NamPost reflects on 30 years of independence

Home Business NamPost reflects on 30 years of independence

Namibia’s national postal operator, Namibia Post Ltd (NamPost) provides service solutions through its postal, banking, courier, philately, agency and money transfer services. As one of the most stable and best performing public institutions, 
NamPost recently inaugurated a new logistics centre in Windhoek to improve operational efficiencies for its courier services. As one of the leading logistics companies in the country, NamPost Couriers covers more than 60 overnight destinations domestically and over 220 international destinations in collaboration with strategic partners. In addition to the new warehouse, NamPost introduced additional products and services to offer a modernised in response to market development and technology advancement. Improved services include mobile hand-held technology, economy services, seven new courier products in addition to the “EasyPack”, route matrix, value added services which include Saturdays, afterhours and same day deliveries as well as prepaid account services.

In addition, deposits at NamPost Savings Bank reached over N$6 billion this year. NamPost Savings Bank also introduced new Visa smart cards to allow low-income clients to transfer, receive and transact easily. 
The new smart cards may be used to withdraw funds at all automated teller machines (ATMs) across the country, as well as make payments through any point-of-sale machines.  >>
NE: What are some of NamPost’s major achievements and performance highlights since independence?
FH: Great progress has been achieved in carrying out NamPost mandate; namely, provision of postal services, running the savings bank and money transfer. For example: 
•    Assets increased from N$69 million to over N$6         billion
•    Post offices increased from 92 to 137 in 2020.
•    In 2006, the savings accounts were moved         from book-based record to SmartCards. That         made NamPost the first successful chip-based         card issuer in Namibia. Other banks joined only a         few years ago. The card was also the first, and 
    so  far, the only one, biometric based payment 
    card issued in Namibia. Other card issuers are 
    sure to follow at one point. 
•    Over the last 28 years, NamPost as a company         reported a loss before tax and unrealised fair 
    value adjustments 4 times and as a Group 3         times. 
    Meaning out of 28 years of existence, 25 years of         those NamPost has reported profit. With a
     reasonable consistency in profitability, retained 
    income has grown from zero to N$319 million.         Not a bad accumulation of reserves given that the 
    shareholder invested only N$5m as capital.
•    Over 124 000 post boxes have been installed and 
    about 80% are rented out.
•    Revenue grew from N$26 million in 1993 to 
    over N$1.1 billion in 2018. However, with changes 
    in accounting treatment of certain revenue lines,         revenue for 2019 was just over N$869 million and         that of 2018 was restated as N$830 million. 
•    We introduced services like courier for both 
    domestic and international services, micro-lending,         Visa-branded smartcards, automated point of 
    sales, state of the art payment system, automated
     mail sorting machines, hybrid mail facilities and 
    insurance cover for our customers.
•    Seven-year average return on equity is 15% 
    compared to average for banks at 20% keeping 
    in mind that only about 60 of revenue comes from 
    financial services and we carry social responsibility 
    post offices.
   No doubt the progress has been very good and 
   value for money for both the shareholder and the
   communities in which we operate.

NE: How has NamPost Savings Bank evolved since its establishment and when can customers expect it to become a fully-fledged commercial bank? 
FH: The Savings Bank has made great progress over the years. Looking back, the savings book has grown from N$55.2 million in 1993 to over N$6 billion currently. 

We developed good treasury skills, a reliable and loyal group of savers, a solid payment system and a dedicated group of staff both in Windhoek and throughout the postal network. So, the Savings bank is solid and ready to be converted into a niche commercial bank focusing on ensuring financial inclusion of all Namibian. But, of course, for that to materialise, the Government must take a decision to that effect. At this stage, the Government did not pronounce itself on the issue. Therefore, we will continue to run the Savings Bank as it is. 

NE: What are some of the latest services offered by NamPost Savings Bank?
FH: You would have noticed that last year in July we started migrating the savings bank accounts from the payment system we have been using for more than ten years which is closed look to a new system with the basic difference being that new system allows us to issue smartcards that are VISA-branded and therefore interoperable with the rest of the national payment system. 
Meaning, you can now use the NamPost smartcard anywhere in the Namibian market where point of sales are available or on any ATM that accepts VISA.
An array of investment products are available to the NamPost customers. Moreover, our customers can access an affordable insurance that cost only N$9.99 per month. 
Besides that, we recently introduced an array of EasyBoxes making it easy for customers to ship items by courier throughout Namibia. We have also differentiated our flagship prepaid courier flyer, the EasyPack, into two products to address the needs of the customers better. 

NE: How does NamPost Savings Bank’s Interoperable Smartcard make banking more accessible to all Namibians?
FH: Well, it creates convenience for the customer to access their funds when the post office is closed. It also limits the need to withdraw all cash as you can shop with your card. It must, however, be noted that the savings products remain and so does the array of investment products for those that want to make sure that their money is not readily accessible. Case in point is the popular 32-day notice deposit.

NE: With the advent of digitalisation, how much have mail volumes declined at NamPost and in light of this how has NamPost reinvented itself for the digital age?
FH: NamPost handled over 100 million mail pieces every year as at independence. Today the volumes have dropped to about 85 million pieces. Barely ten years ego NamPost made 98% of its profit from Postal Services, today it is about 6% contribution. So, we have significantly diversified the business and are indeed one of the most diversified postal business in the world. You would also appreciate that we have a full capacity to send statements digitally to customers in Namibia facilitated by NamPost Hybrid Mail services. 

NE: What measures have NamPost put in place to ensure its continuity and relevance for the short-, medium- and long-term?
FH: In the short-term we aim to survive the prolonged economic recession. In the medium-term our aim is twofold: on one hand, position ourselves as the e-commerce facilitator of choice in Namibia and an unrivalled expert in last mile delivery. Secondly, we aim to continue solidifying the business that are reducing dependence on mail; namely, financial services and logistics. At the same time, we believe the time is right to ride the digital wave and create more convenience for our customers and by extension create value for the shareholder. 

NE: What were the major transitional factors for NamPost as it moved from selling postage stamps and facilitating mail services to connecting individual communications around the world?
FH: Product offerings must change in line with customer preferences. NamPost is not exemption to this principle. Over the past 28 years, NamPost has gone through significant changes as mail stagnated. Since independence, the Namibian population has nearly doubled. Compared to mail, mail volumes were at about 100 million in 1992. 
Today mail volume is at 85 million; so, mail declined while the population grew! Over the years, we preserved the core of the business; namely, mail and savings bank which are the key business that are provided for in the Act and in the Articles of Association of NamPost. Therefore, we still sell stamps and mail and related products contributed more than N$147 million to NamPost revenue last year.
However, it is noteworthy that we have built other business. 
For example, the courier business which is arguably the biggest courier operation in Namibia; payment infrastructure as highlighted more recently in the VISA-branded smartcard, linked all post offices to the core systems in Windhoek, insurance to NamPost customers and micro-finance reaching all corners of Namibia. With those in place, today mail makes up only 17% of the revenue of NamPost.

NE: Is Philately still a lucrative business venture for NamPost in this digital era?
FH: From the collector’s perspective, Philately remains very exciting—indeed, the fewer the stamps the better. From a business perspective, it is not a key driver of revenue and it never was, actually. To put it into context, a stamp is merely a proof of payment for delivery of mail and the philatelic business is on the back of that. Therefore, philately will continue to exist as long as there is physical mail as it is an offshoot of mail services.
NE: How many Post Offices and post boxes does NamPost operate and how will these numbers be managed in the near future?
FH: The number of post offices currently stand at 137. The likelihood is that this number will increase. But in the near-term, it is not prudent to expand the infrastructure while the economy is contracting. 
This is in particular important given that most of the expansion is driven by social needs rather than commercial considerations. 
Of course, this must be understood from the context of the fact that commercial activities fund social activities. 
Therefore, if commercial activities are under pressure and you expand social activities you accelerate your potential to make a loss. With regard to post boxes, we have over 124 000 post boxes. No significant expansion is envisioned in post boxes. But in the long-run we should be able to modernise them.

NE: How did NamPost perform during previous financial year and what are NamPost’s financial projections for the current financial year?
FH: The Performance of the NamPost Group was well below expectations hit primarily by the recessionary economic environment. 
As you are aware, everybody is cutting cost and business such us mail and courier is a cost to other businesses. 
Therefore, businesses will avoid these if they can. 
As I indicated earlier, mail dropped by 17% which is the highest drop we have seen over the past ten years or so. Domestic mail dropped by 11% primarily driven by a 30% drop in government mail. International mail dropped by 28%. 
Group profit has dropped to N$13 million even though revenue has increased slightly by 4.8%. 
This year, not much has changed economically and therefore the results are still likely to be subdued.

NE: Numerous post offices around the world have ventured into e-commerce as a method of self-preservation; does NamPost have similar plans to ensure its longevity?
FH: E-Commerce is already here and we are immersed in it. Yes, at this stage it may not be making up a significant portion of our revenue but we are keeping an eye on it. Indeed, where possible we will facilitate it. Unfortunately, the logistics chain is not all under the control of NamPost and weaknesses with the chain sometimes make people hesitant to use the postal infrastructure. 
That aspect hurts e-commerce growth in postal operations and Namibia is not an exemption.  As a company, we are well aware of that and where possible we are hard at work to ensure that bottle-necks are bypassed.  ◆