There was an era when the Postal Corporation of Kenya, commonly known a Posta, was a crown jewel among State-owned enterprises, minting billions through mail and parcel delivery.
Fast-forward to the noughties, Kenyans shifted to sending less and less snail mail as technological advancements and competition from private courier services entered the picture. Posta starts to struggle.
At one point, reports from the Auditor-General declared the firm technically insolvent and unable to pay employees or sustain operations, leading to job cuts and accumulated statutory deductions worth millions of shillings.
But now, there may be light at the end of the tunnel. And the holder of the torch is ICT Cabinet Secretary William Kabogo, who revealed that the government has now embarked on an ambitious plan to revamp Posta under his stewardship.
Speaking before the Senate’s ICT Committee on Wednesday, Kabogo disclosed that a sustainable revenue model for the corporation was awaiting Cabinet approval.
“In the past, Posta faced challenges including debt collection and unsuccessful business programmes. The government is now keen on revitalising the corporation with a strategy that ensures sustainability,” he said.
ICT Cabinet Secretary William Kabogo.
Photo credit: Dennis Onsongo | Nation Media Group
Among the government’s key revival strategies is a Sh300 million partnership with the Kenya Medical Supplies Agency (Kemsa). It will see Kemsa use postal services to deliver medical supplies to healthcare facilities across the country.
Posta aims to generate over Sh2 billion from logistics services by capitalising on its extensive network of over 600 outlets nationwide.
Additionally, Posta is venturing into e-commerce and last mile delivery services to generate more revenues.
Deliver passports, fertiliser and more
Partnerships with international courier companies could also see it handle last mile deliveries from Nairobi to rural areas.
According to a turnaround strategy document seen by Nation , Posta is positioning itself to play a key role in last mile delivery of fertilisers, medicine and electronic goods.
To support e-government initiatives, the firm will assist in delivering passports targeting up to Sh300 million from the venture.
The corporation is also working to reduce its payroll expenses from over Sh200 million per month to between Sh60 and Sh70 million, a move expected to ease financial strain.
Under its Corporate Strategic Plan (2023-2027), it's restructuring to reduce its wage bill ratio from 82 percent of its revenue to 50 percent.
By December 2023, the corporation had 2,360 employees against an approved requirement of 1,860, leaving an excess of 500 staff.
Over the years declining mail and parcel services coupled with a thriving private courier industry have seen the corporation to struggle to stay relevant. However, it is expanding its Expedited Mail Services (EMS) which brought in Sh600 million in 2022/2023 and Sh800 million in the last financial year.
Increase digital offerings
Posta is also embracing digital transformation by modernising its services and turning post offices into hubs for various digital offerings.
The firm has suffered due to the rise of electronic communication which saw many Kenyans opt for emails over traditional letters.
Meanwhile, private courier services have outpaced Posta with their efficiency and customer friendly operations.
In June 2024, Parliament allocated Sh3 billion to support Posta's turnaround. Of this, Sh1 billion was earmarked for implementing a new corporate structure while Sh2 billion was set aside to modernise its ICT infrastructure. These funds were part of the 2024/2025 budget.
However, financial woes persist because as of December 2023, it had accumulated losses amounting to Sh6.28 billion. Its total liabilities stood at Sh8.3 billion, against an asset base of just Sh1.6 billion, resulting in a negative working capital of Sh6.7 billion.
To ease this burden the government has pledged to settle Sh1.6 billion in pending bills owed to Posta by various State departments and agencies.
