The SA Post Office is on its last legs unless it receives a cash injection from the National Treasury.
Acting CEO Fatima Gana highlighted the “day zero” scenario for the 232-year-old SA institution in parliament last week. The Post Office tumbled into the arms of business rescue practitioners Anoosh Rooplal and Juanito Damons last year, hastening a reckoning with creditors after years of financial haemorrhage.
Aside from the need for a cash injection, the business rescue plan — as outlined by Gana in parliament and approved by creditors in December — underscored the urgent need for a strategic overhaul. The Post Office is like a landline phone in the era of smartphones.
In recent years, the Post Office received about R7.3bn in bailouts yet its ability to deliver parcels still stood at only 68%. Last year, at the start of the business rescue process, it received a cash injection of R2.4bn. It now needs further funding to stabilise its financials and implement the plan to set it on a more solid financial footing.
It is a tough ask from a Treasury that has been ploughing money into the bottomless pits of mismanaged state companies. It is easy to sympathise with that. Continuing to fund the Post Office without a reinvention of the company would be throwing good money after bad.
But the consequences for the Post Office, and millions of people in far-flung rural areas, will be dire if it does not receive the required funding.
“Day zero” means that without a further cash injection, the Post Office will only have cash reserves up to October. Rooplal and Damons may have to wind it up. That scenario would mean all the work the duo have put in would go up in smoke. The turnaround specialists have slimmed down the Post Office, allowing it to leave behind its heavy financial baggage: cutting branch numbers by almost half and laying off workers without jeopardising its Universal Service Obligation mandate.
One potential lifeline for the Post Office lies in forging private-sector partnerships, leveraging its extensive distribution network. It is not unreasonable to surmise that retailers and other e-commerce firms would jump at the opportunity as they are under pressure to step up their online offerings. This is at the heart of the reason newly appointed communications minister Solly Malatsi believes it should be rescued — but he is also clear that it has to enter into strategic partnerships to remain relevant and claw its way back to financial stability.
This is already part of the plan to turn around the Post Office by the business rescue practitioners.
The Post Office has been neglected and plagued by mismanagement and poor political and strategic leadership for years. Rooplal and Damons are pushing hard to turn it around and have put together a solid proposal to do so. Given its reach to far-flung communities and its potential to take crucial services to those communities, there remains a strong case for ensuring that it survives beyond day zero.
The Post Office should be saved, but it would be pointless to do so if there is not a dramatic shift in thinking regarding appointing new leaders — leaders who would canvass more private sector partners to infuse much-needed capital and expertise to catapult the two-century-old institution into the future.
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