Postal services are typically restricted to the transmission of information and tangible objects, wherein written documents, typically enclosed in envelopes, and also small packages, are delivered to destinations around the world.
However in some countries, the postal system also has some authority over telephone and telegraph systems and it others, they also provide additional services such as savings accounts and handling applications for passports.
While postal services can be privately or publicly owned, governments all over the world often place restrictions on private postal delivery systems. Since the mid 19th century national postal systems have generally been established as government monopolies with a fee on the article prepaid. However many of the publicly owned postal services run on deficits are often used as examples of government inefficiencies.
Plans of privatisation of national postal system to make them more efficient and cost effective are usually met with fierce opposition by groups who will like the government to still play the traditional role of owning and operating the postal service because of the peculiar nature of the postal system also providing a social service to the communities it serves.
However, Holland’s TNT, Japan’s Japan Post and Germany’s Deutsche Post are examples of where the government has relinquished its role to the private sector and the resulting companies have gone on to become successful companies.
Postal services in Nigeria dates back to the 19th century when the first post office, a branch of the London General Post Office, in the country was opened by the former British Colonial Masters in 1851. This was followed by a private company, the Royal Niger Company and the British Post Office operating their own postal systems in the country.
Governmental role in the Nigerian postal system came in 1900, when the Southern Nigeria Government took over the responsibility of running the postal system in the entire country. At the time of independence the postal services was administered jointly with Telecommunications as a government department with 176 Post Offices, 10 sub Post offices and 1,000 Postal agencies were in the country.
Since then the postal service has grown in leaps and bounds with the establishment of the Nigerian Postal Service (NIPOST), as a government-owned and operated corporation responsible for providing postal services in Nigeria. It has more than 20,000 employees and runs more than 5,000 post offices.
NIPOST is also responsible for the regulation of all postal activities in the country, including that of the courier services, which are being provided by private local and multinational companies.
However the organisation, like a lot of publicly owned enterprises is besot with its problems, with lost mail, poor public opinion of the postal service, poor infrastructure and high operating costs, abysmal debt collection, and operational inefficiency being some of the challenges it faces.
Nigerians face significant social opportunity costs that arise from an inefficient postal sector, and the government through its Bureau of Public Enterprises (BPE) contracted a Dutch company, NethPost, in 2004 to make recommendations on reforming the Nigerian postal industry.
The key notes of the recommendations made by NethPost included:
• The formulation of Postal Sector Policy/Strategy;
• The design and development of new postal sector legislation;
• Establishment of an independent sector regulatory agency;
• Restructuring of NIPOST into New Business Units (NBUs); and
• Privatization of the NBUs.
NIPOST has already begun to implement some of the recommendations made including;
• Adding new services such as the Parcel Post Venture (a parcel delivery service), PostCash (a domestic money transfer service) and Cash4Africa (an international money transfer service).
• Trimming the workforce, as the organisation announced plans in March, 2008 to lay off 4,000 of its 9,000 workforce.
• Providing e-Business services and creation of a virtual private network for 1500 of its post offices across the country through an agreement signed with Galaxy Backbone Plc in September 2009.
• Improving debt collection drive through the setting up a committee specifically dedicated to going after debtors.
The BPE has also pushed plans to bring about changes in the postal sector legislation and drafted the Postal Act 2007, which also proposed the to expand the reserved service advantage currently enjoyed by NIPOST and levy private courier companies to subsidize postal services it provides. The act has yet to be passed in the National Assembly.
Plans are also afoot to bring about the establishment of a regulatory body for the postal sector as the Postmaster-General of the Federation and Chief Executive Officer of NIPOST, Mallam Ibrahim Mori Baba, announced in November, 2008 that a draft of the bill to pass the body’s creation into legislature was being sent to the National Assembly.
With the reforms being undertaken by the Government for the postal sector to prepare NIPOST for commercialisation, we would like to mention a few factors that should be taken into consideration;
• First, developments such as e-mail, wireless communication devices, and the Internet are transforming business and communication patterns, calling the future of letters into question.
• Second, postal operations themselves are evolving due to developments in information systems, postal automation and retail services, logistics, and distribution technology. Modern postal services now see themselves as logistics and distribution companies, rather than a social service provider.
• Third, with growing globalization of the sector, national postal services face increased competition from domestic and foreign entities.
• An efficient transport system will play a crucial role in producing an efficient postal system. The more efficient the transport system, the quicker and cheaper it would be to deliver postal services. At the moment it takes NIPOST more than three days to deliver a N50 stamped letter anywhere in the country despite its origin at an average cost of N1, 000.
• The current low postal volume in Nigeria, less than half a mail sent or received per person per annum which less than a lot of developing countries, has been attributed to the loss of confidence in the postal service. A more efficient and reliable postal system is likely to bring about an increase in the postal volume within the country.
We will at this point like to make a few recommendations of our own which we will hope will provide fresh impetus for reform in a long mismanaged sub-sector of the economy. We would recommend the following;
• Speed up the setting up of the Postal Regulatory Commission: This should help in eliminating the role that NIPOST plays as both operator and regulator in the postal service industry. It would be extremely difficult for any organisation to regulate itself since it is hardly going to enforce or create rules that threaten its position in the market and favour its competitors.
To create a truly competitive environment where everyone has a fair chance of succeeding, an independent regulatory body will need to be formed, backed with all the powers it needs to pursue offenders, including NIPOST, to the full letter of the law.
• Continue the push towards commercialising/privatising NIPOST: The push to give the NIPOST its own autonomy independent of government interference and restrained commercial mandates will go a long way in making NIPOST a commercial viable entity.
The postal industry in Nigeria is estimated to worth about N100 billion but currently generating only N5 billion through NIPOST. The lack of infrastructure, political interference and inefficiency has been blame for the lack of NIPOST to achieve its potential. Around the world, commercialising or privatising postal operations have been successfully implemented where the postal service was treated more as a business concern than a social service.
Commercialising and then eventually privatising NIPOST will allow it to pursue a strategy of aggressive growth and efficiency, diversification, and internationalization, and possibly turn it into one of the Africa's preeminent postal and communications operators.
• Demonopolise the postal sector: A gradual elimination of the monopoly that NIPOST currently enjoys for all postal articles below 500 grammes as enacted in the Nigerian Postal Service Decree in 1992 would help foster competition in the postal sector. Competition usually leads to increased efficiency by operators within any business sector and invariably lowers cost of operations, which leads to improved services and lower costs for the customers.
This was the case in Germany where Deutsche Post's exclusive right to deliver letters less than 50 grams in Germany expired on 1 January 2008 following the implementation of European legislation. A number of companies are vying to challenge Deutsche Post's near monopolistic hold on letter deliveries, including Luxembourg-based PIN Group and Dutch-owned TNT Post
• Universal Service Obligation: The BPE proposed in its draft of the Postal Act 2007 that NIPOST be compensated from a fund contributed to by all operators in the postal industry for carrying out the function as the universal service provider (providing a baseline level of services to every resident of a country at just, reasonable, and affordable rates). We believe that other companies who are willing to perform the role a universal service provider should also be allowed to participate in the scheme.
The interested companies would apply for licenses from the Postal Regulatory Commission, who will make a determination of the type of services and localities to be covered, as well as the level of compensation on a case by case basis. Failure to provide a universal service, which will be reviewed on a periodic basis, will result in fines or withdrawal of the license.
Ongoing reforms in the postal sector will need to take in the scope of traditional postal monopoly of NIPOST being reduced or eliminated to provide for more competition. NIPOST, and indeed future private postal operators, will have to respond to these changes in the regulatory environment by, for example, reducing costs and improving service.
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