Nigeria: postal sector reforms and national economic development
postal sector is one of the core infrastructure sectors of the economy. Improved efficiency and customer responsiveness in this sector has the potential to stimulate growth, to promote globalization and to facilitate the rise of e-commerce.
Across the organization for Economic Co-Operation and Development (OECD) of which Nigeria is a member, traditional state owned and regulated public utility industries have been transformed by reforms, which have fundamentally changed the way these industries are regulated. The former reliance on State control and regulation has given way to greater reliance on competition and market forces, which has lead to greater focus on efficiency, innovation and meeting the needs of consumers.
Nigeria has witnessed reforms in key sectors of its economy, which has visibly led to improved efficiency, unfortunately, to date, these reforms, have largely bypassed the postal sector. The postal sector in most OECD countries remains dominated by a state owned vertically integrated monopoly still protected from the forces of competition. Interestingly however, Nigeria seems set to join the League of Nations who have carried out postal reforms with the recent advertisement by the Bureau of Public Enterprises (BPE) and the secretariat of the National Council on Privatization (NCP) asking qualified firms and organization to apply for advisory functions.
Postal sector reforms comprises integrated actions designed to organize an important sector of the national economy so as to ensure a healthy balance between free competition and the provision of Universal Postal Service.
Postal sector reforms also covers the modernization of the public post, their independence, self-financing and customer focused policies. A successful reform depends on the availability of outside resource and on government's willingness to make it a national priority.
In the GATS service sectoral classification list, postal and courier service are listed as sub sectors of communication services, a sector which also includes telecommunications and audiovisual services. In the UNCPC, these services are classified in a aa,B,A(B"post and telecommunicationsaa,B,(B? sector, reflective of a long-standing but increasingly outdated tradition of postal and telecommunication services being offered by a single state monopoly. As the introduction of competition and other reforms have taken hold in the telecommunication sector, one of the first changes has usually been to allocate postal and telecom services to separate entities with the postal services entities retaining monopoly rights more commonly than their telecom counterparts.
For the most part, public postal service providers are State owned and have a monopoly on most types of mail delivery services. Courier services, usually parcel delivery or expedited mail service, are often supplied by the postal monopolies but not reserved exclusively for them. Courier services are normally supplied by privately owned companies who compete with one another and with state postal service providers. However, the competitive environment for public postal services is changing as private service suppliers begin to expand into the correspondence market particularly in segments such as business-to-private bulk mailing and direct mail advertising, which is an increasing popular form of corporate marketing strategies. Although corporatization and privatization of postal service monopolies is beginning to take hold, only a few countries such as Finland, New Zealand and Sweden have fully ended monopoly rights in their market for supply of public postal services. A variety of significant postal sector reforms are, however underway. For example a uniform plan for postal reforms is being implemented in the European Union and postal reforms legislation has been debated in the United States and the United Kingdom. Most often, consideration of liberalization centers on where to draw line between reserved and non-reserved services.
One of the important challenges to postal and courier services, both public and private, is competition from other communication services such as facsimile, electronic mail and data networks particularly the business top business segment.
In 1996, faced with the changing postal environment, the Universal Postal Union and the World Bank undertook a comprehensive study on international postal sector reforms. The main objective of the study was to review major postal sector reforms and extract key policy related messages for countries considering reforms. The study examined the postal service of six countries that have implemented postal reforms: Australia, Canada, Chile, Singapore and the United Kingdom. In addition, it gathered information on reforms in many other countries including Papua New Guinea and Tanzania. As a result the key policy messages that have emerged in the study are based on the experiences of about 35 countries.
According to the UPU study, physical mail accounted for nearly 20 per cent of the worlds communication market as a whole in 1995. Fax and telephone accounted for 75 per cent and electronic mail just over 5 per cent. The study further stated that the share of physical mail is expected to decline by 26 per cent with electronic mail expected to gain significant upward volume during the said period. The decline in the presence of upward forecasts for physical mail volumes reflects the fact that the total communication market is growing at a faster rate than the postal market.
The UPU cites economic factors, which however vary greatly depending on region and socio economic environment as the foremost determinant of letter traffic volumes. It ranks as second various postal factors such as quality of service. It described these and other factors such as population growth and education as having a greater impact than technological factors and the substitution of other means of communication (such as electronic mail and internet) when the population as a whole is taken into account.
It is noteworthy to observe that the relation between postal and courier services is that the latter represents a subset of postal-type service i.e. the express mail and parcel delivery service that are usually removed from (or often were never subject to) the exclusive purview of national postal monopolies. It might be anticipated that the range of services removed from the aa,B,A(B"reservedaa,B,(B? status may grow. Also a trend for liberalization may become palatable as new means of electronic communication make it incumbent on postal services to adapt structures and practices to lower cost and offer more price competitive and efficient services.
Despite this gradual opening up to competition, the characteristics of the postal service suppliers are still fairly similar in most countries. A national public postal service monopoly on mail items up to a certain weight level remains the most common market structure for the service although a gradual erosion of the scope of monopoly and the development of the postal-type services outside the monopoly areas, have taken place.
In exchange for monopoly privileges, national regulation commonly holds national postal suppliers responsible for providing universal services in the form of homogenous and reasonable rates, accessibility of letterboxes, a dense network of postal offices and for meeting and improving upon certain standards of quality services. One interesting feature to point out is that while most low-income countries have postal monopolies with fairly broad reservation of services to them, the lower market share attributable to the national suppliers would seem to indicate that on a de facto basis, their suppliers already face significant competition.
Since private courier companies often provides services that are more dependable, faster and cheaper than those offered by national postal services suppliers, the postal suppliers have been increasingly concerned about losing market share in the growing international mail market to private companies. Moreover, as trade barriers have fallen, courier service suppliers seek to take larger shares, the effects of the impending competition seems not only to be with private companies but also among national postal suppliers for bulk mail.
Since 1874, international regulation of postal services has been conducted under the auspices of the UPU, an international organization comprising over 189 members. Its members are considered to constitute a aa,B,A(B"single postal territoryaa,B,(B? within which they guarantee the free circulation of mail. They negotiate agreements and other instruments that collectively address issues that arise in the course of membersaa,B,(B(tm) responsibilities for effecting cross border transit of mails. The Universal Postal Convention sets the basic UPU principles and guidelines for the exchange of letter post mail and to a lesser extent for express mail. Other UPU agreements and guidelines apply to parcel post and financial services such as postal and money orders. The Universal Postal Convention defines general guidelines on international postal services and regulations on the operations of letter post mail. These include the rates called terminal dues that country pay each other as compensation for processing and delivering in-bound mails, the method of calculating terminal dues, the maximum and minimum weights, the size limit of letter post mail and the conditions for acceptance. The representatives of UPU members (i.e. national postal services) may also enter into bilateral agreements to exchange express mail and plurilateral agreements to exchange all categories of international mail under conditions more favourable than might be possible in negotiation at global level.
Legal and regulatory controversies are arising as competition in postal service markets becomes more common and economically significant. In Nigeria, private operators had for long called for the overhaul of the present law governing the sector, the Nigerian Postal Service Act No 41 of 1992.
Private operators in Nigeria have consistently argued that the Act confers NIPOST with an undue advantage over others. It is the contention of the private operators that it was an anomaly to make a competitor, a sector regulator. Significantly, NIPOST role in UPU places them in the position of being, at once, regulators and competitors. Of particular concern are two provisions of the 1989 Universal Postal Convention. Article 25 of the convention permits postal administrators to refuse to handle mail brought into the country by private suppliers and another provision providing that terminal dues rates need not be directly related to costs.
Regarding the role of NIPOST and other national public service monopolies in some jurisdictions, the national monopoly is responsible for extending licences to courier service suppliers while at the same time offering its own express mail or parcel delivery services in competition with suppliers.
Postal administrators of some countries may impose regulations to control pricing and ground handling that may function to give a working advantage to the monopoly postal service supplier in services in which it competes with other courier services. For instance, in Nigeria, as with some other jurisdictions, taxes and concessions fees applied to courier service suppliers are imposed directly by the national postal service provider. In other cases, the scope of courier service commitments may be limited to certain full range of courier services that are not reserved exclusively to the national service supplier. However, there are also instances in which the scope of services that courier service suppliers are permitted to undertake can be broader than usual, encompassing some services most typically reserved to the national postal supplier such as delivering periodicals, selling postage stamps, handling certified and registered mails or renting post office boxes.
Customs practices and procedures can most significantly affect trade in courier services, for example, if a jurisdiction has no custom clearance policy that recognizes courier services as such. This may require them to be treated under time-consuming procedures designed for regular cargo, if unaccompanied, or under passenger type allowance for value and weight, if accompanied. Another example would be customs procedures offering very limited time periods available for clearance, a practice that can defeat the very customer service objectives offered by express mail suppliers to guarantee customer service every day at all hours. It should be noted however, that many national efforts aimed at customs reforms and streamlining more generally, are helping to address some of the issues raised here with respect to courier services.
It is also noteworthy that courier services often encompass some components of other service industries such as road and air transport. Commitments undertaken by courier services may be affected by market access limitation in these other industries especially as it relates to the aviation sector.
In conclusion, the Obasanjo administration should be commended for the vigorous efforts it has so far taken in reforming the key sectors of the economy. However, government needs to put in place a level playing ground for the proper implementation of regulatory policy. One way of achieving this will be the setting up of an independent and impartial Postal Service Commission to regulate the activities in the postal sector just as the NCC does for the telecom sector. Once done, one can then rest assured that the postal sector will witness significant boom in business as well as an appreciable contribution to the gross domestic product of the economy just as has been the evident case in the telecom sector where over five million jobs have been created in the last four years.
Dr. Mamah, is CEO of IFEX Worldwide
