All You Need to Venture into the Matatu Business in Kenya

The matatu industry is not only a vibrant culture in Kenya but also a powerful economic engine where a single vehicle can generate daily returns of thousands of shillings. From 14-seaters earning investors up to Ksh3,500 to larger 33-seaters netting up to Ksh15,000, these vehicles are a profitable investment for those in the know.

But what would it take for an investor to venture into the business? Money254 spoke to Super Metro chairman Nelson Nduki and Brendan Marshall, a member of the Matatu Owners Association (MOA), to highlight the requirements needed.

Notably, capital requirements are high, compliance is non-negotiable, and returns vary widely depending on route, Sacco affiliation, and cost control.

If you've been thinking of venturing into this industry, here's everything you need to know about the matatu business. 

Cost of Purchasing a Matatu

14-Seater Matatus

The Toyota Hiace and Nissan Caravan have been the backbone of the 14-seater fleet. Importing and clearing a used unit from Japan can cost Ksh2.5 million to Ksh4 million, depending on the age of the vehicle. Additionally, one may need to invest in upgrades—bodywork, soundproofing, branding, speed governors, and safety features—which can add another Ksh500,000 to Ksh1 million..

“Registration of new 14-seaters Matatus was halted by the government (in Nairobi), so one has to identify a good unit then modify it,” explains Branden Marshall of the Matatu Owners Association. “A good one will cost about Ksh400,000 to Ksh600,000, then the extras (modifications)  might push that up by another Ksh200,000 to Ksh500,000.”

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Minibuses and Buses

For larger vehicles, a used 25-seater Isuzu NQR chassis costs approximately Ksh4.3 million, while a 33-seater with a standard body costs Ksh6.7 million.

“If you modify it up, you will spend between Ksh2 million and Ksh5 million depending on what you want,” he adds, referring to customizations like premium seats, Wi-Fi, and LED screens. 

Locally assembled new buses are slightly cheaper than imported ones and are preferred, given the financing options available. 

For instance, a non-customized Isuzu NQR81M 33-seater is listed for Ksh7,071,000 on Isuzu's website. However, through asset financing, qualified investors can get it with 5% (Ksh353,550) down payment and a Ksh162,855 monthly repayment for 72 months.

Emerging Options

Some investors are eyeing green transport solutions. Companies like BasiGo and Move Mombasa are piloting electric buses on pay-as-you-drive models, targeting city routes with predictable mileage. 

While the new technologies are yet to be adopted in the masses, forward-looking Saccos are experimenting with these units as a long-term strategy of diversifying, planning for the future, and adapting to the market. 

“We are the ones buying the electric buses,” Nelson Nduki, CEO of Super Metro, noted while speaking on whether the electric buses will affect existing saccos.

Licences and Permits You Must Secure

Before operating, every matatu must obtain a Road Service Licence (RSL) from the NTSA, renewable annually. The cost of RSL typically depends on the number of seats of the matatu and can range from Ksh3,000 to Ksh7,000. 

Vehicles must also undergo PSV inspection once a year to confirm roadworthiness, focusing on brakes, tyres, lights, seatbelts, and safety fittings. NTSA charges Ksh1,050 for an inspection, which one can book on eCitizen. 

Crew Compliance

Drivers and conductors are required to hold PSV badges, which come with medical fitness tests, certificates of good conduct, and refresher training. Renewal is typically annual. 

County-Level Obligations

Counties impose Single Business Permits and seasonal parking fees. In Nairobi, charges vary by capacity. Transport company business permits start from Ksh15,000, while parking fees for 14-seater matatus, the monthly fee can be around Ksh3,650 or Ksh5,000, depending on the payment period. For minibuses (14-42 seats), the fee is about Ksh5,280 to Ksh8,000 monthly. 

Stage management fees may also apply depending on where the Sacco operates. Nairobi County bylaws require all matatus stages to be under the direction of an enforcement official.

Insurance

Insurance is mandatory, and premiums vary by vehicle size and level of cover. While some owners choose only the mandatory third-party, many opt for comprehensive PSV insurance given the accident risks. Policies must be renewed annually, and some Saccos negotiate group rates.

Third-party insurance can cost Ksh20,000 to Ksh200,000, depending on factors such as the number of seats, the route, and the insurance provider. Comprehensive insurance typically costs 5% to 15% of the vehicle’s value annually. 

Joining a Matatu Sacco

Since 2010, matatus have been required by law to operate under registered Saccos or companies. This framework was designed to bring order, accountability, and collective bargaining power.

According to Nelson Nduki of Super Metro, membership resembles any other cooperative. “Registration fee is Ksh5,000 and share capital is Ksh10,000,” he explains. “After every financial year, members receive dividends according to their shares.”

Joining typically requires buying a specific number of Sacco Shares. For instance, a Sacco may charge Ksh10,000 per share with a minimum of 10 shares. 

In addition to entry fees, members pay monthly or weekly deductions to cover administration, Sacco branding, and other services.

Operational Obligations

Saccos manage route allocation and branding. In some counties, stages are well organized; in others, members compete for passengers. 

“Yes, we have assigned stages by the county government, although it depends on the counties,” Nelson says. “For example, Kikuyu town is chaotic as we scramble for passengers.”

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Crew Salaries and Compensation Models

The traditional model is the “target system.” Owners or Saccos set a daily revenue target, fuel the vehicle, and the crew keeps what remains after meeting the target. For example, a 14-seater may have a daily target of Ksh4,000, with any extra collected shared between the driver and conductor.

“Crews who don’t meet daily targets without valid reasons are reprimanded by management,” says Branden. 

Some Saccos, such as Super Metro and Forward, offer more structured packages that include monthly salaries, insurance, or other benefits for staff.

Fuel and Consumption

Fuel is the largest recurring cost. A 14-seater consumes less per trip compared to a 33-seater, but price volatility can quickly erode margins.

Vehicle Maintenance and Repairs

Routine service—oil changes, tyres, brake pads—is a constant expense. Owners often set aside a contingency for breakdowns, as a single day off the road means lost revenue.

Advance Tax

Matatu owners pay advance tax to KRA based on seating capacity, typically Ksh60 per seat annually. For a 14-seater, this amounts to Ksh10,080 yearly. “We do pay taxes. KRA makes owners pay according to seating capacity, with different rates annually,” says Branden Marshall, Matatu Owners Association.

How Much Can You Earn?

Occupancy levels, routes, and trip frequency are the biggest revenue determinants. Short urban routes may yield smaller per-trip fares but allow multiple daily rotations. Long-distance routes generate higher fares but fewer trips.

According to Branden, “For a 14-seater, it depends on the route, but mostly one can get Ksh2,000 to Ksh3,500 daily. Good routes include Rongai, Banana, and Langata.”

For 25-seaters, daily earnings range between Ksh6,000 and Ksh8,000, while 33-seaters average between Ksh10,000 and Ksh15,000 depending on the route. Strong routes for larger vehicles include Rongai, Embakasi, Umoja, and Ngong.

Risks and Challenges to Expect

Enforcement and Penalties: Matatus are frequent targets of police and NTSA crackdowns. Vehicles without proper inspection or licences may be impounded, leading to costly downtime.

‍Route Politics and Cartels: Competition for lucrative stages remains fierce. In some towns, cartels control stages, dictating when vehicles load or even charging illegal fees.

‍Fuel Price Fluctuations: Owners are highly exposed to pump price changes, with diesel hikes cutting directly into margins.

‍Theft and Revenue Leakage: This happens when dishonest crews pocket fares, underreport collections, or give excuses for not meeting daily targets.

Wrapping Up

The matatu business remains one of Kenya’s most dynamic investment opportunities. Passenger demand is steady, and the industry continues to employ thousands. 

But stakeholders caution against assuming easy profits. High capital costs, volatile expenses, and regulatory hurdles can erode margins. For newcomers, taking time to study the industry and consulting with industry experts can help navigate these hurdles.