Personal Finance

Has Posta bitten more than it can chew with PSV venture?

Matatus at a  Nyeri Town terminus. Diversifying into buses  means exposing struggling Posta to the vagaries of public transport in Kenya. PHOTO | JOSEPH KANYI
Matatus at a Nyeri Town terminus. Diversifying into buses means exposing struggling Posta to the vagaries of public transport in Kenya. PHOTO | JOSEPH KANYI 

From moving mail to moving mailers; this is among Postal Corporation of Kenya’s (Posta) latest options to salvaging its dwindling sales. Former Postmaster General Dr Enock Kinara explained to news outlets: “We are starting the Postliner Bus Service that will help improve on our mail circulation quality and, in addition, we shall be able to (sic) get funded to do that by the passenger.”

Is this a global first? No. PostBus Switzerland and PostBus Uganda both emerged over a decade ago. The former as a response to emerging disruption, the latter to fill a yawning public transport gap, then.
PostBus Switzerland has enjoyed phenomenal acceptance, and therefore commercial success; much like M-Pesa.

Enter Postliner, coming in the throes of Internet disruption, intense competition from private courier services and dwindling revenues. Has Posta bitten more than it can chew? I think so.

Diversification is the riskiest growth strategy. Diversification in times of rapid change as we are in is even riskier. The typical lethargy of a parastatal compounds that risk. To be fair, a response to disruption is compulsory. Texting, and instant messaging platforms like WhatsApp are making e-mail the new snail mail.

Suffice to say, sending a letter by post is something that has ‘‘museum’’ connotations to my teenage son.

So, yes, for sheer survival, Posta must evolve. As reported in the media, there has been a flurry of activities to shore up Posta’s dwindling sales. In 2013, the start of Huduma Centres, saw an increase in mail charges and closure of 56 loss making outlets.

In 2015, alarmed by the closure of 18 per cent of total outlets, the Communications Authority (CA) adopted new regulations requiring new postal and courier service providers to adhere to conditions such as use of Posta’s vast national networks.

Then in 2016 there was M-Post, and now there’s Postliner. Despite the leaking ship, the plan is to grow annual revenues by over 1,000 per cent, from Sh3.6 billion to Sh40 billion, over the next three years.

Interestingly, though demand for unregistered mail is waning, demand for post office services remains. In the last decade there’s been an 18 per cent increase in rentals. These statistics must make Posta feel stuck in a time warp and possibly explain Postliner.

Still, the Postliner move is an attempt by a behemoth of a ship to make a 180 degree turn on a dime. Posta will be a fish out of water.

Venturing into public transport is not as simple as acquiring a bus or two. If it was, the graveyard of bus transport companies in Kenya wouldn’t be thriving.

And, no, it’s not just another step from offering courier services. In fact, unchecked, diversification can kill the core business. Diversifying in this manner means exposing struggling Posta to the vagaries of public transport in Kenya. This notwithstanding, with a CA informed 74 per cent Internet penetration in Kenya, Postliner is like insisting on posting a letter instead of an instant message — it’s an analog move on a digital chessboard.

Is it all doom and gloom for Posta, then? I don’t think so. But, to remain relevant in this disruptive time Posta must redefine what business it is in. And it’s not post office or postal services. In my view, it’s communication. And, transport as a means of communication is fast losing currency. Plus, in Kenya, touted Africa’s Silicon Valley, communication is an industry that is growing exponentially and includes telecommunications (and therefore, banking) and media. Whilst leveraging its national distribution of 634 outlets, and facing a rapidly growing millennial market, communication is the space Posta should be seeking to transform (as opposed to diversify) within. What do you think?

Kageche runs the practical programme ELECTRC! (Exploring Leadership in a Time of Rapid Change).
[email protected]