Sat, 19 Jan 2008

Matatus in Kenya

I've been reading one of Dave Zarembka's blog entries, about the background of the violence in Kenya. There's something I don't understand. Dave says:

There are 80,000 matatus on Kenyan roads, most of which are owned and operated by Kikuyu. I estimate (I sit a lot in the matatus and have ample time to analyze the business) that a matatu has an income of $100,000 per year: on average each Kenyan spends over $200 per year for matutu transportation. The conductor rents the vehicle for the day, including the driver, and pays for gas and other expenses keeping whatever is left over at the end of the day. So, he has to push and push to make sure that he doesn't actually lose money. The relationship between the conductor -- who is always trying to increase the price of the ride, stuff more people into the vehicle, and get the driver to go faster -- leads to amazing antagonism. There is no customer service, but customer dis-service. The riders continually believe that they are being abused and taken advantage of. This happens almost every time one gets into a matatu.

How can this be? Dave must be leaving something out. In a marketplace with many buyers and sellers, competition ought to extinguish such behavior. Yet it doesn't, according to Dave's description. Dave is a Quaker, and so I'm sure that he's relaying the facts as accurately as he can. So there must be something else happening, that he left out of his description.

Whenever you make a choice in a marketplace, you are presumably making the choice that pleases you the most (or minimizes your unease). If an outsider like myself looks at your market, and perceives that all your choices are bad, he (I) must conclude that something is preventing better choices from arising.

I don't know enough about Kenya to say what that thing might be. I can, however, speculate on possible causes.

I have no idea is the problem with poor matatu service is caused by one of these flaws, or some other one I have not named. It is clear, however, that something is wrong with the marketplace for public transport in Kenya.

Posted [22:09] [Filed in: ] [permalink] [Google for the title] matatu,kenya,davezarembka,economics [digg this]