My name is Edwin. I am 30. I am not highly educated. I dropped out in Form Three. I work in the transportation sector at a public service vehicle stage upcountry. I earn between Sh900 and Sh1,200 per day from my hustle. My expenses are as follows: Rent Sh7,000, food and groceries Sh400 daily, power and water Sh1,500, wife’s daily allowance Sh200, school fees for my daughter Sh3,000 per month. My wife recently started working at a salon in our town where she gets paid on commission. She is yet to start making anything meaningful because she is new and is just starting to build her name and client base. I recently watched a video on TikTok where you need a deposit of Sh1,040,000 to get a brand new zero-mileage 16-seater Nissan matatu on credit worth Sh5.2 million. The repayment period of this financing is 48 months. Being in the transportation sector, I have always wished to own my own unit and I am wondering if this is my opportunity. How do I save and adjust my budget to raise the required deposit? I have total savings of Sh80,000 in my bank account which I have raised through merry-go-rounds and a win from sports betting. I inherited two acres of land which I estimate to be worth Sh700,000 per acre. Should I sell them to raise the deposit? I have leased them out at Sh15,000 per acre per year and the leases are expiring in December after harvest.
Benjamin Cheruiyot is the Engagement Lead at Abojani Investments, a personal finance and investments advisory firm
With monthly earnings estimated at Sh30,000, you likely have no savings as your expenses amount to Sh29,500. You seem to have a good understanding of the PSV transport sector owing to your experience. While the goal of matatu ownership is viable, raising the deposit for the loan seems like a tall order because you have a deficit of Sh960,000 if you consider your Sh80,000 savings.
What opportunities abound in the PSV transport sector? A 16-seater matatu can net you about Sh8,500 daily if you take two trips between Nairobi and Nakuru. That can bring in Sh220,000 per month, excluding Sundays. This amount is enough to service the bank loan at about Sh110,000 monthly. This assumes a 14 per cent annual loan interest for Sh4.2 million principal amount for 48 months. It also assumes that your background in the sector will come in handy in keeping operational costs at the bare minimum while maintaining regular work.
Barring a best-case scenario, the PSV transport sector is rife with challenges. Good earnings depend on various reasons – Sacco membership and fleet reputation, driver discipline, punctuality, and vehicle roadworthiness. Sector pundits argue that owner-drivers make more money as they save on driver costs and are more likely to drive the car carefully while keeping good relationships with passengers.
Insights into the PSV sector reveal that the owners "eat last" due to the chain of fees that stretch to Sacco management, licensing authorities, payments to drivers and stage operators, city council, not excluding law enforcement. Owners also fall prey to dishonest drivers who may lie about non-existent breakdowns, route challenges and the likes. Generally, the sector isn't for the faint-hearted.
How are you prepared to tackle these challenges? Are you planning to be the driver? Which Sacco do you plan to join and how easy will they make it for you to join? How much fees do they require? Does it have the benefits of enlisting a new vehicle, which sometimes includes preferential pole position at the terminals for a few months?
While there are definitely several challenges that may characterise the cut-throat competition in the matatu sector, opportunities abound for an owner with skin in the game. Sector and insider experience plus street wisdom are a sure recipe for success, otherwise you would be left holding the thin end of the stick.
Your current income and savings aren't sufficient to get you the deposit of Sh1,040,000 for the matatu loan. Even if you were able to save Sh5,000 monthly in a fair return money market fund, it would take you a decade to accumulate Sh1m.
This isn't a viable option. Selling the ancestral land may be a fair option. However, you may have to rethink whether this is a good idea. While people have sentimental attachment to land, especially inherited, and may not consider selling, you do not have any other option to pursue your matatu ownership dream.
You could sell the two-acre land and get Sh1.4 million , which you can then reduce the loan amount to Sh3.8 million. With proper business management skills, you should break even after a few years.
You may voluntarily increase the loan repayment amount to shorten the duration of the loan and cut the pressure of chasing the repayment date every month. This will save you loan interests. This can only work if you avoid lifestyle inflation. Live a modest lifestyle until your debt repayment is done. In the matatu business, just as any business, you will need an emergency fund for uncertainties like vehicle breakdown, insurance cover and vehicle maintenance.
Your personal finances also require a rainy-day kitty. These should preferably be kept in a money market or fixed income fund where you will enjoy daily or monthly returns at fairly decent interest rates.
Consider equipping your wife with skills that would get her decent, regular income to supplement your earnings. Before taking the plunge into the matatu business, conduct a feasibility study on the sector opportunities and threats, ranging from the expected revenue to the formal and miscellaneous costs that you will be faced with.
Have a mentor in the industry who can draw a clear picture for you before you sell your land and put all your savings into this investment.
I’m 28 with a Sh65,000 salary, how do I raise Sh1.5m for land and a car before I turn 30?
My name is Kelvin. I am 28, turning 29 in December. I am not married. My work is mainly freelance and consultancy. On average, I make around Sh65,000 every month. My monthly budget is as follows: Food Sh11,000, Rent – Sh15,000, WiFi – Sh2,000, Entertainment – Sh5,000, Family – Sh5,000, girlfriend – Sh5,000, Tithe – Sh6,500, Airtime – Sh1,500, Emergency and Pocket money – Sh5,000. I have savings of Sh130,000. I don’t have assets at the moment. I would like to own a plot of land by my 29th birthday in December and a small car such as a Mazda Demio by my 30th birthday. I have estimated the cost of land at Sh700,000 and the cost of a second-hand Demio in good condition at Sh800,000. I would like to buy the plot somewhere near Nairobi. How do I achieve these goals within those timelines?
Alex Kibebe is the founder of Rubiani Wealth Management Ltd and an investment consultant and business development coach
You earn approximately Sh65,000 per month and currently spend about Sh56,000, leaving a surplus of around Sh9,000. You also have Sh130,000 in savings. Your goals are to buy a plot of land near Nairobi worth about Sh700,000 by the end of this year and to purchase a vehicle worth approximately Sh800,000 by December 2026.
Given your income and current spending levels, meeting both goals within those timelines may not be feasible without placing undue pressure on your finances. However, with a few adjustments and a slightly extended timeline, I will give you a practical and sustainable path you can follow to achieve both within a reasonable time.
First, let’s address your monthly budget. To reach your goals sustainably, aim at saving at least 25 per cent of your income—about Sh16,000 to Sh18,000 each month. To free up this amount, consider making the following adjustments.
Since you’re single, adjust to a more affordable rental house of around Sh12,000, reduce your food budget by Sh2,000 through better meal planning and avoid impulsive spending. Cap your cut entertainment and miscellaneous expenses at a combined total of Sh5,000 and based on your priorities, scale down your contributions to family to Sh3,000, your girlfriend and church to Sh3,000 for a combined total of Sh6,000 down from Sh16,500.
From these changes, take Sh18,000 monthly for saving and investment. I would advise you to channel these savings into a Money Market Fund (MMF). MMFs are ideal for short- to medium-term goals because they offer liquidity and a modest net annual return of around nine per cent (at current rates). Take time to review different fund managers and select one with competitive returns and a strong track record.
If you invest your current savings of Sh130,000 and contribute Sh18,000 monthly for the next two years and five months (up to December 2027), your investment will grow to approximately Sh700,000—enough to purchase the land. Use this period when investing to carefully search for land, conduct due diligence, and ensure all documentation is in order before making a purchase.
Once you acquire the land, shift your focus to purchasing the car. At this stage, direct your savings into a Sacco account to access a loan to purchase the car. Choose one that offers asset financing—allowing you to use the car as collateral—or one where you can access guarantors. Most Saccos offer loans of up to three times your savings. By saving Sh18,000 monthly for 15 months, you’ll accumulate Sh270,000 — enough to qualify for a loan of Sh810,000 for the car purchase.
Assuming an annual interest rate of 12 per cent and a repayment term of five years, your monthly loan repayment would be approximately Sh17,800. This fits within your current savings, allowing you to repay the loan without straining your finances. Consider utilising the vehicle for a part-time taxi-hailing side hustle. This will generate some income for you while converting the liability into a money-making asset.
Once you acquire the car, consider using it for ride-hailing services like Uber during your free time. This could provide additional income to support your budget or help you repay the loan more quickly. While the plan extends your timeline slightly, it allows you to achieve both goals by the time you turn 32 without getting into unnecessary financial distress.
Place the remaining Sh2,500 in your budgetary cuts in an MMF that you can dig into on a rainy day. You also need to track where your surplus of around Sh9,000 goes by keeping a strict track of your expenditures. Once you establish where this amount goes, redirect it to a Sacco savings account to build up your kitty and creditworthiness.
You may use part of it to bridge the family cuts if there is a genuine, urgent need, and send the remainder to your Sacco. One of the recommendable things you can do is to set a Standing Order that will have your savings and investment targets deposited the moment money hits your account.
If you have any money problems, send us an email at [email protected] and leave your number for contact. Money questions will be answered on this column
