Surprising contribution of motorcycles to economy

The motorcycle is an innovation similar to M-Pesa, the service that rode on mobile phone technology to deliver a revolution in Kenya and beyond.

Never mind that M-Pesa’s success to a great extent depended on our socio-economic set up — we love helping each other, and Safaricom simply helped us do so easier. We send money to our parents, neighbours and friends for upkeep or during funerals, weddings, etc.

The motorcycle, like M-Pesa, has shrunk distances and rides on existing technology, the two-stroke engine. Rural areas have benefited more than urban regions, just as with M-Pesa.

This is one of the few occasions in history where the people at the bottom of the pyramid, the hoi polloi, have benefited more from an innovation more than the elite.

Fight back

The motorcycle has simply killed the bicycle, now a rarity in rural areas. To be fair, the bicycle did try to fight back — did you see them fitted with engines?

The death of the bicycle is the best example of Schumpeter’s creative destruction, where one innovation destroys another. The bicycle will now be ridden for fun, not to ease transport, the same way the horse is ridden for fun, not war.

Most people, including policy makers, see the motorcycle as a nuisance; they are too many and are like a pollutant.

But we need to be more positive. The contribution of the motorcycle to the economy is surprising — if a 5km journey now takes 10 minutes instead of one hour, that’s an 80 per cent saving in time.

The saved time is not used in sleeping, people engage in other economic activities.

Voodoo economics

Let’s put this into perspective. If 15 million Kenyan adults use motorcycles or boda bodas every day, and the minimum wage in Kenya is Sh8,000 a month and one works 160 hours each month, then each saved hour in transport is about Sh50.

Multiply 15 million by Sh50 and then by 30, assuming people travel once every day for 30 days.

You get a whopping Sh22.5 billion in savings every month.

Sound like voodoo economics? Yet, such savings are unlikely to be captured in our national statistical systems.

Multiply Sh22.5 billion by 12 months and you get Sh270 billion a year — this is about 15 per cent of our Budget!

Add the multiplier effect and you will start respecting these young men.

The counties have seen the money in boda bodas and want to charge them a monthly fee. One simple test of a business’ profitability and potential is the interest regulators and taxmen have in it.

The boda boda has not just shrunk distances and made the economy more efficient, it has also changed the social stratification in rural areas. The motorbike is now a status symbol.

In addition, it has kept a lot of youth occupied. If the Government has anything to thank for the fact that the youth bulge has not led to a serious socio-political crisis, it should be the motorbike.

With the motorbike, rural folks can get to hospital quickly, transport produce to the market and show off.

Urban areas have discovered one of the benefits of the motorbike — manoeuvrability.

The police discovered gangsters are using motorbikes very effectively in their evil work for this reason. The motorcycles’ other unintended consequence is that boys are dropping out of school to acquire the status symbol.

Boda boda riders have even contributed to the global economy. By buying motorbikes, our youth have created lots of jobs elsewhere.

For example, Bajaj and Hero are two companies based in India that have really benefited from our appetite for this mode of transport. There are other motorbike manufacturers based in China. Add helmets, spare parts and petrol, and the motorbike becomes the new economic hero.

The motorbike destroyed the bicycle (my dad owned one, which he had bought for Sh25). It is hoped that soon, an affordable car will destroy the motorbike. That’s the nature of economic progress.

There are lots of pessimists who think we have made no progress in the last 51 years. The truth is that we have made lots of progress, only that our model of development is different from that in the East or West. We are unique, and so is every country.

Our model is so unique that we are leap frogging some stages of economic development. We jumped from the telephone booth straight into cellular phones. We are skipping credit and debit cards straight into the use of the mobile phone for our financial transactions.

Unfortunately, the great progress we are making is drowned out by negative news on insecurity and other vices, coupled with our ingrained pessimism. We seem to hate good news.

CREATIVE ENERGY

The progress we have made in recent years is not random. It’s the dividend of liberalising our economy and unleashing the creative energy of ordinary citizens.

There would have been no M-Pesa without the opening up of the telecommunications sector to competition. The cellular phone industry owes its growth to the US government forcibly dismantling AT&T’s phone monopoly.

The motorbike industry is private sector-led. The next big thing is likely to be led by the same sector.

In the next decades, we shall make lots of economic progress if we let the invisible hand of the market do its work.

The visible hand of the Government and pessimists are often restraining, a threat to innovation.

Vision 2030 and all our other economic dreams will only be achieved through the private sector and a good regulatory framework. If you focus on the two, I see no reason Kenya can’t become the Swahili Tiger in my lifetime.

The writer is a lecturer, University of Nairobi.

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