The 49th World Post Week speeches this year (2017) promised e-commerce and diversification into new services. However, the reality is that Posts in countries with smaller economies simply can’t afford the modern software and technology that they need to survive and thrive.

This article was first published as a LinkedIn article in November 2017. It was reposted in the following Groups: The Postal Innovation and The Economist Newspaper readers.

Post Offices in emerging markets are on the precipice of irrelevance

Posts in emerging markets are at the crossroads of Transformation or Irrelevance. They need modern point-of-sale technology now or they will simply disappear. They are challenged by a fast-paced digital revolution driven by new, low-cost smartphones offering instant communication, Internet access and Mobile Money transfers between platforms. Those that have ignored progress have always found themselves without a market and inevitably perish.

The UPU has called for innovation, diversification and reform but has not stepped up with a credible technology modernization plan. These lagging Posts lack the resources to support their country’s developmental and socio-economic aspirations. A 2009 study in India illustrated that every 10 percent increase in mobile penetration leads to a 1.2 percent increase in GDP. The business is there. Middlemen are servicing the e-commerce markets. FedEx and other premium postal operators operate in 34 out of 50 of the world’s poorest countries in Africa, Asia, the Pacific and the Caribbean where the annual GDP PPP per person is less than $3,000US.

These Posts have always faced formidable challenges

The postal USO definitions, economics and strategies of industrialized countries can’t be applied to underdeveloped economies. These Posts generally face low mail volume due to low economic activity, insufficient number of post offices to achieve economies of scale, low investment, high fixed costs, sketchy electricity, poor roads, no addressing, high international mail volume, almost no domestic mail, little business-to-consumer mail and extensive competition brought about by postal liberalization. They lack track-and-trace technology. In many cases, they siphon high levels of government subsidies, taking scarce resources away from infrastructure, social programs and economic development.

 Accelerated change demands bold strategies

In May 2017, UPU Director General Bishar A. Hussein, addressing participants at the Pan African Postal Union’s (PAPU) 36th Administrative Council meeting in Nairobi, Kenya, said, “We are all aware that the postal sector is undergoing unprecedented changes, characterized by rapid technological development, globalization of postal markets and increased competition. These are factors that are making us seek new ways of doing business in order to remain relevant for our customers.” He called on postal operators in Africa to diversify and develop products that meet the changing needs of customers.

At the second annual UPU World CEO Forum in Moscow in September 2017, nearly 60 postal chief executives from around the globe concluded a clear vision for postal transformation saying, “It became clear that growth of the economy and trade, changing demographics, the e-commerce explosion were all broad factors affecting the Post. These factors, in combination with customers’ desire for immediate, personalized digital services and government stipulations for universal service, have created both challenges and opportunities for the Post.”

The CEOs noted that pressure from governments to deliver some services at a loss coupled with a lack of government investment in postal infrastructure, as well as limitations in managing capital, made it difficult for them to transform their service offering.

The CEOs suggested that Posts work with governments to redefine their universal service obligation, increase awareness of the Post’s potential as a driver of socioeconomic sustainability and integrating employees more into the transformation process, whether through retraining or the creation of new positions, so that they become advocates of change within the Post.

This “too-little-too-late” bureaucratic strategy ignores the fact that Posts in emerging markets are falling behind as we speak and soon run the risk of existing in name only with nothing to do. They need transformational technology now.

 Posts can contribute significantly to social and economic development

Progressive Posts have introduced disruptive innovation strategies. Brazil’s Correios launched Exporta Fácil. It gave over 10,000 small and medium enterprises (SMEs) access to foreign markets. In Ecuador, Exporta Fácil tripled the value and volume of exports in two years.

Many Posts have fostered financial inclusion by forming banks or partnering with banks. Correios partnered with the Bradesco bank creating Banco Postal. New businesses increased by 23% and job creation increased by 14%. Banco Postal now has over 11 million accounts. In four years, Poste Maroc’s Al-Barid Bank has increased the number of banking citizens from 34% to 62%, adding 500,000 accounts per year.

Posts also play a key role in the attainment of the UNs 17 sustainable development goals aimed at fostering social advancement and human wellbeing.

 Emerging markets are poised for dramatic growth

Statista projects that by 2019 out of the world’s 7.5 billion people over 5 billion will use a mobile phone. Of those, 2.7 billion will be smartphones. The bulk of the growth is in developing economies. The smartphone is transforming Internet access, mobile money, m-commerce, banking, government participation, agriculture, education, health, energy, farming, water management and more. Posts can play a key role as a trusted, intermediary institution to help accelerate economic/sustainable development but they need expensive, standardized, internationally linked retail technology.

 Technology is the springboard for postal growth

Posts need modern point-of-sale software and technology to diversify beyond postal into products and services that people need, want and are willing to pay for. This could include Mobile Money transfers, MoneyGram / Western Union / RIA, e-commerce, third-party bill payments, banking services, government form completion (passport), identity verification, bulk mail processing, business loyalty program, SMS marketing, Internet, phone charging, pension distribution, trade facilitation, selling competitor products, selling needed retail products (solar lanterns and radios, water purifiers, reading glasses, health and beauty products, mosquito nets, etc.) and much more.

Technology will also accelerate postal reform

Retail technology will impose the business standardization and discipline that is necessary. It will provide a consistent sales and customer-service process, accepted cash accounting and banking procedures, stock control, end-to-end track and trace of parcels for security and control as well as for e-commerce credibility, enforcement of import and export controls, an internationally-accepted reporting practice with KPIs and a consistent data structure for research and planning. It will also provide the process and flexibility required to offer a wide range of services in support of financial inclusion and socio-economic development. Finally, technology will provide the basis for postal franchising that will lower operating costs.

 To make it happen, Posts must work together

There is an African Proverb that says, “If you want to go fast, go alone. If you want to go far, go together.”

To achieve lower pricing for standardized technology, Posts must adopt a strategy of “pooling forces, harmonize operations with neighbours and establish a viable regional network” while maintaining sovereignty over banking, pricing, currency, language, taxes, etc.

The UPU regional unions are key players in facilitating the implementation of global strategies at the regional level. The Pan African Postal Union’s (PAPU), the Caribbean Postal Union (CPU) and the Asian-Pacific Postal Union (APPU) should take the lead to establish representative teams for each Union that would standardize processes while keeping a country-specific needs in the software.

These restricted unions should also negotiate the master agreement and payment options including transaction fee or pay-as-you-go, with providers of post-office software. The cost could be covered through technical assistance aid available from international organizations such as the UN and its agencies, donor Posts, foundations and philanthropic institutions.

From there the country-specific (set-up, hardware and licences) costs become reasonable and could possibly be covered through The World Bank Group or a UPU Quality of Service Fund.

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