Rejjuvenatiing ETHIOPOST

Ethiopost for the past couple of years has been implementing various reform activities aimed at modernizing processes, optimizing its operations, and providing customers with reliable, effective and affordable services. The reform activities entail restructuring the institutional setup, minimizing cost and diversifying services. In collaboration with the Universal Postal Union, Ethiopost is working to leverage its extensive experience in the mail and logistics sector to support e-commerce initiatives in Ethiopia. As part of the reform process, the name of the organization has been changed from 'Ethiopian Postal Service Enterprise' to 'Ethiopost' in 2019. As Ethiopost strives to become a continental leader in postal service and meaningfully contribute to the sustainable development in the country; Capital’s Metasebia Teshome reached out to Hanna Arayaselassie, Chief Executive Officer of Ethiopost, for insights of remarkable strides made by the Post. Excerpts; Capital: It has been 2 years and 7 months since your appointment to this post. What have been the challenges and turn-around registered whilst your firm has provided its services?

Hanna Arayaselassie: Before my introduction to my current role, Ethiopost had been facing a challenging time and was not in the best financial status, quality of operation and so on. At the end of the 2019/20 budget year we were at the back of a 78 million birr loss and it was really difficult to pay the salary of our 2000 plus employees.

The Ethiopost team, going into the 2020/21 fiscal year worked to start over from scratch and to work round the clock. We did this by re-organizing the management team, changing our operation style, collecting the overall assets of the company and making it operational. Likewise for the 2021/22 fiscal year, we worked relentlessly by focusing on improving all our service quality. A testament to our progress was the shift in financial results.

If we compare 2019/20 and 2020/21 within only one year, we have been able to decrease 86 percent of our expense and increase income we got to 72 million birr in profit. Similarly, in 2021/22 we had a 50 percent increment on our revenue and we registered 187 million birr in profit; which is 117 percent greater than the previous year. This was as a result of strengthening and increasing our service volume.

For this fiscal year, we are targeting profits of 300million before tax, and we are working accordingly to achieve that.

Capital: What focus areas have led you to register such marvelous results?

Hanna: Our reforms are focused on 4 main areas. The first one is improving the company’s financial status and finding ways to increase its income whilst decreasing our expenses.

The other focus area is improving and providing quality services. We have different services including the mail service which has different classified services such as letter and government file delivery, and package delivery. Ethiopost delivers packages to over 120 countries and over 700 domestic destinations and customers can send up to 31 kilograms in one package. We also have an Express Mail Service /EMS/ to which we provide fast shipment delivery to 120 international destinations. Additionally, we give logistical services. We work on transporting biological samples and laboratory reagents and test results. As part of our company’s commitment to making financial services accessible to everyone, we provide bulk payment services for organizations and businesses fee collection. We have post shop for manufacturers or importers to sell their products at our outlets throughout the country.

Our Postal Museum and Philately houses over 4000 stamps and historic tools and objects that will take you back to the early days of Ethiopia and Ethiopost, as early as 1894.

We are also focusing on improving the quality of these services by assessing gaps, and by re-designing to improve safety and speed of our services.

Two years ago, it could take about 7 days for package deliveries to reach its destination while now it is less than two days time. Similarly, for the EMS, we have managed to cut the delivery time from 4 days to less than a day.

It is also worth noting that Ethiopost takes major share in the sector when compared to other companies in our country.

We have always been solution oriented in our approach, and we often looks for gaps to assess and find the necessary solutions. We are also a member of the Universal Post Union (UPU) which makes it easy for us to improve our services.

For the past few years, we have been in the least rank at the UPU. However in recent years, the narrative has changed as we have recorded improvements in the last two to three years.

In 2020, we were ranked 84th and following our improvements in 2021 Ethiopost was ranked 78th. In the latest 2022 rank, we were 68 and our EMS service, which is the major source of our revenue, ranked 6th best in service in 2022.

For a while our company had disappeared from the public eye, but we have since then rejuvenated and rebranded including; our branches, customer service and marketing strategy, changing the old annual operation to digital, being transparent and accountable in our ways; doing these will assure financial stability of the company for years to come.

Even though Ethiopost is a governmental enterprise, it is a company which is supposed to be profitable and become financially strong to cover all its expenses for this it has to be led with a profitable business mindset.

Capital: Currently most of government development enterprises are under Ethiopian Investment Holding. Why has the Post not been included thus far?

Hanna: Our alignment and responsibility calling is the decision of the government. Currently, we are under the Public Enterprise Holding Administration. Nevertheless, we will continue to do all our duties and responsibilities to serve the company.

Capital: As the coming era of digitalization there is decrease in demand of postal service in the whole world, how does this affect you?

Hanna: In my point of view there is a misconception that digitization has decreased relevance of postal services. This is far from the case. The services and demand of postal services is increasing rather than decreasing. Most of postal service providers in the world are 100 years older, and have passed through a lot of challenges and changes, but what makes the postal service stick is resilience.

Even though the volume of letters and its contribution to the revenue has decreased, the volume of other operations and services is increasing from time to time. In 2022, Universal Postal Services operating revenue capped at 1.2 trillion dollars. Currently, there are about 618,000 postal service operators in the world creating employment opportunities for more than 5 million people. Despite the volume of letters decreasing by 15 percent after the outbreak of Covid, the volume of parcel postal services has increased by three fold and that’s why we say the nature of postal service is flexible.

When it comes to Ethiopost, for us to manage these global challenges we have developed and have started implementing a three year strategy which sums up our services through the words: Deepening and Diversifying. When we say ‘Deepening’, we have more than 700 branches yet it is still not enough to reach all the population. So we have planned to expand our branches including by partnering with companies as an agency. We have also restructured to strengthen our IT infrastructure, HR management and man power to compete with other companies.

And in ‘Diversifying’, we have planned to expand and introduce new services that can go with global changes. We are focusing on three main models; one is ‘Logistics and Ecommerce’- which is highly increasing from time to time especially after the outbreak of the pandemic. This is also part of government’s strategy to digital Ethiopia 2030. We are now testing our operational readiness, building digital and payment system; it can be from Ethiopia to abroad or to

Ethiopia within Ethiopia and also we also want to have a transit ecommerce service. We are working with the World Bank and we are expecting it to be a major source of revenue. We have also planned to increase our governmental services in collaboration with government organizations as part of expanding E-governance.

And lastly we are increasing our performance in the financial sector, since Posta plays a big role in the financial sectors across the globe. However, except bulk payment, in our country this role has got low, because of not moving timely with modern techniques. Thus we are working to modernize and change that.

Capital: How do you plan to join the financial sector?

Hanna: We have been evaluating various ways on indulging in the financial sector. Establishing a Posta Bank is one viable option as such banks in countries such as France and Japan are huge state owned cooperation. But here in Ethiopia, the Commercial Bank is the largest state owned bank, thus from our assessment we don’t find it necessary and profitable to establish the bank as its duplicating a bank (CBE) which is already existing and doing well. Mobile money is however very lucrative and we are keenly looking into that.

Capital: How do you prepare to achieve all your plans?

Hanna: We have carried out extensive and comprehensive preparations for our five and ten year’s strategy. However it is worth noting that we have achieved targets beyond our current strategy. For example we set plans to generate 1.5 billion birr in revenue this year because of great achievements being realized. However, initially this was our target for the 202e/25 fiscal year. We are fast tracking our goals by working round the clock. In the coming year, we will start implementing this strategy.

Capital: Do you think the revenue goals will be possible with the current status of the company?

Hanna: Despite it looking ambitious on paper, I believe we can achieve it. As Ethiopost we have centered ourselves by working on our team spirit which is the major engine in the achievement of any plan. Even when we assess the performance of the first quarter, great achievements have be noted on both revenue and profit.

Of course we have to sharpen our IT and infrastructure, to which we are working aggressively on.

Capital: It’s been a long time since we have seen new stamps. Why is that?

Hanna: We have lagged a little bit behind with regards to publishing stamps. Previously, we used to publish 4 or 5 stamps per year but starting from 2016 until 2021 we didn’t publish any new stamps. In 2021, in memory of the 50th year of Ethio-china relations we published 1 stamp. Last year we have been planning to publish two stamps but one of the major setbacks we faced was foreign currency and lack of quality local printers which derailed our publishing. On March 2024, Ethio post will mark its 130 years anniversary and up until then we have plans to publish 5 to 10 stamps.

Capital: Do you think privatization is an option for better operations of the post?

Hanna: Some countries have privatized their Postal service operator. In my opinion when it comes to our condition before thinking about privatization we have to be sure all government enterprises are properly being managed as a business entity. In terms of results or profits, changes in ownership do not bring significant change; change is brought about by working responsibly with accountably and transparency.

Capital: What kind of policy changes are you expecting?

Hanna: We expect Posta regulations to be changed as there is no legal frame work which governs the postal sector not only Ethiopia’s Posta but also all the couriers in the sector. The last Posta regulation was adopted in 1966 at the time the only operator in the country was Ethiopia Posta but now there are more than 80 couriers.

So there should be clarification of mandates between us and other couriers. When other couriers focus on only profitable areas, we work on government obligations too without profit. About 80 percent of our branches worked through losses just to be accessible to the public. In other countries there is a so called universal service fund, the entire courier in this sector contribute to finance the designated operator. Due to lack of this, Ethiopost has no other revenue sources. This can’t be sustainable and has impact on us. Ethiopian Communication Authority is the one handling the preparation and we expect it to be finalized before the end of this year.

The other regulation we are expecting is revision of Ethiopia Posta establishment regulation which was amended in 2009 which is needed to expand all our planned new services. We are currently contributing our inputs on this.

The other one is that Posta code Ethiopia doesn't have digital postal codes. Thus the Ethiopia Space Science and Geospatial Institute is working on digital address codes. This will also simplify our delivery service.

Capital: It’s been a while since Posta buses stopped their cross country operation. Is there a plan to restore it?

Hanna: It was stopped when the buses got old. Now, we are planning to restore this service by giving all the necessary maintenance to the buses soon. Additionally we have plans to purchase new buses in the current fiscal year.

Capital: When will you start Ecommerce?

Hanna: This month we have started our transit ecommerce service on packages coming from China to African countries and on outgoing Ecommerce. Slowly we will expand and increase the volume.