- Universal Service Obligation (USO) costs recovery contribute considerably to performance
- P112 million in USO payments recovered from government
Botswana Post says it was able to recover P112 million in Universal Service Obligation (USO) costs from the government, which contributed significantly to its outstanding performance in the 2021/22 financial year, leading to the company recording a 211 percent increase in profit before tax.
According to the Chief Financial Officer (CFO) at Botswana Post, Ofentse Mabote, the USO, which is an agreement between the postal company and the government declaring that all Batswana no matter where they may live in the country are entitled to the benefit of postal service increased by 246.4 percent this financial year.
“We were able to invoice the Government P152 million for these services rendered. However, the company recovered P112 million of this total amount, leading to an impairment of P40 million,” he said this in the company’s recently released annual report for the year 2021/22. Mabote highlighted that being able to duly recover the USO costs from government is a fundamental driver of Botswana Post’s financial sustainability as an enterprise.
Commenting on the USO costs recovery, the Chief Executive Officer (CEO), Cornelius Ramatlhwakwane stressed that the company sees the agreement as a privilege to bring high-quality postal services to the most vulnerable communities across the country, further emphasizing that BotswanaPost has fully committed its resources to the agreement however financially unviable it might be.
“Despite the diverse revenue streams which we have created in recent times through our innovative digital platforms, we still need to be reimbursed by the shareholder for this vital service. This year, we have been able to recover P112 million in USO payments – a vital source of revenue, which underlines the importance of our contribution to the country,” Ramatlhakwane said.
Profit before tax for the postal services company grew by 221 percent to P64.1 million driven by an improved gross profit margin of 33.7 percent and an increase in other operating income. It also recorded a 6.7 percent growth in topline revenue, which it attributed to the successful execution of its digital strategy as well as the growth of the agency services category, which includes payments and collections services and electricity commission.
Recovering from the aftermath of COVID-19 restrictions, Botswana Post further revealed in the annual report that the gradual easing of movement restrictions has allowed international mail volumes to return to a level comparable to pre-COVID volumes. “Domestically, our Hybrid, EMS and Government mail services also began to recover. The Courier, Freight and Warehousing segment grew by 5.7 percent cumulatively.”
In addition, the company said it played a central role in the safe storage and transportation of COVID-19 vaccines across the country, which led to warehousing revenue growth of 4.3 percent while courier services, which provided the distribution of these vaccines, was also a primary driver of growth. “This product line also benefited from the gradual recovery in economic activity by the business community, leading to a robust increase of 12.5 percent.”
High competition levels and low airtime stocking levels hampered growth in the airtime and money transfer commissions product lines, which declined 40.9 percent and 11.4 percent respectively. Another product line at BotswanaPost, which declined, was Box rentals, which dropped slightly indicating shifting of priorities experienced by many households in Botswana.
The company stated in the annual report that the record-breaking performance in the 2021/22 year illustrates the resilience of BotswanaPost and its capacity to adapt to uncertainty both domestically and internationally. “Our financial outlook continues to improve, creating shared value for all stakeholders, supported by better cash availability and finalization of the USO reimbursement process.”
