Communications and digital technologies minister Solly Malatsi has adopted an innovative approach to salvaging the SA Post Office (Sapo): he wants to investigate the possibility of including private sector financial and operational partners instead of relying on a further bailout by the fiscus.
The post office has received R10.4bn in bailouts over the last 10 years including the R2.4bn allocated in the February 2023 budget.
Malatsi has sought the Treasury’s support to form a task team to look into the possibility of private sector participation. He also wants to re-examine Sapo’s monopoly over reserved postal services.
The involvement of the private sector would mark a significant departure from the approach of relying on state support and aligns with the private sector participation that has been sought by Transnet for freight rail and the Durban container terminal.
However, there is strong opposition to any form of privatisation by factions in the ANC and the EFF, and Malatsi would have to win over his cabinet colleagues in the government of national unity.
“This will enable serious consideration of privatisation scenarios as a preferential option to further funding from the fiscus. The goal is to modernise Sapo’s operations, drive innovation and increase its competitiveness,” Malatsi said in a statement on Wednesday.
Former Sapo CEO Mark Barnes, who left in 2019, together with a consortium offered to buy a controlling stake of 60%-75% of the company in 2021 but the offer was rejected. He believes that only a public-private partnership can turn the entity around.
Sapo was placed in business rescue in July 2023 to ward off a liquidation and the success of the business rescue plan was dependent on it getting a R3.8bn bailout from the Treasury, which has not yet materialised.
Malatsi said it was clear any allocation of previously committed funds to the Post Office would be based on a revised business plan by the business rescue practitioners that met the Treasury’s expectations.
He said the department would work to ensure there is accountability for the failure to meet previous conditions that were imposed for the financial support the Sapo received from the fiscus.
Another aspect of the drive to foster an open, competitive environment would be to look into Sapo’s current exclusive license on reserved postal services. Sapo has a monopoly on delivering mail under 1kg to homes and post boxes.
“This comes at a time when postal services are transitioning away from monopolies. The preferred outcome is for Sapo to get back on its feet by regaining the public’s trust, including public entities, not through compulsory use of its services,” Malatsi said.
He said retrenchments or withholding of salaries should be avoided as Sapo was already facing difficulties in attracting talent and maintaining employee morale.
“There has already been necessary but aggressive downsizing. Now, a motivated and stable workforce is essential to the success of any recovery plan.”
Malatsi said he would draw on the expertise of the Universal Postal Union with regard to postal service reform.
“As the newly appointed minister of communications and digital technologies, I am committed to exhausting all reasonable avenues to make the Post Office financially sustainable.
“It is uniquely placed to leverage integration with other state entities for enhanced services to the public, as well as providing affordable postal, courier and digital services to otherwise excluded or underserved communities.”
As recently as in September, Sapo bosses told parliament’s communications and digital technologies portfolio committee that the entity would run out of money in a month’s time and would be forced into liquidation unless it received a R3.8bn bailout or guarantee.
Under the business rescue plan, Sapo’s branch network has been reduced from 1,023 to 657, and more than 4,500 employees have been retrenched.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.