Barbara's literature - THE BICYCLE SUPPLY SITUATION IN KENYA

	Barbara Gruehl Kipke THE BICYCLE SUPPLY SITUATION IN KENYA 25.11.1995-7.12.1995
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	PRODUCT BICYCLE MANUFACTURE/IMPORT Bicycle importation into Kenya was summarized by the national team in July 1995. There has been a real boom in bicycle Imports since liberalization of the economy. There used to be a small production facility in Mombasa, but Glad Home Bicycle Co. Ltd. has since closed down (bfai, Der Markt für Fahrräder-Untergeordnete Rolle im Personen- & Warentransport, 11/86 p.1). Glad Home Bicycle Co. Ltd. already went into receivership in 1985. Plans to produce All-Terrain-Bikes in Kenya never came to realization. Liberalization of the Kenyan economy changed the general economic climate. BICYCLE TYPES Similar to the Situation in Tanzania, Kenyan outlets hardly offer any ladies' bicycles. Only one dealer stocks them in Nairobi and KNTC has some old stock of ladies' Raleigh bicycles in Eldoret. It seems that bicycle dealers tried ladies' bicycles in the 1980's but found that they were slow movers and discontinued carrying them. There are a few stores that have Mountain bikes as part of their product line in Nairobi. In Eldoret, various brand names of Black Mamba bicycles were available, but hardly a Mountain bike. KNTC had a few racing bikes in Eldoret. In terms of the Black Mamba bicycle, Phoenix also has a good name in Kenya, similar to Tanzania. Bicycle wholesalers joined forces to advertise to consumers that there is a difference between genuine Phoenix bicycles versus phony types. Consumers seem to prefer the double bar frame. KNTC has bicycles of different colours in stock. A lady stated that she preferred a blue or red bicycle to the Black Mamba ladies bicycle shown to her. BICYCLE ACCESSORIES The most interesting accessory discovered were bicycle pumps transformed into powerful lorry-like horns. This technology was used both in Nairobi and in Eldoret. People often adorn there bicycles with sayings. In Kenya the tenor is usually: I wish I had a car, but at least my bicycle is the closest I will get to "my new car" (with a new car registration number painted an it). Bicycle tires have a vital role for the bicycle transporters who prefer the so-called "Ugandan" tires that are actually Chinese "Diamond Superior" tires that come into Kenya illegally via Uganda to avoid the high duty. BICYCLE INFRASTRUCTURE BICYCLE PARKING Bata Shoes had an official bicycle parking rack in Eldoret. Coca Cola had a proper shed for their employee's bicycles with racks to place the bicycles in. The Town Hall in Eldoret lacked any form of organized bicycle parking, although it would have been useful to those who left their bicycles at home for fear of the bicycle getting stolen at Town Hall. A lady cyclist in Eldoret paid 10-20 KS to park her bicycle at the market - that is much more than the Municipal Engineer was considering charging for car parking in the City Center! PRICE PRICING The price busters in the market are the supermarket chains that operate Kenya-wide. For example, at the end of November, an Indian Black Mamba bicycle was selling for 2899 KS. The price was reduced to 2599 KS by December 4th, 1995. Part of the decrease is attributable to the lowering of Import duty taxes two weeks earlier (refer to the Section on bicycle taxes). Indications are that Uchumi Supermart's turnover is high - otherwise they could not pass on the benefit to the consumer so quickly. The reason for Uchumi to lower prices to that extent is because they feel that bicycle demand is elastic, meaning that lower prices attract proportionately more customers - thereby resulting in total higher profits. The price list of KNTC in Eldoret can be Seen in Annex ?? The "Welfare bicycle purchase scheme price list" refers to bicycles that are bought on credit with repayment within a year. KNTC previously offered credit schemes but had discontinued them for a while. BICYCLE CREDIT SCHEMES The bicycle credit scheme of Twiga Chemicals in the Industrial Area of Nairobi (Focus Group Discussions with Joyce Malombe) was not successful because although everyone took advantage of the scheme, hardly anyone used the bicycle to work because of the dangers involved. The bicycles were resold or taken to villages rather than used within Nairobi as a means to get to work. In Kenya, there are various hire-purchase schemes offered by outlets that specialize in the hire-purchase business of various items. They charge horrendous prices. Perhaps Kenya Women's Finance Trust could be a suitable bicycle credit scheme partner to target business women in particular. Their payback track record of 98% is quite impressive for small-scale loans (similar to the small size of a bicycle loan) that are repaid on a weekly basis. Within one and a half years the Municipal Council had offered bicycle credit schemes via KNTC to 200 to 300 municipal employees. Since KNTC had run out of Raleigh bicycles (and the credit scheme), the bicycle credit scheme had been discontinued. Talking to Mr. Kidiavai of the Municipal Council Cooperative (a saving society of the employees), he felt that 500 employees! might be interested in a credit scheme if they could repay at the rate of 300 KS/month. Mr. Kidiavai even offered that the cooperative could guarantee the loan. Municipal council employees "terminal benefits" would be enough to ensure repayment of the loans. The Coca Cola Company of Eldoret has a bicycle credit scheme. Out of 300 employees about 150 to 200 employees have taken advantage of the bicycle loan scheme. The bicycle loan scheme started about 10 years ago when they faced the alternative of either providing motorized staff transport or bicycles which provided their employees with individual freedom to move. Women also took advantage of the loan, but they gave their bicycles to other family members. Coca Cola has had no problems with repayment of the loans because even if someone leaves the company, the remaining bicycle loan is subtracted from their terminal benefits. The bicycle credit scheme is very attractive to employees because they charge no interest and have a slow 3-4 year payback period. The bicycles were bought in bulk from Gitonga Cycle Mart. One could see the success of the bicycle credit scheme since approx. 40 bicycles were parked in their bicycle shed in the morning. Interestingly enough, Coca Cola wrote their cyclists a note stating that the bicycles actually belonged to them in order to avoid harassment (indicating that bicycle theft is a real problem in Eldoret). BICYCLE REGISTRATION According to Mr. Chiuri, the Nairobi City Engineer, the City Inspectorate waived the bicycle license in the last budget (this was also the case for hand carts!). Bicycle registration was also dropped in Eldoret. BICYCLE TAXES Refer to overview in Annex ??, Table 2. The continuous reduction of the import duty on bicycles shows a change in understanding of the bicycle which used to be considered a luxury good to its usefulness as a transport mode for the "wananchi". The last reduction in 1995 was contradictory because although the percentage was reduced from 30 to 15% the other clause "or a minimum of Ksh 500" was actually higher (ie. 30% on the lower end of the price scale). The bicycle wholesalers therefore informed the media and "Bicycle prices go up despite pledge in Budget" (refer to Annex ??) informed the public of this contradiction. Apparently, Mr. Gitonga and Mr. M. S, Vohra (who owns Sarova Hotels) are both influential and discussed this issue directly with the President Daniel arap Moi. Only recently, the minimum was reduced to 300 KS rather than 500 KS. There is a 15% import duty on most spare parts. The exception being a 40% duty on bicycle tires. The reason for the high duty on tires is that there is a local bicycle tire manufacturer: Avon (who has nothing to do with Avon bicycles apparently). BICYCLE INSURANCE PLAGE BICYCLE SALES OUTLETS In Nairobi, the bicycle wholesalers formed a relatively cohesive group. This seems to have been attributable to the importing agency: Rimaki Agencies, Mr. Kotecha who could be called the "father of the bicycle business" (refer to "Special Report on Bicycles", Nov. 10, 1995 in Taifa Leo). In most cases the bicycle wholesale business has been passed on from father to son. Mr. Kotecha is one of the few who represents the older generation and in his role as an importing agency, he has dope business with all the other wholesalers. Mr. Kotecha's role was stronger before liberalization. Now more wholesalers import directly. KNTC used to have a monopoly position before liberalization. KNTC is now at a disadvantage because prices can not be reduced according to the market situation - KNTC purchased excessive numbers of bicycles when the Kenyan Shilling was weaker. Apparently influential politicians also played a role in the purchase of the large number of bicycles. Margins in the bicycle business are low. Margins vary depending on the customer. Karim Hardware earns different margins depending on whether he is selling retail or wholesale - the retail margin has to be higher to keep re-wholesalers in business. Margins can be as low as 5% or reach 10%. Bicycle specialty shops are correctly saying they lay emphasis on quality products - to differentiate themselves from the low-quality hardware products. Nevertheless, somewhat lower quality bicycles is also in the interest of bicycle dealers because they usually also have bicycle spare parts as part of their product live and actually earn higher margins on the spares. Gitonga and Rift Valley Cycle Mart were apparently the first bicycle dealers in Eldoret followed by Karim's Hardware which originally Sold only bicycles in the 1970's, but subsequently branched out into the "low-class" hardware business to supplement the bicycle business. Rift Valley Chinese Phoenix were selling for 5700 KS. Other locations in Eldoret charged 5500 KS. Indian bicycles cost around 3300 KS and up to 3900 KS for fake Indian Phoenix. Karim Hardware sells Hero bicycles at 4300 KS while KNTC charges 4700 KS. KNTC of Eldoret had numerous bicycles in stock (around 3000!). Of these, only 26 were ladies bicycles that had been bought in 1982! In 1982, 1000 ladies Raleigh bicycles were bought. The last 26 ladies bicycles were partially cannibalized as spare parts for the gents' bicycles. KNTC no Tonger has Raleigh bicycles but instead has a large stock of Hero bicycles. The quality of their Hero bicycles seems to be better because one customer bought 4 Hero bicycles from a competitor and the last 2 from KNTC - while the 4 bicycles were already breaking down, the ones from KNTC did not show signs of wear and tear. KNTC brought in containers of bicycles including all the necessary parts. BICYCLE TRANSPORTERS The bicycle transporters are a specialty of Eldoret. There are about 60 of them - 40 based at the main market and about another 20 at a smaller market within Eldoret. The 40 transporters at the main market have formed an association with a bank account with 5000 KS savings. The Chairman of the association has a picture on his bicycle with the inscription: Chairman on it. Bicycle transporters feel positively about their transport mode. Some of them compete in bicycle races. A bicycle transporter carried a sack with approx. 50 kg and some eggs for a distance of 3 or 4 kilometers and charged 40 KS. 50 KS is charged for carrying 100 kg. Often they earn 5-10 KS for a trip. 40-50 KS is more than a matatu charges! - but perhaps matatus don't travel to that location. Nevertheless, the bicycle transporters say they only earn between 100 to maximum 200 KS / day. The bicycle transporters explained why they do not ferry people to their destinations - due to the hills there are sections where a potential customer would have to walk and that would be embarrassing to Charge money and in the end the customer would have to walk anyways. Two bicycle transporters also work for Coca Cola BICYCLE RENTAL. BICYCLE REPAIR The extent of the bicycle theft problem in Eldoret can be seen by Karim Hardware's requirement to e given proof of ownership before the bicycle is repaired. Bicycles that are not picked up the same day after repair, are charged a storage fee at Karim Hardware. PROMOTION TEACHING CYCLING A Ladies bicycle was left in Eldoret at Moi's Girls Secondary School. The headmistress will set an example by cycling herself. They will teach girls to cycle with that bicycle. GENDER ISSUES/ POTENTIAL CYCLISTS There seem to be hurdles to bicycle use for women in Eldoret. Partly people think adult women with "larger proportions" Look unseemly on a bicycle. This was the first case I had heard of where the children pressured their mother not to cycle (KNTC, Mrs. Salina Kiniga) because of the way she looks on a bicycle. Perhaps part of the solution to the women's shape is to take up cycling! The few lady cyclists I met had a good figure. Talking to a young woman in Eldoret, I mentioned that in some countries there is a fallacy that women can become sterile from cycling - she said she had also heard about that, indicating that there is need for educating girls regarding cycling. One of the lady cyclists spoken to said people feel sorry for her that she is forced to cycle. Even an avid male cyclist had never asked his wife why she did not cycle. Neither did his three daughters know how to cycle. It seemed he was so proud of his bicycle, he did not want others to use it for fear of the bicycle being spoilt. On the other hand, women at the nearby Medical Training Center cycle a lot. The gents' bicycles were apparently given by a foreign donor even though 50% of the students are female. BICYCLE PROMOTION Uvumbuzi Club is still quite active promoting cycling. They have printed T-shirts costing 300 KS with Uvumbuzi on the front (including a bicycle in one of the letters) and a bicycle on the back of the T-shirt with the caption "Let's share the road". The T-shirt is quite attractive and could be used in the pilot areas. Uvumbuzi was forced to start their annual bike-a-thon outside of the city this year due to lack of safety. More lobbying could result in closing off of routes for this annual event so that it could once again commence from city centre and thereby attract due attention. On December 6th 1995, at an Uvumbuzi meeting an official from the newly-formed NGO "Road Safety Network" came to discuss safety issues. Uvumbuzi could join forces with the NMT project to promote cycling in the Nairobi pilot area. Karim Hardware of Eldoret has a self-made tandem bicycle that could be borrowed for bicycle promotion purposes.
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