Slow but sure death of postal services in Kenya

After a long period at the top, monopoly, rigidity and overconfidence, normal attitudes pose the greatest threat to a business. New competitors don’t have to reinvent the wheel; they just fill in the gaps you have left open. This is the story of the downfall of postal services in Kenya.

The history of postal services in Kenya dates back to 1592 following the arrival of the Portuguese in Mombasa, and later in the late 1840’s when the missionaries arrived. However, formal postal history in Kenya goes back to the late 1890’s when a post office was opened in Lamu. A century down the line, the former monopoly seems to be in thick mire.

Looking back to the roles of the corporation 100 years ago, 50 years ago and even today, you will not be surprised how it ended where it is. The total number of local letters declined by 32.2 percent in the year under review to just under 74 million, compared to over 100 million letters a year ago.  International letters also fell by 4.2 percent to 440,000 letters.

Total courier items fell by 7.1 percent to 1.6 million items. compared to 2 million in the previous year.

Although revenue was up during the year at KSh5.6 billion, there was a slowdown in investments by 24 percent, perhaps leading to where the rain started beating the postal corporation.

In a recent report, CCK says the decline in the sending of letters could be as a result of stiff competition the postal and courier industry faces from the mobile telecommunication operators which offer more efficient and faster means of communication.

Several questions come up from this analysis, are other postal service providers globally feeling the pinch from technology? What are they doing about it? Does the law protect the corporation and can the challenges be turned around to the benefit of the corporation?

Overall, postal services are under threat worldwide. In the United States for example, the Senate has passed a bipartisan, comprehensive bill – the 21st Century Postal Service Act – to prevent these historic defaults by right-sizing, modernizing, and reforming the postal service.

Sri lanka’s Postal Services Minister Jeewan Kumaratunga, while addressing the 138th World Postal Day celebrations, reiterated the necessity of modernising the country’s Postal Department if the global challenge in the telecommunication sector is to be won.

“Merely depending on traditional methods would lead the Post towards a natural death. The next step of the Postal Department should be absorbing modern technological know-how in its operation,” Kumaratunga said.

The postal service globally saw the current problems approach, but chose to hide its head under the sand. In Kenya, it has waited until last year to embrace mobile money services in partnership with telecommunication companies — despite the corporation having been engaged in money transfer for decades. Instead of the mobile money transfer partners using other partners to expand their services, the postal network, one of the most elaborate in the country, could have served this purpose.

The corporation had more motivation to this given the instantaneous death of the Postal Order and Money Orders as a result of the mobile money transfer.

Another major advantage the postal corporation could have utilized to make itself desirable to the public was to maximize on the public trust in their services to encourage people to send parcels using them.

It is worth noting that the corporation has been undertaking this role for decades, has specialized scanning machines as well as its elaborate network.

Even harder to understand is how the corporation was unable to market itself given that the law provides that private couriers should charge at least 5 times the cost charged by the public courier.

The death of the telegram, just like that of the Pager, was unstoppable. However, following these developments on the local scene, the corporation could also have used the same technology that has left it on its deathbed to breathe.

With the growth of e-commerce, technology has given the postal service a new lease of life by facilitating movement of goods locally and internationally. E-commerce has grown exponentially over the years with 2011 statistics indicating that in the U.S, online trading reached US$198 billion and analysts project it could grow reach US$1.4 trillion globally in the next 3 years. Now considering Kenya is a net importer, there are a range of opportunities in facilitating e-trade.

The corporation is also yet to maximize on its financial platform again favored by its reach nationally. While banks continue to expand to other towns, post offices are present in the remotest of areas still unbanked and should rush to capture the market.

Another range of services such as airmail can be maximized, as the company remains the key player. Although privatization is not politically correct, it is known to have revamped other services around the world such as in Germany, Netherlands and Japan. Locally, privatization has also worked miracles in companies such as Kenya Airways, National Bank of Kenya and Kenya Commercial Bank.

Posted in: FeaturedTelecoms

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