Matatus BodaBodas and Financial Inclusion in Kenya


Matatu public transport industry was legalized in 1973 by a presidential decree. The growth of this mode of transport has sparked a wave of matatu SACCOs that is vastly catching on. This initiative is driven in part by government and partly by matatu owners’ cognisance of the benefits to be accrued from cooperatives. The latter is grossly understated despite its significance. The matatu industry makes up 80% of the transport system and is estimated to generate revenues worth Kshs. 73 billion annually; Kshs. 4 billion of this turnover supports the insurance industry while Kshs. 1 billion is collected as tax revenue through licenses. The industry creates direct and indirect jobs for over 500,000 people majority of whom are the youth. As with other industries, growth to such levels dictates some form of regulation; self regulation encouraged by the government to formalise the sector. The impetus of this move has been the operation of cartels on routes, volatility of commuter prices, surge in deaths from road carnage and blatant disregard of traffic rules. As from 2011, matatu operators are now mandated to join SACCOs to acquire the Transport Licensing Board Certificate. On the frontiers of this model is 2NK SACCO; credited with early adoption of this model and spearheading the model in the country.

SACCOs are a double edged sword. Apart from reining in the chaotic sector, they have propelled financial inclusion, a concept that has gained traction in developing countries for its far reaching socio-economic benefits. SACCOs aggregate savings and capital while offering their members credit services at relatively competitive interest rates. Originally set up by owners of the vehicles, they have grown to include their employees as well. By saving regularly with the SACCO, members are automatically entitled to shares and consequently accumulate credit scores that allow them to take loans. The SACCO itself as an entity invests in projects beyond its core business. 2NK SACCO has acquired land and set up a petrol station. Chania Travellers SACCO has acquired plots of land for future development and expanded its fleet by acquiring buses. Sacco’s serve a dual purpose: as a micro-lending institution and investment vehicle. These two salient features have not gone unnoticed by the Central Bank, government, formal lending institutions (Banks and MFIs) and stakeholders. 2NK Sacco has mutually beneficial collaborative partnerships with Yana tyres, General Motors and Invesco Insurance.  Unaitas SACCO partnered with ABC bank earlier this year to offer its members access to the national payment system and cheque services. Cooperative Bank of Kenya initiated a financing scheme, ‘PSV Sacco Bus Financing Scheme’ targeting Saccos, companies and individual investors. Chania Travellers Sacco was a beneficiary of this scheme having received financing for bus acquisitions to the tune of Kshs 20million. The CBK has been wary of some credit societies seeking inclusion in the national payment and clearing system. Their combined asset base is estimated at Kshs 293 billion but despite this, remain excluded from offering some financial services due to regulations. The culmination of this legality has compelled them to seek partnerships with banks to offer their members extended services. They are simultaneously seeking amendments to the Banking Act to incorporate them into the national payments and clearing system. Their growth has threatened the foray of commercial banks looking to tap into the informal financially excluded population and sectors. Equity bank and Cooperative Bank of Kenya sprang up on the spine of marginalized informal populations into the big league pitting them against veteran juggernauts such as Barclays Bank and KCB Bank. The alluring informal sectors and unbanked populations have become targets for banking institutions aiming at higher customer deposits, larger market share and bulking up their loan books through financial innovation. This report offers an insight into the challenges the formal banking institutions face in expanding customer bases.


In my opinion, these relatively miniature modes of transport and logistics have found a niche and filled a void in the overall economy. They look set to emulate the matatu SACCO models, a focal point in a conversation with Peter Nayapare, the chairman of a registered group, Kings Stage, in Kiambu County, Juja.

King Stage group is an organized group of entrepreneurs ferrying goods and people using bicycles and motorcycles. The membership of this group consists of owners of bicycles and motorcycles; they do however take in outsiders on condition that they contribute regularly and adhere to the rules and regulations governing the group. Exit and entry to the group is optional and shares are apportioned accordingly for members opting out of the group. Peter describes how their group mentality has elevated the financial strength and ambition of their group. As we conversed, his grasp of the concepts of mobilizing capital and savings was fascinating. The group savings are held in a group account and are used for extending credit facilities to its members at favorable interest rates. The mobilized savings are also applied to collective profitable ventures. Some of the motorcycles and bicycles have been purchased through this method and non-members employed to operate on their route. The group has grown considerably to include youth from the local community by incorporating a social role; members assist each other in times of grief and marriage through apportions from their mobilized funds.

Kings stage group has ambitions of restructuring into a SACCO and does not rule out replicating the matatu SACCO model. Already, the benefits of pulling together are perceptible and appeal to outsiders and newcomers. Their democratically elected leadership structure, has earned them a place to receive local grants from the government. Unaitas, a locally based SACCO, periodically offers them financial education and advice and extends deposit taking and credit services to the group. It is hard to ignore the impact this has had on their group and the vision that Peter. He fondly speaks of the group’s grand plans to venture into investment opportunities beyond the ferrying business. Currently plans are underway to acquire a piece of property next to their point of operation (shimo) and build a sanitation facility. These facilities have come up in central business districts where they house other businesses while generating revenue from the sanitation facility. Equity Bank, for example, has a financial product precisely targeting investors setting up such facilities. Foray into small scale farming is also on their agenda as he explains; he is not naive to the dynamic nature of their business. He describes how the growth of the number of motorcycles in operation has surged and driven down prices. Members can thus exit the current business and get into other profitable ventures while retaining their membership. A successful agricultural venture could see them employ some of their members in their farming activities. Diversifying their revenue streams is a clear goal.

Bodabodas tap into a niche last mile logistics marketThis group organisation is a nascent stage of a broadly similar matatu SACCO. The challenges that mar the group are early lessons for a budding credit society. Cases of defaulters and moral hazard risks have enlightened the leadership structure to chart clear rules regarding credit extensions to members. It will be interesting to see how these types of groups that have sprawled all over the country develop in the near future. Presently, paltry bodaboda Saccos have emerged.  It certainly is a space to watch especially for the micro finance institutions and banks.

*Matatu – local name for 14 seater public transport vans

*Bodaboda – collectively; bicycles and motorcycles in the business of ferrying goods and people

*Shimo – local term location and point of operation



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