The Postal Sector in Developing and Transition Countries Contributions to a Reform Agenda Edited by Pierre Guislain September 2004 The World Bank Group Global Information and Communication Technologies Department, Policy Division The Postal Sector in Developing and Transition Countries Contributions to a Reform Agenda Edited by Pierre Guislain September 2004 The World Bank Group Global Information and Communication Technologies Department, Policy Division i THE POSTAL SECTOR IN DEVELOPING AND TRANSITION COUNTRIES Acknowledgements This report was prepared by a team including Boutheina Guermazi, Pierre Guislain, Juan Ianni, Charles Kenny, Graeme Lee, and Isabelle Segni. Valuable contributions and comments were received from our reviewers and colleagues in the preparation of this document. Thanks go to Anat Lewin, Gareth Locksley, Paul Noumba Um, Christine Zhen-Wei Qiang, Andrea Ruiz-Esperza, Peter Smith, and Svetoslav Tintchev (World Bank), as well as Alex Dieke (WIK), Bob Cohen (US Postal Rates Commission), and the staff at Frontier Economics. Special recognition to Mark Andrew Wahl for the cover art and interior layout. Disclaimer This report was prepared by staff from the World Bank Group’s Global Information and Communi- cation Technologies Department. The findings, interpretations, and conclusions expressed herein do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the govern- ments they represent. To request additional copies of this report please contact the Global ICT Department, World Bank, 2121 Pennsylvania Ave., NW, Washington, D.C. 20433, USA; email: [email protected]. ii Table of Contents Foreword ..............................................................................................................iv Chapter 1: Introduction ...........................................................................................................1 Chapter 2: Reinventing the Post Office By Pierre Guislain and Graeme Lee ......................................................................5 Chapter 3: What Drives Postal Performance – A Cross-Country Analysis By Charles Kenny ................................................................................................16 Chapter 4: Questioning the Monopoly-Supported Postal USO in Developing Countries By Charles Kenny ................................................................................................29 Chapter 5: Postal Policy and Regulatory Reform in Developing Countries By Boutheina Guermazi and Isabelle Segni .........................................................42 Chapter 6: Case Studies By Isabelle Segni and Juan Ianni .........................................................................52 Morocco ...................................................................................................53 Tanzania ...................................................................................................59 Trinidad and Tobago .................................................................................66 Chapter 7: Conclusion ..........................................................................................................72 Bibliography ........................................................................................................75 Authors ................................................................................................................78 iii THE POSTAL SECTOR IN DEVELOPING AND TRANSITION COUNTRIES From the Editor The World Bank Group has been involved in This compilation was prepared as a contribution postal sector reform for over a decade. At present, to the Universal Postal Union’s 23rd Congress we support reform in about 25 countries in all (Bucharest, September-October 2004) and its regions of the world, with special emphasis on World Postal Strategy Forum. It includes sev- Africa and Latin America. During this decade, eral articles addressing key issues postal the sector itself has changed significantly. The policymakers, regulators and operators are fac- erstwhile paradigm of public sector monopoly ing today. Each chapter looks at the reform pro- justified by the need to deliver and finance spe- cess from a different angle, and the views of the cific universal service obligations is crumbling various authors do not always coincide. under the dual forces of competition (from other providers of postal services as well as substitute Several challenges exist to rigorous research and services such as electronic communications) and policy analysis on the postal sector. These in- fiscal restraint. clude the confusion surrounding the use and scope of the terms postal sector or services, as well as The postal sector has started a transition process the paucity of data and benchmarks on sector witnessed before in telecommunications and other development. While information on the perfor- network industries, from state monopoly to pri- mance of postal incumbents or operators is al- vate-sector-led competition. We are only in the ready limited and uneven, information on other early stages of this process and no clear models sectoral actors is quasi non-existent in any stan- or consensus have yet emerged as to the best route dardized or consolidated format. This is an area to follow, in particular in developing and transi- where the UPU and its membership could pro- tion countries. While sector reform in telecom- vide an increased and much needed contribution. munications started over 20 years ago and is still in process, time is running out for the postal sec- We hope that this compilation will provide a use- tor and reforms will need to be implemented at a ful contribution to postal sector reform in devel- faster pace if the sector is to be saved from irrel- oping and transition countries and welcome com- evance. ments and suggestions. Pierre Guislain Manager, Policy Division Global Information and Communication Technologies Department The World Bank Group iv INTRODUCTION Chapter 1 Introduction he scope of the postal sector broadly cov- At the same time, it is clear from the evidence ers pick-up, transport and delivery of presented in this compilation that in many de- Tletters and parcels, post office counter veloping countries the postal sector is far from services related to letter and parcel delivery, and healthy. The sector, and in particular the in- other related services such as mailbox rental (see cumbent post office, is characterized by low vol- Box 1). At the same time, post offices (the in- umes, poor quality of service, and weak finan- cumbent operator that provides postal sector ser- cial performance. In the majority of developing vices, usually under legal monopoly) often offer countries both the postal sector and the post a range of services outside of the postal sector— office urgently require reform—from the level pensions payments, telephone or Internet access, of policy, through regulation, and to corporate financial services, and retail services for example. restructuring. Postal services have existed for over two thou- The papers in this collection suggest the extent sand years and have historically been important of the policy, regulatory and corporate reform to the development of nations. The Roman postal agenda in improving the performance of the service, the cursus publicus, used a network of postal sector in developing countries, as well as messengers carrying mail up to 80 kilometers per some approaches to such reform. At the same day; illegal use of the postal system was punish- time, the papers suggest that the future of the able by death. The modern postal service goes post office in developing countries as a viable back to 1840 when the stamp was introduced in business, rests in part on the provision of a range Great Britain. The Postal Sector in Developing of services that extend far beyond the postal and Transition Countries reports on several em- sector. pirical studies that posit a link between postal sector development and broader development progress. 1 THE POSTAL SECTOR IN DEVELOPING AND TRANSITION COUNTRIES Box 1. Defining the Postal Sector Webster’s provides an interesting word history for sale of postage stamps. This class excludes postal post: “The word post, meaning “mail”, is ultimately giro and postal savings activities, and other financial derived from Latin ponere, “to place, put in posi- activities carried out in combination with postal ac- tion.” This meaning of the word post was a result of tivities.” Courier activities other than national post the method of delivering mail. In the 16th century, activities includes “pickup, transport and delivery of horsemen were stationed at designated places along letters and mail-type parcels and packages by firms certain roads to ride in relays, with royal dispatches other than national post. This class excludes similar and other papers. These couriers were called “posts.” activities carried out by the national postal author- As the system of mail delivery expanded during the ity.” The distinction between postal and courier ac- next two centuries, post was applied to a delivery of tivities is highly interesting as it is based more on the mail and then to the organization responsible for the provider of the service than the activity itself, which entire system of delivering mail.” “In Middle En- is unusual for an ISIC classification. glish times the word mail meant simply “bag,” espe- cially one used by a traveler for provisions. Such There is a somewhat indistinct border between the