Postal Services Authority in Kenya Closes 56 Outlets

The Postal Corporation of Kenya (PCK) has shut down 56 outlets as increased Internet connectivity and widespread use of mobile phones has reduced demand for its services.

Data from the regulatory authority for the communications sector in Kenya, the Communications Commission of Kenya (CCK), shows that delivery of letters has fallen, with only 17.3 million sent in the quarter to December, compared to 19.7 million in the same period a year earlier.

This has forced PCK to reduce its outlets to 634 units in December, from 690, in response to the reduction in business that is compounded by the entry of private courier firms such as Roy Parcels, Nation Media Group, and security firm G4S.

“The postal market is on a downward trend as evidenced by the decline in postal traffic of local letters sent, and reduced number of postal outlets reported during the period,” said the CCK in a report.

The regulator said the Internet and other forms of communication like SMSs had overtaken snail mail.

The UN Central Product Classification classifies postal services into four main categories. Postal services related to: letters, parcels, counter services and other postal services which include mailbox rental services.

With regard to postal services pertaining to letters, during the period under review, communication via SMS increased significantly, an indication that the service could have consumed some of the traffic of local letters sent.

Mobile phone subscribers sent 3.6 billion short messages in the quarter, reflecting more than threefold growth on the one billion sent in a similar period a year earlier.

Increasing Internet use is hinged on the low cost of transactions, safety, and speed. As a result, instant massaging and e-mails have reduced the need for letter writing, denting PCK’s revenues further as more people turn to mobile phone-based platforms and computers to send money and information.

Internet penetration in the country stood at 41 per cent of the population in December (16.2 million users) from 22.7 per cent at the end of 2011.

International outgoing letters dropped to 1.9 million from 2.2 million, while incoming letters increased by 138 per cent to 191, 612.

The dwindling revenues have seen PCK turn to cost-cutting drives, including layoffs and selling of assets to remain afloat. The state owned firm, with an estimated 4,100 workers, is weighed down by millions of shillings in debt to pensioners and other creditors.

The CCK reckons that the corporation should diversify into financial services, especially agency banking, to reverse its fortunes.

“Deliberate measures such as national addressing system to facilitate delivery of letters to doorsteps, diversification into financial services and wireless Internet services across postal outlets, among others, could reverse this trend and revitalise the sector as happened in most developed countries,” added CCK.