FACTORS AFFECTING THE PERFORMANCE OF MATATU SACCOS IN KENYA: A SURVEY OF SELECTED MATATU SACCO’S OPERATING IN THIKA TOWN, KENYA

7/25/2019 FACTORS AFFECTING THE PERFORMANCE OF MATATU SACCOS IN KENYA: A SURVEY OF SELECTED MATATU SACCO

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FACTORS AFFECTING THE PERFORMANCE OF MATATU SACCOS IN

KENYA: A SURVEY OF SELECTED MATATU SACCOS OPERATING IN

THIKA TOWN, KENYA

PETER SILALI MUSUNDI

RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE AWARD OF DEGREE IN BUSINESS

MANAGEMENT (STRATEGIC MANAGEMENT OPTION) OF THE MOUNT

KENYA UNIVERSITY

MAY, 2!"


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DECLARATION

D#$%&'&*+ - .# S/0#+

This research project is my original work and has not been presented to any other

examination body. No part of this work should be reproduced without my consent or that

of Mount Kenya University.

ignature!!!!!. "ate!#$th%une #&'(!!!!

)eter ilali Musundi

A01+ N* BBM34"35!2!3!6!7

D#$%&'&*+ - S/8#'9*'

This project has been submitted for defense with my approval as the Mount Kenya

University upervisor.

ignature******************* "ate**************

J&$* K G

L#$/'#' S/8#'9+;

F*' &+0 *+ #.&%< *< .# M*/+ K#+-& U+9#'-

ignature********************** "ate***************

Mr. Mwai

+," *Managegement

Mount Kenya University

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DEDICATION

This research project is dedicated to my parentsMr. and Mrs. -ycliffe Musundi family

members my brother /lphas Musundi 0enis and 1li2abeth Nelly Musundi 3lausen

Khanianiambi 4yril -ayong5o and "ouglas Misiko who encouraged and supported mycourse tirelessly. To my close friends as a way of appreciation for their support patience

and understanding throughout the duration of this course. To you all 6 say thank you.

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ACKNOWLEDGEMENTS

7irst 6 give thanks to 3od for giving me strength and divine wisdom throughout my time

of study. 6 give thanks also to the Mount Kenya University the head of department

8usiness "epartment Mr. Mwai all the lecturersfor according me such an opportunity totrain and develop managerial skills with them. Thanks to all those lecturers who were

involved in developing and shaping my destiny.

pecial thanks to my lecturers my researcher supervisor Mr. %acob 3ititi for his

unlimited guidance throughout the time of this research. 0ast but not least 6 would like to

thank my parents brothers and sisters for without their encouragement and support 6

would not have completed this study. 7inally 6 thank the entire management and staff of

selected matatu acco5s for allowing me to use their acco5s as the case study.

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ABSTRACT

The purpose of the study was to investigate factors affecting the performance of theMatatu /44,s in Kenya with respect to Matatu acco5s in Thika Town. The objectivesof the study were9 To find out how management skills impact on the performance ofMatatu /44,s: to find out how business skills impact on the performance of Matatu

/44,s: to establish how matatu industry government policy impact on theperformance of Matatu /44,s: and to find out how work environment impact on theperformance of Matatu /44,s. The descriptive research survey design was used in thisstudy. The study used a target population of ;uestionnaires. The >uestionnaires were self* administered to therespondents at their place of work. The analysis of the data was done with the help ofexcel. ?ualitative data was analy2ed by use of the content analysis. The data waspresented in form of tables fre>uency distributions percentages pie charts and bar

charts. The study found out that majority of the respondents @$&AB felt that there is lackof managerial and entrepreneurial skills as the main cause of low performance by theirMatatu /44,s C(A was of the opinion that the government policies are good enoughto promote the performance of the Matatu /44,s insurance policies are good enoughto promote /44, performance as indicated by C(A of the respondents D$A stated thatthe government policies on road safety increases the rate of corruption among the trafficpolice D&A indicated that there are poor working conditions of the Matatu /44,employees as the cause of low performance in the Matatu /44,s. The study concludedthat management and business skills have impact on the performance of the Matatu/44,s. 6nsurance policies are good as far as profitability of the Matatu /44,s isconcerned. The concerned parties should ensure that road safety rules and regulations are

enforced in order to reduce corruption among the traffic police and increase efficiency inthis sector. The study recommended that: Matatu /44,s should organi2e for trainingseminars and workshops for both the owners of the /44,s and their employees so thatthey can improve on their management and business skills. The owners of the Matatu/44,s are also recommended to do routine inspections of their employees as theycarry out their work so as to improve on efficiency and there improve on revenuegeneration. The government is re>uired to come up with ways of dealing with the corruptpolice officers as a way of ensuring that extortions from matatu industry is reduced to2ero. Matatu /44,s should improve the working conditions of their employees so as toincrease on business profits. The study suggested that the same research to be conductedin other counties so that a coherent report can be drawn for policy making in order to

improve the growth and profitability of matatu acco and also other factors affectingperformance of matatu acco5s also to be evaluated. The findings of the study will beapplicable to all matatu sector investors government as a policy maker and scholars.

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TABLE OF CONTENTS

DECLARATION

DEDICATION

ACKNOWLEDGEMENTS 9

ABSTRACT 9

TABLE OF CONTENTS 9

LIST OF TABLES 9

LIST OF FIGURES =

LIST OF ACRONYMS AND ABBREVIATIONS =

OPERATIONAL DEFINITION OF TERMS =

CHAPTER ONE !

'.& 6NT=,"U4T6,N T, T+1 TU"E'

'.' 8ackground to the tudy '

'.# tatement of the )roblem ;

'.; ,bjectives of the tudy

#.& 06T1=/TU=1 =1F61- $

#.' 6ntroduction $

#.# =eview of the =elated 0iterature $

#.; 4ritical =eview of the 0iterature 'uestions significance of the study limitations and the scope in thatorder. This study investigated the factors influencing the performance of the Matatu

avings and 4redit 4ooperatives @/44,sB operating in Thika town Kenya.

!! B&$@;'*/+0 * .# S/0-

6n Kenya majority of citi2ens depends entirely on public means of transport from one

destination to the other. 6n low income countries public transport systems are the major

provider of inner city mobility for the vast majority of the urban populations @Kamuhanda

chmidt #&&GB.

=oad transportation provides obvious benefits to countries and individuals. 6t facilitates

the movement of goods and people creating employment supporting economic growth

enhancing access to education and health care and connecting people to families and

entertainment. "ata from low income countries consistently demonstrate that

communities living furthest from roads experience higher levels of poverty lower levels

of school attendance and worse health outcome. Transportation is important in physical

and economic development of towns and cities all over the world. )roperty and landvalues tend to increase in areas with expanding transportation networks and increase less

rapidly in areas without such improvements. 6n the urban setting of most developing

countries public transport is run by paratransit operators. /ccording to 6lles @#&&(B

paratransit operations are characteri2ed by flexible fares unscheduled operations and

semi fixed routes.

)aratransit comprises formally and informally operated minibuses vans taxis station

wagons and in some cases informally operated buses. 6nterestingly the significance oftransport sector towards achieving sustainable development and as a component of

sustainability has been stressed by scholars over the years. 7or instance 6lles @#&&(B a

renowned transport analyst emphasi2ed that Limmobility perpetuates poverty. This

connotes that transportation has resultant effects on almost every human being in the

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course of their daily activities. Thus it is rare to conceive a situation over space where

transportation does not play a notable role in the life of any individual or society at large.

ustainable transport system forms a basic foundation that facilitates movement of goods

and services in the present generation. ,ver the years sustainable public transport hasbeen viewed as not just technical issues or >uestions but as an inevitable need @4ervero

and 3olub #&&$B. This stemmed on the premise that without ade>uate consideration of

social economic and political conditions of public transport service sustainable

development cannot be reali2ed. 6n other words sustainable transport cannot be said to be

achieved if it is not coupled with an effective and efficient programme that enhances

livelihood of people. There is need for improved transport infrastructural services as

components re>uired achieving sustainable development to take care of incoming

generations. 6n other words it should be affordable efficient available safe and

supports economic development.

6n Nairobi as well as in many cities in the developing world rapid urbani2ation high

operational costs crumbling infrastructure and weak institutions result in depleted public

transportation services and service voids @8eirao and 4abral #&&$B. 6n Nairobi the

paratransit industry is comprised of minibuses or Matatus. There is a movement occurring

in ub*aharan /frica to reform these paratransit systems most notably in the form of

8us =apid Transit @8=TB. 4ountries such as Tan2ania and outh /frica are currently

looking to effectively operate 8=T systems. 8=T is an attractive option for cities of the

developing world as it is a flexible system that is more affordable than other mass transit

options. 6t also seeks to integrate various modes of existing transport systems many

which are informal into a larger formal system @-orld 8ank #&'#B.

/ccording to the Ministry of 4ooperative "evelopment and Marketing it is estimated

that there are around #(&&& Matatus operating in the country. 6n some areas like centraland 1astern provinces the 'uiring all the Matatu5s to join

/44,s or limited liability companies by "ecember #&'& over '#(( Matatu /44,s

had been registered with the Ministry of 6ndustriali2ation and 1nterprise "evelopment by

March #&'< @M,61" #&'


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8esides enlisting Matatu co*operatives in the improvement of road safety law and order

and bringing sanity on our roads the Matatu /44,s are also tapping into the

economies of scale due to the co*operative business model to create wealth for its

members. 4ooperatives are user*owned and user*benefited organi2ations. They could be

agricultural non*agricultural unions or avings and 4redit 4ooperatives @/44,sB.

They operate in different sectors of the economy including agricultural handicraft %ua

Kali transport housing development building and construction consumer services

banking and finance @)aul 3amba and 6saac Komo #&'&B. 6n addition to the direct

benefits they provide to members cooperatives strengthen the communities in which they

operate. /ccording to omavia @#&B cooperatives are specifically seen as significant

tools for the creation of decent jobs and for the mobili2ation of resources for income

generation. Many cooperatives provide jobs and pay local taxes because they operate inspecific geographical regions.

!2 S#+ *< .# P'*%#1

4urrently public transportation is under*developed and inefficient. Majority of Kenyan s

today use public transport as way of linking them from one destination to the other. 6n

Kenya the rise of Matatu venture has been hindered by financial challenges management

skills and political instability @/ligula et al. #&'&B. 6t is generally recogni2ed that matatu

acco5s face uni>ue challenges which affect their growth and profitability in their

venture in Matatu business and hence reduce their ability to contribute effectively to

sustainable development. ome of the notable challenges are9 0ack of managerial training

and experience inade>uate education and business skills lack of credit unfavorable

national policy and regulatory environment poor infrastructure and scanty markets

information. /ll these challenges lead to poor performance in Matatu business. This study

was carried out to investigate the factors influencing the performance of the formed

Matatu /44,s operating in Thika town in Kenya.

!5 O#$9# *< .# S/0-

!5! G#+#'&% O#$9#

The main purpose of the study was to investigate the factors that affect performance of

the Matatu /44,s operating in Thika Town.

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!52 S8#$


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The study will also be of great significance to various scholars students and researchers

who might be involved in matatu acco5s research activities the documented report of

this study will be easily ac>uired from the library and it will e>uip the learners with more

knowledge and skills on problems facing the matatu business. This will lead to

development of further research activities that will address other factors that will not be

addressed by this study and hence providing more effective solutions to effectively

handle matatu business challenges.

!4 L1&*+ *< .# S/0-

There were difficulties in reaching out the target respondents due to their tight schedule

of work. The researcher contacted them and agreed on the time of administering the

>uestionnaire which was made through several follow*ups until the >uestionnaires were

administered to them.

The issue of confidentiality on the information sought from the respondents was a

challenge as they did not have confidence on the consumer of the information. The

researcher produced the copies of the research introduction letter from the Mount Kenya

University which gave the respondents confidence in giving out the information.

4ases of uncooperative respondents were experienced by the researcher and this affected

achievement of a high response rate. /s a result it led to a number of >uestionnaires notbeing returned from some of the respondents who failed to voluntarily participate in

answering of the >uestionnaires. To this effect researcher was forced to engage the

respondents in a brief interview to let them know the importance of this study as a

strategy to avoid lack of cooperation.

The individuals who were involved in answering the >uestionnaires answered the

>uestions based from their opinions but not from the existing facts in the organi2ation.

This made some of the respondents to be biased. The researcher therefore employed

>ualitative techni>ues to select and document reliable and accurate findings.

!> S$*8# *< .# S/0-

The scope of this research was limited to the Matatu /44,s which are registered in

Thika town and operating to and from Thika town. Thika is the largest town in Kimabu(


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4ounty. The study focused on five active Matatu /44,s with a target population of

;


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CHAPTER TWO

2 LITERATURE REVIEW

2! I+'*0/$*+

This chapter covers literature review on the factors affecting the performance of matatu

acco5s as per the research objectives critical review of the study summary and gaps to

be filled and conceptual framework. This chapter considered literature relevant to the

subject under the study.

22 R#9# *< .# R#% L#'&/'#

The literature review is in relation to the research objectives.

22! M&&/ & M*0# *< T'&+8*' + K#+-&

The fourteen* seater LMatatus are individually owned and managed. +owever some

owners are members of avings and 4redit 4ooperative ocieties @/44,sB where they

save and borrow money and access transport routes commonly controlled by the

/44,s @3raeff #&&GB. Matatus have grown over the years since independence. They

began as an illegal transport entity. 6n 'G$; a presidential decree allowed Matatus to carry

fare paying passengers without obtaining a Transport 0icensing 8oard @T08B licence.

ince then Matatu mode of public transport has grown over the years with the goal of

catering to the mobility demands of millions of Kenyans @4hitere #&&DB. The travel

demands of both the low income and the middle income are met through this means oftransport.

/ccording to the draft ectional )aper on 6ntegrated National Transport )olicy @#&'&B

D&A of the residents in Nairobi meet their daily travel needs by walking while ;(A travel

by public transport @mostly Matatus and busesB and only (A use private cars. ,ther

scholars have shown that approximately


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exists nearly all over the world. ituma @#&&$B looked at the origin of the Matatus and

their destinations types of vehicles used their capacities roadworthiness average

number of trips ridership and the fare structure. The analysis based on the 4ity 4ouncil

of Nairobi surveys of 'GC& indicates that the Matatu mode of transport played an

important role in the public sector in Nairobi.

8arwell5s @#&&GB study examined financing and operating costs of materials and incomes

of Matatu owners. This study like ituma5s is silent on the working conditions of the

Matatu employees. Neither did the studies look at the serious problems of the

disorgani2ation within the Matatu sector. The 4ity 4ouncil of Nairobi @#&&&B reviewed

Matatus as a project component of the proposed Kenya Urban Transport )roject. The

main intention of the scheme was to try to facilitate access to funds by the Matatu owners

to purchase new and second hand vehicles.

4oopers and 0ybrand /ssociation 0td Nairobi @#&&CB advanced a recommendation for a

standard Matatu for the entire country. Kapila et al @#&B in a study of the mode of

transport in Nairobi analy2ed in detail the economic and performance characteristics

with a view of contributing to the public transport policy and planning for Nairobi5s

population. 6t was established that in 'GC# each Matatu in Nairobi created direct

employment for at least two persons at a cost of Kshs. DG(& per year. 6t was further noted

that each Matatu also created two indirect jobs.

222 M&&/ SACCO & S1&%% &+0 M#0/1 E+#'8'# (SME)

/n enterprise is defined here as any income generating activity that is not in the primary

agriculture or mineral production @3ray 4ooley 0utabingwa #&&$B. 6n Kenya the

classification of enterprises is primarily done by the number of employees engaged by

firms. Those firms that engage less than '& employees are referred to as micro*

enterprises those that employ '& to


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experiences the common causes of small business collapse such as lack of capital

experience poor market research administrative incompetence overestimation of market

demand and uneven cash flows @8ennet #&&DB.

225 M&+&;#1#+ @%% + .# M&&/ SACCO

/ major drawback in the growth and performance of the Matatu /44, is the lack of

the basic skills in the business management and entrepreneurship. urveys of small

business failure maintain that entrepreneurs often have good ideas and are competent but

they do not have clue on how to run a business underlying appreciation of business

fundamentals @8arron #&&&B. 4ant et al @#&&GB points out that the identification of

business problems and development of the appropriate training programs to address these

problems which will assist in e>uipping small and medium enterprise owners with the

necessary managerial skills to survive in today5s competitive world.

0igthelm et al @#&B observed that the deficiencies in the internal environment are the

major cause of failures in small and medium enterprises and they revolve around among

others management skills. This problem comes from some specific management issues

such as lack of business management training and skills inability to act as an

entrepreneur and limited family business culture. They finally point out that management

behavior and actions that are lacking: inability to set strategic goals plan forward

reluctance to seek advice lack of management commitment and unwillingness to adapt

change.

/ccording to 0abie and Mersland @#&''B corporate governance is a system or se t of

mechanisms by which an organi2ation is directed and controlled in order to reach its

mission and objectives. /44,s are usually characteri2ed by multiple objectives and are

therefore different not only in their organi2ational forms but also in terms of products

methodologies social priorities and profit seeking behaviour @Mersland torm #&&GB.4orporate governance focuses on the board room but extends the scope to include owners

and others interested in the affairs of the company including creditors debt financiers

analysts auditors and corporate regulatorsJ @Tricker #&&


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3overnance is about the use of power in an organi2ation and it seeks to ensure leader5s

governance to people. 6t also seeks to ensure that leaders act in the best interest of the

organi2ation. 6t targets members who are the owners of the organi2ation and seeks to

ensure that the power of an organi2ation is used in a manner that facilitates independence

responsibility efficient fairness accountable social responsibility transparency

efficiency and discipline @Murtishaw and athaye #&&DB. 3ood 4orporate 3overnance

entails effectiveness competitiveness and sustainability of the society. 6t also ensures the

achievement of objectives innovation >uality productionOproducts competitive edge and

credibility which would attract investments. 6t emphasi2es the use of resources efficiently

preservation of physical and social environment sensitivity to society5s needs and social

responsibility @8osch #&&(B.

/ccording to acco ociety =egulatory /uthority @/=/B acco5s5 should establish

appropriate policies in areas such as human resource credit investment savings

li>uidity risk management and establish audit committees to enhance internal controls.

They should also adopt international accounting and auditing standards. acco5s and are

supposed to appoint external auditors who have met the re>uired standards as laid out in

ection


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Mochache @#&&(B observed the importance of training and how it enhances growth and

competitiveness of the M15s. Training empowers owners and employers to make better

decisions and provide better >uality goods and services. +e further noted that the training

duration is influenced by the competency re>uired for the particular trade. Managerial

skills are important in making decisions which are non*routine and strategic in nature.

0igthelm et al @#&B states that financial management is a crucial field within the

environment of the small and medium enterprises thus present numerous potential

obstacles. Management competence is often determined by the availability of

management and financial information. Mc=ae @#&&'B asserts that the potential of the

education system to contribute further to the growth of an entrepreneurship culture has

not been harnessed. The superior performance of high growth enterprises is partly

explained by the owner5s level of education and training. 1ntrepreneurial skills whether

formal or informal enable the owner of a business to seek growth and utili2e

opportunities to make profit.

Namusonge @#&&CB noted that without re>uisite skills the goal of Kenya attaining

industriali2ation through M1s will not be possible. The ac>uisition of the relevant

business skills is critical for their growth. +e recommended for the formulation of a

comprehensive entrepreneurship development policy to nurture the entrepreneurs.

22" T.# G*9#'+1#+ P*%$- G*9#'++; M&&/ SACCO

=egulatory restrictions are one area in which business people and entrepreneurs need to

be facilitated in order that they become formal and grow. 6f regulations are friendly such

as registration process and tax rates are clear and affordable the small scale businesses

will openly operate and contribute to the economy more than at present @3.,.K essional

paper ' 'GGDB.

4hitere et al @#&&


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Unit =egistrar of Motor Fehicles "riving Test 4enter Traffic )olice and 0ocal

/uthorities. These institutions are fragmented across ministries and departments. The

=egistrar of Motor Fehicles who determines and fixes passenger and luggage capacity

for all vehicles is currently under the Ministry of 7inance while the "riving Test Unit is

under the ,ffice of the )resident.

The absence of a proper regulatory framework and the relaxing of the Michuki =ules

have also led the Matatu crews to practice collusion with the police @Kimani et al #&&


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Ndungu Kibua Masinde @#&&


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countries. The study developed tructural 1>uation Model @1MB to elucidate the

interrelationship between the observed variables and unobserved variables and their

impact to the overall commuters5 satisfaction. Unobserved attributes such as ervice

?uality @?B afety @B and Travel 4ost @T4B were estimated. 0evel of satisfaction was

found to be significantly influenced by ervice ?uality @?B afety @B Travel 4ost

@T4B and the perception on the systems5 performance.

8arwell5s @#&&GB study examined financing and operating costs of materials and incomes

of Matatu owners. This study like ituma5s is silent on the working conditions of the

Matatu employees. Neither did the studies look at the serious problems of the

disorgani2ation within the Matatu sector. The 4ity 4ouncil of Nairobi @'GC&B reviewed

Matatus as a project component of the proposed Kenya Urban Transport )roject. Themain intention of the scheme was to try to facilitate access to funds by the Matatu owners

to purchase new and second hand vehicles.

Kyalo @#&'#B did an analysis of factors affecting performance of Matatu enterprisesJ

sector by using a case of selected routes in Nairobi. The study concluded that the

weaknesses in the Matatu sub*sector can be reduced by improving the management skills

of owners lowering costs of operations research law enforcement and improving theroad transport infrastructure by the government. Eoung people need to be encouraged to

form partnerships to enable them purchase higher capacity )Fs which are more

profitable to operate. Matatu business has a chance of rapid growth if there is law and

order and if it is well supported by government and financial institutions that can give

loans at low interest rates.

4ox @#&&;B examined performance indicators in urban transport planning. Throughout the

world increasing traffic congestion threatens economic growth. 6n many high*incomeworld urban areas urban transport planning is based upon various principles that may be

generally characteri2ed as seeking to encourage public transport use walking and cycling

as an alternative to the automobile. uccess then it could be said should be measured by

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the extent to which public transport walking and cycling market shares increase while

automobile market shares decline.

1boli and Ma22ulla @#&'#B examined performance indicators for an objective measure of

public transport service >uality. The measurement of transit performance represents avery useful tool for ensuring continuous increase of the >uality of the delivered transit

services and for allocating resources among competing transit agencies. Transit service

>uality can be evaluated by subjective measures based on passengers5 perceptions and

objective measures represented by disaggregate performance measures expressed as

numerical values which must be compared with fixed standards or past performances.

The research work dealt with service >uality evaluation based on objective measures:

specifically an extensive overview and an interpretative review of the objectiveindicators until investigated by researchers are proposed. The final aim of the work was

to give a review as comprehensive as possible of the objective indicators and to provide

some suggestions for the selection of the most appropriate indicators for evaluating a

transit service aspect.

ituma @#&&$B looked at the origin of the Matatus and their destinations types of vehicles

used their capacities roadworthiness average number of trips ridership and the fare

structure. The analysis based on the 4ity 4ouncil of Nairobi surveys of 'GC& indicates

that the Matatu mode of transport played an important role in the public sector in Nairobi.

4oopers and 0ybrand /ssociation 0td Nairobi @'GC&B advanced a recommendation for a

standard Matatu for the entire country. Kapila et al @'GC#B in a study of the mode of

transport in Nairobi analy2ed in detail the economic and performance characteristics

with a view of contributing to the public transport policy and planning for Nairobi5s

population. 6t was established that in 'GC# each Matatu in Nairobi created direct

employment for at least two persons at a cost of Kshs. DG(& per year. 6t was further noted

that each Matatu also created two indirect jobs.

Niyonsenga @#&'#B studied public transport supply for Kigali =wanda. )ublic transport

is supplied to provide mobility to people who do not have access to private or provide an

'(


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alternative option to private car mobility. )ublic transport is increasingly adopted for

many purposes such as providing mass mobility managing traffic congestion mitigating

air pollution reducing energy consumption and creating development opportunities. The

results indicated that the prevailing public transport in Kigali could serve up to D(A of

the potential demand regardless of the distance re>uired to reach the bus stop. ;$A of the

demand was ade>uately served in case both spatial and temporary aspects of service

were considered. This low service performance was due to the deficiencies of public

transport route network and the service capacity constraints.

26 S/11&'- &+0 G&8 * # F%%#0 - .# S/0-

0iterature review looked at the studies as conducted by other scholars in as far as

organi2ational performance is concerned. Not much has been done on the factors

influencing the performance of Matatu /44,s operating in Thika town even though the

research has been carried in other places. 7rom the literature review the study established

that several scholars had reviewed the concepts of factors affecting performance of

matatu saccos. 7or example Ngatia 7umihiko and Toshiyuki @#&'&B examined the

structure of users5 satisfaction on urban public transport service in developing country

using the case of Nairobi. "2iekan @#&&CB studied ease*of*use in public transportation P a

user perspective on information and orientation aspects. 4in>uina @#&&CB did a study on

the ustainable public urban transport systems using the case of 4uritiba. Mccormick

Mitullah 4hitere ,rero and ,mmeh @#&'#B reviewed paratransit operations and

regulation in Nairobi matatu business strategies and the regulatory regime. Kyalo @#&'#B

did an analysis of factors affecting performance of matatu enterprisesJ sector by using a

case of selected routes in Nairobi. There is no known study that has specifically studied

the factors affecting financial performance of public transport business in Kenya. The

study therefore intends to fill these gaps.

2" C*+$#8/&% F'&1#*'@

/ conceptual framework is a graphical or diagrammatic representation of the relationship

between variables in a study @8org 3all 3all #&&(B. 6t helps the researcher to see the

proposed relationship between the variables easily and >uickly. This section provides an

exploration framework concerning variable inter*relationships that explains the factors

'D


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affecting performance of matatu acco5s. The study explored the relationship between

business management entrepreneurial skills in the Matatu /44,s the policy

framework governing the Matatu /44,s working conditions for the Matatu operators

in Kenya and Matatu /44,s5 security issues and the performance of the Matatu

/44,s.

The conceptual framework provides the explanation concerning the relationship between

independent and dependent variables.

I+0#8#+0#+ V&'&%# D#8#+0#+ V&'&%#

'$

Management skills


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F;/'# 2!: T.# C*+$#8/&% F'&1#*'@

S*/'$#: R##&'$. D&& 2!"

2"! M&+&;#1#+ @%% + .# M&&/ SACCO

/ major drawback in the growth and performance of the Matatu /44, is the lack of

the basic skills in the business management. urveys of small business failure maintain

that entrepreneurs often have good ideas and are competent but they do not have clue on

how to run a business underlying appreciation of business fundamentals. There is need

for identification of business problems and development of the appropriate training

programs to address these problems which will assist in e>uipping small and medium

enterprise owners with the necessary managerial skills to survive in today5s competitive

world.

'C

)erformance of the Matatu

/44,s

8usiness skills

The government policy

governing Matatu

6ndustry

-orking environment for the

Matatu 6ndustry


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2"2 B/+# S@%% + .# M&&/ SACCO

7or every business to have high productivity there is need for the operators to have the

re>uired business skills through training and business experience. Training empowers

owners and employers to make better decisions and provide better >uality goods and

services. The training duration is influenced by the competency re>uired for the particular

trade. 8usiness skills are important in making decisions which are non*routine and

strategic in nature. The superior performance of high growth enterprises is partly

explained by the owner5s level of education and training. 8usiness skills whether formal

or informal enable the owner of a business to seek growth and utili2e opportunities to

make profit. The ac>uisition of the relevant business skills is critical for their growth.

There is need for the government and all matatu acco5s to join hands and formulate

comprehensive entrepreneurship development policy to nurture the matatu industryentrepreneurs.

2"5 P*%$- F'&1#*'@ G*9#'++; M&&/ SACCO

7or matatu industry to be viable to the investors there is need to have a clear and effective

policy framework to govern the operation of the industry. The government is working

closely with other sector and institutions related to the transport industry which include:

National Transport ervices /uthority @NT/B The Kenya =oads 8oard @K=8B is the

main institution responsible for the national road infrastructure network in Kenya. ,therinstitutions include the Transport 0icensing 8oard @T08B Motor Fehicle 6nspection

Unit =egistrar of Motor Fehicles "riving Test 4enter Traffic )olice and 0ocal

/uthorities. These institutions are fragmented across ministries and departments. The

=egistrar of Motor Fehicles who determines and fixes passenger and luggage capacity

for all vehicles is currently under the Ministry of 7inance while the "riving Test Unit is

under the ,ffice of the )resident.

2"6 W*'@+; #+9'*+1#+


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2"" P#'


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CHAPTER THREE

5 RESEARCH DESIGN AND METHODOLOGY

5! I+'*0/$*+

This chapter outlines the methodology that was used in gathering data on the factors thataffect performance of matatu acco5s with respect to matatu acco5s in Thika Town. The

research design and methodology used was well defined and the reason as to why they

are chosen in the study was elaborated in the course of the study. The research design

was incorporate important aspects of methodology that will include study design target

population sample design data collection methods and data analysis methods. This was

accurately and effectively done to ensure desirable results.

52 R##&'$. D#;+

The research design used for the study was descriptive survey. This is because it focuses

on the large population and it gives explanation on the state of affairs as they exists at

present @Kothari #&&


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The Matatu /44,s also have casual employees i.e. drivers and conductors. The study

included # drivers and # conductors from each /44, which made the total population

si2e to be ;


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was >uestionnaires. ?uestionnaires were designed in a simple form which were easily

understood and were delivered to the respondents who participated in the research study.

/ specific time frame was given to the respondents to fill the >uestionnaire.

?uestionnaires were used to provide the major sources of data. This is because>uestionnaires are always economical and time saving and free minded responses are

encouraged. ?uestionnaires were designed and given to respondents so that they can fill

at their own convenient time. The >uestions were closed ended. ,pen ended >uestions

were availed and space left for filling in the relevant explanations. This gave an

opportunity to the respondents to clearly state and elaborate their views accordingly.

/ccording to @Mugenda and Mugenda #&&;B validity is the accuracy and meaningfulness

of inferences which is based on the research results. 6t is a degree to which resultsobtained from the analysis of the data actually represents the phenomenon under study.

The >uestionnaires were also subjected to scrutiny by researcherJs supervisor and other

research expertsJ for validation purposes and it was found to be valid.

=eliability refers to the consistency of a measure the ability of the instrument used in

research to consistently measure the characteristics of interest over time @/hmed et al

#&&uestionnaire according to 4reswel @#&&GB is to help the

researcher understand the meaning of the >uestions to be respondents and how they arrive

at their response. The >uestionnaires were distributed to '& respondents from matatu

operators who were not the part of the study. / specific time frame of five days was

given to the respondents to complete the >uestionnaire. The >uestionnaires were

distributed to individual persons in the categories.

#;


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54 D&& A+&%- M#.*0

/ccording to Kombo and Tromp @#&''B data analysis procedure includes the process of

packaging the collected information putting in order and structuring its main components

in a way that the findings can be easily and effectively communicated. The >uestionnaires

were carefully checked to ensure that responses were correctly ascertained. The data was

finally analy2ed >uantitatively using Microsoft excel. This involved the use of

descriptive statistics @mean fre>uencies and percentagesB analysis method to ensure

accuracy. The fre>uency tables charts and figures were used to present the results for

easier understanding and interpretation.

#


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CHAPTER FOUR

6 DATA ANALYSIS, PRESENTATION AND INTERPRETATION

6! I+'*0/$*+

The chapter deals with analysis presentation and interpretation of the study which was to

investigate the factors that influence the performance of the Matatu /44,s operating in

Thika Town. The analysis was done based on the research objectives.

62 P'##+&*+ *< F+0+;

This section represents the findings of the study as per the research objectives.

62! R#8*+# R

,f the ;& ownersOmembers targeted for the study #& responded to the >uestionnaire

representing D$A response rate. There was a '&&A response rate from the management

level employees drivers and conductors. Thus a total of D& respondents out of the drawn

sample of $& responded to the >uestionnaires representing CD A participation level as

shown in the table


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C*'- R#8*+# P#'$#+&;#

,wnersOMembers #& 4>

Management 1mployees #& !

"rivers '& !

4onductors '& !

T*&% 4 74

S*/'$#: R##&'$. D&& 2!6

The above information form the basis of the research findings analysis interpretations

conclusions and recommendations contained in the study.

622 D#1*;'&8.$ C.&'&$#'$ *< .# R#8*+0#+

The study examined the demographic characteristics of the ownersOmembers

management level employees drivers and conductors in the Matatu /44,s through the

following aspects9 gender age level of education as well as the number of years in the

Matatu /44, as indicated in this section9

F;/'# 6!: G#+0#' *< .# R#8*+0#+

S*/'$#: R##&'$. D&& 2!6


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7igure


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P**+ .#%0 +

.# SACCO

L#9#% *< E0/$&*+

C*%%#;#3U+9#'- P'1&'- S#$*+0&'- T*&%

< F F F

4onductors ' '&A & & G G&A '& '&&A

"rivers ; ;&A # #&A ( (&A '& '&&A

Management

1mployees

'# D&A & & C


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P**+ .#%0 +

.# SACCO

D/'&*+ *< S#'9$# + .# SACCO

!?5 6?4 >? T*&%

< F F F

4onductors ( (&A ( (&A & & '& '&&A

"rivers ; ;&A # #&A ( (&A '& '&&A

Management 1mployees '# D&A < #&A < #&A #& '&&A

,wnersOMembers C


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T&%# 6" L#9#% *< 1&+&;#1#+ &+0 /+# @%%

A$9- A%&-

!

S*1#1#

2

H&'0%-

5

N#9#'

6

R#8*+0#+

"o you keep books ofaccountI

$& #& '& &.& '&&

"o you properlydetermine your profitsI

D&


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6" E


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)romotes discipline among drivers and conductors ;& (&A

=educes road accidents '( #(A

0eads to smooth process of /44, registration $ '#A

6mproves the security of the Matatus ; (A

)roper maintenance of the vehicles ( CA

T*&% 4 !

S*/'$#: R##&'$. D&& 2!6

The table


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0engthy process of Matatu /44,

registration '( #(A

)F are very expensive ( CA

T*&% 4 !

S*/'$#: R##&'$. 0&& 2!6

,ut of the respondents who felt that government policies are not good enough to promote

the performance of the Matatu /44,s D$A stated that the government policies

increases the rate of corruption among the traffic police #(A of the respondents

indicated that it lengthens he process of registering matatu acco while (A of the

respondents indicated that )F licenses are very expensive. The results are as shown in

table


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7rom the figure


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4onductors & & '&&

"rivers &


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;&'*


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T-8# *< A%%*&+$# F'#/#+$- P#'$#+&;#

8reakfast allowance '& (&A

0eave allowance & &

+ouse allowance & &

+ealth allowance & &

0unch allowance '& (&A

T*&% #& !

S*/'$#: R##&'$. D&& 2!6

/s indicated in table


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7igure


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S*/'$#: R##&'$. D&& 2!6

/s shown in the table


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67 P'*'- P'*%#1 &+0 C*+'&+ A


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T&%# 6!7: C&/# *< %* 8#'uate governmentpolicies

;&


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,nly ;(A of the respondents were of the opinion that government policies in the Matatu

sector need to be reviewed.

T&%# 6!: W&- *< 18'*9+; M&&/ SACCO 8#'


54/70

employee5s works for more than C hours in a day majority of the employees are also

employed on temporary basis and no other allowances are given to the employees apart

from breakfast and lunch allowances. )oor working conditions were indicated as a major

contributor to low productivity and hence low income generations.


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CHAPTER FIVE

" SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

"! I+'*0/$*+

This chapter discusses the summary of findings conclusions and recommendations of theresearch study. The summary of findings gives an in*depth explanation of the major

factors raised by the respondents on the factors influencing the performance of Matatu

/44,s operating in Thika town. This was based on the analy2ed facts in >uantitative

analysis where numerical values were used to explain the effects of independent variables

on dependent variables. The findings contributed towards answering of the research

>uestions and making conclusions of the research study. The study gave several

recommendations and suggestions for further studies to address.

"2 S/11&'- *< .# M&*' F+0+;

The study examined the demographic information in regards to matatu ownersOmembers

management level employees drivers and conductors in the Matatu /44,s which

included gender age and level of education as well as the number of years in their Matatu

/44,s. /ccording to the data presented majority of the respondents @C(AB in the

Matatu /44,s are males compared to '(A representing the females. 6n the past

matatu industry was seen as a man affair business only and you could easily see a lady aconductor of driver and even women investing in matatu industry. The results shows that

with time things are changing and as men used to dominate and do well in matatu sector

women too can do better. The streamlining done in matatu sector 6 terms of governing

them through acco5s has brought sanity in the industry and therefore bring confidence

within the investors as well as prospective investors.

Majority of the respondents @


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decision pertaining to the business and also contribute to any ideas which may promote

the sector. ,perators among youth bracket are well represented and this means that we

have energetic people who can work with a lot of 2eal and become more productive.

Majority of the respondents @


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The study found out that majority of the respondents @C(AB was of the opinion that

government policies are good enough to promote the performance of the Matatu

/44,s. C(A of the respondents stated that insurance policies are good enough to

promote /44, performance while only '(A of the respondents were of the contrary

opinion. +owever out of the respondents who felt that government policies are not good

enough to promote the performance of the Matatu /44,s D$A stated that the

government policies on road safety increases the rate of corruption among the traffic

police.

"26 W*'@+; E+9'*+1#+


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The study therefore concludes that Matatu business owners and their employees should

be trained on management of their venture because it improves growth and knowledge.

ome of the aspects of training programme evaluation form for the trainees were the

relevance of course to the needs of the trainees the course objectives and course content.

The study also concludes that the impact of training on the venture is measured or

evaluated through reduction in grievances through the reduction of turnover and through

increase in revenue.

The study further concludes that policy makers impact the business both positively and

negatively. The study concludes that the /44,s the traffic police county council and

the ministry of transport impact the venture positively and negatively. Matatu acco5s are

important bodies in the transport sector. Therefore both formal and informal institutions

have been found to affect matatu business operations. The formal institutions generally

come in the form of public and government institutions set up to regulate the performance

of the matatu sector. They come in the form of government ministries departments and

regulatory authorities. The government has set in place some formal regulatory bodies for

both the roads and the users of the roads.

7rom the research objectives it can be concluded that business management and

entrepreneurial skills have impact on the performance of the Matatu /44,s. )roper

maintenance of books of accounts training of the employees on management and

entrepreneurial skills attending workshops and seminars and inspection of employees as

they work should be encouraged always so that Matatu /44,s can be able to achieve

high levels of profitability.

econdly it can be concluded that insurance policies are good as far as profitability of the

Matatu /44,s is concerned. ,ther government policies towards the Matatu business

are good: however road safety rules and regulations need to be enforced in order toreduce corruption among the traffic police and increase efficiency in this sector. Thirdly

poor working conditions impact on the profitability of the Matatu /44,s. Most of the

employees work for more than C hours in a day only ;A of the employees are employed

on permanent basis and only $.'A of the Matatu /44, employees are given health


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allowance and house allowance. Most of the employees are not motivated due to these

poor working conditions and hence it leads to low productivity.

"6 R#$*11#+0&*+

3iven the above findings and conclusions the researcher recommends the followingmeasures for implementation with regard to the performance of the Matatu /44,s9

Matatu sector operators should organi2e for training for both the owners of the Matatus

and their employees so that they can improve on their management and business skills.

The owners of the Matatu business are also recommended to do routine inspections of

their employees as they carry out their work.

3overnment policies are good as far as the performance of the Matatu business is

concerned: however the policies on road safety have resulted in massive corruptionamong the traffic police officers. 4orruption reduces the levels of profitability in the

Matatu business. The government is therefore re>uired to come up with ways of dealing

with the corrupt police officers. 4ollaboration and participation is a subset of /44,s.

)oor working conditions lead to low productivity of the employees which in turn make

the Matatu /44,s to record low profits. 6t is recommended that Matatu /44,s

should improve the working conditions of their employees so as to register huge profits.

1ngagement in extra security measures by the Matatu /44,s increases their operation

costs. The study recommends that the government increases road patrols so as to reduce

incidences of carjacking and robbery.

There must be collaboration and participation of each and every matatu owner in order to

draw the much needed synergy that will enable them maximi2e on profits. To attain a

higher stability and efficiency the matatu owner managers must ensure that the resources

they have are prudently used and proper records kept. Monitoring and evaluation of every

activity in the business must be continuously done so as to detect weakness early and takethe corrective action.

The study recommends that in order to improve their earnings owners have to properly

manage their relationships with the individuals contracted to run their matatu business.

acco5s need to come up with strategies that will lead to better management of acco5s to


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allow for set of rules that can have positive effect on the matatu businesses and also

training seminars for the matatu operatives so as to improve the overall performance of

the matatu businesses. Taxes and levies imposedOeffected by T08 need to be aligned to

the effect they have on the performance of the matatu businesses as they are high.

"" S/;;#*+


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4hambo et al @#&&CB. &n analysis of the Socio'Economic (mpact of Cooperatives in&frica an" their institutional conte)t. 6nternational 4ooperative /lliance and the4anadian 4ooperative/ssociation.

4hava 7rankfort Nachmias and "avid Nachmias @'GGDB.Research Metho"s in the Social

Sciences. t. Martin5s.

4ooper ". =. chindler ). . @#&&CB. Business Research Metho"s. '&th 1ditioningapore9 Mc3raw*+ill.

4oopers and 0ybrand /ssociation 0td @'GC&B. Report on specification for a stan"ar"Matatu. Nairobi.

"e oto +ernando @'GCGB. The *ther #ath+ The (nvisible Revolution in the Thir" ,orl".NewEork9 +arper and =ow.

"r. 1.N. 3icheru @#&&GB. &n analysis of the socio'economic impacts of the Ne-(ntegrate"National Transport #olicy$ The case of / seat transport S&CC*s in 0enya. /research paperfirst presented at the 64/ 3lobal 4onference held at Mikkeli in 7inland/ugust #&''.

3ithinji @#&&(B. &n investigation into the constraints affecting the gro-th an"profitability ofpublic transport business in Nairobi. / case of 0angataO =ongai route.Thesis KenyattaUniversity.

3raeff @#&&GB. The organization an" future of the Matatu in"ustry in Nairobi 0enya.

3ray K. =. 4ooley -. and 0utabingwa %. @'GG$B. Small scale manufacturing in 0enya.%ournal of mall 8usiness Management ;(@'B DD*$#.

6kiara 3.K. @'GG'B.#olicy changes an" the (nformal sector9 / review in 4oughlin ). and6kiara 3.K. @1ds.B KenyaJs 6ndustrial "ilemma 6leinemann Kenya Nairobi.

6ntegrated National Transport )olicy @#&&;B. 3overnment )rinter.

6nternational 4enter for 1conomic 3rowth @#&&'B. !uman Capital an" %ro-th.,ccasional )apers No.


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6)/= @#&&


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Naituli 3 -egulo 7N Kaimenyi 8 @#&&DB.Entrepreneurial characteristics among microan"small'scale -omen'o-ne" enterprises in North an" Central Meru "istrict 0enya.6n4.4reigton7. Eiele @1ds.B. 3ender ine>uality in Kenya. UN14,.

Namusonge 3.. @'GGCB.Determinants of gro-th oriente" small an" me"ium enterprises

inNairobi 0enya. Thesis %omo Kenyatta University of /griculture and TechnologyKenya.

Ndungu Kibua Masinde @#&&


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Ferma .K. @#&&


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APPENDICES

APPENDI I: LETTER OF INTRODUCTION

P##' S%&% M//+0

PO BO !67,

THIKA

"ear =espondent

6 am a student at Mount Kenya University pursuing my 8achelor degree in business

management strategic management option. /s one of my re>uirement of my course 6 am

carrying out to examine9 7actors influencing the performance of matatu acco5s in Thika

Town9 a case of selected matatu acco5s operating in Thika town. Eou are kindly

re>uested to respond to this >uestionnaire by ticking @SB in the box. The information you

will give will be highly appreciated treated with confidentiality and used for the purpose

of the research.

Eours incerely

P##' S%&% M//+0


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APPENDI II:

SURVEY QUESTIONNAIRE

This research is intended to find out the factors influencing the performance of Matatu

/44,s in Thika Town with reference to Matatu /44,s operating in Thika town.

A%% -*/' '#8*+# %% # '# . & .;. %#9#% *< $*+uestions by ticking @SB against the most

suitable alternative or giving narrative responses in the spaces provided.

SECTION A: B&$@;'*/+0 I+


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(T. #$*+ * #


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iiB No @ B

';. '


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ivB 0unch allowance @ BvB 8reakfast allowance @ BviB ,ther @pecifyB

!!!!!!!!!!!!!!!!!!!!!!!!!!..

SECTION E: P'*'- P'*%#1 &+0 C*+'&+ A


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Train the employees on managerial and

entrepreneurial skills

=eview government policies in the Matatu

sector6mprove the working conditions for the

employees

6mprove securityO 8an Matatu 4artels

T.&+@ -*/

Documents

FACTORS AFFECTING THE PERFORMANCE OF MATATU SACCOS IN KENYA: A SURVEY OF SELECTED MATATU SACCO’S OPERATING IN THIKA TOWN, KENYA