Posta Kenya eyes new strategies as it seeks to remain in business

The Postal Corporation of Kenya (PCK) is mulling key changes to its business strategy aimed at turning around its dwindling fortunes.

Posta Kenya has said that it was implementing various policies for its planned e-commerce business growth, and it was in the process of acquiring a National Payment Gateway system which it says “will be the pivot for all forms of public payments in Kenya.”

“We have seen our revenues dip, as mail volumes tumbled and private parcel delivery companies ate into our market share. To improve our fortunes, we are now leveraging on the advent of digital globalization through modern technologies and strategic partnerships,” said Postmaster General of Postal Corporation of Kenya Dan Kagwe in a telephone interview.

Through the adoption of e-commerce platforms, Kagwe said that to keep loss making branches open, the corporation will partner with the Ministry of Information to implement the National Addressing System and Kenya Transport and Logistics Network as it gradually transitions into a paperless and cashless agency.

“We have re-engineered the organization to become a formidable partner that will facilitate e-commerce by being the intermediary between the country’s SMEs and foreign and local online retailers,” he said.

A 2019 report by financial analysts at Citibank expressed the need by telecommunication service providers to heavily invest on infrastructure to facilitate payments and money transfers for the flourishing e-commerce market.

According to the report, Kenya’s e-commerce market is worth over Sh400 billion in the long term and between Sh70 billion and Sh120 billion in the short to medium term, presenting a lucrative revenue opportunity for the likes of PCK.

The renewed e-commerce push by PCK is hoped will help prevent the company from being rendered irrelevant amid continued financial struggles in the last seven years.

Last year for instance, the national treasury paid a total sum of Sh 810million to Posta Kenya in a one off payment that was meant to cushion the corporation from the disruptions and shocks of the coronavirus pandemic – in a period that also saw its workers endure three months without monthly salaries.

Data from the Auditor General indicates PCK spends Sh2.2 billion annually on employee salaries.

While appearing before the Senate last week, Kagwe asked the Senate Committee to fast-track the approval for an annual budgetary allocation of Sh1 billion to cushion the firm from the burden of Universal Service obligation. The amount would also keep most of its loss making branches open.

The Universal Service Fund (USF) is a fund managed under the industry regulator, Communication Authority of Kenya (CA) by the Universal Service Advisory Council (USAC) to facilitate connectivity to unserved and underserved areas.

All telecom operators in the country are required to contribute 0.5 per cent of their annual turnover to the fund the project with CA topping up the remaining 25 per cent. On average, telecom operators contribute Sh1.4 billion per year.