More funding to the tune of R3.8 billion, mutually-beneficial partnerships, as well as providing digital and e-commerce solutions, have been touted as ways to improve the fortunes of the South African Post Office (SAPO).
Once considered a key South African institution, mismanagement, staff retrenchments and inadequate investment in IT systems have brought the post office to its knees.
The state-owned entity has been in dire financial straits and its once wide branch network has significantly shrunk over the years.
The ailing state entity has been under business rescue for over a year, led by joint business rescue practitioners Anoosh Rooplal and Juanito Damons.
Yesterday, SAPO officials briefed Parliament’s Portfolio Committee on Communications and Digital Technologies on behalf of the business rescue practitioners, warning of a “day zero” scenario, with SAPO expected to exhaust all its cash reserves by October.
The officials also updated portfolio committee members on the progress made to save the entity.
Need for more cash
Despite receiving the full R2.4 billon funding allocation from National Treasury in 2023, it was revealed that SAPO requires a further R3.8 billion, in order to fully implement the approved business rescue plan.
As a result, a formal application for this funding allocation has been submitted, says a statement from the business rescue practitioners.
Outlining the actions undertaken over the last few months, including rescaling the business, the practitioners say 4 875 people out of a total staff complement of 11 083 were retrenched through a Section 189 process, in consultation with the Commission for Conciliation, Mediation and Arbitration.
The branch network was also rationalised, with 366 post office branches permanently closed. When this process is completed, the post office will have about 657 branches across SA, with 232 sites offering motor vehicle licence renewals through the Department of Transport.
In line with the Government of National Unity's intentions to consider private partnerships, the practitioners indicate government should proactively and reactively consider mutually-beneficial partnerships for the post office, as laid out in the business rescue plan.
“An internal investment committee has been constituted and partnership protocols have been established. Already, one partnership has been agreed, with Ethiopian Airlines, in 2023. The partnership has cleared the international mail backlog and resumed mail connections to international destinations.”
The business rescue practitioners are also pursuing strategic partnerships with various state organisations to revitalise the post office’s operations from a government-to-government business, enhance service delivery and unlock new growth opportunities. They are also identifying partnerships that will help to improve the “last mile” of delivery, support digital inclusion and lead to property upgrades, according to the statement.
Furthermore, they are examining opportunities to repurpose buildings and provide built-in services to small retailers in areas where a branch may not be commercially viable.
Joint business rescue practitioner Rooplal comments: “An important reminder is that the reason and efforts made to restructure this business are based on the fact that the post office has a social mandate that requires it to serve all South Africans.
“While city dwellers have the means to pay for and access communication networks, South Africans living in rural areas have fewer choices. We will not exclude the urban hubs, but we intend to fulfil our social mandate by providing WiFi, printing, scanning, training and development of internet usage in local townships and rural areas.”
The post office aims to do this through leveraging its fibre and branch network, to provide affordable internet access, according to the business rescue practitioners.
“Looking ahead, the post office is pursuing relevance and financial sustainability through the delivery of meaningful economic and digital communication access to all South Africans. A number of proof of concepts are being rolled out to support this strategy.”
Tough crowd
Parliament’s portfolio committee raised concerns with SAPO’s presentation on the work of its two independent business rescue practitioners.
While acknowledging the significant work done by practitioners, the portfolio committee believes there is room for a more aggressive and innovative approach to improving the fortunes of the ailing state entity.
According to the committee, the efforts of the business rescue practitioners came at great cost to SAPO, its employees and underserviced communities.
Even more alarming was SAPO’s revelation of a pending “day zero” scenario, in the event it does not receive a cash injection from the fiscus, it notes.
Based on the latest financial projections and no further capital injection, it’s been revealed that “day zero” means SAPO will have no more funds to operate.
This will result in a legal obligation on the business rescue practitioners to place the company in liquidation, in line with Section 141(2) of the Companies Act 71 of 2008.
The committee has called on the department and SAPO to intensify their engagements with their counterparts in government to enhance co-operation and collaboration, and expand government-to-government business directed to SAPO in their areas of operation.
Furthermore, the committee called on communications minister Solly Malatsi to consider renewing SAPO’s exclusive licence for the distribution of mail and parcels weighing less than 1kg.
Portfolio committee chairperson Khusela Sangoni-Diko says: “The alarmist announcement of ‘day zero’ made at such extremely short notice is gravely unfortunate and can only be read against what seems to be a lacklustre attitude by the business rescue practitioners in the turnaround of the SAPO.”
Resultantly, the committee has requested a detailed and time-bound strategy on the envisaged turnaround of the post office, beyond expenditure cuts – to future-proofing SAPO and positioning the entity as the post office of the future.
“This plan must include novel recommendations to leverage SAPO’s strategic assets, including its extensive property portfolio and the opportunities offered by digital innovation. SAPO’s properties value over billions if the right equity partnerships are forged,” states Sangoni-Diko.
Rooplal stated: “We are cognisant of a number of hurdles that the post office faces, not least the loss of confidence in its ability to make deliveries, but we are seeing an improvement with our focus on delivery.
“We believe that the post office can again play a unique role in South Africa and must be supported. It can be an efficient postal service provider and a lifeline for many South Africans, offering them affordable access to vital communication and financial services.”
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