If the Post Office wants a monopoly, give it one

The South African Post Office is mounting a campaign to enforce its monopoly over the delivery of small items weighing less than 1kg. If it gets its way, it will inflict long-lasting damage on South Africa’s fledgling e-commerce industry.

The Post Office has been agitating for years for its monopoly over small-item delivery to be enforced. That means stopping private courier companies – most of which are far quicker and more efficient at actually delivering.

It means Vodacom or MTN won’t be able to use a courier service to deliver your next cellphone; Takealot won’t be able to send you your new running shoes; and Evetech won’t be able to get you that new computer mouse you ordered. Unless, of course, they all make use of the notoriously unreliable Post Office.

The need for a national postal service has declined markedly in recent years, thanks to the Internet. People rarely send letters anymore

Mad as this idea is, communications regulator Icasa this week said it was backing the Post Office in its campaign to stop private couriers from delivering small parcels.

“Icasa’s mandate is to implement what the law requires, and we are doing exactly that,” Business Day on Monday quoted Icasa spokesman Paseka Maleka as saying.

And if the law’s an ass, Mr Maleka?

World’s moved on

The world has moved on significantly since policymakers crafted the legislation that the Post Office is today hoping to use to muscle its commercial rivals out of the market. The need for a national postal service has declined markedly in recent years, thanks to the Internet. People rarely send letters anymore – why would you when you can talk to your loved ones on WhatsApp or Zoom? Companies are weaning themselves off the Post Office, too – it’s much cheaper and efficient to e-mail an invoice than to use the Post Office.

To be sure, there is an opportunity for the Post Office to reinvent itself as a low-cost fulfilment agency for e-commerce. It has the distribution network in place to do it. The problem is, no one believes it is capable of doing the job. Why? Because it is a lumbering, state-owned enterprise that is simply incapable of delivering the sort of customer service levels expected from private sector rivals.

In short, it will be a miracle if the Post Office was granted its monopoly over small items and actually then met the expectations of both e-commerce players and end-user customers.

The author, Duncan McLeod, argues that government isn’t asking the hard questions about the Post Office

What else does the Post Office do? It pays social grants. But retailers like Shoprite and Pick n Pay would love to help the South African Social Security Agency to disburse these grants. And why shouldn’t they? With the right ground rules in place, they’d do it well.

Of course, government has grand plans to use the Post Office – through Postbank – to create a full-service state-owned bank to compete with the private sector. Whether people put their money in there is another matter. Would you entrust your life savings to a state-owned bank operated by a company that can barely deliver on its basic mandate, namely delivering the mail? I know I surely wouldn’t.

The Post Office’s big problem is that it, like its peers around the world, it is rapidly becoming irrelevant. In an era of fibre broadband, social media and instant messaging, the Post Office is an anachronism.

In an era of fibre broadband, social media and instant messaging, the Post Office is an anachronism

Is the Post Office worth saving? Probably not. If it was, somehow, miraculously, able to reinvent itself overnight as an online shopping fulfilment agency, I’d then argue that it has a place in greasing the wheels of commerce in South Africa. But because it is state owned and inefficient and overstaffed and unlikely to be privatised anytime soon, the chances of that happening are next to zero.

And it knows this, too, which is why it is attempting to enforce its monopoly, even where such a monopoly will harm the economy. It’s a bit like Telkom in the early 2000s, when it claimed that the old Telecommunications Act extended its monopoly over the provision of telecoms services to the Internet protocol, threatening the very Internet service providers that were forcing down prices and improving customer service at the time. Telkom lost that battle; the Post Office should lose this one.

Dying enterprise

I don’t know what the long-term future is for the Post Office. It may not have one. Whatever the case, government — and Icasa — shouldn’t try to support it by banning competition. Instead, they should be asking the hard questions: Does the Post Office have a future? If it doesn’t, what do we do with it? Should it be privatised, perhaps with its assets sold off to the highest bidder? What lessons can we learn from other markets?

In the meantime, by all means, give the Post Office a monopoly — over printing stamps! Anything more than that will amount to protecting a dying enterprise at the expense of the rest of the economy. – © 2021 NewsCentral Media