BotswanaPost teeters on the brink
Keikantse Lesemela | Friday May 23, 2014 14:31
According to BotswanaPost chief executive, Pele Moleta there were many factors that impede development and self-reliance.
He told a media briefing this week that the organisation’s revenue growth for the year ended March 2013 was negatively affected by the delays in the decisions to revise tariffs and to grant it the authority to borrow in the open market.
“This negatively impacted our cash flows and day-to day operations. Without capitalisation of the business, the company is going to be undercapitalised and therefore there would be a threat of closure. Its upon the government to fund the business,” he said.
The 100 percent government corporation generated cash from operating activities was P13 million while the profits recorded a loss of P76.6 million for the year-ended march 2013.
Moleta said the current state of BotswanaPost’s infrastructure is another impediment to revenue growth.
“This is a major challenge as the post office’s delivery of service relies on the environment in which customers are served and on building adequate capacity to handle both customers served and on building adequate capacity to handle both customer volumes and changing customer demands,” said Moleta.
The 2013 Annual Report for BotswanaPost states that during the earlier years of the turnaround strategy, costs would be higher on account of the myriad of improvement initiatives consequently resulting in a negative bottom line. The report states that going concern of the group is dependent on continued government support. The statement, however, notes that the government has provided written assurance that it will continue to provide the necessary financial support.
In the modern communication technology, BotswanaPost is experiencing the low volumes of mail services.
Moleta said the future of their business lies on hybrid mail services and they are in the process of developing infrastructure.
He said improving the mail infrastructure has the potential to contribute to an improved cost structure as investment in mail sorting equipment, ICT and delivery infrastructure capabilities will reduce manual and multiple interventions on the handling of mail.
“The investment will go a long way in enabling us to improve the national addressing systems,” said Moleta.
Moleta explained that Botswana Post’s mandate to provide postal services to marginalised and remote parts of the country had greatly impacted the organisation’s margins.
He said although this is a duty for the government to take these services to communities they are not funded for these projects.
Moleta explained that the tension between the posts commercial mandate and its universal service obligation is yet to be solved.
‘We are still discussing with the government to provide funds like every other service provider. Looking at the current financial status of Botswana Post we are undercapitalised and facing the threat to closure”.
He said the organisation is planning to rent some of its structures in order to generate income, as they are not allowed to raise funds to cover up their expenses.
Moleta said the government is the major contributor to the loss as they rely on its funding and most of the services are offered to government but they are never paid on time. He said the situation forces them to take loans to cover the day-to-day activities.
He explained that under the universal service obligation, the post continues to provide postal services on non-commercially viable terms and conditions.
“This compounded by inordinate delays in the approval of prescribed tariffs and payments for services rendered to government departments has seriously compromised the post’s ability to ensure that its revenues are sufficient to produce a reasonable return.”
Meanwhile Moleta said Botswana Post is planning to become a P500 million revenue company with a cash cost to income ratio of 60 percent by 2016.
The parastatal is also in the process of merging with Botswana Savings Bank.