Background of the Study The transportation industry sector is comprised of a wide range of service providers covering all modes of transport; air, road, sea and rail. In Kenya, both private and public providers offer transportation to the public.
Due to the diversity of the transport sector in Kenya, the infrastructure group; the department of Price Waterhouse Coopers-Kenya that deals with researches on industries and infrastructures, had classified roads as the prime link between all the economic sectors since they account for 80% of Kenya’s total passenger and freight transportation as well as value of output (PWC Kenya 2009).
The word matatu is derived from the local kikuyu vernacular word mang’otore matatu which means “thirty cents” which was the standard charge for every trip made. Chitere. O and Kibua. N, 2004).
Majority of Kenyans do not own private cars, thus they use matatus as their mode of transportation. By 2003, the number of matatus operating in both urban and rural areas was estimated at 40,000 and they provided employment to 160,000 people and paid up to Ksh. 1. 09 billion per annum to the government in taxes (Chitere and Kibua, 2004).
The origin of matatus in Kenya can be traced back in the late 1950s. After Kenya’s independence in 1963, Africans migrated to Nairobi to search for employment opportunities.
Informal settlements began to expand in areas where there was limited transport. These people were too poor to own private vehicles. Recognizing the opportunity for financial gains while providing the much needed service, mini-bus taxis (which were largely owned by middle-income people) began offering transport services from rural areas and informal urban settlement around the city. Due to high demand, the number of matatus increased but was operating illegally until 1973 when the then president (Mzee Jomo Kenyatta) issued a decree officially recognizing matatus as a mode of public transport.
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This made them to be the main mode of transportation in Nairobi metropolitan up to today, with an estimated number of 15,000 matatus. (Graeff J, 2009).
The benefits that are attached to matatus as a mode of transport by various parties include: Owners get income inform of profits, workers such as drivers, conductors and stage workers also get income in form of salaries, passengers get mobility and safety, other road users such as cyclist, motorists and pedestrians also get safety, and institutions such as local authorities get revenue.
Despite all this, there is still a struggle for regulatory and economic sphere of influence in the matatu sector (Khayesi. M, 1999).
It has been reported that there is insufficient consistent data about matatus. If any, there is limited access to the database and can only be found through SACCOs (Graeff. J, 2009).
Since the official recognition of the matatu as a means of transporation in 1973, the sector grew to the extent that the owners formed a national association to control the operations of the sector and also advocating for their rights and demands.
All matatu operators were expected to belong to this association, that is, The Matatu Vehicle Owners Association (MVOA).
They had a rule that forced new matatu operators to register with the association in order to be allocated a route of operation. The association attracted the attention of both the Government and political opposition groups who saw the association as an important ally to advance political moves. The association was disbanded by the Government and was accused of having been penetrated by rich individuals who were oppressing the weak members by assigning them to routes that had fewer passengers.
The Government then left individual members to operate on any route although it did not end the influence and support that politicians had for the matatu owners and operators (Khayesi. M, 1999).
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The Government then introduced SACCOs in the matatu sector as one of the reforms strategy that targeted to manage transport systems (Graeff. J, 2009).
These SACCOs played an important role in addressing the concerns of the stakeholders and integrating the matatus into a comprehensive system. They are the professional transport firms as they act as the key takeholders. They act as the liaison between the members of the SACCO and the other stakeholders including the Government. They have the ability to unify the industry and strengthen the voice of the stakeholders which is an important incentive. Although SACCOs are important, they compete with each other thus creating a dangerous and stressful environment (Graeff. J, 2009).
A Savings And Credit Co-Operative (SACCO) is an association of like-minded people registered under the ministry of cooperatives.
It is owned and operated by its members, according to democratic principles, for the purpose of encouraging savings, providing credit facilities and other related financial services (The SACCO bill, 2005).
In Kenya people are eligible to form a SACCO if; they have a similar occupation or profession or are employed by a common employer or within same business district or market area; they have common membership in association or organization including, but not limited to: religious, social, cooperative, labor or educational groups; who reside, worship or work within the same defined community (the SACCO bill, 2005).
It extends to any form of industry, not exclusively transport. In the case of matatus, a group will register to become a SACCO identifying itself mainly with the route where it is operating, although many people refer to the SACCOs as route associations (Graeff. J, 2009).
1. 2 Statement of the Problem There have been several benefits that have been accrued to the use of SACCOs as a mode of matatu management in Kenya. They include; creation of employment and additional revenue in form of taxes to the Government (Chitere. O and Kibua.
N, 2004), professional management, financial support and reduced conflicts to the owners and employment benefits, credit services and employment contracts (Khayesi. M, 1999).
The proponents of managing matatus individually argued that, operating matatus individually earns a lot of profits due to reduced costs such as SACCO contributions, the taxes paid to the Government and the salaries paid to the professionals and employees and poor financial management (The Citizen, 2010).
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There has been an argument that operating matatus on individual basis makes it easy to reach decisions faster than when in SACCOs.
This was based on the argument that in the SACCO; there will be a split of decision among the members on different issues concerning the SACCOs thus delaying the decision making process. The financial management in SACCOs can be poor simply because the leaders who manage the finances have no basic knowledge of financial management with the addition of poor working environment and increased political interference (The Citizen, 2010).
While the benefits of matatu SACCOs are undisputed, there have been several concerns about its success in terms of financial benefits, handling matatu industry challenges and improving road safety.
Investors and other stakeholders need guidance concerning this. This study was used to guide the entrepreneurs interested in the matatu sector on the mode that would bring full benefit to them which took the form of studying the performance of matatu SACCOs, before and after their formation and that of individual management. 1. 3 Objectives of the Study 1. 3. 1 General Objective To assess the effectiveness of SACCOs in the management of matatus in Nairobi 1. 3. 2 Specific Objectives To find out the difference in the financial revenues and costs before and after the formation of matatu SACCOs.
To examine the role of matatu SACCOs in handling the challenges facing the transport industry. To find out the level of road accidents before and after the formation of matatu SACCOs. 1. 4 Research Questions What are the financial benefits that come with SACCOs as a mode of matatu management? How do matatu SACCOs handle the challenges that face the transport industry? Has matatu SACCOs helped in dealing with road safety? 1. 5 Significance of the study Matatu SACCOs operate in environments surrounded by communities who depend on them for jobs, tax revenues and quality services.
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All stakeholders have interests in the well-being of their SACCO. This SACCOs also operate in environments which are characterized by political interests, markets existence, culture, values, technology, regulations and taxing authorities (Agumba. N, 2008).
This study would be of great benefit to the matatu owners as it found out the challenges that matatus and matatu SACCOs face in these environments. This uncertain environment leaves doubt in the stake holders. This study would also benefit the stake holders as it would aid them to make decision in order to improve the services of this industry.
There is SACCO leadership for efficiency and probity and that SACCOS are responsible, responsive, accountable, transparent, competitive and sustainable. Through the study, the new entrepreneurs would want to be reassured that; Matatu SACCO enterprises are viable, sustainable and competitive; are held accountable and not left to run amok; are competitively attractive to investments; are responsible corporate citizens and that they comply with legal framework and remain relevant and legitimate in society (Agumba. N, 2008)
The majority of matatu owners has reasonable educational and training qualification and occupational experience in fields such as banking, accountancy as well as teaching and is well informed of about the industry. Mostly they have other sources of income and can use credit to improve their vehicles. This shows that the industry still attracts new entrants and entrepreneurs with funds to invest in the industry, they will therefore need some guidance on which form of management they should use for their business. 1. 6 Scope of the Study
This study was conducted to find out the financial gains that matatu owners get when they are operating their business through SACCOs. This covers credit facilities to acquisition and maintenance of the mini-buses, repair costs, level of income and generally the issue of security in order to help the owners acquire loans from the financial institution. The study also covers how productive the SACCOs manage the matatus better than if it was to be managed on individual basis and if there are any savings made if the matatus are managed through SACCOs.
This study also found out the benefits that SACCOs give to other stakeholders in the matatu industry, the differences that SACCOs have brought to the welfare of the workers in the matatu industry, the levels SACCOs aid in the reduction of road accidents and how far they aid the road traffic department in bringing order to the roads, the safety that the users (customers) feel while using the SACCO owned matatus in comparison to the individually run matatus and the challenges that matatu SACCOs face during their operation.
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This study also covered the transport industry in Kenya, and because of the diversity in the industry, the research will focus on the road transport in Nairobi. This was through finding out how effective the matatu SACCOs have been in the management of the matatu industry. 1. 7 Limitation of the Study For a general conclusion to be reached, this research needs to be conducted within the whole country, but in this case, the study is limited to Nairobi alone. As an addition, there are other factors that can be used to measure the effectiveness of the matatu industry other than the ones that this research has used.
The results of this study did not put in to consideration the other variables that affect the functionality of the matatu SACCOs. Usually, it is always difficult to make people reveal the amount they benefit from a given business or enterprise. CHAPTER 2 LITERATURE REVIEW 2. 1 Introduction The matatu as a means of transport has an array of businesses and individuals who are involved in it. Apart from the regulatory dominance that has been shown, there are economic interests pursued by the owners and operators.
The matatu is not just a business for the low-income and the self- employed workers, it is a big time enterprise now involving the affluent in the society (Khayesi. M, 1999).
There are cases where one individual owns several matatus. There are also other businesses that are linked to the matatu industry, for example insurance firms, motor vehicle body builders, vehicle assemblers, vehicle importers, garages, petrol stations, driving schools and commercial banks/ money lenders but in this case SACCOs will be our main concern.
This means of transport employs drivers, conductors and stage workers. All these people are stakeholders in the matatu industry and therefore they have benefits that they attach to the industry hence a need for effective management of the industry (Khayesi. M, 2002).
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This chapter explores what other researchers have found on how the stakeholders have gained from managing the matatus on individual basis in comparison with SACCO mode of management. 2. 2 Conceptual Frame Work The management of the matatu industry in Kenya has taken two main forms of management.
These are management through SACCOs and managing the matatu business as an individually. This research took the matatu SACCOs as the dependent variable on to which the effectiveness of the industry will be measured through the factors as the independent variables. These are the financial benefits of using SACCOs as a mode of managing the industry. In this case, costs and gains, access to credit and other financial benefits, effectiveness in terms of handling of matatu industry challenges, effectiveness in improving road safety and reducing road accidents.
The outcomes of the results can be affected by the involvement of the Government but during this research its effects were kept constant. Figure 1 Conceptual Framework | | |Financial Benefits/Revenues | Independent Variables (Factors) Dependent Variable (Outcomes) | | |Effectiveness Of Matatu SACCOs | | | |Matatu SACCOs | | | Road Accidents | Source: (Researcher, 2012) 2. 3 Theoretical Review According to Aline. J, (2011), the first Kenyan co-operative society, the Lumbwa co-operative society was formed in 1908 by the European farmers with the main objective of purchasing farm inputs at radically reduced prices because of their numbers and on friendly terms to the members who paid in installments or when they harvested and then market collectively market their produce. Lumbwa was replaced in 1930 by the Kenya Farmers Co-Operative to take over the role of farm input supply.
After seeing the success of European co-operatives, the smallholder African farmers fought for the formation of their own co-operatives, in which they were allowed to form in the late 1950s and register co-operatives for cash crops like coffee and pyrethrum. Consequently at independence in 1963, there were 1,030 co-operative societies with 655 being active with total membership of 355,000(Aline. J, 2011).
Since independence investment in Kenya has empowered and energized by the existence of the co-operative sector where pooling of resources was closely linked to Mzee Kenyatta’s call of Harambee.
Presently, matatu SACCOs are dominating the city route in form of route associations (Graeff. J, 2009).
In Kenya, SACCOs are co-operatives which are formed by an association of people who come together with a common purpose of pooling together resources for mutual economic and social benefit (Aline. J, 2011).
According to Mikwamba. E and Ng’ombe. W (2003), a SACCO is an autonomous association of persons united voluntarily to meet their common economic and social needs through a jointly owned and democratically controlled enterprise or business.
The objectives of forming SACCOs include; organizing and economic interests of its members; promoting thrift among members opportunity for accumulation of savings, loans at fair and reasonable terms; providing opportunities for members to improve their economic and social conditions; and perform the functions that they were formed to (Aline. J, 2011).
According to the SACCO society’s regulatory bill, 2005, a SACCO is registered by writing an application to the registrar of SACCO societies who will register the SACCO if it has complied with the provisions of the Act.
This research found out if the objectives of forming SACCOs in the matatu industry are being realized by using them in the managing of the matatus in the Nairobi’s transport sector and their effectiveness. 2. 3. 1 The Management and Operation of SACCOs According to Mikwamba. E and Ng’ombe. W (2003), members are the heart of the SACCO and the reason for the SACCO’s existence. The members are the owners and the only “users” of the SACCO and no more persons has the monopoly in a SACCO regardless of one’s share and savings.
Usually SACCOs are democratically run and controlled organizations. According to the SACCO society’s regulatory bill, 2005, one thing that is clear is that the affairs of a SACCO are managed and administered by a board of directors elected at annual general meeting. It is this board of directors which will hire a manager and support staff to run the day to day operations of the SACCO. In most cases the manager and the staff hired are qualified and competent people with skills and knowledge of SACCOs (Chitere. O and Kibua.
N 2004).
According to Mikwamba. E and Ng’ombe. W (2003), a SACCO is a financial business and it has to be managed as such. Its major commodity is the money the members bring in as their savings for the safe keeping, convenience and as a form of investment. The savings earn competitive interest rates. Members who have established their credit worthy can borrow from the SACCO. The interest on loans, investments and the other income is used to cover operational costs as well as paying interest on members’ savings.
The next surplus is used to pay dividends to the members and the building of SACCO capital reserves. Specific duties and responsibilities in a SACCO are assigned to different committees to ensure smooth running and coordination of SACCO activities. All the committee members are elected from the general membership. According to Chitere. O and Kibua. N, (2004), owners of the matatu are employees and professionals in different fields like, banking, accountancy and teaching and thus they don’t involve themselves in the hand on management of their matatu businesses.
This study found out how effective the employees of the SACCOs will be effective in the running of matatus on behalf of their employers and ensuring that they receive the benefits they are entitled to as provided in their values. 2. 3. 2 Effectiveness of SACCOs SACCOs create the opportunity for people to take responsibility for their own financial organization, these is facilitated through democratic processes. SACCOs pay dividends on shares to their members once the SACCO is established and profitable. Members therefore take pride in owning their own SACCO.
SACCOs educate their members on financial matters by teaching prudent handling of money, how to keep track of finances, how to budget and why to keep away from hire purchase and loan sharks, this encourage saving culture for their members. Loans of SACCOs are usually insured thus death of a member the estate will not have to repay the outstanding loans to the SACCO. After deducting all the working expenses from the income, the profit is usually shared among members according to their patronage (South African Reserve bank, 2011).
. 3. 3 Effectiveness in Terms of Financial Benefits According to Mudibo. E, (2006), SACCOs have been in existence for a long time starting with the Raffeissen movement in Germany in the middle of the 19th century. The movement has since spread to most countries, both developed and developing world and throughout the decades they have been important for small-scale savers and borrowers. This has been embodied in the co-operative and SACCO principles which was summarized as: user-owned financial services.
In this case the savers/ borrowers own and govern their institution which provides them with the financial services that they need. This was the fundamental quality of the SACCO since its set-up provides for demand-led services decided by members in a democratic and participatory manner. It is the clients who are the members, as well as the owners themselves, who decide on which type of financial services to benefit them, how these are to be provided and where the external forces cannot take advantage of members need for the services.
Not only did SACCOs provide savings facilities from their formation but they also generally applied a holistic approach to the needs of their members. Loans were provided for productive purposes and variety of needs for example for welfare and consumption purposes (Mudibo. E, 2006).
This research reflects these financial benefits to the case of matatus, whereby according to Chitere. O and Kibua. N, (2004), the initial capital to invest in matatus is large and hence difficult to rise together with the insurance costs and taxes.
The other benefits will be in terms of operating costs like fuel, costs of repair and maintenance which can be reduced when operating in SACCOs (Chitere. O and Kibua. N, 2004).
2. 3. 4 Challenges of Matatu SACCOs Cartels have positioned themselves in the name of SACCOs to take advantage of new operators seeking to join the industry. The high financial requirements demanded from new by established SACCOs have forced some operators to miss out on this business while some operators use fake stickers of unregistered SACCOs (Mwaniki, W 2011).
Some SACCOs have invested in other line of businesses and when a new member comes it becomes a challenge. 2. 3. 5 Effective in Terms of Handling Challenges According to Agumba. N, (2008) SACCOs operate in an environment surrounded by communities who depend on them for jobs and tax revenues and customers for quality products and services. All stakeholders have interests in the well-being of their SACCO. These SACCOs also operate in an environment which is characterized by political interests, markets existence, culture, values, technology, regulations and tax authorities.
Despite these challenges, SACCO values under the principle based model – voluntary membership, democratic member control, member economic participation, autonomy and independence, education, training and information, cooperation among SACCOs and concern for community are key to enhancing performance in handling challenges within and out of the SACCO (Agumba. N, 2008) According to Chitere. O, (2004), most drivers and conductors do not observe traffic rules and are responsible for many accidents in both rural and urban areas.
Other problems include harassment of owners and workers by the police, corruption, government and local authority taxes, lack of control of the industry by the vehicle owners and exploitation by cartels. A larger study was carried out that examined policy, legal and regulatory framework; institutional arrangements; costs and benefits; and the internal capacity of the industry at the local level and their training was weak and conditions of work poor (Chitere. O, 2004).
This research found out how effective the matatu SACCOs have been in the handling these challenges. 2. 3. 6 Road Safety in Kenya
There has been a rapid increase in the number of matatus on Kenyan roads from the time they began operating till today. Unfortunately, the industry’s vast growth has been accompanied by increasing road traffic accidents that have threatened the safety of Kenyan passengers. The accidents tripled from 3,578 in 1963 to 10,106 in 1989, and 11785 in 1994 (Chitere. O and Kibua. N, 2004).
In these accidents, 2,014 persons were killed, 6,650 were seriously injured and 11,094 had minor injuries. The cause of these accidents are majorly reckless driving, driving non-roadworthy vehicles and poor conditions of the road.
Research by Odera, Khayesi and Heda (2003) found that 3,000 people are killed annually on Kenyan roads, which translates to 68 deaths per 1,000 registered vehicles. This is the leading trend in whole world (Chitere. O and Kibua. N 2004).
Transport Licensing board (TLB) is supposed to license all PSVs, allocate them routes and regulate their operation timetables. It has been unable to allocate routes and monitor or even ensure PSVs have operation timetables which might be as a result of the board not being conversant with the routes (Chitere. O and Kibua. N 2004).
Due to this the Government has tried to put in some measures in the form of the famous Michuki rules in order to reduce the rate of accidents on roads. These reforms included; Fitting speed governors to all PSV and commercial vehicles to a speed of 80km/hr. Fitting seat belts to all vehicles (both public and private).
Issuing of badges and uniforms to all drivers and conductors. Indication of route details for purpose of easy identification. Re-testing drivers after every two years. Displaying of drivers passport photograph together with the identification details.
These rules (Michuki rules) proved difficult to maintain owing to the level of expenses attached to it. This research found out how the SACCOs have helped in the reduction of reckless driving through enforcing the reforms that were put in place by the government and also found out how far the SACCOs have gone to reduce accidents in Nairobi. CHAPTER 3 RESEARCH METHODOLOGY 3. 1 Introduction This chapter looks at the methodology used to conduct the study. It highlights and expounds on the research methods employed in conducting the research, methods that were used in collecting data, how the data was analyzed and reported. 3. 2 Research Design
Research design is the plan and structure of investigation so conceived so as to obtain answers to research questions. The plan is the overall program of the research and includes an outline of what the investigator did from writing the hypothesis and their operational implications for the final analysis of data. Cooper and Schnielder (2003) summarize the essentials of research design as an activity and time based plan; always based on the research question; guides the selection of sources and types of information; a framework for specifying the relationship among the study variables and outlines the procedures for every research activity.
In conducting this research, descriptive research design was used in collecting the data from respondents. The design was preferred because it was concerned with answering questions such as who , how, what, which, when and how much (Cooper and Schnielder, 2001).
A descriptive study was carefully designed to ensure complete description of the situation, making sure that there is minimum bias in the collection of data and to reduce errors in interpreting the data collected. 3. 3 Target Population
This research considered all matatus operating in Nairobi County. Those operating on the routes that ferry people to the city were the main target population. This gave the researcher easy access to the workers of the matatus as they were at their respective stages (matatu terminus).
In the sample frame, more consideration was awarded to the major matatu SACCOs with offices in Nairobi metropolitan operating large occupancy vehicles. This was efficient and effective in terms of cost and accessibility to the researcher.
Table 1 Target population | Route |North of Nairobi (a) |East of Nairobi (b) |South of Nairobi (c) |West of Nairobi (d) |Long | |(Population Size) | | | | |Distances (e) | |Capacity | | | | | | |(Population Category) | | | | | |High Occupancy | | | | | | | |30 |30 |30 |30 |30 | |Low Occupancy |40 |40 |40 |40 |40 |
Source: (Researcher, 2012) 3. 4 Sample Design Majorly stratified and clustered sampling was used to select a sample that will represent the entire population. Stratified sampling was the best procedure as it gave the chance to group the matatus in accordance with their capacity i. e. , high occupancy and low occupancy. In addition, clustered sampling supplemented stratified sampling.
This technique helped in accessing all routes (Nairobi County has several routes) which gave a fair ground for the acquisition of different opinions since different routes have different matatu SACCOs that have varying strategies in attaining their goals. This method was the major source of primary data. Table 2 Target sample size Route |North of Nairobi (a) |East of Nairobi (b) |South of Nairobi (c) |West of Nairobi (d) |Long | | |(50%) |(50%) |(50%) |(50%) |Distances (e) (50%)| |Capacity | | | | | | |High Occupancy | | | | | | | |15 |15 |15 |15 |15 | |Low Occupancy |20 |20 |20 |20 |20 | Source: (Researcher, 2012) 3. 5 Data Collection Instruments
In this research, the use of both primary and secondary sources of data was adopted. Personal interviews were done through appointments with the managers or phone call interviews in case an appointment failed, questionnaires which were given in a period of one week and then collected by the researcher and direct observation on physical basis were the source of primary data. The use of relevant literature like; Matatu SACCO’s website, business magazines, daily newspapers and government authorities (traffic department) journals available for the public was an ideal source of secondary data. 3. 6 Data Analysis and Presentation The data collected in this study was both qualitative and quantitative in nature.
This was for the analysis of data to show the effectiveness of SACCOs in the management of the Matatu Industry. The analysis applied the use of percentages to show the effectiveness of SACCOs. This analysis made it possible to draw appropriate conclusion about the study and pave way for reporting and documenting the study. In order to infer the data that was collected into a form that is understandable to the users of this study, the researcher used tables for quantitative analysis and cross comparison analysis and pie charts that depict the trends and frequency distribution of the research. CHAPTER FOUR DATA ANALYSIS, PRESENTATION AND INTEREPRETATION 4. 1 Introduction
The study aimed to establish the effectiveness of SACCOs in the management of the transport industry in Nairobi County. This chapter discusses data analysis and findings of the research. Descriptive analysis was used and represented by the use of tables and pie charts. Qualitative analysis was used to summarize the respondents’ final comments in the questionnaire so as to get a better insight on their opinions on Matatu SACCOs as a mode of transport industry management. 4. 2 Respondents The sample size comprised of 100 respondents drawn from selected Matatu SACCOs. Out of the 25 SACCOs that were given questionnaires, 5 of them gave their feedback. Table 3 Sample and number respondents MATATU SACCO |Sample size |Returned |unreturned |percentage | |MWI Sacco |20 |18 |2 |90% | |Double M |20 |20 |0 |100% | |Super highway 45 Sacco |20 |15 |5 |75% | |City hopper |20 |16 |4 |80% | |KBS |20 |18 |2 |90% | |TOTAL |100 |87 |13 |87% | The research targeted the owners, managers and employees (drivers, conductors and stage workers) of the SACCOs to provide information. Table 4 Type of respondents |SACCO |OWNERS |MANAGERS |WORKERS | |MWI SACCO |5 |5 |8 | |DOUBLE M |2 8 |10 | |SUPER HIGHWAY 45 SACCO |4 |3 |8 | |CITY HOPPER |3 |4 |9 | |KBS |0 |6 |12 | |TOTAL |14 |26 |47 | 4. 3 Findings The financial revenue benefit was indicated by 85% of the respondents saying that there are financial revenues gained by the use of SACCOs as a mode of matatu management and 15% supported individual management and that the financial status before SACCOs were formed was the same as that of individual management which was prominent in the past. Figure 2 Pie chart presentation on increase in financial benefits [pic]
When it comes to the reduction of the operational costs, 83% of the respondends accept that there is a significant reduction in the operational costs of the matatu sector. This is attributed to the fact that some SACCOs have their own petrol station thus reducing the costs. On the other side, the remaining 17% don’t see any reduction in the operational costs as there are contrubutions made by the SACCO every morning or evening of the day. Figure 3 Pie chart presentation on the reduction of operation costs [pic] In reference to the level of profitability, 25% of the respondents said that the profitability of the SACCOs was high compared to individual management. 58%, of the respondents said that the profitability of SACCOs is medium but etter than individual management, and 17% retained that the profitability of the SACCOs was low compared to individual management since daily contributions are made by the SACCO which reduces daily production. Figure 4 Pie chart presentation on the level of profitability [pic] To the challenges facing the transport (matatu) sector, majority of the respondents at 50% still maintain that SACCOs have done nothing to manage the challenges. They attribute this to the fact that the SACCOs are just a statutory requirement and not a free will initiative while others state that the challenges facing the transport industry is a responsibility of the government for example, bad roads and that the work of the SACCO is to support them financially not in terms of handling challenges. 2% of the respondents said that the management of the challenges by SACCOs is better than individual management. This is mainly due to the fact that finances are also a challenge and that the services offered by the SACCOs are part of the solution to the challenges. 18% of the respondents are satisfied with the way SACCOs are handling the challenges that face the industry. Figure 5 Pie chart presentation on the level of handling challenges by SACCOs [pic] In response to the level of accidents, 54% of the respondents support that SACCOs have reduced road accidents supported by the fact that they ensure that their drivers maintain road safety while others said that they service their vehicles in order to enhance safety standards. T
The remaining 46% of the respondents said that accidents have not reduced because they are not only caused by public service vehicles alone but others like personal cars, long-distance Lorries, motor cycles, and other users. Figure 6 Pie chart presentation on the level of road accidents [pic] In terms of general effectiveness, 85% of the respondents said that the SACCOs have been effective in the management of transport industry and have brought order in the matatu industry. 13% of the respondents said that matatu SACCOs are not effective in the management of the transport industry. Figure 7 Pie chart presentation on Effectiveness of SACCOs [pic] 4. 4 Qualitative analysis
From the findings we can see that the introduction of SACCOs as a mode of transport industry management has benefited the owners, workers and other stake holders of the matatu industry with 85% of the respondents supporting that SACCOs have been effective in the management of the transport industry. To the owners, there has been a benefit in terms of accessing credit facilities, sharing of operation costs with other matatu owners and monthly or yearly dividends received from the SACCO with or without operation since 83% of the respondents supported that the SACCOs have reduced operational costs. Drivers also get financial support from the SACCO as a means of self -help.
They gain credit facilities from the SACCOs at an affordable rate as compared to the other financing institutions like banks. The Owners and other stakeholders like the Government also benefit financially in terms of taxes and profitability since 85% of the respondents supported that SACCOs have increased financial benefits and the profitability gained through them are as follows: High-25%, Medium-58% and Low-17% The other beneficiaries of the Matatu SACCOs are passengers, who enjoy safety and quality services and other road users benefit from the relatively good order on the roads and discipline in both conduct and service with 54% of the respondents who have supported that SACCOs have reduced road accidents and have increased road safety.
Unfortunately, the SACCOs have not been able to curb certain challenges within the transport sector such as corruption, harassment by the police and reckless driving by their drivers with 50% of the respondents saying that they have not done enough to handle these challenges. CHAPTER FIVE DISCUSSION OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 5. 1 Introduction. This chapter presents the summary of the research based on the analysis of the responses received from the relevant respondents. It is a summary of the main findings of the research and how they relate to the nature of the study. This chapter also includes suggestions for further action and research. 5. 2 Discussion of the Findings Matatu SACCOs have been effective in the management of the transport industry at 85%.
This is attributed to the increase in financial revenue benefits at 85%, reduction in the operation costs at 83%, level of profitability being medium at 58% and reduction of road accident at 54%. Despite being unable to manage the challenges facing the industry, SACCOs are still able to manage the challenges of the industry at 32% – better and 18% – best, 50% of the respondents indicated that SACCOs are worst managers of the challenges facing the industry. The passengers indicated that the use of matatu SACCOs as a mode of transport industry management has set standards of service in order to satisfy the customers. Other road users indicated their satisfaction towards the improvement in the level of order and road ethics. In comparison to management by Matatu SACCOs, the effectiveness of management on individual basis stood at 15%.
This was indicated by the financial revenue benefits at 15%, reduction of costs at 17%and profitability at 42%. Generally, passengers were dissatisfied with the services offered by the matatus and they saw the industry as a house of insanity and disorder. This was attached to reckless driving and high level of accidents as a result of this. 5. 3 Conclusion With use of Matatu SACCOs as a mode of transport industry management, there is a sign of relief to the stakeholders of the matatu industry. SACCOs give the owners professional service in terms of management. Therefore, the profitability of SACCOs is medium and it gives satisfaction to the owners since they benefit financially from the SACCOS.
In the long run, there is anticipation by all stake holders that the problems and challenges facing the industry will be handled through the SACCOs and in turn this will improve the Matatu Sector. 5. 4 Recommendations The challenges facing the SACCOs can be helped by the government. This includes improvement of road networks. This will help reduce the cost of maintaining the vehicles. The Government should put the right structures in the right places in order to reduce the procedures regarding the registration and legislations of the SACCOs. The dealers in the petroleum industry, should try to reduce the cost of fuel. This will be of great benefit to the other stakeholders.
To reduce the level of road accidents, that should be taken as a responsibility of everyone who makes the use of the road from motorists to pedestrians. The government should enforce the road safety (the famous Michuki rules) to the latter. To the SACCO management, there should be additional training to the staff in areas such as financial management and customer service. The drivers and other workers should be employed on relatively permanent basis for better accountability. 5. 5 Limitations No SACCO accepted to give their financial report. The SACCOs termed the financial reports as private and could not be issued for research. Most of the Matatu SACCOs are new (less than 3 years old) since the government legislated them.
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