Are matatus ready for disruptive technology?

Kenya: Kenya’s matatu sector is identified by its almost inherent nature to repel regulation.

It was, therefore, a rare photo opportunity when industry representatives and the Government shared a podium in June last year to drum up support for cashless matatu fare payments.

Last month, however, BebaPay, Kenya’s first electronic payment card used to pay matatu fares in Nairobi, announced that it would be withdrawing from the market in less than a month’s time.

ANGRY COMMUTERS

The demise of BebaPay, which was hatched out of a partnership between Google and Equity Bank, ignited debate about the readiness of Kenyans to adopt disruptive technology, even as angry commuters took to Twitter to vent their frustrations.

The Government, through the National Transport and Safety Authority (NTSA) had earmarked July 1 last year as the day when Kenya’s public transport system would make the final shift to cashless payments.

Cashless payments were expected to help matatu owners keep track of their investments by cleaning up the accounting system, and prevent extortion from cartels and traffic police, which would make the sector more attractive to investors.

It was also thought that the mass adoption of cashless payments would help the Treasury access a share of the Sh218.1 billion the sector collected last year, according to the 2014 Economic Survey.

For passengers, the selling point was convenience and peace of mind that comes with better management of commuting expenses, a vital component of household budgets.

Financial service providers and telecommunications companies are also expecting a share of the lucrative revenue through agency fees and commissions.

Today, however, despite several postponements, enticing offers from commercial banks and telcos, and a campaign by several large matatu Saccos to accept card-only payments from passengers, the cashless system in Kenya’s public transport sector remains a hard sell.

A spot check across most major matatu Saccos reveals the majority of passengers are still paying for their bus fares in cash, ignoring the numerous agents giving out free cards from several service providers.

Shying away

This is, however, not the first time that Kenyans are shying away from efforts to radically change how the chaotic public transport works.

 

Megarider, which was popular in the 90s, enjoyed brief success until it was quietly phased out in what was the beginning of the woes that eventually led to the collapse of State bus company, Kenya Bus.

In 2009, Tata Motors and the then Ministry of Nairobi Metropolitan Development launched Smart Buses. Instead of conductors, the buses had turnstiles where passengers would deposit two or three Sh20 coins, depending on their destination and time of day. The project stalled after large-scale deployment became impractical.

According to a paper published last month by think tank Financial Sector Deepening, cash accounts for 98 per cent of the transactions done in the country.

This has been attributed to the nature of Kenyans’ sources of income, the mode of receiving this income and a cultural inclination to rely on hard cash for settling transactions.

But still, the matatu sector billions remain too enticing to ignore, and several service providers are set to launch their cashless offerings in the coming weeks. It remains to be seen if they will hit the right chord with commuters.