Uganda’s Postal Service Under Pressure from Unlicensed Couriers

The Public Accounts Committee on Commissions, Statutory Authorities, and State Enterprises (COSASE) has raised serious concerns about the challenges facing Uganda Posta Limited (Posta Uganda). Unlicensed courier companies are rapidly gaining control of the market, raising fears about the sustainability of Uganda’s postal service. During a plenary session on October 14, 2024, Members of Parliament debated COSASE’s report based on the Auditor General’s findings on Posta Uganda’s financial statements for the fiscal year ending June 30, 2023.

Presenting the report, Allan Mayanja, the committee’s deputy chairperson, noted that unlicensed courier companies now account for 60% of Uganda’s courier market, according to the Uganda Communications Commission (UCC). This surge in unregulated operators is significantly hurting legitimate players like Posta Uganda, with the government losing substantial tax revenue in the process.

Mayanja emphasized that Posta Uganda is finding it difficult to stay competitive due to the rapid growth of these unlicensed services. “The rise of unregulated courier services has led to an uneven playing field, causing Posta Uganda to lose market share and revenue, both for the company and the government,” he explained.

In recent years, Posta Uganda has experienced a notable decline in revenue. Sales revenue dropped by 6.29% in the last fiscal year, and key services such as bag rentals saw a drastic 64% decrease, while post-shop sales plunged by 68%. Faced with shrinking income, the company has increasingly relied on overdrafts, with overdraft usage rising by 22.31%.

Though Posta Uganda did manage to report an increase in after-tax profits, from UGX 0.179 billion to UGX 0.397 billion, this was insufficient to resolve its liquidity issues. Mayanja warned that without urgent financial intervention, the company would continue to struggle to meet its obligations.

Mayanja called for stronger regulatory enforcement to level the playing field for Posta Uganda. He urged the UCC to tighten its oversight and ensure that all courier companies operating in Uganda are properly licensed. “The UCC must take swift action to enforce licensing regulations for courier companies. Fair competition is essential if Posta Uganda is to survive,” Mayanja insisted.

Several Members of Parliament expressed their concerns about Posta Uganda’s management and its ongoing financial struggles. Christine Kaaya, the Woman Representative for Kiboga District, dismissed the argument that the company’s challenges were solely caused by the COVID-19 pandemic. She pointed out that Posta Uganda had shown resilience after the pandemic, suggesting that the issues lay elsewhere.

“Posta Uganda cannot continue blaming the pandemic for its troubles. The company recovered after COVID-19, and it’s clear that the root problem is poor management,” Kaaya remarked.

Faith Nakut, the Woman Representative for Napak District, echoed these concerns, calling for a comprehensive overhaul of the company’s leadership. Nakut argued that Posta Uganda needed better management and a clear vision to regain its footing. “Posta Uganda requires serious re-engineering and fresh leadership if it is to become a competitive force again,” she added.

Jonathan Ebwalu, MP for Soroti Division West, highlighted the unpaid liabilities owed to retired Posta Uganda employees. The company reportedly owes UGX 11.673 billion to 373 retirees, an amount that remains unsettled. Ebwalu stressed the need for the government to address these outstanding payments to avoid leaving retirees in financial hardship.

“The government must ensure that retired Posta Uganda employees receive their dues. This debt must be settled as soon as possible,” Ebwalu urged.

Other MPs, including Mathias Mpuuga (Nyendo-Mukungwe Division), emphasized that while reform was necessary, dissolving Posta Uganda was not the answer. Mpuuga warned against dismantling an institution that still provided essential services to Ugandans and employed many people. He advocated for reforming the company instead of shutting it down. “We must focus on improving management at Posta Uganda. The company is still valuable to our society and should not be dissolved,” he stated.

Frank Kabuye (Kassanda County South) called for a forensic audit of the company’s operations, stressing the need to address mismanagement and resource misallocation. “A forensic audit is essential to ensure accountability and transparency at Posta Uganda,” Kabuye asserted.

The Leader of the Opposition in Parliament, Joel Ssenyonyi, highlighted the company’s mounting financial obligations. Posta Uganda reportedly owes UGX 20.4 billion in debts, UGX 45 billion in court awards, and UGX 3.2 billion in payroll liabilities. Ssenyonyi pointed out that these debts were crippling the company’s ability to function effectively, especially since some staff had not been paid.

“How can Posta Uganda operate efficiently with so many outstanding debts and unpaid staff?” Ssenyonyi questioned.

In response to the concerns raised by MPs, Speaker Anita Among announced the formation of an ad-hoc committee to conduct a thorough review of Posta Uganda’s operations and governance. The committee, to be chaired by Faith Nakut, will include members such as Moses Aleper (Chekwii County), Herbert Tayebwa (Kashongi County), and Xavier Kyooma (Ibanda County North).

“I have directed that an ad-hoc committee be established to scrutinize Posta Uganda’s operations. We need to hold the shareholders and responsible ministers accountable for the company’s current state,” Among concluded.

The committee is expected to produce a detailed report on Posta Uganda’s challenges, offering recommendations for governance reforms, financial recovery strategies, and improvements in regulatory enforcement.

Table: Posta Uganda’s Financial Struggles (2023 Fiscal Year)

MPs continue to stress that without stronger regulatory enforcement and better management, Posta Uganda will struggle to remain a viable player in Uganda’s courier market.