Pan Africa Bicycle Information Network (PABIN)

Levies threaten to push bicycle taxis off the roads
Business Daily (Nairobi)
19 August 2007
by George Omondi

In spite of the growing number of jobless youths turning to bicycle taxis (boda boda) to earn a living, a leading bicycle distributor says high taxes are hindering the growth of the alternative means of transport.

Under pressure from its East African Community partners, Kenya introduced a 10 per cent import duty on bicycles in the Budget read in June.

The increase reversed the gains made in encouraging bicycle use by gradually lowering the tariff to zero. "When you add the 10 per cent duty to the 16 per cent value added tax, the bicycle becomes unaffordable for many people in the low income bracket who are the main users," said Mr Sanjay Shah, a director of Turaco Limited.

The company is the sole supplier of Raleigh bicycles in the East African region.

Mr Shah said the high cost of steel which has also been rising gradually has also made bicycles too expensive.

The dealers have, however, asked Finance minister Amos Kimunya to review the taxes.

"These taxes should be abolished to encourage cycling in order to boost the green campaign in the transport sector," he said. Bicycles ease congestion on roads and does not require imported automotive fuels.

Mr Shah said he was selling bicycles at between Sh4,500 to Sh7,000 up from Sh3,000 and Sh5,000 depending on their design and quality.

The proprietor of Nakuru-based Valley Cycle Mart, Ms Jane Njoki, told Business Daily she was now only selling heavy duty and children's bicycles because of heavy taxation .

"I stopped stocking light brands such as Raja, Diamond, Simba and Royal when their prices shot to between Sh4,000 to Sh4,200 up from between Sh2,500 to Sh 3,000 because people stopped asking for them", she said.

Ms Njoki said she now stocks heavy duty machines because of high demand from boda boda operators and children .

Among the heavy brands she has in stock are Neelam, which goes for Sh5,400, Hero and Avon go for Sh5,800, Atlas Sh5,000 while Phoenix sells at Sh6,500.

She said children's bicycle brands which she used to sell at Sh1,800 to Sh3,000 depending on their design and quality are now retailing at between Sh2,500 to Sh4,200

Since its origin in the border town of Busia in Western Kenya, boda boda taxis have become a source of mass employment for youth in rural areas where poor roads have made it uneconomical to run regular public service vehicle (PSV) commuter business.

In Nakuru where the sub-sector is hardly three years old, 6,000 people are employed in the trade, the region's Secretary-General of Boda Boda Operators Association ,Mr Peter Machira said.

The Nakuru Municipal Council, which collects Sh300 a month from each operator as levy, is targetting to raise Sh275 million from the operators in the current financial year, the budget announced last month estimates.

This excludes indirect charges such as a fine of Sh700 for trespass in non-designated areas which boda boda officials says earns the council more revenue than the monthly levy.

Mr Machira said the high cost of bicycles had forced many riders to share bicycles or to hire them at Sh70 a day from non operators.

Turaco Limited, which distributes all types of bicycles, including those for sports say the 10 per cent duty has affected their business in the region.

According to Mr Shah, governments of other countries such as Australia which perform well in the international cycling sporting events removed all taxes to encourage cycling as a sport and a pollution-free means of transport and physical exercise.

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