Reforming the Postal Sector – Nigeria

Globally, the postal service has undergone reforms, which is galvanized by an avalanche of factors on the information society. This is largely attributed to breakthrough recorded in computerization, telecommunication, publishing, audio-visual techniques. The ancient monopolies are compelled by the effect of globalization to surrender a large proportion of the market to the emerging service providers, this is currently witnessed in the telecommunications sector.
In Nigeria, NIPOST had enjoyed the monopoly of the postal sector, with the universal service, geographical balancing of out of charges services as its obligations; NIPOST became an administrative behemoth, whose financial objective was to balance its accounts.
The organization of NIPOST takes into account its obligation to provide a public service while guarding jealously its exclusive rights because of this posture liberalization becomes difficult. However several reasons of historical, economical and social militate against the liberalization of postal sector, this monopoly maybe justified in so far as economy of scale remains significant in this sphere and also the fact NIPOST employs a significant number of the populace.
The development of multinational enterprise and the increasing requirement of professional clients have since 1970 played a major role in the growth of the express mail service, which often provides a guaranteed delivery period. Industrial subcontractors have become major clients of the express service, with enterprises trying to reduce stocks, thus competition in the postal sector is acquiring new forms and becoming stiffer. This setting has given rise to the need for a radical reform in the structure and regulatory framework of the postal sector.
The alarming growth rate of the communication industry has forced the postal service to move beyond the core physical mail business to broaden the range of services they offer to customers. New hybrid postal products that combine electronics with hard copy delivery are being use successfully today. The success in the establishment of a veritable world electronic trade through the internet has boosted market growth rate in the delivery activities which should encourage the development of the large and sophisticated multinationals companies which until now are specialized in the express mail market, mass mailing is often the first to be liberalized, reposting is an original form of competition, while the volume of postal expenditure in some sectors, such as financial service or mail order has induced the search for skirting tactics.
The postal service is less subject to the rapid technological change; the sector has witnessed the growth of computerized networks (e-mail) and the use of fax.
In the light of this, the traditional operators like NIPOST have been forced to react to these developments, either on their own initiative or as a result of regulatory changes, there has been a wide spread and rapid expansion of the commercial approach oriented towards the client.
National operators have been forced into participating in new markets such as express mail service or e-mail. To some extend the new rivalry between the national operators and the service providers have rendered international postal diplomacy under the auspices of Universal Postal Union (UPU) a thing of the past. In the face of this brutal glasnost, the character of the postal services in Nigeria remains the same, as in the 60s, with a feeble attempt at restructuring, while we are cognizant of the demands placed on postal services, amongst which are homogeneity, reasonable rates, accessibility of letter boxes, dense network of postal offices, with the monopoly restricted to a certain weight, due to the development of new services outside this sphere there has been an erosion of this monopoly. According to a UPU report, between 1996 and 2005: “the typical postal administration will be a corporative state enterprise which benefits from a monopoly or an exclusive license in the letter post market and is increasingly commercial in outlook, but whose powers in pricing are limited. It further states that a minority will be modeled on fully private companies listed on the stock exchangeî.
While the reform in the telecommunications industry has been profound, when this occurs in the postal sector, transformation in the status of the monopoly will take place in two stages. first, the separation of regulation and operation activities, which implies the dismantling of public administrative bottlenecks. At the second stage liberalization leads to the introduction of management techniques and in some cases to the partial or complete privatization of the monopoly.
A study conducted by this writer reveals that the USA and Britain are not enthusiastic about the liberalization of the postal sector. This can be appreciated by the fact that if a system works optimally, there is definitely no impetus for change. Unlike, less developed economies of Latin America, Africa and Asia, which in fashioning its postal sector after the British system, ended up with a poor, inefficient postal system, which persisted until the winds of liberalization gave it the desired boost. For Nigeria to make any meaningful reform in this sector, and tap into the potentials of this sector, the government, must embark on the privatization of the postal sector. The Argentine Liberalization Programme on the Postal Sector, offers a pragmatic example of the boldness of the government.
Argentina adopted a cautious liberalization of the postal sector, which was gradual, with the transformation of administrative services into public enterprise and partial privatization and the opening up of competition for new services outside the monopoly.
Argentina, through its national postal agency, ENCOTEL, had enjoyed a quasi-monopoly of postal service. This monopoly was gradually restricted in the 70s with the arrival of franchise holders which, in exchange for a fee, subject to certain operating conditions lost the right share of the monopoly. The difference between the franchise holders and ENCOTEL lay in the obligation respecting universal service, since the latter applied only to ENCOTEL, with franchise holder filling the slot on the market. This led to decline of ENCOTEL and its activities between 1981 and 1991.
Decree No. 118/93 on privatization of the post office was based on the following principles:”The postal service was not fundamentally different from any other economic activity. The government has the obligation to guarantee a universal basic service through out its territory, the provision which may be subsidized”.
Hinged on these principles, the Argentine government established the private limited liability company, ENCOTESA. Under Decree 265/ 97, the government initiated the privatization process by granting license in the postal service for a period of 30 years in accordance with provision of the Act in respect of the reform of the State (Act No. 23. 696). In a typical expression of globalization, a number of foreign postal enterprises, Sweden, New Zealand, United Kingdom, showed interest in managing the postal services of Argentina.
Following an international tender in which four groups participated, the SOCMA – BANCO DE GALICA GROUP was selected as operational partner or technical adviser of the official postal service of a UPU member, this economic experimentation has yielded huge dividends for the Argentine government as postal services are being rendered efficiently.
In Nigeria, liberalization of the economy, remains one of the cardinal objective of the Obasanjo government. A cursory look, reveals that in the postal sector, there is the absence of an independent regulatory organ. NIPOST, doubles as the dominant player and also as the regulatory body, this gives NIPOST an unfair advantage over other operators and stultifies the growth of the postal sector.
At this stage of our nationhood where government’s role has become regulatory rather than participatory, the writer is of the strong view that government should embrace its liberalization, wholesomely and not selectively. The postal service sector needs a diagnostic review coupled with a fearless privatization blueprint, that would enable government shift from its participatory role with its attendant distraction from core governance to a regulatory one.