The role of policy makers in the
development of the postal and
courier sector in
East Africa
Daniel Obam
Communications Radio Technology Expert
National Communications Secretariat
INTRODUCTION
• Sector dominated by a publicly owned, vertically integrated
entities, protected from competition.
• It is one of the core infrastructure sectors of the economy
• For improved efficiency and customer responsiveness it has
the potential to stimulate growth, promote globalization and
facilitate e-commerce
• It has undergone radical changes from a regulatory,
operational and technological perspective.
• New forms of competition from other communication services
have arisen accompanied by new opportunities
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CHALLENGES FACING POSTAL SECTOR
• Factors that undermine the postal services is electronic
communications, include but not limited to the following;
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–
–
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Fax
Internet
electronic mail and
electronic bill payment.
• At the higher end, threats are posed by express carriers
who make fast delivery of documents and small packages.
– This competition has contributed to erosion of the capability of the
public service postal provider to sustain their public service
obligations
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CHALLENGES FACING POSTAL SECTOR
• The role and function of postal services is undergoing
fundamental change.
– Demand for distribution of letters, print media , advertisements, and
other documents is declining due to the rise of advanced electronic
communications.
– At the same time, demand for parcel delivery services should increase
due to the development of e-commerce, just-in-time manufacturing,
and other business trends driven by the new electronic technologies.
• Market-oriented reforms have been undertaken within public
postal market that have focused on the reduction and scope of
monopolies:
– Furthermore, new regulatory issues have arisen as a result of
liberalization
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CHALLENGES FACING POSTAL SECTOR
• Meeting the growing competitive threat from electronic
communications and express and parcel carriers.
– Growth of quality, speed and penetration of electronic
communications systems is a strong substitute for physical mail
and threatens traditional revenue streams
– Business-to-business and business-to-residential markets are
being lost.
• Internal reform and restructuring to improve
responsiveness and customer satisfaction and to reduce
loses
– The postal incumbent is a large enterprise employing a large
number of people
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CHALLENGES FACING POSTAL OPERATORS
• The financial sustainability of universal service providers
is challenged as their key postal revenue source, letters,
is under pressure. As a result, Postal services providers
have:
– launched cost savings programmes with negative impact on
employment level and conditions.
– increase postal tariffs (particularly for single-piece items), and
– adapt postal operations to improve efficiency within the limits of
the universal service obligation.
• However, increasing prices and changing service levels
may further push volume decline.
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OPPORTUNITIES FOR POSTAL OPERATORS
• Through e-commerce the operators have been able to;
– substantially push distance selling domestically
– Increased cross-border transactions with the most important
driver for B2B being economic growth and the trend to buy
goods online (e-commerce) promotes B2C shipments.
• Innovations like selling goods online has broadened their
customer base.
• With liberalization, there is an increased opportunity for
private sector involvement in partnerships with
incumbents to enhance broader reform covering issues
such as improved service delivery, staffing, tariffs and
competition.
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OPPORTUNITIES FOR POSTAL OPERATORS
• Today the most important social function of the Post office should
no longer be that of letter delivery.
• Postal services should extended their service options to include
provision of pensions, financial and newer more electronic based
services or activities.
• Under those circumstances, what consumers/customers need most
is “universal access” to those services, as opposed to just letter
delivery.
• At the same time, there are clear economies of scale in
aggregating services within one location.
• A first step towards a coherent “universal service” strategy would
be to decide on a list of services that government believes should
be provided to the great majority of citizens and then look for
opportunities to “bundle” those services.
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POLICY INTERVENTION TO DEVELOP THE SECTOR IN EAC
• Policy should aim at two overarching objectives:
– protect and promote an affordable, reliable, and efficient universal postal
service and to promote a fully operational EAC market in postal services.
• Specifically, harmonise and improve domestic postal services and specifically to
improve the ‘unsatisfactory’ quality of cross-border services.
• Member states should be encouraged to:
– provide unrestricted market access to players from the region
– address unreasonable practices by dominant suppliers, to ensure that
any licensing requirements are transparent and reasonable
– guarantee independence of regulators from suppliers in the sector.
– recognize the necessity of government intervention to ensure the
universal supply of quality basic postal services, including through direct
government-supplied services and the designation of exclusive suppliers.
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POLICY FRAMEWORK TO DEVELOP THE SECTOR IN EAC
• The main objective of the policy framework is to visualize trade
in the manner in which this highly competitive sector can add
to the development and growth of the services in the region.
• EAC countries should aim to create synergies amongst
themselves, while reinforcing and widening the scope of
cooperation activities as new actors join the sector
• Four aspects of sector integration can be advocated for:
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Legislative Framework -harmonization
Regulatory Integration (Including capacity building)
Technological Integration
Logistics Integration
• Initiate a comprehensive data gathering exercise to determine
the level of regional development of sector
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POLICY INTERVENTION TO DEVELOP THE SECTOR IN EAC
• Member States should agree to:
– provision of a basic set of affordable universal postal services to all
residents throughout the region.
– Rates for each universal service geared to costs, affordability,
transparency, and non-discrimination.
– set regional service standards for each universal service and to monitor
compliance with those standards.
– A modernization strategy of ‘gradual and controlled liberalization of the
sector’.
– Set common price and weight limits on the scope of the reserved area
and adopt the principle that the reserved area could be maintained only
'to the extent necessary to ensure the maintenance of universal service .
– ensure the proper functioning of the universal service and to ensure
undistorted competition in the non-reserved sector.
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POLICY FRAMEWORK TO DEVELOP THE SECTOR IN EAC
• Formulate a general framework of action allowing standards
for operation to facilitate, secure and seamless transfers and
interaction in a technologically enabled environment:
– Harmonization of logistical arrangement
– establishment of similar treatment protocols between customs agencies,
transportation companies and the airline industry
• Systematic review and realignment of services and provision of
services based on market trends and other impacting factors.
• Build capacity to execute market studies to determine the
needs of EAC customers based on trends in the market place.
• Ensure fair competition in mail delivery as part of policy and
legal reform process – through competition law of regulatory
intervention
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POLICY FRAMEWORK TO DEVELOP THE SECTOR IN EAC
• Put in place policies that encourage increase in private sector
involvement in both the retail and delivery portions of current
postal operations—including retail franchising, and sale of the
public operator’s network delivery functions.
• As part of a participatory process, agree the scope of bundled
“universal” services to be offered by postal retail outlets
• Promote initiatives to ensure the region’s Postal and courier
sector becomes:
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Customer-oriented
market driven
innovative, and
responsive to the increasing demands of customers,
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CONCLUSION
• Policy makers in EAC should ensure there is improved
relationships between the general public and the sector due to
enhanced quality of service delivery in the sector:
– capable of competing nationally and internationally;
– with a revenue base that would allow for growth and self sustainability;
it would demonstrate efficiency through continuous performance
improvements
• This would result in improved financial management systems
with greater accountability, transparency, flexibility and
efficiency in the use of resources.
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CONCLUSION
• There should be improved relationships between the general
public and the sector as a consequence of enhanced quality of
service delivery in the sector:
– capable of forming and sustaining profitable alliances and partnerships;
– utilizing modern Information Technology;
– which would place major emphasis on human resources development,
this would be with a view to enhancing job satisfaction and morale.
• Security should be a prime concern:
– With the rapidly changing environment, security in the sector should be
treated as a priority, ensuring that citizens and businesses can trust the
sector with their sensitive and confidential transactions.
– Illegal entry of harmful elements through mail should concern the entire
sector.
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CONCLUSION
• Ensure the funding of the USO, fair competition in the
interest of the citizens in the sector, as well as to create
guidelines for future entry and operation in the sector.
• The future of the sector will depend on how they adapt to
the explosive growth in the communications market.
• Some Postal services have embarked on reform and
restructuring becoming more independent, self-supporting
commercial enterprises.
– The goal is to provide higher quality Postal services at reasonable
rates and to offer a wider range of products and services which meet
their customers' growing expectations
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CONCLUSION
• The industry has ability to adapt quickly to technological
developments.
– Many have already entered the electronic realm, embracing new
technologies to improve products and services and create new ones
for their customers.
• The main challenge is to find ways to effectively counteract
substitution of physical mail by electronic communication;
and at the same time, to use the opportunities offered by
new technology to expand and improve their products and
services.
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THANK YOU