Bad infrastructure affecting our money transfer business – Postmaster-General

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

After the COVID-19 pandemic disrupted logistics and supply chains, it became increasingly necessary to explore beyond traditional methods of commercial operation. What is NIPOST currently doing to rebrand logistics in Nigeria?

The pandemic has posed several challenges to our operations as a postal operator. We are the designated postal operator for Nigeria. The problem that arose as a result of the pandemic was that the entire global postal operations came to a halt due to the closure of several borders. During the pandemic, it was difficult. Sixty percent of our revenue comes from the export of items including couriers, packages and freight. During the pandemic, that all stopped. Although the pandemic has subsided, the fallout from it is still with us today. That’s why we have these world food prices going up, and we still have the problem of inflation, which affects the whole world. It is not only Nigeria and Africa, even the United States and other parts of the world that are affected. The Russian-Ukrainian crisis has also worsened inflation. The truth is, every postal administration in the world has to go back and tinker with its processes and operations in order to stay relevant. For us, we must also remain alert. We have to keep working around and doing the things necessary to catch up. What we’ve been doing since the pandemic subsided is looking at how we can positively engage and leverage technology by building lasting partnerships with organizations, especially those who have worked extensively in the field of logistics. Logistics, as you know, is one of the major thriving businesses in our current environment. Our own role actually has to do with the very regulation of logistics operators in Nigeria, more specifically because we have seen cases where most operators are now using their platforms to cause security issues. So we had to do something about it. In the area of ​​rebranding, we signed an agreement with Egypt for a fleet management platform. We have also signed agreements with vehicle and motorcycle owners. They are used to pick up and deliver packages across the country. We started with Lagos and we arrive in Abuja.

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

The starting point was when we met with the leaders of the NDLEA. During the meeting, they told us that the problem with many courier logistics operators in the country is that in many cases they use these motorcycles to traffic drugs and weapons. So what we did was have some kind of agreement with the NDLEA, which meant that for every registered operator that we authorized, we sent the list of company names, their locations and their administrators at the NDLEA. So if you ride your motorbike on the road and get accosted they have the up to date list and if your name is not on the register they will confiscate the vehicle.

With growing competition in the logistics industry in Nigeria, some people claim that NIPOST might become useless in a few years. In light of this, how does NIPOST stay ahead of its competitors? Also, how do you strike a balance as a service provider and regulator?

This has always been the most interesting part of our job. NIPOST has also been regulating and playing an active role in this supply chain for many years. This is why one of the main complaints from operators is that it is not fair that we are both operator and regulator. This has been taken into account in the new NIPOST bill, which is in the National Assembly. That was the problem. It is better to separate these two functions. Even though we serve both ends of the market, we have managed to ensure that this does not affect the way we operate.

Some courier and logistics companies complain about high licensing fees and overcharging by NIPOST and state government agencies. What is the agency doing to fix it?

There is no such thing as overtaxation because we do not collect taxes. The only thing we collect is the license fee. If you want to operate a courier business in Nigeria, you must be licensed. That’s what the law says. So no one is overtaxing anyone. However, there is a natural process in our country that people will shout from the rooftop once a small contribution is made. For example, when we were working on the new regulatory framework (2020/21), the last time such a reform took place was in 1992. So we were still charging for licenses the price of 1992 in 2020. This is not feasible given what has happened in the industry. So there was no such thing as overtaxing.

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

Interestingly, on the issue of oversight, we’ve done a lot of work lately. Since last year, when the new regulatory framework came into force, the operation has been ongoing. We have a monitoring task force in Lagos, Benin, Abuja, and we are always walking around. It was very effective because in some special cases like in Edo State, the government invited us to a round table; he also invited their courier and logistics companies and we worked out an agreement offering them the possibility of paying for their licenses on the basis of a plan. How much are we talking about? N250,000 for the lowest segment of the market – SMEs; and we say you can break it down and pay monthly. It is also designed to make life easier for operators. I don’t think we’ve done anything that’s inconsistent with operators enjoying very smooth operations. But at the same time, we will not allow unlicensed operators to use the logistics service to defraud innocent citizens. We have reported cases of companies picking up 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 soon due to the rising cost of logistics?

The truth is that with the current level of inflation, what we have seen is that the cost of operation is increasing day by day. For the moment, we have not proposed any upward revision. We have barely started to implement the new pricing policy, which was launched at the end of last year. We are watching and if there is a need along the way for an upward revision, we will explore. But I’m sure you know it’s a very technical thing. We don’t just sit back and raise the price. It goes through a lot of discussions. There’s actually an interdepartmental committee sitting to look at this, using the template provided by the Universal Postal Union. So it’s not something that we can sit down and do on our own. But we’ll be watching the market to make sure that as we go up, we’re able to close the gap so that we don’t go up every year.

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

This is another area where we are looking to increase our revenue. Faced with the decline in revenue from parcels and letters, we are trying to explore other areas to galvanize ourselves in order to increase our revenue. I think the main problem we are facing is mainly due to the lack of infrastructure in our country. The way international money transfer works is that we have the clearing house at UPU. They have a very strict regulation about the transaction cycle – if we create a transaction today, when should this transaction end. And it’s very strict – within three days – you have to complete this cycle. But we have seen a situation where either the internet is down or the Central Bank of Nigeria is unable to respond in time. All of these factors have slowed our performance in this area. We had consultations with the Central Bank of Nigeria, and we were assured that things would be better.

What role does NIPOST play in e-commerce and other sectors of the economy?

E-commerce is an area where we strive for a well-designed application. We have an app called Postagy, which will take advantage of all e-commerce platforms. Amazon and Alibaba come to operate in Nigeria through our Postagy platform. Once that happens, we will further enrich the ability to push things into the national space. E-commerce has grown since the pandemic, and we expect that to continue as we move forward. Moreover, we contribute to Nigeria in several ways. For example, NIPOST is also involved in distributing support to the rural community through the cash transfer program. We have just completed the third installment of the distribution to states like Kebbi, Enugu and Uyo. More importantly, the role we play must be seen from the perspective of a government agency that plays a vital role in moving goods from one place to another, transporting cargo, mail and packages. And substantially, our operation is subsidized.