1.1 Background of the Study
The transportation industry sector is comprised of a wide range of service providers covering all modes of transport; air, road, sea and rail. In Kenya, both private and public providers offer transportation to the public. Due to the diversity of the transport sector in Kenya, the infrastructure group; the department of Price Waterhouse Coopers-Kenya that deals with researches on industries and infrastructures, had classified roads as the prime link between all the economic sectors since they account for 80% of Kenya’s total passenger and freight transportation as well as value of output (PWC Kenya 2009).
The word matatu is derived from the local kikuyu vernacular word mang’otore matatu which means “thirty cents” which was the standard charge for every trip made. (Chitere. O and Kibua.N, 2004).Majority of Kenyans do not own private cars, thus they use matatus as their mode of transportation. By 2003, the number of matatus operating in both urban and rural areas was estimated at 40,000 and they provided employment to 160,000 people and paid up to Ksh. 1.09 billion per annum to the government in taxes (Chitere and Kibua, 2004).
The origin of matatus in Kenya can be traced back in the late 1950s. After Kenya’s independence in 1963, Africans migrated to Nairobi to search for employment opportunities. Informal settlements began to expand in areas where there was limited transport. These people were too poor to own private vehicles. Recognizing the opportunity for financial gains while providing the much needed service, mini-bus taxis (which were largely owned by middle-income people) began offering transport services from rural areas and informal urban settlement around the city. Due to high demand, the number of matatus increased but was operating illegally until 1973 when the then president (Mzee Jomo Kenyatta) issued a decree officially recognizing matatus as a mode of public transport. This made them to be the main mode of transportation in Nairobi metropolitan up to today, with an estimated number of 15,000 matatus. (Graeff J, 2009).
The benefits that are attached to matatus as a mode of transport by various parties include: Owners get income inform of profits, workers such as drivers, conductors and stage workers also get income in form of salaries, passengers get mobility and safety, other road users such as cyclist, motorists and pedestrians also get safety, and institutions such as local authorities get revenue. Despite all this, there is still a struggle for regulatory and economic sphere of influence in the matatu sector (Khayesi. M, 1999). It has been reported that there is insufficient consistent data about matatus. If any, there is limited access to the database and can only be found through SACCOs (Graeff. J, 2009).
Since the official recognition of the matatu as a means of transporation in 1973, the sector grew to the extent that the owners formed a national association to control the operations of the sector and also advocating for their rights and demands. All matatu operators were expected to belong to this association, that is, The Matatu Vehicle Owners Association (MVOA). They had a rule that forced new matatu operators to register with the association in order to be allocated a route of operation. The association attracted the attention of both the Government and political opposition groups who saw the association as an important ally to advance political moves. The association was disbanded by the Government and was accused of having been penetrated by rich individuals who were oppressing the weak members by assigning them to routes that had fewer passengers. The Government then left individual members to operate on any route although it did not end the influence and support that politicians had for the matatu owners and operators (Khayesi. M, 1999).
The Government then introduced SACCOs in the matatu sector as one of the reforms...