Kenya: Matatu Owners Say Fuel Tax a 'Monster' As Farmers Cry Foul

Fuel pump.
2 September 2018

The public transport sector has termed the massive increase in price of fuel as a 'monster' that commuters must be ready to feed with blood and sweat.

The sector, which offers the only means of transport to majority of Kenyans, reckons that it will pass on the 16 per cent value added tax (VAT) to commuters because trying to absorb even the slightest margin would force most Public Service Vehicles (PSVs) off the road.

The increase will also hit Kenyans who have become accustomed to using taxi-hailing companies like Uber, Little, Taxify and Mondo hard, something that could make the service out of reach for many.

RIPPLE EFFECT

The ripple effect could be condemning hundreds of Kenyans who have taken loans to buy cars to offer the taxi-hailing service to misery, worsening their situation considering their numerous strikes in demand for better rates.

"Increase in fuel prices of this magnitude is a monster we cannot be able to cushion. We have to pass the cost to commuters," said Simon Kimutai, Matatu Owners Association (MOA) chairman.

He added that with a litre of diesel expected to skyrocket to as much as Sh120, PSV operators intend to increase commuter fares between Sh10 and Sh30 in Nairobi. Effectively, it means that in Nairobi the minimum fare will be Sh30, up from Sh20.

Considering that majority of commuters in Nairobi leave in estates where fare is on average Sh60, an increase of Sh30 will mean further tightening of belts.

TAXI-HAILING

Kenyans using taxi-hailing services and who have been paying on average Sh250 for short distances could see the cost increase to Sh350. Currently the taxi-hailing companies charge on average Sh35 per kilometre.

"We constantly monitor fares and driver economics to ensure that we provide the best possible fare and service so that riders continue to take trips and drivers have access to more fare paying passengers," said an Uber spokesperson.

The significant increase in fuel prices is bound to make the already difficult public transport business even harder.

Despite the fact that the value of PSVs depreciate in value at a rate of Sh1 million annually, owners must content with costs associated with insurance, service, sacco membership, police bribes and in recent times crackdown by the Nairobi County government that is limiting their access to the Central Business District.

NOT PROFITABLE

"The matatu business is no longer profitable and if we try to absorb the new prices it will kill us completely," noted Mr Kimutai.

He added that many operators are struggling to service loans and cannot afford to burden themselves any further.

Many farmers who spoke to the Sunday Nation in the country's food basket in North Rift lamented that they will be pushed out of business if the increment is effected.

"We always grapple with high cost of inputs during the planting season. People with large farms will incur a lot of costs tilling the land in form of fuel for our tractors. The increment will hurt struggling farmers, "said James Rogony, a farmer from Ziwa in Uasin-Gishu.

CARTEL ENTRY

The farmers want the price of a 90-kilogram bag of maize to be increased to Sh3,500 up from Sh3,200 for farming to be a viable venture.

The farmers accused the Jubilee administration of being insensitive to the plight of farmers.

"The government should look for tangible long term policies to make farming a productive activity. Farmers should not be complaining every year as cartels infiltrate the agriculture sector, "said Kipkorir arap Menjo, Kenya Farmers Association (KFA) Director in Uasin-Gishu county.

National Matatu Organising Secretary Victor Manoti said all Kenyans will face adverse effects if the pump prices are adjusted.

"Nobody will be spared in this," said Mr Manoti.

Matatu officials, he said, will meet any time this weekend to discuss what they will do in the face of possible fuel hikes.

Stories by Njiraini Muchira, Wycliffe Kipsang, Victor Otieno and Magati Obebo

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