September 24, 2022

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Poor infrastructure affecting our money transfer business – Postmaster-General

The Postmaster-General, Dr Ismail Adewusi, Nigerian Postal Services speaks with SAMI OLATUNJI on how NIPOST operates as a regulator and service provider in the fast-changing, highly competitive logistics sector

After the COVID-19 pandemic disrupted logistics and supply chains, there has been an increasing need to explore beyond traditional methods of business operations. What is NIPOST doing currently to rebrand logistics in Nigeria?

The pandemic brought about several challenges to our operations as postal operator. We are the designated postal operator for Nigeria. The problem that happened following the pandemic was that the entire global postal operations stopped because of the closure of several borders. During the pandemic, it was difficult. Sixty per cent of our revenue comes from the export of items, particularly mails, parcels and cargoes. During the pandemic, all of these stopped. Although the pandemic abated, the fallout of it is still living with us today. That is why we have these global prices of food going up, and we still have the problem of inflation, which cuts across the world. It is not only Nigeria and Africa, even the United States and the other parts of the world are affected. The Russia-Ukraine crisis also compounded inflation. The truth of the matter is that every postal administration globally needs to come back and tinker with its processes and operations in order to remain relevant. For us, we also have to remain on alert. We need to continue to work around and do the needed things to catch up. What we have done since the pandemic abated was to look at how we can engage positively and leverage technology by building sustainable partnerships with organisations, especially those who have done a lot of work in the area of logistics. Logistics as you know is one of the major thriving businesses in our environment today. Our own role actually has to do with even regulating the logistics operators in Nigeria, most particularly because we have seen incidences where most of the operators are now using their platforms to cause security problems. So, we had to do something about that. In the area of rebranding, we signed an agreement with Egypt for a fleet management platform. We have also signed agreements with owners of vehicles and motorcycles. They are used to pick up and deliver parcels across the country. We started with Lagos and we are coming to Abuja.

 In terms of security, you mentioned that some logistics service providers use their platforms to move around weapons and contrabands. What is NIPOST doing to ensure that dangerous/contraband weapons and equipment are not moved from one point to another via courier or mail?

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The starting point was when we met with the leadership of the NDLEA. During the meeting, they told us that the problem with many of the courier logistics operators in the country is that in many instances they use those motorcycles to traffic drugs and weapons. So, what we have done is to have some kind of understanding with the NDLEA, which means that for every registered operator that we licensed, we sent the list of the names of the company, their location and directors to the NDLEA. So, if you are riding your motorcycle on the road and you are accosted, they have the up-to-date list and if your name is not on the register, they will impound the vehicle.

With increasing competition in the logistics sector in Nigeria, some people claim NIPOST may become irrelevant in a few years. In light of this, how is NIPOST staying ahead of its competition? Also, how do you create a balance as a service provider and a regulator?

This has always been the most interesting part of the work we do. NIPOST has been regulating and also been an active part of this logistic chain for so many years. That is why one of the major complaints of the operators is that it is not right for us to be an operator and regulator at the same time. That has been taken into account in the new NIPOST Bill, which is at the National Assembly. That has been the issue. It is better to separate these two functions. Even though we are serving both ends of the market, we have managed to ensure that it does not affect the way we operate.

Some courier and logistics companies complain about high licensing fees and over-taxation by NIPOST and state government agencies. What is the agency doing to address this?

There is nothing like over-taxation because we don’t collect taxes. The only thing we collect is the licensing fee. If you want to run a courier operation in Nigeria, you must be licensed. That is what the law says. So, nobody is overtaxing anybody. However, there is a natural process in our country that people will shout to the rooftop once a little input is made. For instance, when we were doing the new regulatory framework (2020/21), the last time that such reform took place was in 1992. So we were still charging for licences the price of 1992 in 2020. That is not feasible given what has happened in the industry. So, there was nothing like overtaxing.

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There has been a proliferation of courier and logistics companies in Nigeria, and there have been complaints of poor regulation on the part of NIPOST. How would you react to this?

Interestingly, on the issue of monitoring, we have done a lot of work in the recent past. Since last year, when the new regulatory framework took effect, the operation has been continuous. We have a monitoring task force in Lagos, Benin, Abuja, and we are still going around. It has been very effective because in some peculiar cases like in Edo State, the government invited us to a roundtable; it also invited their courier and logistics companies and we worked out an agreement that provided an opportunity for them to pay for their licences based on a plan. How much are we talking about? N250,000 for the lowest end of the market-the SMEs; and we are saying you can break it down and pay monthly. It is also designed to make life easy for the operators. I don’t think we have done anything that is not consistent with making the operators to enjoy very smooth operations. But at the same time, we will not allow operators who are not licensed, to use the logistics service to defraud innocent citizens. We have reported cases of firms collecting products for delivery and they suddenly disappear with the products. But if they are registered, we will fish them out.

The minimum postage price was moved to N250 last year from N50. Will there be another increase this year or any time soon in line with the rising cost of logistics?

The truth of the matter is that with the level of inflation now, what we have seen is the cost of operation rising by the day. At the moment, we have not come up with any upward review. We have hardly actually started implementing the new price policy, which was launched late last year. We are watching and if there is a need along the way for an upward review, we will explore. But I am sure you know it is a very technical thing. We do not just sit down and increase the price. It goes through a lot of discussions. There is actually an inter-ministerial committee that sits to look at this, using the template provided by the Universal Postal Union. So, it is not something that we can sit down and do by ourselves. But we will be watching the market to ensure that as we are increasing, we are able to close the gap in such a way that we will not be increasing every year.

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NIPOST is involved in some international money transfers. What have been the challenges around remittances and what are you doing to address them?

This is another area where we are looking to enhance our revenue. In the face of declining revenue coming from parcels and letters, we are trying to explore other areas to galvanise ourselves to enhance our revenue. I think the major issue we face has been mainly due to infrastructure deficiency in our country. The way the International Money Transfer operates is that we have the clearing house in the UPU. They have a very strict regulation as to the transaction cycle – if we originate a transaction today, when should that transaction finish. And it is very strict – within three days-you must complete that cycle. But we have seen a situation whereby it is either the Internet is down or the Central Bank of Nigeria is unable to respond in time. All of these have slowed down our performance in that area. We have had consultation with the Central Bank of Nigeria, and we have been assured that things will get better.

What role is NIPOST playing in eCommerce and other sectors of the economy?

The eCommerce is one area we are pushing so hard to get a properly designed application. We have an application called Postagy, which will leverage all eCommerce platforms. Amazon and Alibaba are coming to operate in Nigeria through our Postagy platform. Once that happens, we will further enrich capacity to push things into national space. E-commerce has been expanding since the pandemic, and we expect that this will continue as we move on. Also, we are contributing to Nigeria in several ways. For instance, NIPOST is also involved in the distribution of support to the rural community through the cash transfer programme. We have just completed the third tranche of the distribution to states like Kebbi, Enugu, and Uyo. Most importantly, the role that we play should be seen from the perspective of an agency of government that plays a critical role in moving goods from one place to another, moving cargoes, mails and parcels. And substantially, our operation is subsidised.