Post Office a ‘major disaster’, its death inevitable

If the South African Post Office (Sapo) is dying – and it looks that way this week with plans to lay off thousands from its bloated workforce – it only has itself to blame, say experts.

The organisation has blamed the recession, smartphones and the SA Social Security Agency (Sassa) for not making a profit for more than a decade.

But, according to political analyst Piet Croucamp, poor management and inefficient staffing mean “it just can’t work, you won’t make money”.

Croucamp said Sapo’s problems were similar to those of most state-owned enterprises and these were caused by bad strategic policy making by the government. In the case of Sapo, it was subjected to political interference in a competitive environment.

Taxpayers to pick up Post Office debts

Economist Dawie Roodt said taxpayers will be expected to pick up the debts of the post office.

“There are no real alternatives – unless they can sell some of the assets, but it’s probably not worth much,” he said.

Roodt said the post office had a statutory monopoly on certain products, like letters, but the private sector provides most other post office services except for Sassa grants. Roodt added Sassa recipients would be affected but the service may be easy to outsource to the private sector.

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“The post office is highly inefficient and unproductive – a major disaster like most other SOEs,” he said.

Durban resident Angelique de Meyer said her fiancé waited four months for his medical aid card in the post.

“When we went to our local post office, it disappeared. The post office down the road just closed down,” said De Meyer.

“We don’t know where else to find out about the medical aid card,” she said.

De Meyer said they phoned Discovery yesterday to find out about the whereabouts of the card sent last year.

“They said if we didn’t get it within two weeks, they would courier us a new card,” she said.

The International Post Corporation (IPC) said that 55% of international priority and first-class letter mail within Europe was delivered within two days of posting, 79.5% within three days and 94.2% within five days.

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These results covered a total of 32 countries that included the 28 European Union member states together with Iceland, Norway, Serbia and Switzerland. That would be unheard of in South Africa.

Problems due to ‘stupidity’

Political expert Prof Amanda Gouws said the problems at the post office were due to stupidity.

“A few years ago, they closed for about six months and people started making other plans, like using e-mail and using Postnet. That’s how they lost their clients,” she said.

Gouws said Covid further exacerbated the collapse of the postoffice. Customers just never went back.

“People don’t want to stand in long queues because other people struggle with their bank withdrawals,” she said.

Cutting costs

Sapo spokesperson Johan Kruger confirmed it was in consultation with labour unions on steps to right-size employee numbers. Kruger said the post office was obliged to take these steps for cost reasons.

“The post office has been successful in cutting other costs, reducing expenses to 25% below budget,” he said.

“However, the salary cost makes up 68% of total expenditure and needs to be addressed urgently.”

Kruger said Sapo last posted a profit in 2004 and the decline in its financial position began in 2006.

“The economic recession in 2008 and the adoption of smartphones accelerated the decline. A protracted strike in 2014 was the straw that broke the camel’s back.

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“Bulk business customers had to find alternative service providers and this allowed new entrants to come in,” he said.

Kruger said some of the contracts signed in the past were detrimental to Sapo, benefitting other parties while Sapo lost money providing services.

“While the principle of Sapo distributing social grants is the correct one, the Sassa contract was not in the interests of Sapo. Security costs related to the Sassa contract alone amount to roughly R600 million per annum,” he said.

Kruger said the long queues as a result of grants – especially the social relief of distress grants – were detrimental to other services of Sapo.

“Customers avoided the queues by choosing different service providers for some of the revenue lines such as motor vehicle licences and financial services,” he said.

– marizkac@citizen.co.za