Will PostaPesa save and revive PCK’s fortunes after PostaPay fiasco?


Will PostaPesa fly? : Anastasia Kimtai - KCB Director Retail Division, Dr Enock Kinara - Post Master General & CEO PCK and Dr Fred Matiang'i - ICT Cabinet Secretary at the launch of Posta Pesa, which will provide agency services
Will PostaPesa fly? : (From left to right) Anastasia Kimtai – KCB Director Retail Division, Dr Enock Kinara – Post Master General & CEO, PCK and Dr Fred Matiang’i – ICT Cabinet Secretary at the launch of Posta Pesa, which will provide agency services

The past week brought with it a mix of both negative and positive news for the Postal Corporation of Kenya (PCK). The bad news for the PCK – the public entity established to provide accessible, affordable and reliable postal services to all Kenyans wherever they reside – came from CCK which in its Third Quarter Sector Statistics Report for 2012/2013 (Jan-Mar 2013) stated that in the postal and courier industry, eight (8) courier operators were licensed while the number of postal outlets declined by 1.9% to reach 622 outlets from 634 posted during the previous quarter

The report added that: “The number of letters sent within the country stood at 16.2 million down from 17.3 million letters posted during the previous quarter. In comparison with the same quarter of the previous year, a decline of 3.4% was recorded. The number of international outgoing letters during the quarter declined by 33.2% from 1.9 million sent during the previous quarter.”

Overall, CCK notes that “the postal and courier sub-sector has continued to record declining trends in the traffic volumes for local mail due to the competitive pressure that the telecommunication sector has continued to exert on the sector.”

“Consideration of modern methods to speed up letter delivery, restoring customer confidence, diversification of services to meet customers growing demands as well as increasing the use of modern technological innovations could provide a turnaround for this sector to become more dynamic and competitive,” recommends the CCK in its report.

Diversification of services to meet customers growing demands must have been the key driver for PCK when on Tuesday July 30, 2013 – and this was the positive news for and from PCK – the parastatal announced the launch of a new agency and electronic payment service, Posta Pesa.

According to an article in CIO East Africa, Posta Pesa – to be offered via 600 outlets and targeting both government and private sector – will provide cheque, card processing, deposits and withdrawals services.

The system – acquired at a cost of $ 1 million (Kshs 85 million) – has already signed up various partners including National Bank, KCB Bank, Cooperative Bank, Equity Bank, Airtel Money, Orange Money, Kenya Power, Nairobi Water and Sewerage Company and the Kenya Revenue Authority. KCB is also offering cash handling services for Posta Pesa. 

Kenya’s ICT Cabinet Secretary Dr Fredrick Matiang’i said while launching the service that the ministry is keen to fast track adoption of Brazil’s Postal model, adding that the ministry is working on a paper to be presented to the Cabinet that would recommend PCK to be the sole agency handling processing of all payments for the government and public sector entities.

PCK boss Dr Enock Kinara said that all the efforts are aimed to revive the fortunes of the postal services provider and eventually boost its revenues of Kshs 3.5 billion annually through offering of agency services.

But before we celebrate the launch of PostaPesa, let’s first be cautious and reflect on what exactly befell another payments service from PCK, PostaPay which has since ceased operations due to a scandal.

PostaPay was an Electronic Funds Transfer (EFT) service that offered users the opportunity to send and receive money instantly from various locations both locally and internationally. The service enabled both relatives and friends to have access to cash on demand for as short as 15 minutes through PCK’s outlets.

PostaPay’s operations were terminated after the suspension of 7 PCK managers in early 2009 over an alleged fraud. A draft audit of PostaPay, carried out by Deloitte had revealed serious loopholes, which facilitated a Kshs 2.4 million loss through fraud. Among those suspended as a result of the audit report was the then PCK boss Fred Odhiambo.

Fred Odhiambo lost his job as Post-Master General and was replaced by former Police Commissioner Major General Hussein Ali who later relinquished his position to current PCK boss Dr Fred Kinara. Also worth noting is the fact that Dr Kinara was previously head of PostaPay and PCK’s agency business.

By 2009, when it ceased operations due to the fraud investigation, PostaPay – which was launched in 2009 even before M-Pesa was unveiled in March 2007 – had transferred over Kshs 10 billion, in the process earning PCK a monthly commission of Kshs 34 million. The service charged between Kshs 17 and Kshs 25 per transaction or transfer.

This background into the previous operations of PostaPesa’s predecessor, PostaPay, is crucial to ascertain how far and how successful the new service will be and the kind of challenges it is likely to be faced with.

Also worth considering is the fact that PostaPay was launched and operated before the likes of M-Pesa; Orange Money; Airtel Money Money were unveiled. This means that PostaPesa will not only be facing competition from money transfer platforms provided by mobile service network operators but also from the likes of Western Union; MoneyGram as well as Nation Hella.