Matatus still make economic sense in age of social media

NAIROBI: Two things are authentically Kenyan: matatus and nyama choma. We will leave choma for now until around fast-approaching Christmas.

Photos of Nairobi in the early 1960s show parked double-decker buses whose shapes closely resembled a loaf of bread. In the early 1970s, matatus became the dominant means of transport; they ran off Nyayo Bus and Stagecoach.

While many will quickly add that matatu operators are rowdy, break rules and are discourteous to customers, any economist will gladly use the matatu business as the best example of perfect competition.

To begin with, in perfect competition, all firms sell an identical product. Matatus are to a large extent identical, in terms of number of seats, and are patronised by mostly low-income citizens. Matatu owners try differentiating their vehicles with colours and music – rarely courtesy. Some charge higher fares, like shuttles that carry fewer passengers and fill up faster.

Second, all firms are price takers and cannot control prices. This is true for matatus; they are too many to control prices. In fact, the price fluctuates depending on the supply and demand of travellers.

Third, all firms have a relatively small market share. Matatus considered as individuals have a very small market share, but as Saccos have bigger market shares, aided by cartels that ensure only certain matatus ply certain routes.

Fourth, all buyers have complete information about the product being sold and the prices charged. For matatus, they even announce the fare before you board.

And finally, there is free entry and exit, only that one has to pay some goodwill to get a matatu onto a certain route.

Something sentimental

Economics aside, there is something sentimental about matatus. I often take one to connect with reality. You meet Kenyans in their true colours, with no time for class, pretence or showing off.

Lots of them sleep as soon as they get into matatus; it could be out of comfort or a day of hard work. Rarely do they talk to each other, preferring their phones instead.

They haggle over fares, from Sh30 to Sh20 – small amounts, but this makes you realise what being a low-income earner means.

Most passengers in matatus are not in a hurry; their vehicle will stop several times. The low fares are counterbalanced by the time spent on a trip. Matatus have realised that the number of Kenyans conscious of time has gone up, and came up with shuttles. Uber is taking advantage of the same. High parking charges are also driving us to Uber.

There are surprises, too; matatus still use decoys to make a vehicle appear almost full. Mostly young men sit in matatus, and as passengers check in, they walk out. Are they paid for this?

Taking matatus has another advantage; you get a chance to find out what is happening and sample Kenyan creativity. After alighting from a 118 matatu, I noticed lots of shops and eating places along Tom Mboya employ ‘mobile billboards’ – men or women who hold up signboards showing prices, etc. Is this a way to beat kanjo?

Hawkers still sell their wares, including mitumba underwear. How demeaning, despite our poverty.

Matatus show how we can solve our problems without waiting for the Government. There is no Government involvement in transportation, yet we hardly ever miss a trip to any part of the country or to work. The invisible hand of the market is at work in the matatu industry. What would Adam Smith say about matatus?

Should other sectors emulate matatus, with the Government only providing public goods, like roads? Will SGR be like that, with anyone allowed to run a train on it?

The few Kenyans who own cars might look down on matatus, but their philosophy might be what is needed to take this country to the next level – solve problems, do not wait for anyone.

Car owners need to take matatus occasionally to reconnect with reality and appreciate the ingenuity of ordinary Kenyans and how a car enslaves you unknowingly.

Set sectors free

If you live within 15 kilometres of the city centre and drive a car with a minimum 1,500cc and avoid traffic jams, you probably pay more for parking than petrol. I suspect any time matatu drivers see me in traffic all alone in my car, they do not admire me; they sympathise.

Should the Government not learn from matatus and set other sectors free? In education, private schools have ‘matatu-rised’ the sector; the same thing with the health sector. It is only in banking that the Government has reversed the tide. In the informal financial sector, shylocks have a field day.

Matatus seem to indicate that some of the most complex problems can be solved with very simple solutions. We do not go to work by subway (underground train) or by trams, but by matatus – five cheers for matatus in an age of Twitter and Facebook!

The writer is senior lecturer, University of Nairobi. xniraki@gmail.com