eCommerce

The potential impact of NIPOST in the financial, eCommerce sectors

June 07, 2018 · 4 min read
NIPOST

One of the government establishments that has the capability to revolutionise the eCommerce industry is the Nigerian Postal Service (NIPOST), with its wide network of offices across the country.

Despite being a government parastatal with access to funding, manpower among others, the company is still facing fierce competition from private players in the courier service space.

But it appears that NIPOST is on the path to convert its competitors into clients with its move to explore the full potential of its capabilities.

Speaking during the 2018 edition of Indo-Africa ICT Expo recently, the Minister of Communications, Adebayo Shittu revealed that NIPOST will be exploring 5 other businesses which are financial services, property and development, transport and logistics, eCommerce as well as e-governance.

With over 5,000 offices nationwide, it can be assumed that this move by the postal authority would go a long way in revolutionising those sectors.

According to the Postmaster-General of NIPOST, Bisi Adegbuyi, the agency recorded an increase in revenue of ₦700 million in 2017. Adding more business units would, no doubt, further increase its revenue base.

Let’s consider other possible effects of this move on banking, logistics as well as eCommerce industries.

Banking and financial inclusion

The services listed under the financial service unit of NIPOST include money order, which is an issued certificate that allows the stated payee to receive cash-on-demand. Others services are agency banking, utility payment and mobile money services.

In trying to bring people into the banking and payment system, banks and other players in the industry maintain networks of branches and agents but these are mostly concentrated in cities across the country.

Figures from GTBank’s 2017 Investors Presentation (PDF) revealed that its Nigerian business unit has 218 branches, 17 e-branches and 48 GTExpress. Similarly, Diamond Bank has 277 branches in Nigeria, according to its Q1 2018 results.

If the number of branches of the two banks above is to be extrapolated across all the 21 commercial banks in the country, that means the average Nigerian commercial bank would have about 247 branches. Hence, the total number of commercial bank branches in Nigeria would be about 5,187.

With the above assumption, the number of NIPOST branches in the country is at par, if not more than the assumed total number of commercial bank branches. Considering those post offices are not only located in major town and cities, NIPOST has a higher potential to serve the underserved populace, especially those within the rural areas.

If it weren’t for a higher institution of learning that’s located in Saapade, Ogun State, the whole of Remo North would not have a single Automated Teller Machine (ATM), whereas almost every town under its local government authority has a post office.

With NIPOST offering its offices as a channel to access financial and payment services, it means commercial banks can get to serve more people especially those within the rural areas which will, in turn, have an effect on the financial inclusion drive of the Central Bank of Nigeria (CBN).

eCommerce and logistics

In a bid to boost delivery services in the country, NIPOST last year partnered What3Words to ensure efficiency in service delivery and to address one of the major problems of logistics in Nigeria — addressing system.

Findings revealed that the eCommerce and logistics business unit of NIPOST has been running for a while but the online portal for the division is still in process. And as it is, only registered businesses can make use of the service, as proof of business registration is one of the requirements to sign up.

The registration process starts with an application letter to the NIPOST divisional head in charge of eCommerce and logistics. Whereas the application has to be addressed to the national head of the business unit if the company wants to partner with NIPOST on a national level.

Back in 2015, Konga.com made efforts to make use of NIPOST’s network to serve the nation but after a year or so, KOS Deliveries was launched.

NIPOST’s eCommerce and logistics unit is supposed to allow buyers pick up items purchased online at a nearby post office of their choice. One courier service company, Nationdelivery Nigeria claims to be making use of this NIPOST offering already.

On the notion that the price of shipping items using NIPOST is cheaper, this could translate to a higher profit margin for businesses of all sizes while also allowing them to serve the entire nation without the need to set up a separate arm to cater for logistics and distribution.

It would also mean that businesses selling online can worry less about warehousing. Even a company that doesn’t stock products in a physical facility can conveniently serve the entire nation without the need for a warehouse.

The not so good

While adding more business units or making sure that the current ones are efficient and sustainable is a good move by the government, there’s still the need to ensure efficiency of service.

This would surely increase the revenue base of the government establishment while also ensuring that its facilities nationwide are under full utilisation.

One thing which cannot be overlooked is the key driver of this move by NIPOST. The government is not the driver, its backbone is — the civil service. Despite the fact that the civil service has the most important role in the realisation of the NIPOST dream, the attitude of the civil servants over the past is not so appealing.

There are other issues which seem inseparable from the Nigerian civil service which includes bureaucracy, political interference, bribery and corruption among others.

The success of this move is entirely dependent on the efficiency of the service delivery that’s capable of retaining businesses.

Yinka Awosanya

Yinka Awosanya

Author

Mobile & African Tech Enthusiast │ Data Analyst │ Music

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