Posta Uganda faces collapse over expired license and mounting debts

The Uganda Communications Commission (UCC) has revealed that Posta Uganda’s license to operate mail and deposit services expired in 2021, leaving the state-owned postal operator struggling with UGX 1.7 billion  in unpaid license fees dating back to 2017.

Abudu Sallam Waiswa, UCC’s Head of Legal Affairs, disclosed this to the Parliamentary Ad hoc Committee investigating the financial woes of Posta Uganda. Waiswa warned that without urgent intervention, the national postal operator risks shutting down.

“We are embarrassed to say their license expired in 2021, and we have continuously asked them to renew it. Despite their challenges, they cannot operate without a valid license,” Waiswa said. He emphasized that UCC has sent multiple reminders, but Posta Uganda remains in arrears.

Posta Uganda serves as Uganda’s designated postal operator under the Universal Postal Union (UPU) Convention, which mandates member states to maintain a functional national postal service.

“We are aware of our international obligations,” Waiswa explained. “We must balance national interest and our UPU commitments, which bind us to have a national operator.”

Despite its operational challenges, UCC has refrained from enforcing penalties on Posta Uganda to preserve its status as a critical national asset.

If Posta Uganda’s financial troubles persist, UCC may advise the government to consider private operators as alternatives for the national postal role. While international firms like DHL have shown interest, Waiswa cautioned that private companies might not fully address the universal service and logistical demands currently handled by Posta Uganda.

Posta Uganda’s financial troubles extend beyond licensing fees. The operator owes:

• UGX 5.5 billion to Uganda Telecom in rent arrears.
• UGX 1.4 billion to the Uganda Revenue Authority (URA) in VAT.
• UGX 1.2 billion in rental tax arrears.

The company’s total liabilities include UGX 20.4 billion in unpaid debts, UGX 45 billion in court awards, and UGX 3.2 billion in payroll liabilities, according to a report by the Auditor General.

UCC Executive Director Thembo Nyombi urged Parliament to support a government bailout for Posta Uganda. “They need financial leverage and investment to redefine their business. Posta Uganda’s logistical role is essential, and it should not be left solely to private entities,” he said.

UCC officials proposed Posta Tanzania as a model for recovery. The Tanzanian postal service has successfully re-engineered its operations, focusing on logistics for critical sectors like education and healthcare.

Committee Chairperson Faith Nakut emphasized the importance of saving Posta Uganda, noting, “Uganda’s postal services must be preserved. This investigation will guide re-engineering efforts to decide on the necessary government actions.”

The committee, formed by Speaker Anita Among, is assessing management gaps within Posta Uganda to determine the next steps. The investigation’s outcome will likely influence whether the government opts for a bailout or explores alternative operational models.

This critical juncture will determine whether Posta Uganda can regain its footing or face privatization as a last resort.