New venture for Kenya transport sector

June 16, 2010

, NAIROBI, Kenya, June 16 – In a bid to transform the local public transport sector, several companies have established a public private partnership that aims to promote the use of high capacity buses in major cities across the country.

The Cooperative Development and Marketing ministry, Cooperative Bank , General Motors East Africa (GMEA), Invesco Assurance and the Matatu Owners Association will work together to streamline urban public transport starting with Nairobi in an effort they hope will reduce congestion.

“I believe the idea behind the launch of the ‘PSV Vision 2030 Campaign’ is to encourage Kenyans to invest into profitable modern transport opportunities as opposed to lower capacity public service vehicles which are a major cause of congestion in our urban centres,” said Cooperatives Minister Joseph Nyagah during the launch of the campaign.

The vision envisages a decongested Central Business District (CBD) by allowing few designated high-capacity buses to drop and pick passengers within the area.

The partnership will provide a concessionary package in which GMEA will supply their high capacity Isuzu buses; Cooperative Bank will finance the acquisition of the buses, while Invesco Assurance will provide a comprehensive insurance cover.

Investment in the public transport sector if well regulated, Mr Nyagah pointed out, remains one of the most lucrative opportunities and urged Saving and Credit Cooperatives (SACCOS) to venture in this business.

“I therefore wish to encourage lending institutions to consider partnerships with Sacco members in the country to enable them buy high capacity PSVs whose return on investment is guaranteed,” he said.

He pledged support to the training workshops that will be held in selected regional towns to educate Sacco members about how they can benefit from economies of scale by investing in this initiative.

GMEA Managing Director William Lay said the partnership was part of his company’s strategy of taking a leading role in modernising the country’s public transport system.

“As the East African governments work towards Bus Rapid Transit systems, GMEA is already rolling out higher capacity buses to support the system. We will continue to innovate and commit resources to avail safe buses that make economic sense to investors and offer comfortable rides to commuters,” said Mr Lay.

Kenya has for a long time grappled with how to address inefficiencies in the near Sh500 billion industry. The economy loses billions of shillings in traffic jams and in the occasionally strikes organised by matatu operators.

While some have called for the establishment of a body to regulate the sector, others have argued for a comprehensive public transport policy framework which they say would address the mess in the industry in a holistic manner.

In last week’s budget, Finance Minister Uhuru Kenyatta set aside Sh1.9 billion for a commuter train transport network to provide Nairobi residents with easier access to the city but details of when the project will commence or how long it will take before the benefits can begin to be felt were not given.


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