Smart Matatu

Edwin Keverenge is a social entrepreneur based in Nairobi, Kenya. He is the founder and CEO of Smart Matatu.  Smart Matatu is a data driven company streamlining mobility in the Public Transport Sector in Nairobi city, Kenya.

He previously co-founded Greenwize Energy with Evans Wadongo in 2011. Greenwize Energy designs and distributes energy efficient consumer products to rural communities in Kenya. He is passionate about Innovation, Artificial Intelligence and Big Data and how the three can be leveraged to improve livelihoods for the people at the bottom of the pyramid in developing nations.

He served as Secretary, Institute of Electrical and Electronics Engineers IEEE-Kenya Section in 2013 and Treasurer in 2014.He holds a Bachelor of Science degree in Electrical and Electronics Engineering from the University of Nairobi and is a Microsoft Certified Professional. He is also a member of the Institution of Engineers of Kenya.

An estimated 70% of Nairobi’s five million residents(2017-estimate) rely on some 20,000 privately owned mini-buses(Matatus) as their main mode of transportation. Commuters often report being overcharged when it rains or at rush hour. On a normal day, passengers from the outskirts of Nairobi are charged an average of 0.5 USD (50 Kenya shillings) for a one-way ride to or from the city center. But, fares may go up five times during these busy periods. Commuting is a daily hassle.

To eliminate commuter exploitation, Smart Matatu has emerged to help with electronic ticketing, traffic prediction for Matatus (Buses), Passenger seat reservation, predictable fares for passengers and facilitating mobile money fare payment using a smart card.

We intend to streamline commuting for the Passenger, deliver value to the Bus owner and provide Big Data to government for effective data driven policy formulation.

conductor using Smart Matatu mobile payment before COVID-19

during COVID-19

Commuting in Africa’s major cities is a daily hassle for millions of people where public transport systems are underdeveloped and overwhelmed by the fast-growing number of urban dwellers. For Nairobi’s matatus, the privately-owned buses which carry Commuters everyday across the city, the ubiquitous anarchy makes the hassle even more torturous for commuters.

over 70% of Nairobi's 5 million residents rely upon matatus, the privately owned minibuses that have engulfed the city over the past half a century, for public transportation.

This has led to commuter exploitation, arbitrary fares, lack of policy from Government and harassment of women and girls on the Buses. Since fare payment is largely by cash, The matatu sector is the greatest enabler of corruption with matatu crew bribing police officers to break traffic rules. Matatu owners on the other hand suffer from revenue pilferage due to cash based fare collection leading to business losses.

Women and girls constantly endure harrassment from rogue matatu crew who overcharge them and sometimes refuse to refund the change/balance after fare payment.

by going cashless through our mobile money fare payment platform, we help  prevent the spread of COVID-19 through physical exchange of cash.

passengers boarding Bus/Matatu

Matatu Traffic

Smart Matatu is micro payment fee processing platform that utilizes a mobile money wallet. It is currently deployed in the Nairobi public transport sector. It allows commuters to pay for fare in a cashless form using their mobile money wallet and a smart card. It also allows passengers to reserve a seat on a public transport vehicle (Matatu) and the Matatu driver to schedule trips on a mobile app. It relies on the data generated by the users to predict traffic and suggest favorable routes to Matatu drivers.

We leverage mobile money wallets offered by telecommunication companies e.g M-PESA by Safaricom and link every Passenger's mobile money wallet to our Near Field Communication Smart Card called Tap'nMove. Each Matatu is then given our specially programmed POS that is able to process fare payment by accepting a Tap from the Smart Card holder, deducting money from the passenger's mobile money wallet and remitting the same to the Matatu owner's(the merchant) mobile money merchant account. The POS then issues a receipt to the Passenger as proof of payment.

Additionally, SmartMatatu uses maps and navigation to enable Matatu drivers schedule trips and passengers to reserve seats on those trips via  mobile app.

Matatus in Nairobi mostly ferry commuters from informal settlements who commute daily to work. A typical trip to the CBD costs Ksh.50(50cents-USD) on average. Most of these commuters don't have bank accounts due to the attendant costs in maintaining a bank account, but they have a mobile money wallet where they save money. Smart Matatu directly serves this segment of commuters by streamlining commuting. 

By enabling mobile money fare payment, we enable prudent financial management for the commuter. We have also reduced muggings because vulnerable commuters e.g women and girls no longer carry cash thus not targeted by thugs. By interacting and regularly travelling alongside the commuters and interviewing them, we continually redesign our system to make commuting safer and secure.  We provide our customer care number on the Ticket issued to get feedback. 

For the matatu crew, we have created quality jobs since they now earn a steady monthly income as opposed to daily wages. we have reduced corruption by eliminating cash thus most traffic police no longer demand for bribes from matatu conductors. The Big Data generated By Smart Matatu allows Matatu owners make informed business decisions.

Matatus are generally used by the Bottom of the Pyramid commuters

Matatu are mostly used by commuters from the informal settlements of Nairobi who include construction workers, cleaners and private security providers who earn meager daily wages. They cannot afford to maintain a bank account but almost all of them have a mobile money wallet. In helping Matatus go cashless, we reduce exploitation of these commuters and enable saving and prudent management of funds on their mobile money wallet. They can then access mobile money loans based on these savings. Matatu seat reservation reduces time wasted queuing for public transport thus increased productivity and more wages for the commuters.

As a public Transport user in Nairobi, I suffered several inconveniences while using Matatus(Public Buses). After finishing university, I missed a job interview because the Matatu I boarded suddenly changed the designated route because of traffic dropping me off at the wrong stage.

I have watched with dismay how Matatu crew mistreated passengers especially female passengers using public transportation. the Matatu crew would routinely refuse to give change to female passengers after fare payment.they would also arbitrarily increase fare by even 100% depending on weather or traffic. Passengers had no way to lodge complaints and sometimes female commuters would physically engage the Matatu crew before their change/balance is given.

Since there was inaction from government, I came up with the idea of electronic ticketing and cashless payment of fare in order to benefit the passenger and the bus owner. I used my personal savings and approached two of my former schoolmates with the idea and they agreed to invest money into the idea and thus I assembled a team and begun development of Smart Matatu. I approached Matatu owners and they liked the idea. Now we have over 300 Matatus/Buses and over 60,000 commuters using Smart Matatu.

having Lived in Nairobi city for over 15 years, I have witnessed how commuters, especially women and girls, suffer at the hands of rogue Matatu crew. Most of the people who use Matatu for public transport are casual laborers from informal settlements in and around Nairobi. They are exploited and spend over 40% of their daily wages on commuting.

It gives me much satisfaction to make a difference to these neglected section of our population. through mobile money fare payment, we have ensured constant fares despite the traffic or weather situation. we have also provided authorities with a means to enforce fare guidelines on specific routes to avoid overcharging the passengers.

it was a culture shock 15 years ago when I arrived in Nairobi for my university education(the first time in a city) and had deep trouble commuting.

Smart Matatu has reduced corruption on the roads. Traffic police no longer demand for bribes from Matatu crew since fare payment is cashless. they now concentrate on service provision without favor. 

The fact that we continue to reduce exploitation and harassment of women and girls in Matatus gives me satisfaction that we are making the world a better place 

I am an astute electrical engineer with over ten years work experience. I am passionate about the project Smart Matatu and bring on board the vast experience from my previous work engagements. I am a team player and I am also capable of assembling and inspiring a winning team. The fact that i was elected by my professional colleagues to be the secretary of the  Institute of Electrical and Electronics Engineers, Kenya section in the year 2013 is testimony to my leadership abilities. By working with the rest of the executive committee, We managed to grow membership from 200 to 400 and initiated many mentorship activities for young engineers as well as overseeing several professional development activities for members.

The following year I was again elected treasurer where I was able to set the section on a firm financial footing with transparency in financial management of section affairs as well as mobilize funds to run section activities.

At Smart Matatu, I surround myself with talented people who believe in success and have a strong work ethic.  I am thus a strong team players with a particular preference for efficiency and creativity.

I also have startup experience having successfully co-founded Greenwize Energy in 2011. Greenwize Energy specializes in distributing green energy consumer products like solar lanterns, cooking stoves to off grid rural communities in Kenya. It remains a going concern presently.

At Smart Matatu, we issue POS terminals to Matatu crew(conductor). Since the POS machines enable cashless payments and thus deprive the Matatu crew of cash that they would normally pilfer, the crew resorted to sabotaging our POS machines. They would even hide the machines and claim that they are lost. This was a big headache for us considering we were just rolling out our system.

I talked to the telecoms providers and we reached an agreement for tracking our POS devices using their GSM network. I also signed a memorandum with the Kenya Police to locate any lost POS machines and apprehend those found in possession. Since this undertaking, we seldom lose the machines and the Matatu crew are aware of the consequences of sabotage. I also convinced the Matatu owners to impose a hefty penalty for any sabotage which includes monetary fine or dismissal from work.

We also realized that the POS terminal screens were breaking due to mishandling using the wrist lanyard cable attached. We consequently changed the design ditching the wrist lanyard cable and designing a carrying case that hangs around the neck of the conductor. This provided ergonomic handling of the machines.

redesigned carrying case

After being elected as the secretary of the Institute of Electrical and Electronics Engineers, IEEE-Kenya Section, I learnt that the then IEEE President, Peter Staecker would lead a high powered delegation including Director of Social Innovations Programs Tara Wisniewski, the then immediate former IEEE President Gordon Day and other senior IEEE officials for a visit to Kenya to asses the section activities as well as foster partnerships with government and industry players.

I was tasked with the co-ordination of the program for their five day visit as well as organizing engagements with Government officials and other industry stakeholders. I was able arrange for the officials to visit various government ministries to engage with high ranking government officials, organize media events, dinner events as well as engagements with the entire section membership and other private industry stakeholders. The President applauded my effort and that of the entire Kenya section secretariat for coordinating a successful five day program.

As IEEE Kenya section secretary, am seated first from left in a round table addressed by then IEEE president Peter Staecker at Nairobi Intercontinental in 2013

past IEEE president Gordon Day, Kenya section vice chair and I at a reception in Nairobi

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Traditionally, cashless payments involved a credit or debit card that is either linked to a bank account or is topped up via bank transfer. 

However, the population segment that we serve are the urban poor who live in the informal settlements of Nairobi and earn daily wages. Most of them live from hand to mouth and cannot afford to maintain a bank account because of the account maintenance costs, minimum balance requirements etc. As a result, Several telecoms companies operate mobile money wallet services in Kenya and Africa eg. M-PESA. Through clever cloud computing, We were innovative enough to leverage these mobile money wallets and come up with a smart card (NFC) that links directly to a commuters mobile money wallet. We also introduced a POS terminal that can process mobile money payments by accepting a tap from our smart card. Our smart card works with all major mobile money wallet providers.

Users manage their smart card via USSD. 

Through Smart Matatu, passengers can access a credit facility called "FULIZA" from M-PESA in order to pay fare in case there is zero balance on their mobile money wallet. This enables travelling on credit.

We also use maps and navigation to ensure Matatus/Buses follow the designated routes and enable commuters reserve seats on the bus via a mobile app thus reduced traffic.

We also provide the Matatu owner with a web portal to access sales data in real time and generate reports for business intelligence and data driven decision making.

Systemic, disruptive and catalytic Impact:

• Commuting in Nairobi using Matatus is now secure thanks to Smart Matatu. Commuters are no longer required to carry cash in order to commute. this is because they can pay fare via their mobile money wallets through our special POS terminal given to conductors. As a result, commuters living in informal settlements are no longer targeted for muggings since they don't carry cash. Currently, over 60,000 commuters have our mobile money wallet linked NFC smart card and 55,000 use Smart Matatu on a daily basis.
• Smart matatu has greatly reduced corruption on the roads as noted by one client,Ambrose, Operations manager of Metro Trans East Africa in an interview. Since the Matatu crew no longer handle any cash, they cannot bribe traffic police officers thus reduced corruption and adherence to the law.
• The Big Data generated from our system has helped Bus/Matatu Owners make informed business decisions for maximum profits.
• Smart Matatu has transformed public transport eliminated the rampant arbitrary fare increases that led to overcharging of commuters as noted by a local Television commentator in Kenya.

Better quality jobs & higher incomes:

• we have created better quality jobs and higher incomes for the Matatu crew including conductors and drivers. The matatu sector is among the largest youth employers. Each Matatu maintains at least two crew: the driver and conductor.  With the introduction of Smart Matatu, at the Bus companies that are currently using Smart Matatu, the Matatu crew are now paid a monthly salary through the bank. This has improved the quality of the job and the Matatu crew can now get loans from banks based on their payslip. Over 1,200 Bus/Matatu crew benefit from quality jobs.
• Increased profits for Matatu owners means they will buy more Matatus and employ even more youth in future.
• Efficient commuting with bus scheduling has led to less traffic thus commuters spend less time on the roads and in turn are more productive at their work stations.

Happy Matatu/Bus conductors for some of our Matatu clients displaying the Smart Matatu Point of Sale Terminals

According to the Kenya national census of 2019, nearly 6 million people live in nairobi city. 70% of this population uses Matatu or Public transport mini-buses to commute to work. This is effectively our addressable market in Nairobi alone.

Currently, slightly over 300 Matatus use Smart Matatu in nairobi. Each Matatu serves an average of 300 commuters per day. this means that Smart Matatu is currently impacting roughly 90,000 commuters directly on a daily basis. this is in Nairobi city alone. 

In one year's time, we expect to have signed up close to 1500 matatus bringing the total number of Passengers impacted by Smart Matatu to 450,000 Commuters.

We expect to even scale up further to other cities in Kenya and Africa and we expect to launch in Kampala, Kigali and Dar Es Salaam within the next five years. This means that conservative estimates of the number of commuters that will be benefiting from our solution is expected to stand at 8 million commuters.

We create value for Bus owners and streamline commuting for Passengers making commuting safer and predictable. This is a major milestone in achieving smart cities in developing economies.

In the next one years, we expect to recruit competitive staff to help increase the Customer base and the number of commuters using Smart Matatu. The focus is on business expansion. We expect to continuously improve our product and achieve user and customer satisfaction. We shall also leverage the Big Data generated to improve service delivery and lobby government for policy formulation.

Within the next five years, we should have a subscriber base of at least 9000 Buses/Matatus in Nairobi city alone. This figure is conservative and we may well surpass the 9000 Matatatu figure. Also in the same time, We shall have over 3,000,000 commuters issued with our mobile money smart card and using Smart Matatu in the various Matatus to pay fare in Nairobi alone. 

We also expect to expand and offer our mobile money fee processing services to other industries such as the restaurants, small scale groceries and even Boda Boda riders. Boda Boda is a means of transport that uses a motorbike. it is popular in rural cities in Kenya and Africa.

In five years time, we expect to have a footprint in Kampala Uganda, Kigali Rwanda and Accra Ghana. these cities have adopted mobile money and the demographics closely resembles that of Nairobi city. Also their infrastructure and public transport systems are structured in the same way as Nairobi and thus we expect our entry will streamline commuting just like we have done in Nairobi city.

Currently, the greatest bottleneck to expansion is financial constraints. We need to buy the POS terminals and then program them with our own custom developed firmware that is capable of communicating with the Mobile money APIs from M-PESA. The hardware is expensive since we procure it from abroad, China to be specific. All our POS terminals must have an NFC reader which makes them quite expensive. Currently we are unable to meet the demand for the Terminals since many Matatu want them. We also import the Smart Cards which we program to be compatible with our POS terminals.

Another limitation in the short term is human resource. we need more android developers to improve our software and introduce more features as requested by our customers and the commuters. We also need advertising professionals to be able to formulate an aggressive advertisement campaign to reach more clients and users.

In the Long term, for expansion to other countries like Kampala Uganda, we shall need legal services to be able to operate cross border. This we project to be a bottleneck.

Culturally, we do not expect barriers since mobile money penetration in Africa is on the rise and our system leverages heavily on mobile money.

To overcome financial constraints, which is arguably our main bottleneck and barrier to expansion, we are taking a number of remedial measures:

1. We currently re-invest all our profits into the business. We have so far re-invested over 100,000 USD back into the business for expansion, product developement and research to improve our product offering
2. we intend to seek financing/ credit facility from our bankers in order to finance expansion
3. We intend also to sell equity to investors in order to generate capital to expand and improve our product Smart Matatu
4. We shall seek advisory services from established firms on taxation, accounting and legal services for expansion purposes
5. We shall expose our workforce to mentorship programs and continuous training in order to gain an edge and necessary ideas for sustainable expansion. this will help us maintain a lean but efficient workforce to power our expansion and scale up to other African Cities.

Currently, we partner with Safaricom Limited. Safaricom is a local leading telecommunications provider in Kenya with a subscriber base of over 21 million users. They also provide a mobile money wallet to their subscribers called M-PESA.

Through our working partnership, they opened up the M-PESA mobile money transfer portal for us to integrate into the same and process mobile money payments form its subscribers who use MPESA. They thus exposed the MPESA API to us and we wrote our own integration software that allows our POS Terminals to communicate with this MPESA API and process MPESA payments for commuters on their behalf.

It is a mutual relationship because we increase the usage of MPESA as well as make commuting easier and streamlined for the Nairobi commuter.

We are also in talks with other mobile money wallet providers such as Airtel Kenya with their Airtel Money Mobile money transfer service with a view of integrating it to our POS terminal to accept payments from commuters

Our business model is to improve revenue collection and maximize profits for the Bus/matatu owner while  providing value and convenience to the commuter in Nairobi city. 

Smart Matatu does streamline business for the Bus/matatu owner by sealing all revenue leakage loopholes thus maximizing profits. For this benefits, the Matatu owner pays us a daily subscription fee. he also benefits from Big data generated by our system to make business decisions.

The impact on the commuters is direct as they enjoy safer travel. they are able to pay fare using mobile money. the fares are now predictable and we provide a way for authorities to ensure compliance to fare regulations. convenience in reserving a seat on a Bus from a mobile application thus avoiding ques for public transport. 

There is also a direct impact on the Matatu crew. We enable quality jobs since they are now engaged on improved terms due to increased profits from the Matatu. They no longer earn daily wages but are paid a monthly salary enabling them to plan their finances and even access bank loans based on their payslip.

there is social benefits to the community in that there is reduced corruption on the roads. when traffic police are unable to receive bribes from Matatu crew, they enforce traffic rules without favor and all road users benefit including pedestrians. there is less traffic jams and less road accidents.

Our business model ensures both revenue impact and social impact for our customers and users respectively

Smart matatu is offered as Software as a service and our revenue model is the subscription model. Each Bus/Matatu that signs up for Smart matatu is considered a paying customer. We issue our POS terminal to the Matatu and the Matatu pays a DAILY subscription fee of Ksh. 250 which translates to about 2.5USD per day for every Matatu.

Our account lifetime is basically the number of years a Bus/matatu is serviceable and remains operational. In Nairobi, a Matatu will be decommissioned after six years of operation. This means that on average, the account lifetime for Smart Matatu is 6 years.
In addition, we are working on ways to increase our revenue streams by offering advertising on the ticket receipts that our POS terminal issues to every passenger.
Our model, SaaS, increases the Monthly Recurring Revenue (MRR) and Customer Lifetime Value (CLV) while lowering the Customer Acquisition Cost (CAC).

We re-invest all our profits into the company for expansion purposes.

In addition, we mobilize resources from the co-founders as capital injection and also plan to offer equity to external investors in order to generate more capital for expansion

We innitially mobilized 60,000 USD from our savings as founders and also received an equity funding of 50,000 USD in 2017 from Bit Infiniti LLC. this helped us develop, test and  roll out the product to our first client. 

The software industry has gone through many changes in the last few years. Software as a Service (SaaS) is booming in this internet age.

Smart matatu is offered as Software as a service and our revenue model is the subscription model. Each Bus/Matatu that signs up for Smart matatu is considered a paying customer. We issue our POS terminal to the Matatu and the Matatu pays a DAILY subscription fee of Ksh. 250 which translates to about 2.5USD.
Out of this amount, our daily spend is roughly 40% leaving us with a daily profit of Ksh.150 (1.5USD) for every account/Matatu.
Our account lifetime is basically the number of years a Bus/matatu is serviceable and remains operational. In Nairobi, a Matatu will be decommissioned after six years of operation. This means that on average, the account lifetime for Smart Matatu is 6 years.

In the past 12 months, our revenue was 200,120 USD from the Bus subscriptions we have. We are steadily growing our customer numbers.
In addition, we are working on ways to increase our revenue streams by offering advertising on the ticket receipts that our POS terminal issues to every passenger.
Our model, SaaS, increases the Monthly Recurring Revenue (MRR) and Customer Lifetime Value (CLV) while lowering the Customer Acquisition Cost (CAC).

We seek 700,000 USD in order to scale up our product Smart Matatu. This will enable us service our current orders for Mobile Money POS devices, mount an aggressive marketing campaign, Hire more developers, print More Smart Cards for mobile money payments and most importantly, launch our operations in Kampala city, Uganda.

We are open to any type of funding but would prefer Equity funding. A healthy mix of Equity funding, debt and grant funding will suffice for us.  We had hoped to raise the funds by October 2020 but the COVID-19 pandemic has forced us to review our timelines and now we mostly hope to meet the funding goals by April 2021.

Our estimated Expenses

1. Rent                                                           9,000 USD
2. Utility bills                                                  1,000  USD
3. Phone bills/communication costs           1,000  USD
4. Accounting/bookkeeping                         5,000  USD
5. Legal/insurance/licensing fees               10,000 USD
6. Advertising & marketing                           50,000 USD
7. Salaries                                                     40,000 USD
8. POS machines purchase                        100,000 USD
9. Smart Cards                                             50,000 USD
10. Thermal paper rolls                              30,000 USD

In my own humble opinion, the elevate prize presents a golden opportunity for us to surmount the barriers hindering our success in the following manner;

1. By leveraging the professional management and business development services, we can be able to streamline our operations and strategically restructure our business in order to expand the reach of our product; Smart Matatu.
2. Elevate Prize can help us to constitute a board of directors who are actually industry leaders in the mobility and Fintech sectors. The board shall offer invaluable business insights and oversight to help us scale up in the shortest amount of time.
3. We could tap into the mentorship, coaching and educational training service offered to train our staff in business management practices and product evolution strategies in order to stay on top and conquer the African Market
4. The connection with influencers and business coaching and mentor ship programmes will help us prepare for Series A funding in order to obtain the much needed capital for scaling our business
5. The media marketing campaign shall undoubtedly increase our visibility and introduce us to potential customers in developing Cities.
6. we stand to learn and gain invaluable knowledge from the dynamic network of Elevate Prize Global Heroes and partners.
7. Of course an opportunity to get funding by virtue of the cash award  is an exciting prospect that will help us to expand operations, service the orders we currently have immediately and set us on a path for greater success

We need mentorship and business coaching to assemble a board that is diverse and ready to guide us in scaling up. This will ultimately lead to a series A funding drive that will help us generate enough capital to expand. The business mentorship shall help us restructure business operations and set us on a success path.

Marketing and exposure shall create visibility for our company and help to attract new customers while business coaching and training shall help us develop top notch talent at the company in order to improve our product offering and even diversify our revenue models and revenue streams.

• Since we operate in the mobility space, we would appreciate to learn from Lyft how to scale our solution to have many Buses/Matatu subscribe to our platform. Also how to better leverage maps and navigation for the best customer experience for the commuters.
• We would also appreciate working with Uber to learn how to help commuters reserve a seat on a Bus/Matatu using a mobile application. 

the two partnerships we highlight above are educational and will help us build capacity to improve our product and scale up.