Vhahangwele Nemakonde
Digital Journalist
3 minute read
27 May 2021
11:52 am

SA Post Office to close 130 branches nationwide amid cash crunch

Vhahangwele Nemakonde

CEO lists lack of profitability and the concentration of branches within a small radius as among reasons for closures.

The South African Post Office (Sapo) says it will close 130 branches nationwide amid its financial challenges which have been worsened by the lockdown.

Earlier this month, Sapo said it had reopened 27 branches that were closed due to the nonpayment of rent, after negotiations with landlords.

While some branches will remain closed, others will be reopened, CEO Nomkhitha Mona told Parliament.

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“The process has been ongoing for a while. Our targeted number of branches that we are going to close is 130. Now we are left with 80, those are the ones that we are still looking into closing.

“I think what is important to note is that sometimes we do have to respect the contracts we have with the landlords because if we just step out of it immediately we are prone to penalties. So we are doing that in a staggered form so the number is 80 to go and the target was 130 so we have to close some of those,” she said.

Mona listed lack of profitability and the concentration of branches within a small radius as some of the reasons for the closures.

“Sapo also took a decision to move post offices to where the traffic was in terms of locating in shopping malls. We then found that there was a proliferation of branches in terms of numbers within a very short radius, sometimes within a 5km radius you would find there were three branches. So we are taking this as an opportunity to consolidate and move some branches into one,” she said.

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Mona said the decision to close branches would be carefully considered in rural areas where branches are already sparsely situated.

“Where we had branches closed in rural areas we will do our best to reopen them. Mostly the reasons we have them closed is due to crime.”

Turnaround strategy

Auditor-General Tsakani Maluleke told Parliament last month that according to the Post Office’s financial statements, the group incurred losses of nearly R1.8 billion, with its liabilities exceeding assets by nearly R1.5 billion for the year ending 31 March 2020.

The group and company were therefore commercially insolvent because it is unable to pay its debts.

READ MORE: Post Office in the red and commercially insolvent

In a bid to turn the situation around, Mona said the company was in looking at implementing some strategies that had been on the table for a while.

This includes a focus on the e-commerce side of business.

“We are signing up a number of new clients internationally. We already have one that we have started working with. We have two more – one from Malaysia and another from the US that we will be signing up very soon,” Mona said.

“There’s also issues of the digitisation of our systems because we are working on archaic manual systems which impact what we do going forward.”

Additional reporting by Ina Opperman