Nigeria: With free enterprise, the postal sector can compete with telecom

IS modern technology a threat to traditional postal service providers? Well, Mallam Ibrahim Mori Baba, Post Master-General and CEO of the Nigeria Postal Services, (NiPOST) thinks so, but believes the post remains a vital ingredient of communication in modern business enterprise.

“Despite increasing threat of modern technology in the areas of telecommunications, the Internet vis-a-vis the prevailing global economic liberalization policy, the Post remains a constant factor in the league of communication options available to the people. In contemporary Nigeria, postal service is still the most affordable means of communication to a greater percentage of our population. It has continued to play the role of an important medium of communication that can not be ignored. Interestingly, the Post is even waxing stronger and absorbing the potentials of new technology into its array of services,” the PMG was quoted on the NiPOST webpage — www.nipost.gov.ng.

In a bid to get the Nigerian postal system in sync with modern business trends, the government is in the process of enacting a new Postal Reforms Bill that would apparently give the body greater authority and control in the business of mails delivery. Private courier providers already see the new bill as a threat to their corporate existence, although details of the new bill still with the National Assembly since the regime of former President Olusegun Obasanjo, have not been officially made public.

Mr. Isaac Orolugbagbe, former Chief Executive of Red Star Express (FedEx) believes the new reforms policy bill is a way to the total annihilation of private investment. “I think the new postal reforms bill is something every well meaning Nigerian must stand up against. If it is allowed to get through, it will spell the death kernel for private courier business in this country,” said Mr. Orolugbagbe, at a recent breakfast meeting with journalists in Lagos.

Mr. Orolugbagbe believes that like the telecom reforms in the early days of President Obasanjo’s government that now allows Nigerians to make telephone calls so easily, the postal sector too could rake in good fortunes for the country. He noted that reforms in the telecom sector have brought about huge Foreign Direct Investment (FDI) into the country.

Initially, the government of President Obasanjo had hoped to commercial NiPOST, but the agency charged with the responsibility, Bureau of Public Enterprise, BPE deferred that operation, opting rather for outright privatisation.

“NIPOST was initially slated for commercialisation but was subsequently upgraded to privatisation. The comments made by the prospective consultants for the privatisation of NIPOST, and the fact that NIPOST is a moribund enterprise in a declining sector, led the BPE to revisit the privatisation strategy for NIPOST. A successful transaction and a turn around in the fortunes of NIPOST can only be achieved by restructuring the enterprise in such a way that private sector participation is introduced in the activities that are deemed commercially unviable, and those deemed commercially viable are privatised outright.

“Thus, to achieve the above stated goal, NIPOST will be restructured before privatization. The process would be in three phases: Phase I will determine the appropriate option for the restructured postal sector from an organisational perspective and an institutional perspective. Phase II will focus on the restructuring of NIPOST into various business units, whilst Phase III will be the actual privatisation of the entities created from NIPOST, that is, the implementation of divestiture and non––divestiture privatisation options,” a BPE notice said on its website. Mr. Orolugbagbe, recently retired from the Red Star service after serving as Chief Executive for nine years and has since been replaced by his erstwhile DMD, Mallam Sule Umar Bichi.

Mr. Orolugbagbe, believes his greatest achievements as Chief Executive was moving the company from annual revenue base of N 250 million in 1997 to over N 2 billion in 10 years. He noted that the company started with a share capital base of N 3 million in 1992. “The company actually needed N 60 million to start operation, but at the end we just made do with N 3m and today, it is now a household name.”

Red Star recently entered into working alliance with the American Federal Express (FedEx) courier boosting its annual financial statement with additional USD 3 million.