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Why Kenya’s transport e-payment system has failed

Kenya , 04 Jul 2014

Why Kenya’s transport e-payment system has failed

Cash is king in Kenya’s transport sector as commuters and drivers shun a cashless payment system intended to go live at the start of July.

Industry stakeholders had six months to comply with a government directive to move over to cashless payments.

But the 1 July deadline has come and gone, despite an array of cashless transport payment systems hitting the market such as those from VISA and Safaricom.

Moreover, Kenya’s Matatu Owners Association (MOA) has asked government for more time on the matter, amid claims transport body was left out of negotiations.

“We are now at crossroads regarding cashless fare collection, whose technology in terms of effectiveness and efficiency is yet to be thoroughly tested across the board and authorised by the central bank of Kenya, who are the regulators of any monetary transactions in Kenya,” MOA said in a statement.

Observers and other stakeholders; though, have been sharp in their criticism of cashless payments, as they say the process was hurried.

Speaking to ITWeb Africa, Kyai Mullei, co-founder and chief executive officer of mobile fundraising tool M-Changa, adds that stakeholders have not been involved in the selection of the payment choices.

Mullei also said that the current nature of the matatu industry does not favour cashless payments.

“Most matatu owners still subscribe the ‘lease’ approach, where they get daily amounts for use of their vehicle from the driver and conductor.

“This means there was absolutely no incentive on the part of many to use the e-payment system,” Mullei told ITWebAfrica.

He also added that the industry is afraid of formalising and entering the country’s tax brackets.

He explained that fears exist that e-payments could allow government to tax individuals and companies running the fleets.

Mullei; though, does have advice for the industry:

“Organize the industry, remove criminal elements, demystify route allocation, create incentives to organise, for example, by giving tax refunds to entities that demonstrate that they pay their drivers and conductors monthly, or those entities that collect more than say KShs 10M monthly through e-payments.”

In the meantime, the National Transport and Safety Authority has said the migration will no longer be an event but rather a process, to ensure everyone complies.

NTSA said there are roughly one million cashless fare payment cards in circulation, an indication that the public had not taken to cashless payments in large numbers.

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