President Kenyatta was right to reverse 14-seater transport policy

Nearly a fortnight ago, the president made a proclamation that reversed a policy restricting the importation of 14-seater vehicles for public transportation in Kenya.

Ideally, the reversal of any policy should be through a formal mechanism with the reasons clarified, together with a check on whether the process adopted is legally sound, and the decision itself correct and altogether justifiable.

Granted, the reasons offered to the press when the reversal was announced are less cogent than would be expected.

ERODING ASSET VALUE

Yet credit goes to the administration because they reached the correct destination, even if statements offered in public do not represent the most lucid economic reasoning.

The president’s decision is correct because the initial justification used to enact this policy was not only weak, but resulted in an arbitrary disenfranchising of property owners.

READ: Multicoloured and 14-seater PSV ban lifted

Introducing a rule that required the Registrar of Motor Vehicles to cease registration of 14-seater vans for public transport in Kenya confronted the owners of these vehicles with escalated erosion in the value of their assets.

The reasoning behind the restriction was that Kenya’s urban areas, and primarily Nairobi, needed higher-capacity vehicles to ease traffic congestion.

SUB-OPTIMAL POLICY

Expectations that urban congestion would be solved by the magic of high-capacity vehicles were a fantasy and reflect the tendency of regulators in Kenya to base decisions on only partial analysis of policy matters.

As a matter of fact, public service vehicles constitute much less than 40 per cent of vehicles registered in the country.

READ: Why off-the-cuff remarks ought to be well thought-out

READ: MATHIU: ‘Nissans’ are terrible for our economy

READ: THANG’WA: Rescinding matatu graffiti ban will unleash creativity

The choice to restrict only 14-seater public service vehicles within a substantially smaller share of all vehicles is clearly sub-optimal policy-wise. In essence, the problem was incorrectly defined and the policy choice taken subsequently proved to be limited.

If the pace of traffic movement into Nairobi is considered a policy issue worthy of response, then restricting use of personal automobiles must be the principal area of focus.

FARES STILL HIGH

To concentrate on a subset of public service vehicles is to pick a convenient soft target, perhaps because of the poor reputation of the operators of these vehicles.

Together with the argument for adopting high-capacity vehicles was the claim that public fares would fall because high-capacity vehicles spread the costs among a large number of passengers.

The ultimate expectation was that the reduction in fares and public preference for larger vehicles would converge to displace all 14-seater vans from routes in urban areas to marginal routes in Kenya’s rural areas. Neither the reduction in fares nor the displacement of vans towards rural areas is in evidence.

The president’s reversal of the policy preference for higher-capacity vehicles is important because it has restored the economic rights of the owners of these motor vehicles.

ARBITRARY DECISION

The initial decision to restrict the use of 14-seater vans in Kenya based on the weak evidence above adversely affected the economic rights of the owners of these vehicles.

While this issue was not contested in constitutional courts, it is possible that a court would be persuaded that this arbitrary decision reduced the ability of a class of property owners from effective participation in the economy and thereby violated their economic rights.

While the policy announcement made a fortnight ago was not rendered in constitutional language, the economic rights violated will be restored once a gazette notice is made to expunge these oppressive rules.

Kwame Owino is the chief executive officer of the Institute of Economic Affairs (IEA-Kenya), a public policy think tank based in Nairobi. Twitter: @IEAKwame