The state-owned Postal Corporation
of Kenya (PCK or Posta) dominates the Kenyan postal market, though
private delivery firms maintain a significant presence. Since 2003, the
number of licensed postal and courier operators has doubled. Like many
national posts worldwide, Posta sees expansion into financial services
as its best avenue for future growth.
The Kenyan postal service has its origins in the mail system
created by Britain, the colonial power, to serve sub-Saharan British
East Africa -- what is now Kenya, Uganda and Tanzania. The combined East
African postal service for the three territories was consolidated into a
single postal union in 1933.
Kenya gained independence in 1963. Fourteen years later, in
1977, the government-controlled Kenya Post and Telecommunications
Corporation (KP&TC) emerged as the country's national post after the
demise of the East African Union and its regional postal service.
KP&TC's telecom arm was separated from the postal wing in
the late 1980s, and in 1999 KP&TC was officially split into the
Postal Corporation of Kenya, the Communication Commission of Kenya
(CCK), and Telkom Kenya, which remains the sole provider of landline
phone service.
Structure
As of June 2009, Posta operated 31 main post offices, 472
departmental postal outlets, and 204 postal agencies (sub-post offices).
The service provided letter post, parcels, expedited mail services
(EMS), money orders, third-party payments and receipts (agency
services), electronic money transfer services, and lottery tickets.
Posta employed roughly 4,300 postal workers in 2009. The main labor
union representing Kenyan postal workers is the Communication Workers
Union of Kenya.
According to CCK's 2007-08 annual report, "private letter boxes
continued to play an important role as the last mile in the delivery of
postal items by PCK." As of June 2008, Posta had installed 414,616
private letterboxes. Of those, 335,438 were rented.
Posta derives a significant chunk of its revenue from processing
utility bill payments for public and private suppliers, since the
stream of "social letters" is weak. Posta's CEO said that business mail
-- bills, invoices, bank statements and demand letters -- accounted for
70 percent of Posta's 3 billion Kenyan Shillings (Ksh) (US$39 million)
in revenue in 2007.
The postal service's stated goal is to become "financially
stable." In March 2010, Posta claimed on its website that it sought to
grow financial services revenues from their current level, Ksh 700
million (US$9 million), to Ksh 5 billion (US$65 million) over a
five-year period. (As of March 2010, Posta's website did not list a
beginning or end year for this five-year period.) Planners hope that
mail revenue will grow from Ksh 2.2 billion (US$26 million) to Ksh 3.2
billion (US$42 million) and that revenue from courier services will
increase nearly tenfold, from Ksh 113 million (US$1.5 million) to Ksh 1
billion (US$13 million) over the same five-year period. In total, postal
leaders hope to triple revenue, from roughly Ksh 3 billion (US$39
million) to over Ksh 9 billion (US$119 million).
Posta is pinning much of its hope for growth on so-called agency
business -- processing an expanding stream of utility bills and
required mail for the retail, financial and banking sectors. Favorable
deals negotiated with other government-controlled entities may foment
growth in the agency business. Posta already collects commission fees
from utility companies to collect fees and bills on their behalf. These
arrangements are based on complicated fee-sharing contracts. At present,
Posta is paid fees by utility companies which range from Ksh 17
(US$0.22) and Ksh 50 (US$0.65) to collect payments.
Liberalization and
Privatization
Posta Kenya effectively maintains a monopoly on the delivery of
letter mail. Kenyan law requires that private operators handling letters
of up to 350 grams charge at least five times Posta's basic letter
rates.
All firms offering postal or courier services are required to
obtain licenses from the CCK. Licenses are valid for 15 years, as long
as the licensed firm pays the annual fee. Fees for private operators
range from Ksh 22,500 (US$290) to Ksh 450,000 (US$5,800). PCK must pay
an annual license fee of Ksh 3,750,000 (US$48,300).
The breakup of the Kenya Post and Telecommunications Corporation
in 1999 was one of the first concrete steps toward liberalizing the
Kenyan communications sector. Telkom Kenya was largely sold off in 2007,
but Posta is still government-owned.
There are no plans to privatize Posta, but the service is
working with outside firms to upgrade mail and courier services and move
into modern financial businesses. The postal service is also launching
efforts to franchise at least 60 post offices, particularly those that
had made losses, to private firms and individuals.
Competition
Nearly 150 postal and courier firms currently operate within
Kenya in accordance with the Kenya Communications Act of 1998. As of
2008, there were 14 licensed international operators and well over 100
licensed operators within the country.
Regulation and Universal
Service
Posta is regulated by the Communications Commission of Kenya
(CCK). According to the Kenya Communications Act of 1998, CCK is
mandated to license and regulate postal and courier services throughout
the country. CCK grants licenses to operators, regulates the tariffs and
fees for basic services, and maintains the overall order of the postal
and courier market.
Posta is the "public postal licensee" and the official universal
service provider for Kenya. As such, Posta must provide the "consistent
supply of basic quality postal services [including reserved services
and postal financial services] at affordable prices at all points in the
country."
The Commission establishes and enforces minimum standards for
Posta's delivery performance. Mail delivery expectations range from one
to six days, depending on the day of posting and whether the delivery is
to be made in an urban or rural area.
Mail posted for delivery before noon within the same urban area
is expected to be delivered on the same day. Mail posted after noon for
delivery within the same urban area is expected to be delivered the next
day. The same is true for letters sent from one urban area to another.
Urban to rural delivery standards are established at three days, and
rural to urban standards at five. Posta is considered in compliance with
its universal service obligation if it reaches these standards if at
least 65 percent of the time. Financial Services
Remittances from abroad are a major source of income for the
Kenyan economy, but Posta's share of the cash transfer service market
has dwindled, thanks to the likes of Western Union, MoneyGram, and
mobile-phone company Safaricom's M-Pesa service. The market for
international remittances approaches Ksh 60 billion (US$779 million)
annually.
Posta has long operated the government-owned Kenya Post Office
Savings Bank, which is structurally separate from the postal service and
reports to the Ministry of Finance. About half of all Posta's post
office locations also serve as outlets for the Savings Bank.
Futures
The CCK has warned Posta that it will be overtaken by competitors
if it doesn't modernize. Posta has already lost market share in the
courier sector to rivals which now control the Ksh 3.3 billion (US$43
million) courier business. Not long ago, Posta effectively monopolized
that business.
A 2008 report in Business Daily, a Nairobi newspaper, suggested
that Posta's regular mail delivery is slow and erratic. The service
wants to boost revenue by franchising out post offices which are losing
money, building up direct mail marketing, and undertaking a complete
restructuring of its money remittance and courier businesses.
Additionally, the service has plans to introduce a postal-based savings
service, postal giro services, and hybrid mail. However, some analysts
say the strategic shifts will have little impact because competitors
have already locked up the most profitable market niches.
