The Miseducation of Informal Sector Biashara


Biashara in Africa’s emerging economies – Nigeria and Kenya – are at loggerheads with the state.  An ever bulging young demographic  and a failure to absorb them into the formal economy has resulted in increased biashara.  The informal sectors’ low barrier to entry favours entrepreneurial Africans. They have carved out biashara opportunities for themselves mostly in trade and services.

But, the peculiar nature of the informal economy presents a challenge for state agencies. [Read more…]

PesaBit #003 : Why the Matatu Cashless payment initiative failed

bebapay-googleafrica-tweetA little more than a year ago, Equity Bank and Google partnered to offer Nairobi commuters NFC based prepaid cards and simultaneously equipped matatu touts with android phones accepting NFC payments. No issuing, acquiring and transactions fees were involved; matatu owners now had an auditable tool to aggregate daily collections straight into their bank accounts. In light of Kenya’s fast tech based economy, on paper and high up in the boardrooms, this was ostensibly a brilliant idea.

Today, the online business daily ran a title “Family bank joins quest for cashless fare license”. The Kenyan Government has been keen to formalize the 218 Billion ($ 2.44 billion) public transport industry – matatus (collectively, vans and buses). Despite its obvious far reaching implications on curbing corruption, inefficiency, regulation and taxation– the move hit a snag and I wonder if Family Bank have an alternative to where its predecessors – Equity Bank and Google fell short. [Read more…]

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. [Read more…]