Postal corporation seeks partners in bid to cut costs
Postal Corporation of Kenya is opening opportunities for investors as it seeks individuals to run some of its branches on a franchise basis.
The company has applied for cabinet approval to offload land and buildings valued at Sh3 billion as a way of cutting costs and focusing on core service delivery in areas mostly around urban areas.
Mr Fred Odhiambo, the post master general, said franchising outlets was already underway as one of the corporation’s strategies to enhance service delivery and shore up the bottom line.
Also in the pipeline is disposing of some of its non-core assets that the corporation is not making full use of such as land and buildings in various parts of the country.
The corporation has 900 branches countrywide. Mr Odhiambo said that a fifth of them, 180, located in remote areas would be more viable under a franchise model.
Under the Universal Service Obligation PCK is supposed to have one postal office for every 6,000 Kenyans.
However, Mr Odhiambo said the corporation could offer only one postal office for 35,000.
Postal Corporation of Kenya is opening opportunities for investors as it seeks individuals to run some of its branches on a franchise basis.
The company has applied for cabinet approval to offload land and buildings valued at Sh3 billion as a way of cutting costs and focusing on core service delivery in areas mostly around urban areas.
Mr Fred Odhiambo, the post master general, said franchising outlets was already underway as one of the corporation’s strategies to enhance service delivery and shore up the bottom line.
Also in the pipeline is disposing of some of its non-core assets that the corporation is not making full use of such as land and buildings in various parts of the country.
The corporation has 900 branches countrywide. Mr Odhiambo said that a fifth of them, 180, located in remote areas would be more viable under a franchise model.
Other than providing investment opportunities, Mr Odhiambo said the deal would enable it to save on expenses such as staffing. He said the corporation’s universal access policy meant it cannot close outlets in areas that are not commercially viable.
“We are supposed to offer services to all parts of the country whether there is profit or not according to the universal access policy,” said Mr Odhiambo.
Under the Universal Service Obligation PCK is supposed to have one postal office for every 6,000 Kenyans.
However, Mr Odhiambo said the corporation could offer only one postal office for 35,000.
So far the franchise exercise has attracted interest from eight entities that would like to partner with the corporation.
PCK intends to use the money obtained from selling its none core assets on automation, staff welfare and improving customer care services.
The corporation has automated 350 out of its 900 branches in a bid to increase profit margins. Mr Odhiambo said that while mail delivery accounts for 70 per cent of its total annual revenue, the process consumes 65 per cent of the income.
“The mail process is so manual and if we automate our processes we could reduce the cost involved to 45 per cent and thus increase our profit margin,” said Mr Odhiambo.
Last year the company made a turnover of Sh3.2 billion and a pre-tax profit of Sh167 million. Its turnover projection this year is Sh3.6 billion.
Other than the mail service, PCK is also in the courier and money transfer services. However, competition in the courier service has seen it command only three per cent of the market share.
Since the liberation of the market, the regulator has licensed 130 postal and courier operators. The total investment by the end of last year was Sh806 million, projected to reach Sh1.4 billion by 2012.
According to a CCK study, the size of the postal and courier market grew to Sh6.6 billion in 2007, up from Sh4.1 billion in 2002.
1 USD = 75.5393 KES
