Postal Corporations across the globe are innovating to stay relevant in a fast evolving industry. It’s no secret; mail volumes, the mainstay of the Post Office, has declined massively over the years due to emergence of new technology and the high penetration of the mobile phone.
What is the Postal Corporation of Kenya doing to stay ahead?
Hustle East Africa Magazine interviews the Post Master General Dan Kagwe to understand the corporation’s business model. Excerpts herewith.
HUSTLE: What is Postal Corporation of Kenya’s Mandate and obligations?
POSTMASTER GENERAL: The Postal Corporation of Kenya was established by an Act of Parliament (PCK Act 1998) and operates as a Commercial Public Enterprise. The Corporation’s mandate includes provision of accessible, affordable and reliable Postal Services to all parts of Kenya as the designated Public Postal Licensee, where communications through the Post Office is a basic human right as enshrined in the 1948 United Nations Charter.
Our mission is to provide innovative Communication, Distribution and Financial solutions to our customers and create value to stakeholders at all times.
Posta Kenya operates in accordance with the provision of section 50 of the Postal Corporation of Kenya Act 1998 (Revised KICA 2013), to provide and operate;
a) Postal services, and perform incidental services relating to the receiving, collecting, sending, dispatching and delivery of postal articles and electronic mail,
b) Postal financial services, incidental services relating to the issuing, receiving, mobile payments, general electronic agency services, registration & delivery of newspapers and periodicals, collection of bills, virtual saving services and GIRO services,
c) Electronic retail transfer and the National Payment system,
d) To perform any other duties/functions as the Cabinet Secretary may assign,
The Corporation as a Postal Licensee has the monopoly to offer Post Office letter boxes services, issues postage stamps and conveyance of letters below 350 grammes.
HUSTLE: What is Posta Kenya’s National Network and Product Portfolio?
PMG: The Post Office operates a vast national network of postal outlets totalling to 625 with a distribution of at least two (2) post offices in each of the 47 Counties. The population served per Post Office is over 70,000. Our overall goal is to improve penetration levels by expanding the postal network to meet the Universal Service Obligation which requires that 6,000 persons are served by one post office.
The Post Office provides a wide range of innovative products and services that include but are not limited to the following:
1. Mails Services- Ordinary letters, Corporate Mail, Private Letter Boxes, Philately, and International Mail Services among others.
2. Courier Services- EMS services, Parcels, Post Cargo (Clearing & Forwarding) and Travel Lite.
3. Payment/ Financial Services including Money Order, Posta Pay, Utility/Third Party Payments, Agency Banking services on behalf of our partners in the Banking sector, Mobile Money Transfer on behalf of Telecommunication companies among others.
We are proud that the Post Office provides the much-needed brick and mortar for;
a) The National Government –The Post Office currently provides existing infrastructure that hosts over half of the Huduma Service Centres country wide.
b) Financial Institutions-PCK is in partnership with six (6) banks namely: Kenya Commercial Bank, Barclays Bank of Kenya, Cooperative Bank of Kenya, Diamond Trust Bank, National bank of Kenya, Equity Bank among others. We not only provide Agency Banking services but much needed physical presence through the existing postal outlets countrywide.
c) Small and Medium Enterprises, Youth, Women and Persons With Disability-We envision to boost the role and capacity of the postal network as an enabler of e-commerce, notably by establishing last mile hubs, as partners to the government, citizens and enterprises that are excluded from e-commerce. This will include, especially, Small and Medium Enterprises, Young People and Women who are marginalized and lack affordable access to e-commerce platforms, payment options and delivery possibilities for cross-border e-commerce.
HUSTLE: In this era of electronic mail, is the Post Office still relevant?
PMG: Yes, of course the Post Office is still very relevant, our mission being to provide innovative communication, distribution and financial/payments solutions to customers and create value to our stakeholders. Allow me to breakdown the relevance in three aspects, anchored on the mission statement:
a) Mail/Communication Service-Despite the digital disruption today, corporate mails and private letters boxes contributes to 70% of our annual turnover. These corporate correspondences that include legal documents from the Judiciary, admission letters, bank statements, certificate of incorporation, vital documents such as log books, title deeds, driving licenses and academic certificates, requires physical delivery that only the Post Office can provide.
Regarding international mails, the main flow of cross-border letter posts have historically been between developed countries. However, with an increasing share of citizens in developing countries shopping at online market places, the flow of cross border letter mail is increasing. Therefore, this has reversed the trend in the recent decline in mail volumes.
We currently have over 500,000 boxes installed countrywide with capacity utilization at 90%. The post office box (PLB) is not only a legal requirement for company incorporation and a delivery point for mail items, but it provides an identity and a sense of belonging to all citizens. The Corporation has adopted mobile technology to enhance the private letter boxes by introducing the virtual box, where the customer can access the postal services via mobile phone (USSD) and Website.
b) Courier/Distribution Services –The Post Office is at the core of last mile delivery, a concept that has proven challenging to retailers and institutions with customers spread all across the country. We deliver to Wajir, Mandera, Lamu, Lokichoggio, Lunga Lunga, Isibania, Mt.Elgon, Kacheliba, Turkana among others which are situated in topographically challenging terrains.
The Post Office, having identified the need for a seamless importation process, provides clearing and forwarding services and full logistic solutions to customers, importing items through Posta Cargo services.
c) Payment/Financial Services – The Corporation supports the unbanked population through Agency Banking by partnering with banks. So far, PCK has acquired and installed one hundred (100) points of sale devices in four hundred and seventy (470) postal outlets out of 625 offices. We offer infrastructure to micro finance institutions as a pay point for collection and disbursement of funds. We are also mandated by law to act as the National Payment Gateway where the Government should channel all payments through the Post Office, which includes Social Protection Funds. We are at advanced stage of partnership with Equity Bank to provide, among other services, disbursement of funds to Older Persons dubbed the Inua Jamii programme.
Having explained all these three aspects, you realize that a great number of institutions have appreciated the significance of the robust and resilient postal network infrastructure, our capacity for last mile delivery (e-commerce) and support for financial inclusion to the marginalized and unbanked population.
HUSTLE: Comment on the emerging trends of the Postal transformation in the world arena.
PMG: The future of the Post in e-commerce and financial inclusion in providing logistical solutions for last mile delivery cannot be understated. It is interesting to note that 1.5 billion people worldwide are already using the financial services offered through the Post Office.
Kenya is a member of the Universal Postal Union (UPU), a United Nations (UN) specialised agency on postal matters. As a specialized agency of the United Nations, the UPU helps its 192 member countries to work towards achieving development of economies, societies and electronic trade, and in narrowing the digital divide. The global Postal network of over 600,000 outlets worldwide is a huge infrastructure which has the power to spur on e-commerce and financial & social inclusion.
HUSTLE: What are the main achievements of Posta Kenya since you took over as the Postmaster General in July 2016?
i. Independent Electoral and Boundary Commission- clearing, forwarding and distribution to all 290 constituencies of the election materials for 2017 General and repeat elections.
ii. Kenya Literature Bureau/Ministry of Education- Distribution of books to schools nationally in January and February 2018.
iii. Construction and relocation of EMS Centre/Hub from Posta House to Machakos Road in Nairobi Industrial Area and Kisumu GPO towards facilitating growth, penetration of e-commerce and warehousing. The relocation will reduce on the operational costs and enhance access of EMS Centre/Hub by customers and other stakeholders. The two projects are scheduled to be completed and operational on or before 31st December 2018.
iv. Modernization and automation of our major outlets through installation of a POS (Point of Sale), Post Global (Counter Services) and Enterprise Resource Planning systems.
v. Roll out of Agency Banking with 5 banks on board (Kenya Commercial Bank, Co-operative Bank of Kenya, Diamond Trust Bank, Barclays, National Bank of Kenya). The integration of Family Bank and Equity Bank among others, are at final phase and look forward for operationalization before the end of the year.
vi. Acquisition of 22 official motor vehicles locally assembled for sales (11 Saloon Polos) and operations (11 Isuzu D-max Pickup) to enhance service delivery in line with Universal Service Obligation charter of the United Nations.
vii. Partnership with Easy Coach Limited for delivery of International Parcels and last mile delivery of Parcels to Coast Region of Kenya.
viii. Corporate Social Responsibility initiative –Construction of Kenyatta National Hospital Paediatric Care Services Waiting Bay-May 2018.
ix. PCK Quality Management System (QMS)- ISO Certification has been upgraded from 9001:2008 to 9001:2015. This was done after a rigorous auditing process of the business procedures, processes, policies and regulations, which took place in September 2017.
HUSTLE: What are some of your new innovations riding on ICT?
PMG: The Corporation has very attractive innovative services. These innovations include;
(a) Tunza Nyumba na Posta- Linking retailers and consumers of basic household commodities through e-commerce which is a value add to our EMS service
(b) EMS2GO- is an android mobile application fully loaded with all of postal services and products as a new focal point for engaging with its customers. The service will engage over 25,000 motor bike riders, when it is fully operational
(c) Postal Digital Parcel locker – the latest innovations for e-fulfillment, adding value to the traditional parcel delivery methods
(d) Mpost- an innovative product that enables any mobile phone user to use his/her phone to receive letters. It allows you to make your mobile number to be a formal postal address
(e) Posta Mobile Wallet- development is ongoing for integration of postal products to a payment platform centered on convenience and relevance in digital space
(f) E-njiwa-provides for registration of virtual rental boxes running Serially over & above the installed physical capacity for continuation of Posta’s Rental Box Addresses besides creation of e-Stamps (based on QR Code Technology)
(g) Global partnership on e-commerce with Jersey Post and Amazon Web Services.
HUSTLE: How is Posta Kenya contributing towards the Government’s Big 4 Agenda?
PMG: The Government plans to create 1.3 million manufacturing jobs by 2022 and achieve 100 per cent affordable health care coverage for every citizen. Other key pillars are affordable and decent housing and food and nutritional security:
• Employment Creation through Manufacturing-The Corporation has purchased 22 vehicles locally assembled at General Motors and DT Dobie to enhance sales and service delivery. This is in line with Government policy of supporting local manufacturers to create employment.
• Affordable Universal Health Care-We provide distribution and logistical solution to pharmaceutical companies, Mission for Essential Drugs and Supplies (MEDS) and other suppliers. Through our EMS Courier service Pharmaceutical drugs are distributed throughout the vast network countrywide. The Corporation has already migrated the entire workforce of 3,000 employees NHIF super cover that was effected 1st July 2017.
• Food and Nutritional Security –In order to boost food security, we distribute through our Postal Network of agricultural inputs to farmers countrywide. We also facilitate third party payments to farmers particularly in Western Kenya and Rift Valley Regions.
• Affordable and Decent Housing –Through our Postapesa product we are able to provide payment solutions to real estate firms, contractors and other beneficiaries.
HUSTLE: COMMENT ON THE ROLE OF POSTA KENYA IN THE NATIONAL ADDRESSING SYSTEM
PMG: We note and appreciate that Postal Corporation of Kenya is a direct beneficiary of the National Addressing system currently being developed by the Government. The Government has put in place a committee of key stakeholders driven by Ministry of ICT and Communication Authority of Kenya to develop the ideal National Addressing System in Kenya. Posta Kenya will be a key beneficiary of the addressing system upon completion, for door to door delivery, thus enhancing e-commerce growth in urban areas.
HUSTLE: COMMENT ON THE GENERAL PERFORMANCE OF THE CORPORATION IN THE LAST FINANCIAL YEAR.
PMG: We note with appreciation that Postal Corporation of Kenya has never been given any subsidy by the National Government since the split from the Kenya Posts and Telecommunication (KPTC) on 1st July 1999. The Corporation has been financing its operations and capital investments from internally generated funds. In the Financial Year 2013/14, we posted a profit of Kshs. 173 Million and thus declared a dividend to the National Treasury of Kshs. 17.3 Million. In the Financial Year 2016/17 we incurred a loss of about Kshs. 1 Billion, but in the Year 2017/18, our performance in revenue improved, recording an annual turnover of Kshs. 4.1 Billion. This reduced the loss to a marginal figure of less than Kshs. 80 Million against our yearly operating expenditure.
The Corporation has an opportunity to improve its business performance if it can be supported by the National Government, who is the sole shareholder, through being mandated as the preferred logistics and financial services provider to Public Agencies. Posta Kenya has also been operating in commercially non-viable areas towards meeting the Universal Service Obligation that all citizens have a right to communicate. In view of this, we qualify for subsidy either from Universal Service Fund or from the National Treasury to meet our obligations as per the PCK Act (1998).