Where else can I renew my Lebanese passport, pay my cellphone bills, pay that parking ticket from the time I was late to a meeting, and send my brother in London the pair of shoes he left at home? LibanPost, Lebanon’s postal service operator, does more than just drop letters in mailboxes.
With 82 post offices throughout the country — with plans to reach 100 by the end of the year — and 950 employees, LibanPost has been diversifying its services since 2002.
That year, after attempting to run the postal service company for four years following its privatization in 1998, the Canadian postal operators and several Canadian investors threw in the towel. Due to the Lebanese Civil War, Lebanon had been without postal services for 20 years, leaving a whole generation accustomed to living without them, so a change of culture was critical to revive the use of postal services. The Lebanese government had promised the Canadian operators that they would provide them with all the support they needed, from delivering municipality bills to telephone and electricity bills. It was a series of promises that it failed to deliver on.
“We were promised more or less the same support as the Canadians, but, being Lebanese, our expectations were lower,” says Khalil Daoud, LibanPost’s chief executive since 2002, the year it was taken over by a consortium of Lebanese investors including the Mikati family, Bank Audi and affiliates of Bank Audi. In 2011, Bank Audi and its affiliates left their place to the Saradar group which now shares the ownership of the postal operator with the Mikatis’ M1 Capital.
From the onset of Daoud’s helm at LibanPost, he initiated a more commercial-oriented direction for the postal operator, realizing that the company would not be financially viable if it relied on the government as a client or failed to diversify its services.
Khalil Daoud has been chief executive of LibanPost since 2002
From government-related services such as renewing passports and facilitating papers of foreign workers, to vehicle services such as checking the amount due on a car’s annual motor inspection, to financial services such as paying phone bills, depositing money at certain banks and settling parking fines, LibanPost is continuously adding services. Today, 55 percent of their revenues come from non-postal related services. As for the government, it contributes to just 5 percent of revenues.
While Daoud refused to disclose the total revenues of the company, he revealed that the country’s postal operator has been averaging 13 to 14 percent annual growth in revenues since 2002 and started generating profits in 2006. With a lot of debt that piled up during its earlier years, LibanPost still has cumulative losses, but Daoud says “they are declining as we grow and we hope to be [phasing] those out and making a few bucks,” before their contract with the government expires in 2016. “We still have a few years,” he says.
As for the impact of the ongoing turmoil in neighboring Syria on the company’s performance, distribution and delivery of mail between the two countries was only stopped in March of this year. The suspension was without precedent. Even during the 2006 war with Israel, services, which were suspended for just 48 hours, transited through Syria for international mail, and domestic mail was still being dispatched. The Universal Postal Union, a United Nations agency, sets postal rules and instructions for its member nations and, according to Daoud, “It asked us to stop sending mail to Syria until a practical solution is identified. Things are getting more difficult now.”
Getting the right directions
Another difficulty that the company faces is homegrown and simple: addresses. “Close to the hospital”, “after the school”, “the building of the supermarket”, “take a left after the petrol station”, and other inexact directions are often used to locate an address in Lebanon. To complete their deliveries, LibanPost places its postmen to service the neighborhoods they are from. “Is it scientific? No. Is it reliable? To a certain extent. Is it legal? No … It could be a divorce case or a lawsuit and we can’t play with people’s lives like that,” Daoud says.
Having worked with public committees for over 10 years trying to establish an address system in Lebanon, Daoud finally gave up. “The problem is that within the municipality council, they fight to name the street after their late father or late uncle. In New York, streets are given numbers. What is wrong in giving numbers to our streets?” says Daoud.
But Daoud points to another solution. Google, using its global positioning system, can translate an exact location into a 36 to 38-sequenced number. Working with a Canadian company, LibanPost is developing an algorithm that transforms this sequence number into a more manageable 8 to 10 character code and plans to offer the application for free to the public by the end of the year. “At a later stage, we will see if the government wants to adopt it,” says Daoud.
With the Saradar group on board and following their acquisition of a majority stake in the Swiss-owned Near East Commercial Bank at the beginning of the year, is LibanPost going to start offering banking products similar to its French counterpart, La Banque Postale? “Why not?” says Daoud as he explains that most of the growth in the future is likely to come from basic banking products catered to low- to mid-income citizens. “If a taxi driver needs $1,000 for his engine, there is no possibility for this support,” he says and this is an opportunity that the postal operator eventually strives to tap into.
LibanPost has come a long way since its reestablishment in 1998, and it has big plans ahead. Its diversified and efficient services are realizing many benefits for citizens. It serves as an example to the government of how putting public companies in the right hands within the private sector could reduce debts, increase efficiency and, most importantly, help facilitate some of its citizens’ cumbersome chores.