchasing price and you end up spending about 850,000 KES.
15. >Hi Wambururu,
I really like your honest and informative answers.I would like to know how much (minimum] one may need to go for a loan for a 33 seater mini bus and where to start, is it GM or a particular Sacco or bank?
If I am new in Matatu business and i want to learn is it advisable to start with a second hand 14 seater or a 33 seater on financing?
For your first question on cost of a 33 seater, see answer for question {11} above.
And again i think you should start low. What I mean is, start with a 14 seater, run it for six months or so and understand the business, then you can decide whether you wish to invest in a 33 seater.

16. >I’m interested in investing in transport business. Toyota 5L used is my target, currently I can raise about 800k. My concern is, First I’m out of the country for a period of time and the management of this venture is dreadful to say the least. Second, my view is a long term investment by ploughing back the proceeds into the venture.. At certain point you mentioned about registering a venture to manage this profitable but highly risk business. Now in the view of these circumstances, what assurance do I have from you personally as a manager and confidant regarding safeguarding my interest..
It might appear like a high risk business but it is not such. Matatu investment is a public service provision business that has very good returns. Below is monthly review for a 14 seater.
JANUARY 2015
KAY —–X. ———————————— 14 SEATER

REG.NO.
  1st   2nd   3nd     4th         5th         6th          7th           TOTAL

3500   3500   3500   3500     3000     ——        2000         19.000
  8th    9th    10th    11th      12th        13th      14th
  3500   3500  3500   3000     3500       3300   3000         23.300
15th   16th   17th    18th      19th        20th      21st
1000   3500   3300   3500   3300       3500      2000        19.900
22nd   23nd   24th   25th     26th       27th       28th
    3500   3500   1000   3500   2500   3200      3000        20.200
29th   30th   31st.
….  2900    3500                                                          6 .400
TOTAL = 88.800
EXPENSES.
FULL SERVICE. {OIL/FILTER/PADS/ DIESEL FILTER/ ELEMENTS/ GREASE.}= 5.300
ALIGNMENT.= 1200                                REAF SPRING.=1500
BUSHES.=600                                       LABOR.=1500
NEW MID-RANGE SPEAKER.= 3500      INSURANCE.= 7800
WELDING REPAIR. = 1000                    WIRE/ COMPENSATION = 4000
PARKING KAJIADO.= 1500                    NOZZLES SERVICE .= 3000
PARKING NRB.= 3600

TOTAL .= 32.500.00
GROSS INCOME .= 88.800.00
LESS EXPENSES= 32.500.00
NET INCOME= 56.300.00.
As your manager, I will be sending you a bank slip for the net income and also give you the breakdown. Alternatively, we can agree I be depositing a flat rate of 50.000 kes per month and take care of maintenance and all expenses, insurance parking, servicing and replacing minor parts.
17. >Thank you But is it a guarantee that they can pay up the loan on themselves because I have seen banks repossessing some of these buses and that might be a problem.. And on another note, is it advisable to take two 37 seater buses or put a deposit on a bigger bus and which Company/sacco would you advice..
Buses have high capacity and yes it is true they carry more passengers; but in matatu business especially short distance routes, they don’t attract more customers-pasengers still prefer low capacity vehicles that fill easily and are faster. Fare price also differs and by large margins.
A 51 seater bus plying nrb Rongai routes make four return trips in a day at an average fare price of 40 kes.{ 50 passengers X 40 Kes X 4 trips X 2 {return}= 16,000 Kes.
Fuel is = 4500-5000. Sacco contribution + police, touts, etc= 2,000, salaries= 3,000. Net income is about 6,000.
A 33 seater{ MANYANGA} minibus does 7 return trips at an average of 60 kes, ={ 32 passengers X 60 kes X 7 trips X 2 {return}= 26880.
Fuel is= 6,500—7,000. Sacco contribution+ police and normal expences = 4000. Salaries= 4000. Net income is between 10—11000Kes.

18. >Pls am from Ghana and i want to start a matatau transport business in Kenya. Pls i want to know if it is possible for a non Kenya can invest in the business. And how much is the Kenya shillings to one US DOLLAR. Thank u
I don’t think it would be a problem to invest { although I’m not sure about what the law says; but I know some foreigners who have bought rental houses and public service buses; as long as you are not the driver- you can surely invest in the industry and get your money at you bank just like anyother investor. One US Dollar is exchanging @ 90 KES. To put a brand new 33 seater minibus that meets the current market on the road, you will require about 59.000 US Dollars.

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5 Comments

Posted by on February 20, 2015 in Its life, Matatu matters, Spiritual wisdom

 

Tags: , , , , , , , ,

5 responses to “Frequently asked questions on matatu investment 2015.

  1. Francis

    February 24, 2015 at 5:20 pm

    Hey sir, am really interested in investing in matatu. I can afford 2.5m n I really want to start with a 14 sitter.I would like you to advise me on whether I should with one new or 2 second hands?. Still I would like to know which sacco is best for me?. thank you

     
  2. Lourien Musto

    March 2, 2015 at 12:04 pm

    I appreciate what you are doing. My father was in the matatu business but things went sour. Since i was exposed to the industry i plan to invest in it in the near future and i know i do need your advice to go strong. I will reach for you one day God willingly. God bless you as you continue with the great work.

     
  3. edd

    February 25, 2016 at 5:01 pm

    iam a student and i am a die hard matatu fan and my dream is owning a matatu company in the near future .iam really inspired by your standings and clearly explaining the essentials of owning a matatu and the way to move foward.your message is really clear and well illustrated.kudos

     
  4. p. w. wambugu

    March 14, 2016 at 5:06 pm

    Hae Mr wambururu. thanks for the great advice. I would like to have your advice. am intending to take a loan of 1m and buy a secondhand 14 seater matatu. I’ll b paying the loan by a side hustle. my questions are; what quality of a car will I get with that amount, secondly what’s the minimum amount per month should I expect, considering that I’ll ensure the car will always b on the road.

     
  5. Geoffrey Ojwang

    November 21, 2016 at 11:59 am

    I salute you. Keep on keeping on. I’ll come for one on one talk when time reaches. kudos

     

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