We must not give up on Zimpost

By Kevin Tutani | Feb. 9, 2024

Although Zimpost has the potential to make the overall economy more effective, it is in need of vital changes to its current business model.

IN 2013, President Vladimir Putin signed a decree, which included the national postal service, Russian Post, to the list of the country's strategic industries.

President Putin understood that there are very few businesses, which have as wide a reach as a national post office, through its extensive branch network.

A post office connects the people to the government and other businesses more than most services can do, except for the internet.

Nevertheless, the internet itself is not as enduring as several people might think.

In the event that a few key undersea internet cables break, a country may lose internet connectivity internally and with the outside world, leaving it to depend on traditional services, such as, the post office and analogue (traditional) media broadcasts like radio or TV.

A functional post office can also serve as a means for the government to keep crucial details about the characteristics of its population. Private businesses can also use the post office to assist with market engagement, through the distribution of pamphlets and market research surveys, among other things.

In several countries, postal services can also be used to make payments to all types of government accounts (water, electricity bills, taxes, etc), distribute social grants (pension allowances, disaster relief cash payments, etc) and for the purchase of various products such as bus or train tickets. Thus, the importance of the post office can only be undermined by one without replete knowledge of the capabilities and potential, which such an organisation wields.

Zimpost

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Zimbabwe's national postal service provider, is Zimpost, which is wholly-owned by the government. The company has a wide branch network, comprising 239 outlets, distributed through the country, covering both rural and urban areas.

Reports suggest that it currently employs over 1 000 workers, although in its prime (in the early 2000s), it would have been responsible for far greater numbers.

Had it not undergone various operational challenges, a distressing local business environment and failure to keep pace with changes in technology and customer demands, it would have still been a major national employer to date.

The company offers mail and parcel delivery services, freight logistics and insurance, among other products. Due to technological improvements in mobile internet technology, mail services have rapidly declined, whilst parcels and freight logistics, which includes the delivery of huge product consignments for companies, have grown.

Partnerships with banks and other money transfer agents (such as Mukuru, Access finance) has created an additional revenue channel for the company.

There is also agency banking, which enables the customers of various banks to make deposits or withdrawals from their bank accounts at any Zimpost branch.

This has enabled banks, such as FBC, NMB and others, to have a wider reach than they originally would have, without the partnership with Zimpost.

Although Zimpost has the potential to make the overall economy more effective, it is in need of vital changes to its current business model.

Thereafter, it may need to introduce more innovative strategies, so as to ensure that it grows and plays its part as an enabler of economic growth in the country.

Changes to existing structure

In order to improve the viability of its branch network, Zimpost may need to consider closing down some of its unprofitable branches.

The 239 it currently has, immediately raise the concern that they may be a burden on the company's viability. In South Africa, for example, SA Post Office has determined to close about 400 of its 1 000 branches, in order to remain with only 600.

The 600 will be distributed evenly across the country, with a post office truck moving around on certain days of the week in the most isolated areas, to continue providing services.

It also goes without much saying that of the 239 branches, which Zimpost has, several are likely unprofitable. Thus, considering a reconstitution of the number of branches and their distribution across the country will be essential.

An employee audit will also be crucial, in order to ensure that there are no duplicate job roles within the organisation. The audit should also search for ghost workers who may still be getting salaries whilst they have been made operationally redundant, by lack of equipment in the organisation or through being assigned to a branch which was long-closed.

Existing products, such as, the money transfer services - Zipcash and Postcash, need to also be redesigned or discarded if they have a poor cost-benefit balance.

It may not be surprising to discover that the two have cost the company much more than their respective earnings, since they do not appear to have widespread adoption in the market, such as, the competing services of Ecocash and NetOne's "OneMoney", among others. Agency banking services, however, seem to have been embraced and may only need to be upgraded, in the future.

Importance of new products and services

One of Zimpost's services includes the provision of customer-focused delivery (logistics) services for various retailers, which sell their products online. These include OK Zimbabwe and Gain Cash and Carry. To expand the reach or significance of the logistics branch of the company, Zimpost may also need to partner with government, in order to become the preferred service provider for the government's transportation needs.

This means that they should be the recommended choice for distributing command agriculture or presidential-scheme crop inputs, which are meant for farmers and villagers spread all around the country.

Additionally, the Zimpost logistics vehicle fleet may also need to utilise any disruptions to National Railways of Zimbabwe (NRZ) services, so that it serves affected customers, whose freight may be affected by any NRZ delays or challenges. This will translate to greater income for the business.

The company also needs to consider participating in the importation and export of goods (international trade) on behalf of its local customers.

Marketing and brand strategist, Simbarashe Mukondo, wrote in one of his' blog posts on LinkedIn, emphasising that Zimpost may need to provide the comprehensive package of vehicle customs clearing, registration and number-plate application services for civil servants' duty-free car imports.

To add to that, considering that there are about 54 000 cars (50 000 second-hand and 4 000 brand new), which are imported into Zimbabwe each year, it may be gainly for Zimra to target the whole market segment of imported vehicles and provide the requisite facilities. Alternatively, the company may apply to financial regulators and get licences to facilitate foreign trade at a financial level, through letters of credit, purchase order finance, etc.

The sheer size of the country's imports (US$8,6 billion in 2022) indicates that there is so much business, which the postal service provider can profitably utilise.

In his blog post, Mukondo went on to describe how Zimpost could also branch into errand services where it can serve the domestic market with assistance around basic needs such as, dropping and picking customers' clothes from the dry-cleaner.

This may also include school drop-offs for scholars, utility bill or other petty (small) payments to third parties, etc. There is a strong likelihood that errand services would be a successful revenue stream, since the authentic brand of Zimpost (which is government-owned) implies that it will be easier for clients to establish trust with the company, unlike as they would, with unknown private sector participants.

There is also a possibility for the post office to enter the ride-hailing business, where it transports passengers and acts as competition to Uber, Bolt, Vaya Africa, etc.

In order to revamp the money transfer side of the business, the post office should find creative methods to ensure that it restores its lost market share and retains profitability.

Much revenue can be made from the provision innovative financial services. Firstly, Zimpost may need to provide a digital app (to be downloaded online) which can be used by anyone to upload or deposit payments for further use at retail stores or onward transfers to third-parties, which include; all government accounts, relatives, friends and private businesses.

Citizens still have gaps in their payment requirements to government service providers (including utilities), for the payment of transportation (ride-hailing or plane tickets), retail services, mobile transfers to individuals and so forth, which can be provided for by this touted Zimpost digital payments app.

In order to differentiate this from a bank account, it can have a $500 limit on cash which individuals can upload (deposit) to the app. This means that, the post office should further entrench its involvement with cash and financial services.

This is mostly necessitated by the fact that physical mail will continue to lose relevance through the years. Thus, instead of making mail and parcels the main revenue stream, the business must grow towards digital finance and other innovative and timely market requirements.

The leadership at Zimpost may need to lobby (seek) for the integration of the post office into the government's digital transformation processes, as another option for generating revenue.

When the government chooses to provide digital versions of birth certificates, national ID documents, title deeds, marriage or divorce certificates, among others, the post office should aim to be the facilitator which will collaborate with the authorities.

In South Africa, from 2022, the Department of Home Affairs embarked on a quest to transform 340 million paper-based civic records (IDs, birth certificates, etc), into digital format.

The country's finance Minister, Enoch Godongwana, assigned the project a budget allocation of ZAR559,5 million (US$29,6 million) for the 2023/24 financial year.

Since such projects involve significant expenditures and human resource requirements, incorporating the input of post office workers in them, would result in greater profitability for the postal service provider.

The long-term goals of Zimpost may need to include using drones as part of their mail and parcel delivery systems. Apart from the efficiency that drones bring, they will add towards strengthening of the brand parity of Zimpost, if they are managed well.

Drones have an added advantage of high reliability, since they cannot be stuck in traffic.

In November 2023, it was reported that South African courier company, AramexSA was contemplating using the "Black Swan drone", manufactured by Dronamics, for some of its cargo deliveries in that country.

The drone is reported to be able to transport up to 350 kg of cargo, for 50% less cost (compared to road freight), 60% less emissions and 80% more speed.

It was also mentioned that it could take-off and land, in a 400 metre space and travel as much as 2 500 kilometres. The executives at Zimpost may need to keep their eyes open regarding this product line, so that they are not overmatched by their competitors, who may also introduce this technology, at some point in time.