How Nairobi’s Matatus Defied the Will of Kenya’s Cashless Policy Makers

Nairobi’s failed cashless experiment, an attempt to digitize all commuter payments in Kenya is a poster child on the pattern of thinking that’s left a trail of struggling Fintech experiments in the name of Silicon Savannah.


We often fall into the trap of making broad sweeping assumptions about people and places based on our preconceived notions of an what we consider is an ideal world. In the context of East Africa and its bulging informal economy, countless technology entrepreneurs, policy makers, donor agencies and wazungu NGOs have fallen victim to throwing resources at reality hoping to turn it into their Utopian dream. Pick a sector, any sector – be it agriculture, transport, banking, ecommerce. Everything but the kitchen sink has been tried at perceived problems. I say perceived because the definition of the problem depends on who you ask.

Kenya’s short innovation history is littered with such experiments, typically ambitious, well funded but not lasting long before packing up.

Nairobi’s failed cashless experiment, an attempt to digitize all commuter payments in Kenya is a poster child on the pattern of thinking that’s left a trail of struggling Fintech experiments in the name of Silicon Savannah.

The Informal Matatu Industry Is Chaotic

I’ve been boarding matatus all my life. As far back as 1994 when after school, I would catch a route 44 mathree with a mini TV, just to catch the 5pm cartoons on my way home.

I imagine if it is your first time coming across Nairobi’s matatu industry, it looks like a jungle. Until, you settle into the culture,  warm up to it and and you realize, all first impressions aside, the damn thing actually works!

Cashless matatu initiative was a policy move by government via the ministry of transport to clean up the industry. The new regulations were contrived in a legal notice titled National Transport and Safety Authority (Operation of Public Service Vehicles), published in September 2013 with a deadline set for June 2014. On paper, the idea was to formalize the industry, weed out inefficiency, corruption and bribing culture by mandating cashless commuter payments.

The providers of electronic payments systems were all the big FinTech brands in Kenya. Equity, Google, Safaricom Mpesa, Mastercard, KCB Bank, and Family bank. All of them had their eyes on the prize, 2 billion KES annually just from processing commuter transactions.

Since you can’t technically ban cash, the owners of the vehicles had to buy into the plan. The Matatu Owners Association was aptly roped into the narrative, even coming up with their own prepaid solution, the 1963 card. For them it was and still is about pulling in as much revenue as possible at days end, a task that squarely rests on matatu drivers, touts and their ability to deliver in a marketplace of commuters.

Matatu Owners Association (MOA) chairman Simon Kimutai said pre-paid fare cards would help bring order on Kenyan roads. Through cashless payments, all the day’s collections would end up in their bank account and the cash that previously got siphoned off would finally make it to the books. So, across the media, matatu owners were portrayed as on board.

All the pieces were set

  • The government through the ministry was going to streamline the sector, and potentially rake in more taxes from more transparent matatu cash flows.
  • Safaricom, Mastercard, Family Bank, KCB Bank, Equity Bank and Google were the profit makers, who stood to make up to 2 billion KES in fees annually from the nearly 205 billion in annual revenues.
  • The Matatu owners association, matatu owners and bus companies would rake in more daily revenues after patching all the leaks via cash.
  • If all went according to plan, police bribery mostly in cash would be choked off.

It all made for a great story, headlines, and a warm tingly sense of excitement at finally formalizing industry.

The Cashless Solution

In April 2013, Equity Bank officially Partnered with Google to Introduce BebaPay, a Cashless card payment solution

BebaPay, an Equity Bank product powered by Google who bring their expertise in payments and Near Field Communication (NFC) technology. The technology allows commuters to simply tap their BebaPay cards on a card reader to pay, making it easier for commuters to transact with operators .

I could see why it was cool. The kind of rainbow solution you would expect from a team of technologists at a hackathon – great on paper.

There was a whole process on how to sign up for the Equity Bank issued card from one of its agents and branch network. I signed up for a free BebaPay card and a separate free Google online account, topped up 200 kes cash and paid 50 for a trip to campus. Matatu touts had been handed nfc mobile handsets that tapped to pay, followed by an sms notification to my phone to confirm payment and balance.

4 other projects by Big Banks and Telcos, jostled for space in the cashless payments race ahead of the July deadline, including the matatus owners association with their own customized prepaid card. They even hauled in the President to officially endorse it!

  • KCB Pepea card Safaricom Pay with Mpesa
  • Matatu Owners Association 1963 Card
  • Mastercard Fare Card
  • Family Bank Pesa mob

1.5 years later, after coming up against Africa’s informal sector, all these projects failed. I received an email from Google’s Ireland office with the subject “End of Bebapay Service and Discontinuation of Bebapay Website.” You would be hard pressed to find any one of them that actually works in Nairobi today. We have all moved on, like a bleep in memory.

So why did this fail?

It depends on who you ask.

I have seen opinions, lots of them. From Kenyans on twitter KOT, commentators, journalists. All of them share a common pattern – assumptions. Assumptions about the informal economy, matatu industry, the matatu touts and drivers who work in it, the processes and relationships that make the industry tick and all the hidden forces that you really appreciate until you slug it out with them in ‘their’ world.

The most crucial piece – the driver – is overlooked in all the sketching and planning, and the opinions. In the case of Google, no one bothered to look digitizing the industry from the point of view of the matatu drivers and touts who were expected to roll out the service on the ground.

Was there anything in this new system for the touts and drivers who sweat it out on the road day in day out?

On February 23, 2015 , Standard media digital reported

“Matatu operators are opposed to the BebaPay — a cashless payment system for commuters. Matatu operators do not like BebaPay since it denies them that extra cash that they would have otherwise not remitted to the matatu owners. The operators we spoke to say the system is denying them ‘their fair share’ of the day’s proceeds. As a result, the operators sabotage it.

So there wasn’t anything for them to begin with.

What Do Matatu Drivers and Touts Want?

As part of field work in 2016 for Aywa markets, a mobility company, we found out the cries by matatu drivers and touts were simple – they wanted more money in their pockets. All the madness we associated with the industry could be traced back to economic incentives  – how to make as much money as possible per day.

From my field notes,

It is why they rush mad around the city trying to beat rush hour

It is why they carry excess capacity, because every empty seat or space is a lost revenue opportunity or opportunity to maximize revenue. 

It is why during low demand periods of the day (off peak), they opted not to come into the city but instead cut short their routes. They are better off serving a shorter route with higher demand (and revenue) per km.

It is why they make endless stops at any stop to pick up any commuter en route on any destination along the long distance route during off peak hours, much to the chagrin of Nairobi commuters.

Other times, they switch completely to a different route during off peak hours

OR find a gig transporting a group of travellers on a contractual basis – students back to school, women’s group to social events like burials and weddings etc.

Drivers and touts have over time intuitively figured out when demand peaks and when to adjust fares across the day accordingly. Nairobi’s commuters are always complaining about fare hikes during stormy rains 

Mobile phones also came in handy for driver and touts during the day, when they made make calls within their social and trade network to scout demand at their stops.

Matatu touts even sub contracted agents briefly at bus stops for the odd 20 bob to help them on board commuters during off peak hours.

They have to respond to uncertainties, emergencies and unexpected events eg a police road block, traffic jam, accident, or rain.

For matatu drivers, insights on demand or unexpected events informed how they planned and executed each trip. The matatu driver and tout were out to maximize revenue. All their decisions on a day to day basis boiled down to how much they took home to the owners and what was left for them at day’s end.

MTRR Sacco Stop Nairobi
MTRR SACCO at Old Nation

Internally, the matatu ecosystem was not as chaotic as first appears. Organized groups of matatus had a record keeping system at the stops to keep order during peak times. Every matatu pick up or drop off was recorded on a public board so no one skipped turns.

So the best approach to formalizing the sector, would have been to step back and take a holistic view of the industry, one that included the matatus, commuters, and the entire ecosystem.

I sought insights from someone who did exactly this

I think cashless matatu was not a problem solving oriented solution, rather it was a generic “cashless is good” motto. financial inclusion. cashless. banking the unbanked – all these are just void words for the basic Africans. Just go out and solve their problem. They will not care about what tech is behind. Copying the west (cards, kopo kopo, etc…) does not help as well.Often, informal sectors are very good at spotting unsolved issues, even going illegal. So here what we did was look at the transport as an industry and look at the variables

In Conclusion

I am still puzzled by innovators, policy makers, eager tech entrepreneurs, social impact entrepreneurs, academics, foreign researchers, NGOs, development agencies, and journalists who think they can just walk into the informal sector with an already thriving ecosystem of actors and just insist that everyone adopt their solution.

This pattern of thinking is consistent across other failed experiments in Kenya.

  • Low Insurance penetration
  • Low use in mobile bank accounts
  • Slow merchant till adoption by informal sector offline merchant
  • Persistence of informal savings groups and chamas

These failures in Kenya are important because they hold great lessons for future entrepreneurs in Kenya, East Africa or other emerging African countries and now, maybe even, for the Chinese who are courting the next frontier of Africa’s emerging economy.


Recommended Additional reading

Niti Bhan Curious case of Google’s BebaPay: A mobile payment app that users refuse to adopt

Toffene Karma How Search Engines technology can solve Africa’s mass-transit mess

Ian Grigg Hitler vs. Modern Western State of the Art Transit Payment System

Ken Griffith Why Cashless Transit Payments Don’t Work in Nairobi


Author: Michael Kimani

Consultant, Entrepreneur, Researcher, Writer, Digital Assets Investor and Trader,

7 thoughts on “How Nairobi’s Matatus Defied the Will of Kenya’s Cashless Policy Makers”

  1. Very telling account of events especially, “Often, informal sectors are very good at spotting unsolved issues…”. I have to admit I have also on many accounts fallen prey to this bias that automation = solving problems; that you can messianically fix things by dropping the tech hammer at will. Back to matatu issue, I think the concept was borrowed from developed countries with monthly transport subscriptions, only thing different is the ownership of the industry there is municipalities versus private ownership in Kenya. Another aspect not taken to account may have been matatu stages tend to be ‘owned’ spaces; you have to ‘renew’ your carrying fee to the ‘unknown owners’ for each trip.

    Liked by 1 person

  2. I think the problem is throwing a solution to a phenomenon that shouldn’t have been allowed to be there in the first place. Like the actual problem that we are trying to solve is how to move a huge mass of people from point A to point B efficiently, safely, and affordable. Matatus are not the answer. So anything else we do on top of the matatu madness is most likely going to limp and work ineffectively.


  3. Great article. But what about the ‘unwilling’ commuters? Cash in your pocket is the most flexible payment mechanism when managing daily expenses. A prepaid card locks in your cash, particularly if it’s only usable for one type of purchase. You might need to buy milk and bread on the way and decide to trade it off your matatu fare for food, choosing to walk home instead. And how inconvenient is it to first topup your card at the nearest Equity agent as opposed to jumping on the nearest bus with cash in hand?


    1. hey, thanks for taking the time to read it!
      About your question – that still remains to be solved. I have had conversations with people who have different ways of approaching the problem. It’s definitely possible to turn commuter fares into cashless – some of it from the fringe like SWVL and Long distance ticketing. But the daily commute is another level of complexity. On the bright side, i have noticed every once in a while 1 or 2 commuters in a bus convince the matatu tout to accept Mpesa. But then again, this was in a student town route.


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