Uganda: Posta Fights to Keep Afloat in a High-Tech Sector
Posta Uganda, the country’s traditional postal service provider, is sliding out of business after taking damaging knocks from new sophisticated players amid severe under funding from the government.
“Posta needs re-capitalization to become profitable,” the former Posta Uganda Board Chairperson Aisha Lubega said last week.
Her statement underlined the deep seated precarious situation under which the company is operating. Almost ten years after its formation, the company has failed to break even despite initial government promises to subsidies it with a Shs1 billion annually. It only posted profits in 2004/05 of Shs 400 million according to company reports shown to Business Power.
Mr Kitongo said Posta Uganda has received only Shs150 million from the ministry of Works since 2002. Today, the company fails to deliver on some of its most core business for lack of financing.
It delivers mail at no profit, it is burdened by outstanding statutory obligations and is deeply indebted to the tune of Shs 4.3 billion as assessed tax liability and more than Shs 2.3 billion for contributions to the National Social Security Fund and staff contributory schemes, according to the company’s ministerial policy statement for 2007/08 presented in June.
Posta Uganda formerly Uganda Post Ltd was formed in 1998 after Uganda Posts and Telecommunications, formed in 1983 by an Act of Parliament, was split into four separate entities; Uganda Post Ltd, Uganda Telecom Ltd, Uganda Communications Commission and Post Bank Uganda Ltd.
The company’s share capital of Shs 25 billion are wholly held by the government.
Last week however, at the inauguration of a new board, financial woes returned to haunt the company.
In order to be able to make money and survive the tough onslaught of competitors armed with new information and communication technology, the company is barely on its knees for serious capitalization. It has since more than halved it jobs from 611 to 300 to keep up with the pace. Early this year, during the Pan African Post Day, former Managing Director Collins Oneko sounded even scarier about survival.
“The traditional African postal industry is facing stiff competition at a rate never seen before. In order for the Post to survive, it has to re-engineer itself so as to incorporate new technology in its service delivery or else it becomes obsolete. This is what the consumer market dictates today,” he said.
Confident
Posta Uganda Managing Director Alex Mulooki, however, is confident that e-competition is less of a threat than an opportunity for the postal company to muscle its resources for competition.
Among the changes to come are the automation of the company’s operations, introduction of Electronic Fund Transfer Services within East Africa and setting up of telecentres in rural towns to offer Internet facilities.
1 British Pound (GBP) = 3,342.38 Uganda Shilling (UGX)
