By Temitope Owoeye

As a Nigerian with a deep-rooted love for our traditional cuisine, I frequently find myself scrolling through Instagram, hunting for food content and gift ideas for loved ones.

Recently, a post caught my eye that stirred up some troubling thoughts. The post narrated a tale of a delivery driver absconding with a substantial quantity of goods due to the absence of a robust tracking system note it has an Amala and Ogufe background which got me salivating (sorry I digress due to my love for good African food).

But the story and the recurring complaints about delivery personnel tampering with parcels got me thinking about the challenges small businesses face, the after-effects of primary loss of revenue and diminished customer satisfaction, all exacerbated due to weak delivery infrastructures.In Nigeria, we often blame economic and environmental problems on deficient infrastructure. However, the critical question is whether we are fully utilizing and optimizing the existing infrastructure to meet contemporary needs.

For example, why has the Nigeria Postal Service (NIPOST) taken so long to optimize and provide visibility on its last-mile delivery and provide customized products for small and medium-sized businesses? And given the limited number of online retailers, why hasn’t NIPOST explored collaborations for same/next-day delivery of groceries and fast-moving consumer goods? NIPOST holds immense potential to radically transform the delivery landscape in Nigeria, particularly the last-mile delivery aspect, which entails transporting goods from a hub to its destination. NIPOST maintains, for its operations, 32 territorial head offices and 4,559 postal establishments as of December 2002.

There are 1,004 landed properties with 948 fully developed and 706 transportation fleets. NIPOST has, on average, six service centers per local government area. This vast infrastructure, dedicated to delivery and conveniently located near delivery points, presents a golden opportunity that can be tapped into with efficient technology and human capabilities.

Over the last five years, NIPOST has faced a significant downfall in its revenue. As per the data available until 2022, the revenue plunged by an alarming 57%, dipping from 7.1 billion Naira to a mere 3 billion Naira. Despite this downturn, the NIPOST postmaster ambitiously aims to generate 10 billion Naira in 2023, which is a 232% increase from its 2022 revenue. However, as of now, there is no clarity on the company’s 2023 annual revenue. It would be a commendable feat if NIPOST achieves even half of this projected revenue. It’s noteworthy to mention that despite the declining revenue from local operations, government funding has surged significantly for NIPOST, sparking debates about privatization. NIPOST’s revenue primarily includes earnings from sorting international packages, a segment where it holds a monopoly.

The accompanying chart illustrates the 2IPD metrics of various nations. These metrics measure critical parcel delivery parameters, including reliability, reach, relevance, and resilience. For instance, in the USA, USPS has a 2IPD score of 86.4%, accounting for 32% of all non-letter packages dispatched in the country. In stark contrast, Nigeria’s 2023 2IPD score stands at a disappointing 35.12 out of 100, indicating poor performance across all four parameters.

In an ambitious drive to revitalize its operations and enhance its market presence, NIPOST has embarked on a series of strategic initiatives over the years. Faced with dwindling revenues and a shrinking market share, the government enlisted the expertise of KPMG. The renowned consultant delivered a thorough report in December 2018, highlighting the critical issues plaguing NIPOST. This was followed by an Interim Report in April 2019, which set the stage for an initial unbundling proposal, although this has currently been put on hold.

The most notable initiative is NIPOST’s recent alliance with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN). This partnership sparks intriguing questions regarding NIPOST’s intended industry focus and customer demographic and whether this approach will effectively steer the company toward its objectives. For NIPOST to truly thrive and improve its revenue, it must adopt a business-oriented strategy in providing services to the modern entrepreneur, utilizing cutting-edge technology to guarantee efficient product delivery and comprehensive insurance services.

This would require the development of bespoke services for small and medium enterprises (SMEs) designed to meet their specific needs without compromising the efficiency of operational processes such as registration, payments, pickup, and drop-offs. By strategically leveraging technology, NIPOST could ensure next-day or two-day delivery of packages received by a specific cut-off time.

This would necessitate the adoption of sorting solutions technology to map out all stages of parcel delivery, with barcode solutions playing a crucial role in sorting packages to their respective destinations. Luckily, NIPOST can utilize readily available technologies like route optimization features and barcode scanner technology.
To further customize operations, NIPOST could collaborate with local content solution providers to develop AI-embedded solutions to enhance its operations continually. As a supply chain professional, I am excited about NIPOST’s potential to optimize its delivery services.

Simple arithmetic suggests that if NIPOST delivers around one million packages monthly under this new service offering, with an average delivery cost of 2K per package and an operational cost of 1K per package, it could generate an additional billion Naira in annual revenue, which is ~ a 33% increase compared to its 2022 revenue.

This assumes that NIPOST secures a 10% market share in the first year of its new last-mile offerings. In conclusion, NIPOST has a golden opportunity to disrupt its operations, boost its reputation, and ramp up revenue through the strategic use of technology. It’s time for NIPOST to step up and take the lead in Nigeria’s last-mile delivery services.

This could also pave the way for innovative offerings such as payment on delivery options, temperature-controlled delivery services for food vendors, and more. With the right leadership and foresight, NIPOST has the potential to capture over 50% of the market share, equating to roughly 100M packages by 2030 and resulting in an additional #10BN in revenue annually, without taking inflation into account.

Temitope Owoeye wrote in from Lagos.