Cooperatives as a means of paratransit reform : case studies of inter-city Matatu savings and credit cooperatives in Kenya

Abstract

The Kenyan public transport authorities observed that the voluntary organisation of some fragmented inter-city matatu businesses into Savings and Credit Cooperatives (SACCOs) had resulted in improved service and regulatory compliance. They therefore decreed in 2010 that all matatu operators should either join a SACCO or a transport management company. How SACCOs work, and the benefits they offer, have not received much research attention. Drawing from the results of case studies of inter-city SACCOs operating out of Nairobi, this paper investigates how public transport SACCOs are organised, the benefits they offer, and the lessons the Kenyan inter-city public transport SACCO experience has for paratransit reform elsewhere. It is argued that SACCOs vary considerably in size, driver employment, vehicle management and member benefits, and that there is therefore no single public transport SACCO model. It is further argued that the organisation of matatus into SACCOs has been an important step in rationalising inter-city services and improving quality. They enable operators to preserve their business capital, borrow to maintain, repair, and replace vehicles, and, when drivers are salaried and collectively managed, they offer a means of removing the negative driver behaviour incentives associated with the ?target system?. They have demonstrated a readiness to adopt innovative service operations technologies and practices. SACCO dividends from diversified business interests provide additional income, and member benefits and services reduce vulnerability to risk.