SA Post Office has big digital plans to take on couriers – but no one to fund it

 ·3 Nov 2022

The South African Post Office (SAPO) appeared before the Select Committee on Public Enterprises and Communication this week to brief the committee on its financial viability and the measures it has put in place to mitigate its ailing financial position.

The ‘Post Office of Tomorrow Strategy’ aims to digitise SAPO to bring it up to speed with current technological developments in the postal environment. These measures will allow SAPO to reclaim its market share. However, funds to make this a reality are lacking.

SAPO CEO Nomkhita Mona said that SAPO is on the verge of securing an e-commerce partnership with a leading member of the global postal industry.

“If it can be funded, we can unlock SAPO’s e-commerce space, financial technology, logistics capabilities, courier and freight potential, among others that would enable it to reclaim its market share.”

However, Mona admitted that without a government bailout, SAPO would be unable to meet its statutory obligations.

The deputy minister of public enterprises, Philly Mapulane, told the committee that the department had requested the funding but was disappointed to hear it had not been granted – given SAPO’s precarious position.

Mapulane shared this concern and called on the committee to exercise its legislative mandate to ensure that SAPO’s turn-around strategy is funded.

Chairperson of the Select Committee on Public Enterprises, Zolani Mkiva said that SAPO had the committee’s support, as it serves South Africa’s marginalised communities. He added, “Something must be done to preserve this entity because we know what would happen if it were to collapse.”

However, SAPO still faces many operational challenges. General manager of strategic planning at SAPO, Geert Bataille, noted that, to date, employee compensation costs stand at R1.7 billion, accounting for 62% of its total accumulated expenditure of R2.6 billion against collected revenue of only R1.3 billion in the current financial year.

Additionally, SAPO’s debt to creditors is sitting at R4.9 billion. So dire is the situation that SAPO owes money to the South African Receiver of Revenue and cannot pay service providers or landlords – forcing the public postal service to close many of its branches.

In light of SAPO’s concerning financials, Mkiva asked how much SAPO needs to make it sustainable. SAPO’s acting CFO, Lenny Govender, said R2 billion would suffice to fund its turn-around strategy.

Mapulane gave the committee a broad overview of SAPO’s problems, saying that the main culprit responsible for its problems is it had failed to adjust to new market trends – resulting in lost market share and value.

Another significant problem that was raised during the briefing is one relating to ghost employees on the payroll. To combat this, SAPO is using an employee authentication process and has enlisted the services of an external forensic entity to continue with this process.

It said that any worker who fails to authenticate themselves will be regarded as a ghost employee and will not be paid their salary.

Read: Big plans for new state-owned shipping company in South Africa

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