GOVERNANCE | POLICY
As a result of the digital age and the decline of first-class mail, there is no question that the Postal Service must change and develop a new business model.
— Bernie Sanders
Nigeria’s postal system has long served as a key communications infrastructure, with roots stretching back to 1852. Once a thriving institution, the Nigerian Postal Service (NIPOST) now struggles with public trust and reliability.
In Nigeria, the government’s response has been a series of reform efforts spanning nearly two decades, with the most recent involving the unbundling of NIPOST into separate entities. Yet, these initiatives have been met with mixed results. With legislative setbacks, the revocation of subsidiaries, and ongoing debates around privatization, NIPOST is facing perhaps its greatest existential challenge.
This article explores the complex landscape of NIPOST’s reform, delving into the broader global trends in postal service modernization. More importantly, it asks the critical question: Is NIPOST truly on the path to meaningful reform, or is it trapped in a cycle of stalled progress and bureaucratic confusion?
What Does NIPOST Do?
NIPOST has 7 service offerings. Here’s a brief overview of each of them for the uninitiated:
- EMS-Parcel: EMS (Express Mail Service) handles fast and reliable delivery of parcels and documents, domestically and internationally. It’s a time-sensitive service designed for express shipments, offering tracking and security for customers who need urgent deliveries.
- E-commerce & Logistics: This division supports online businesses by providing logistics solutions to move goods, including warehousing, distribution, and fulfilment.
- Counters: This service provides over-the-counter transactions at various NIPOST offices, allowing people to access postal products, bill payments, and other services. It also serves as a customer interface for various postal and non-postal services.
- Mails: The core traditional postal service that manages the sending and receiving of letters, postcards, and printed materials domestically and internationally. Historically, this service was NIPOST’s mainstay, but in today’s digital era, its relevance is shrinking.
- Financial Services: NIPOST’s Financial Services offer payment and remittance solutions like money transfers, savings, and bill payments. The division aims to provide accessible financial services to underserved populations, leveraging NIPOST’s extensive network.
- Workshop & Property: This division is responsible for maintaining and managing NIPOST’s physical assets, including its vast properties across Nigeria. It oversees the repair and servicing of postal equipment and vehicles. The Post Square on Adeola Odeku Street — housing Moniepoint Group and the UAE consulate — is one of its properties (or not?🤔 The current ownership couldn’t be verified).
- Postal Institute: The Postal Institute serves as a training and research arm of NIPOST, offering programs to develop the skills of postal workers and conducting studies to improve postal operations. It ensures the workforce is up-to-date with the latest industry practices.
With its service structure out of the way, the next point on the learning curve is its woes and previous reform efforts.
Making Sense of Previous Reform Attempts
Legislative Efforts
Tracking legislative efforts in Nigeria is notoriously difficult, with the Senate’s website existing as a facade — zero substance. A search for “postal” bills on PLAC’s website reveals 13 relevant bills — nine from the House of Representatives and four from the Senate.
Notably, SB106 (2015) and SB437 (2017) sought to repeal the 2004 NIPOST Act. These were harmonized in 2018 but did not see passage until 2021. The conference committee report was approved the following year. The bill aimed to designate NIPOST as the public postal operator, create guidelines for a National Digital Addressing System, establish a Postal Service Commission, and create a Universal Postal Service Fund (see pages 1–3 (Arrangement of Clauses Section) of the Committee Report).
However, the bill never got Presidential assent, leaving NIPOST reform in legislative limbo. This stagnation underscores the challenges in modernizing Nigeria’s postal system and the need for better coordination between legislative and executive branches.
Restructuring NIPOST
Despite ongoing legislative efforts to reform NIPOST, parallel restructuring initiatives were launched by the agency and its overseeing ministry. In October 2017, the National Council on Privatization (NCP) approved plans to modernize and restructure NIPOST, signalling the start of what appeared to be a transformative era for the postal operator. Jeff Adama’s article for Vanguard is a detailed work on the unbundling and restructuring set in motion.
By 2020, Minister Pantami announced that NIPOST had created three companies and two had commenced operations — NIPOST Properties & Development Company Limited, NIPOST Transport & Logistics Company Limited, and NIPOST Microfinance Bank Limited. However, the legislative and administrative confusion surrounding their establishment would soon overshadow these actions.
The National Assembly launched investigations into the establishment of NIPOST’s subsidiaries in 2023, citing irregularities. This culminated in a dramatic call for their deregistration, effectively stalling the unbundling efforts. It could not be verified if any of the relevant ministries, agencies or private entities were invited to a hearing. The eventual revocation of the incorporation of the subsidiaries by the Corporate Affairs Commission (CAC) has cast doubt over the future of these companies and the broader reform agenda.
NIPOST has gone after illegal courier operators in Edo, Kaduna, Kano, and Osun. The existence of the Courier & Logistics Regulatory Department within NIPOST makes it an operator and a regulator in the logistics industry. As ‘Damola Adediji and Folakunmi Pinheiro rightly argue, NIPOST’s ability to set fees while competing with private companies abuses its position. This anomaly has remained a prominent subject in every NIPOST reform effort and is properly addressed by the passed bill. In 2022, NIPOST generated ₦209 million from courier license fees (see page 5 of NBS’ Postal Services Data 2022).
NIPOST is not covered by PEBEC’s business facilitation reports, making it difficult to point to a local quantitative assessment of NIPOST’s performance. However, on the global front, the Universal Postal Union (UPU) provides an assessment metric.
A Global Perspective
The UPU’s State of the Postal Sector 2023 report highlights a fundamental shift in global postal operations: the sharp decline in demand for traditional letter services has been counterbalanced by explosive growth in e-commerce and logistics. This evolving business model suggests that countries like Nigeria, where postal services still lag in modernization, have an opportunity to pivot by capitalizing on e-commerce and logistics to leapfrog traditional postal development.
In many countries, the parcel and logistics segment is open to private players. This means an important revenue lever for postal operators (POs) is in a competitive environment where operational excellence wins. With postal service being a means of delivering public service, it becomes imperative for governments to carefully think of how they balance revenue generation with public welfare.
The UPU regularly publishes its Postal Economic Outlook to assess the global postal sector and groups them into 10 postal development levels (PDL) based on their 2IPD score. The highest PDL is 10 and the least is 1.
The UPU’s Integrated Index for Postal Development (2IPD) measures the performance of the POs using its four Rs; reliability, resilience, reach and relevance.
The detailed methodology for calculating the 2IPD is here and the latest UPU report is here
Nigeria’s 2IPD score has deteriorated sharply, plummeting from 52.21 in 2016 to a dismal 35.1 in 2022, ranking at PDL 4. Nigeria’s struggles are shared by many other countries in the region, reflecting a broader trend of postal inefficiencies across Africa.
Countries above level 7 in the UPU’s PDL typically have good reliability scores followed by resilience, reach and relevance. Nigeria’s priority should be to improve its reliability and resilience scores. A look at the comments on NIPOST’s social media handles tells the extent of its unreliability.
Operational Model for Postal Operators
…this potential to contribute to national economic prosperity is intrinsically linked to the selection of a postal business model. While diversifying income streams undoubtedly enhances resilience within the postal sector, an ill-conceived product mix can significantly erode a country’s postal relevance
Globally, countries have taken diverse approaches to managing their telecom and postal services since the wave of unbundling began in the 1980s. In Nigeria, the early 2000s saw the creation of the Nigerian Communications Commission (NCC) and NIPOST.
Today, a private sector-controlled market is the most popular approach with telecoms — few countries have a fully state-owned telco. With posts, it is nuanced, and very few countries have fully privatized their postal operator.
Many countries are exploring changes to how their PO operates. From Israel to Morocco and the US, privatization is increasingly becoming an option on the table. The Trump administration proposed privatizing the USPS but it did not sail.
Only five countries have a PDL of 10 in the UPU’s latest report. Four of them run a “commercialized operator” model. Expanding the scope to level 7 and higher — the “best-in-class” in the report — the model strikes again as the most popular. The number of unbundled/partially commercialized and state operators in PDL 7 and above is nearly evenly split.
However, full privatization is unpopular among the best-in-class POs, as only 3 countries — the UK, Germany and the Netherlands — have a privatized model. Germany’s Deutsche Post still has the government as its single largest shareholder, reducing its stake to 16.5% to finance rail upgrades. Interestingly, while the UK’s Royal Mail is privatized, its post offices are still owned by the government and the Royal Mail does not have a monopoly of the post offices.
There are nearly 10 state operators within the best-in-class POs, and Ethiopia — Africa’s regional champion in the latest report — is a state operator.
If it is not clear enough, operational excellence holds more significance than the category itself. A country can adopt any model and deliver reliable service.
In the UK, there were threats of strikes in resistance to privatization — 96% of staff voted against Royal Mail’s privatization. The growing calls to renationalize the Royal Mail is a cautionary tale for NIPOST privatization proponents. Renationalization supporters point to the closure of delivery offices and the labelling of drivers as self-employed.
With NIPOST’s extensive network of locations, any acquirer of the entity becomes a monopoly, leveraging its footprint to push competition out of the market or become the price setter for the logistics industry. The acquirer will likely close some locations as profitability would require cutting off areas with low traffic — Deutsche Post, PostNL and RoyalMail closed some offices after privatization.
While there is no public information on how many days it takes NIPOST to make deliveries in urban and rural areas, it can be inferred from global counterparts that rural areas take longer to receive deliveries. Legislators in developed countries have often had to intervene to prevent POs from closing offices in rural communities.
Treating the post as an important public good is why universal service obligations exist — everybody everywhere in the country should have access to the service at the same price. USOs extend to the telecoms industry in many countries, including Nigeria.
The Universal Service Provision Fund (USPF) was established by the Federal Government of Nigeria to facilitate the achievement of national policy goals for universal access and universal service to information and communication technologies (ICTs) in rural, un-served and underserved areas in Nigeria.
Nigeria’s USPF does not cover postal services. However, if NIPOST is to maintain universal service, it will need funding. Recall that the NIPOST bill establishes a Universal Postal Service Fund. A popular criticism of privatized POs is the reduced emphasis on universal service obligation, particularly in rural communities.
The COVID-19 pandemic is the most recent pointer to NIPOST’s decline. In many countries, their postal operator supported efforts to distribute PPE, and relief materials (palliatives 🌚). There’s a straight line from poor distribution of relief to an ineffective NIPOST. If we're keeping it a buck, NIPOST’s failure to run a proper financial institution is a contributor to the growth of agent banking.
In the UPU’s ‘The digital economy and digital postal activities — a global panorama’, the authors argue that the post can be leveraged for digital inclusion. Nigeria is not covered in this report. Hence, the extent of digital services offered by NIPOST cannot be ascertained. However, it provides a list of potential areas such as integration with merchant websites, e-commerce escrow and public internet access at its locations. The non-inclusion of the digital economy policy as a priority area in the minister’s strategy document remains a cause for concern.
…postal networks should be an integral part of discussions in which governments, policymakers and international organizations design strategies for fostering digital inclusion
— The Digital Economy and Digital Postal Activities — A Global Panorama
If you want to knock yourself out, head to the UPU’s website for its reports and blogs.
A Tall Order for Tola Odeyemi
Goal: Our plan is to revitalise the operations of the Nigerian Postal Service through a Public-Private Partnership (PPP) model that reimagines post offices as last-mile hubs for commercial and government services.
Metric: Improve business model for NIPOST and modernise 50% of their locations by the end of 2027
An improved business model is measured by revenue, profit, market share, customer retention, return on investment, cost efficiency and similar metrics. The choice of this metric is tricky. It firmly places NIPOST as a state-owned enterprise — which is problematic — without specifying measures pointing to the improved business model. By keeping it open-ended, any measure that shows promise can be chosen and reported to the public.
A Questionable Partnership
While the PPP model has become popular in Nigeria, it is crucial to recognize the inherent tension between business and government objectives. Companies seek profit, while governments aim to prioritize public welfare. Therefore, PPPs require careful evaluation to ensure that both parties — and the public — derive tangible benefits.
In January 2024, NIPOST entered a PPP with TAJ Bank — The bank will leverage NIPOST’s location strength for its branch expansion. All news reports say the same thing about the partnership; “rent, refurbish and rebrand”. While modernization is a key benefit for NIPOST as outlined in the minister’s strategy document, the question remains: Is this partnership truly beneficial for the long-term viability of the postal operator?
With 1180 post office outlets (NBS 2022 data puts the number at 2251), if TajBank leverages only 10% of the outlets, the partnership will see TajBank increase its footprint from less than 50 branches to around 170. This conservative estimate will give TajBank triple the footprint of Lotus Bank. 20% of outlets will add 236 locations to TajBank’s footprint, putting it in the same league as GTB and Ecobank.
50%? That will be 590 additional branches for TajBank. Nigeria’s largest bank by branch number is Access Bank with 554 locations.
It is not farfetched to posit that rapidly expanding to numerous locations will be prohibitively expensive for TajBank. However, if the partnership grants TajBank exclusive long-term rights to these outlets, NIPOST could confer an unfair advantage through its real estate. Or it already has?
It is the only publicly reported PPP undertaken since the PMG’s appointment. It aligns with the strategy document but raises questions of antitrust and unfair government support. Since the partnership details are not public, there are no conclusive answers. The PMG needs to be clear on this as the partnership risks lawsuits from the banking industry or, in a miraculous event, the FCCPC.
Reform Efforts Are Stuck
At the “NBCC meets Postmaster General” event in July 2024, Odeyemi mentioned that the agency will not be a regulator and operator as part of the ongoing work on a postal reform bill. It is unclear why a new bill is in the works to achieve the same purpose the bill passed by the 9th Assembly sought to achieve.
The minister and his PMG will join the long list of public officials who enter office, put existing work on hold and start all over with their handling of existing reform efforts set in motion by the last administration in 2017. This is a troubling trend as NIPOST reform efforts date back to 2008 — hampered by a lack of funding. The two most important policy actions to reposition NIPOST — unbundling and passing a new bill — which were underway are now in limbo.
“In terms of the activities that happened, these are restricted communications from the president’s office, and I am not at liberty to discuss or divulge what comes from the president. However, the deregistration of the two subsidiaries had a history because last year, the House of Representatives and the Senate both called for their dissolution,” Odeyemi noted.
Concerns as NIPOST reform initiative hits rock — Isah Ismaila (Daily Trust)
It is a surprise that the Presidency would direct the revocation of the incorporation of the subsidiaries — one year after taking office — without consulting the PMG and the minister. If the revocation did happen without their input, it is an open question of their relevance to the President who appointed them to oversee the agency. As the Presidency has moved two agencies away from the minister’s purview, no one should be surprised if NIPOST joins the list.
You can find detailed reporting on the past reform efforts by Jeff Adama (Vanguard) and Isah Ismaila (Daily Trust). Best to read Adama’s first.
Unlike the AI strategy workshop that led to the release of Nigeria’s AI Strategy, the NIPOST strategy workshop in December 2023 delivered radio silence. Odeyemi must take a leaf from the minister’s book and clearly outline the NIPOST reform plans in a document for the public to read. Unlike the MD of NIGCOMSAT who has followed the minister’s footsteps in having a strong public accountability, the PMG has towed the path of typical public servants. NIPOST requires public trust, which cannot be achieved by “working in the background”. Take the Taj Bank-NIPOST partnership, NIPOST did not issue any statement and the PMG made no announcement. All the news reports used the bank’s statement.
The decision to work on a new bill and discontinue the unbundling started by the last administration raises the bar of expectation for the PMG. The passed bill is publicly available. If the new one does not differ, the PMG will have to explain why a Presidential assent to the already passed bill was not done instead.
Some may excuse the minister and the PMG for not making any major publicly known moves to reposition NIPOST as it has only been one year. Year two has begun. They have had one year to survey the land and scatter it too. They must deal with the regulator-operator status of NIPOST and articulate the commercialization approach for its operations before it ends. Anything short of this will add them to the growing list of ministers and PMGs who tried and failed to reposition the postal operator.
To truly reform NIPOST, the leadership and government must embrace transparency and public accountability. They must present a clear, actionable roadmap for improving service delivery, backed by measurable goals and timelines. The current lack of transparency only fuels scepticism, leaving the public in the dark about how — if at all — NIPOST intends to rise to its challenges. As a public entity, it is wise to ensure the plans to reposition it are publicly available to allow for important feedback. Anything short of this will be walking with blindfolds. Someone will fall.
The ideal NIPOST will be the local agent for access to government services : licenses, passports collection, registration, biometrics etc. It will also be an infra partner to logistics companies for pickup and drop offs for local and international logistics
This is the second in a series of articles on Bosun Tijani’s leadership of Nigeria’s Ministry of Communications, Innovation & Digital Economy in his first year. You can find the first article below
