Transport is very crucial for economic development of any nation because the industry has a significant effect on the economic growth and development of a nation and major investments are channeled through the industry. However,  in Kenya studies have shown that public transport is not efficient thus not attractive to investors enough to fill the gap between the required investment levels versus the current status which is low, characterized by high costs on fares and uneven costs on daily commuters using the public transport means. This study seeks to establish the challenges facing investment in public transport industry in Nairobi, Kenya. The specific objectives are to establish the effect of government regulations on investment in public transport in Kenya, to find out how profitability of the transport industry affects investment in public transport, to find out how access to adequate financing affects investment in the public transport industry and to establish how cartels in the transport industry affect the investment in public transport industry in Kenya. The study adopted a cross section survey design. The target population for this study was the owners of passengers’ service vehicles for public transport in Nairobi. Using simple random sampling, a sample size of 100 respondents was selected to respond to the questionnaires for primary data collection. Descriptive statistics and regression analysis was used to analyze data. SPSS version 21 was used to process the data to come up with summary tables and the results that have been subjected to regression analysis. The study findings showed that government regulations, profitability of the industry and access to finance contributed significantly and positively to investment in public transport industry whereas effects of cartels in public transport contributed negatively to investment in public transport industry.

Key Words: Challenges, Investments, Public Transport

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