A private-public partnership, political changes could save Post Office, say analysts

Falling victim to operational inefficiencies, financial mismanagement and poor governance, the days of South African Post Office (Sapo) belonging to government should be long over, according to industry heavyweights.

Operating in the fields of mail, financial services, logistics, property, electronic commerce and retail services, as well as traditional collection, sorting and delivery of letters and parcels, the struggling state-owned entity has been in dire economic straits for years and forced to cut its workforce and shut down branches.

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Calling for calm from clients, creditors, employees and users of the Sapo after being placed in provisional liquidation recently for a second time, Communication and Digital Technologies Minister Mondli Gungubele said Sapo had “developed an exciting and bankable strategy to transform the entity into a profitable business responding to the demands of this age and time”.

Gungubele said he continued to engage with stakeholders in dealing with the placement of Sapo in provisional liquidation.

Private-public partnership

However, political analyst Goodenough Mashego said what Sapo needed was a private-public partnership because most of the core functions of Sapo used under apartheid and until 2006, had been taken over by other mail service providers.

According to Mashego, in a private-public partnership, the department may be able to negotiate the terms of that partnership with regards to what occurred with the debt, whether the government could provide surety on the debt and avoid further borrowing and money injection from National Treasury.

This year, Treasury awarded the state-owned entity a R2.4 billion cash injection in the 2023 national budget to clear its debt.

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Mashego said there were more small businesses seen all over and more franchises of them opened in the city and in townships, which meant even if Sapo received a cash injection today, it would still need to play catch-up for the next 10 years or so.

“Unfortunately for Sapo, its board is not much of a professional board that gets appointed by the minister of communication right now, which, in a way, means you are not going to get the best people.

“You are going to get comrades being deployed there for other purposes,” he said.

“Sapo could have been able to turn around a lot of money without the needed R2.4 billion that it was given.”

Political changes

Chief economist at Efficient Group Dawie Roodt said the confidence in government was just too low and it was difficult to believe there was a workable plan to turn the post office around.

“I simply do not believe the minister and I have a suspicion that this new plan would require the minister of finance to put even more money in the post office,” he said.

Roodt said the only thing that needed to happen was to make political changes and restructure the post office.

“Restructuring would mean closing a lot of post offices down and selling them,” he said.

Post Office benefits many

Former Sapo CEO Mark Barnes, in an interview with Business Day regarding the aspect of saving Sapo, said although the private sector could do what the post office does, it would only benefit few people.

“Here is the issue: it is a developmental necessity and a combination of commercial realities and capacity which enable us to fund transformation, development and things that Sapo requires, but the state has only one source of revenue and that is tax,” he said.

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“In order to earn tax, they have to create profitable environments in which businesses can thrive in, make profit and pay tax.

“So, if you were to allow the post office to disappear and courier companies and other private sector entities to prevail, then I guess we would service about two or three percent of the population. That is wrong.”

– lungas@citizen.co.za