Issues involved in the privatisation of Nipost

Recently there were advertisements in national dailies for Expression of Interest in the Nigerian Postal Service, NIPOST, but Tayo Ajakaye in this write-up examines the issues involved in the planned privatisation of the national mail carrier.

At the inception of this administration, a lot of emphasis was placed on the need for government to hands-off the running of enterprises especially as it is becoming increasingly clear that state-owned enterprises are becoming more inefficient by the day while their counterparts, even those with lower capacity, in private hands are doing much more better.

As the adminstrations tenure progressed, many government companies were advertised for sale. Some have been sold off under the first phase of the governments programme. Many others are in the process of being privatised. The second phase of the programme which is on, is set to remove the Nigerian Postal Service, NIPOST, from state hands. NIPOST is one of the firms the Bureau of Public Enterprises, the government agency responsible for the sale of these companies has listed as next in line.

NIPOST will be privatised as a matter of government policy. This tallies with government's position that businesses are better run by businessmen while government should concentrate on providing the enabling environment for the businesses to thrive. This position is helped by what many people considerly gross inefficient service on the part of the national mail carrier. The Minister of State for Communications, Alhaji Haruna Adekunle Elewi said that much recently when he declared that NIPOST was a "sick baby" which nobody wanted to touch. That, observers say, was when things were very bad for the organisation. Having achieved some measure of success in bringing the service back to a considerable level of efficiency and gradual return of customers' confidence, government believes that to sustain and improve on the successes already achieved, NIPOST should go into private hands.

Privatisation is not a new phenomenon in the postal systems world over. Issues of privatisation of the postal system have always evoked passionate debates on the merits and demerits of such action. In the European Union, the debate has continued and even in the United Kingdom, it has not gone away.

In none of the several cases around the world, however, has there been a complete privatisation of the postal system; the service being essentially a social service first, then a profit-making venture. That is the reason why when the issue of privatisation of the postal administrations is mentioned, everybody gets concerned. In Germany, the government-owned Deutshe Post put on offer 35 per cent of its equity shares, but retained 65 per cent. No nation, some experts have _emphasized can afford to leave its postal system completely in private hands. They readily cite the Anthrax attack scare as a ready example of why some measure of government control have to be retained in the postal company. But the case may be different in Nigeria because one of the reasons why most of these enterprises have remained inefficient was because the choice of their management compositions have become a matter of political patronage, unlike in other parts of the world.

But are there any alternatives to total privatisation of NIPOST? Many of the postal administrations that have not been fully privatised among them Canada Post, Royal Mail and the Dutch Post have had tremendous impact internationally doing business and are in the forefront of companies transformed into multinationals.

These companies have been able to do this by entering into partnership and sometimes outright acquisition of other smaller companies. The United States Postal Service, USPS, the largest in the world, recently went into partnership with FedEx, the largest courier company in the US for more efficiency. The USPS has also been able to make huge amounts of profit because it categorised its services. For instance, it has First class mails, standard A mail, which represent more than 90 per cent of its volume and 80 per cent of its revenue. There are also Periodicals, Priority Mail and Standard B Mail in its list of services. This, experts point out, is one of the things a re-oriented NIPOST could do.

In Canada, the Canada Post's main strategy is to work with existing postal administrations in an advisory capacity. It has gone ahead to set up a subsidiary specialising in international postal consultancy services. This apart, the Canada Post International has established an electronic post office which enables customers to receive their bills electronically.

For Deutsche Post (DPAG), the approach to prosperity is to build up an European parcel distribution network, expand international overnight delivery service and also expand its logistics and value-added services.

For the Royal Mail, the ambition is to spend at least GBP1billion over the next five years on joint ventures, acquisition and partnerships. The Royal mail has also made strategic investments in some areas including a romance with TNT Group and the Singapore Post. This is apart from the 15 per cent stake it has acquired in City Mail, a Swedish company. The 100 per cent acquisition of Crie group of postal companies was considered by many to be the attempt by the Royal Mail to operate more effectively in the French market.

The New Zealand Post International, like the CPI engages in international consultancy with some foreign postal administrations. It has recently been linked to be having talks with NIPOST. A report in the United Network International (UNI) stated that "undoubtedly, this company does not have the financial leverage that other multinational postal companies have…." The report went ahead to say however that the NZPI has a reputation amongst postal administrations and organisations providing financial assistance such as the World Bank. It said "this reputation gives New Zealand Post a leading edge advantage in gaining an international profile beyond its financial means." The report in conclusion added that "New Zealand Post's reputation has been a bit tarnished at home as the deregulation there has started to eat into its profits."

Since it started its international consultancy for which it was reportedly reputed, the NZPI has managed to rake up a lot of controversies and accusations of foul play. In South Africa, NZPI won its biggest contract ever with the deal said to be "the largest postal contract deal ever tendered internationally and has been subject to an intensive bid and evaluation process run by the South African Govern-ment since July 1998." Reports have it that in the first six months of the contract, 78 New Zealand Post International staff have been seconded to work in South Africa including six managers. And probably because the NZPI could not cope, it had to give strategic roles to the Royal Mail, Lockheed Martin of the United States and Deloitte & Touche Consulting to play in the contract.

Expectedly, the South African contract has not been without controversy. For only its former managing Director, Harvey Parker to serve as Special Assistant to the SAPO Chairman, Max Maseila, the New Zealanders were demanding $125,827 per month! That amount is six times the salary of President Thabo Mbeki.

But the contract has since been terminated by the South Africans who saw through the game being played by the NZPI. They claimed the South African Post Office is continuing in operational inefficiency while the NZPI was making a lot of money which it was repatriating home to New Zealand.

This explains why in recent months, since the issue of privatisation of NIPOST has come to the fore, observers have been wondering why the organisation should have anything to do with the NZPI. Operators in the industry view the relationship which the NZPI is trying so strenuously to establish with NIPOST as one that would take the service back to those old days which Elewi referred to as the "sick baby" days.

The ironic thing in all this is that the South African Post Office is already making overtures to NIPOST to help it restructure and repositioned for better efficiency and stability. Equipped by reports of near-magical turn-around of the Nigerian postal system, SAPO wanted help and expertise from Nigeria while Nigeria on the other hand is seeking for help and expertise from a company which has its reputation to prove.

Experts are also of the view that what NIPOST should have done in the circumstances would be to buy up some the smaller courier companies operating in the country to enhance its efficiency. This would tally with some of the solutions the Royal Mail applied when it faced the same problems.

Also, there should be a move away from leaving the overnight delivery system to the luxury buses companies who rake in a lot without actually delivering neat and efficient services.

Another area of improvement which NIPOST officials have said that they are planning to work on is the development of its parcel distribution network. That area had been left mainly to the courier firms.

NIPOST could increase its revenue profile if it goes into partnership with strong and established courier firms which has all the logistics on the ground. The US Post Office has set the pace in this direction. It is another solution industry operators proffer as a way forward but the most important task would be that a reputable foreign delivery firm take hold of NIPOST for a proper turn around.

NIPOST could increase its revenue profile if it goes into partnership with strong and established courier firms which has all the logistics on the ground. The US Post Office has set the pace in this direction. It is another solution industry operators proffer as a way forward but the most important task would be that a reputable foreign delivery firm take hold of NIPOST for a proper turn around.

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