Why the boda bodas will remain popular despite new excise duty riding into effect

Boda boda operators in Kapsabet, Nandi County demonstrate against the police for alleged collusion in the protection of criminals. They issued an ultimatum that the criminals be arrested. [PHOTO: KEVIN TUNOI/STANDARD]

Nearly every week, a county government issues a directive curtailing the operation of boda boda operators. For an industry serving millions of Kenyans on a daily basis and brings billions of shillings to the economy, not so much love has gone its way, with riders being blamed for all manner of truancy.

And things are not looking up for this transport sub-sector. For those planning to buy new motorbikes next week after some window shopping last week, be prepared to spend more money.

From Tuesday, the average price of a motorbike will increase by Sh5,000 and by a similar amount a month later to be at par with a government directive that imposes a Sh10,000 excise duty. A move, it appears, not only meant to get much needed revenue for a cash-strapped government, but also reduce the rate at which motorbikes are being imported.

Of note though, is the fact that in his 2009 budget speech, then Finance Minister Amos Kimunya zero-rated all motorcycles below 250cc, to encourage more youth to take up employment in the sector. So what has changed in six years?

This will not be the first time such increases have been meted on an informal sector that absorbs hundreds of thousands of previously unemployed youth and which supports many more households.

What does this mean for the more than 400,000 boda boda operators countrywide? And even of equal importance, does this affect the more than 14 million countrywide who chose boda bodas mode of transport? And on a macro scale, will the central government’s bottom-line be affected by this move?

“It is funny. There was a time every bad thing was blamed on touts and matatus. Nowadays, everything bad in society is blamed on boda boda operators. There is too much noise that even, sometimes, the Government forgets that we too pay taxes and contribute to the overall growth of the economy,” says Ken Onyango, the chairman of the boda boda association.

He claims there are concerted efforts to kill an industry whose contribution to the economy and job creation has always been underplayed. “We are always the villains. Everyone else plays the hero,” he says.

On average, a single motorcycle brings the owner Sh1,000 every day. But, on a larger scale though, earnings from a single operator pale once juxtaposed with the grander national picture.

Data from the Motorcycles Assemblers Association of Kenya (MAAK) as well as NTSA and the Kenya Revenue Authority paint a similar image. From January to November this year, some 123,000 motorcycles were bought and registered.

For every motorcycle sold and registered, the central government gets an average Sh20,000 through various duties and taxes like VAT. Translating to more than Sh2.4 billion annually or Sh223million every month in direct revenues to the central government, or Sh7.4 million every day. This is excluding the licensing fees paid to county governments by individual operators.

But why is it that in spite of this, bans and stringent measures continued to be plied on the industry?

For instance, in November the county government of Nairobi banned operators from accessing or operating within the central business district.

“Pursuant to the provisions of the Traffic Act CAP 403 of 2014 of the Laws of the Republic of Kenya, the Nairobi City County Government wishes to inform all motorcycle (boda boda) operators ferrying passengers to and from the Central Business District (CBD) that such activities have been banned with immediate effect,” Nairobi governor Evans Kidero said in a statement circulated to newsrooms, threatening hefty fines and even jail terms for those contravening the directions from his office.

But is this a solution for an industry that has well over 400,000 operators, in a country with an estimated unemployment rate of 40 per cent.

“We know the industry has had some problems in the past and continues to experience some issues here and there. But quite frankly, some if the issues being blamed on boda bodas are system problems out of the control of boda bodas,” MAAK chairperson Isaac Kalua says.

For Ken and his members, they are simply providing a service needed by the public.

“Those trying o fight us should know that we are here because there is a demand for our services. Nairobi has become one block of traffic.

Moving from the airport to Westlands in the middle of the day can take you four hours. We can do that half an hour,” he says. Stephen Mutoro, the CEO of the consumer federation of Kenya says demonising the entire industry is not right.

“What options do the people have? Even in rural areas, boda bodas thrive because the roads are impassable by car. How then do people get around if we will decide to ban or impose hefty taxes on the motorcycles,” he says.

Previously, levies have been imposed as a short term solution to solve existing problems. For instance, numerous taxes have over the years been imposed on the importation of second hand clothes in a bid to revive the country’s cotton industry but all to naught.

Ginneries remain shut and farmers have almost entirely moved on to other crops.

“The current increase can be counterproductive for the Government. Then new impositions might be so high that the industry is slowed down considerably.

Leading to much fewer imports thus fewer collections for government,” says Gladys Moraa, a sociology lecturer at Kenyatta University specialty in transport sociology.

“Will this help reduce accidents or improve security? The jury is still out there. But, the fact is that, if these punitive measures continue to be levied, then the employment gains and wealth creation born out of this industry might also be slowed down.”

But solutions can be found. At least according to the manufacturers.

“One of the biggest issues we have had has been proper training and provision of suitable riding gear for the operators which our members are addressing.

For instance, we have companies that need buyers to produce a valid licence, and insist that the bike is bought with helmets and traffic rules hand book. Safety and knowledge are now priorities,” Kalua says.

He, just like many others in the industry, says the operators are ready to play by the rules.

“For example, how many parking spots are set aside for motor cycles, yet every day, new termini is put up by matatu operators on almost all major roads cutting through cities and towns country wide. Yet we provide essentially the same service albeit more efficiently,” Ken, the chair of the boda boda operators says. “Plus if we abandon the bikes, what alternatives will the thousands of young men spending hours on bike back have.”

Majority of boda bodas are owned or operated by Kenyans under the age of 35. There are 24 registered and operational motorcycling assembly plants in the country that employ about 7,000.

“We need to rethink our approach to this industry. Knee jerk reactions will not provide a solution to individuals trying to solve some of the most nagging problems currently facing us; a transport crisis in both urban and rural areas and the national unemployment problem,” Mr Kalua says.

Data from the Kenya National Bureau of Statistics shows 44,154 motorcycles were registered in the first three months of 2015. Last year, over a similar period, only 25,277 motorcycles were in government books.

Although the cost of the motorcycles will go up slightly, indications are that in the absence of proper mass transportation systems, poor roads and inexplicable traffic jams, Kenyans will continue riding the boda bodas.

“So, how does everyone involved help structure an industry that can contribute so much?” asks Ms Moraa.

“It’s not re- inventing the wheel. The science already exists.”

For now though, Ken and his colleagues continue to depend not on an exact science, but an approximate art. The art of evading county and traffic officers to get their clients from point A to point B.

This he says, they will continue to do even after the Sh10,000 excise duty comes to effect next week.

“As long as we abide by all rules and regulations that the authorities set,” he says.