Union fights liquidation of Sapo while govt says it cannot bail it out

As economists warn that the loss-making SA Post Office (Sapo) is not a viable business entity, the country’s second-largest labour federation, the South African Federation of Trade Unions (Saftu), has stepped up pressure against the imminent liquidation of Sapo.

Saftu general secretary Zwelinzima Vavi on Sunday demanded “urgent and decisive action to save the South African Post Office from liquidation”.

He expressed concern that – in delivering the medium-term budget policy statement – Finance Minister Enoch Godongwana did not comment on allocating R3.8 billion to the state-owned enterprise.

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Sapo will receive no bail out

Last week, Godongwana said Treasury could not bail out Sapo. But Vavi said government was in contravention of its undertaking in court to save the Sapo.

Prof Waldo Krugell, of the North-West University School of Economics, said its liquidation seemed inevitable. “Looking at its current revenue, the post office is not viable. It cannot borrow money and the National Treasury has no appetite for further bailouts,” he said.

“The post office was sunk by a changing business environment and technology. “It is not clear that what is left is worth saving.”

According to experts, factors that led to the bankruptcy of the Sapo included lack of targeted capital investment, poor strategy and business model, declining revenues and weak balance sheet, challenging market conditions and an unsustainable cost structure.

Arguing in support of a Sapo revival, Vavi said with a R2.4 billion bailout from National Treasury – part of the rescue plan – the business rescue practitioners had settled some of the entity’s debt and restructured it. “Since entering business rescue, the Sapo has registered progress.

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Sapo being run into the ground

Between June 2023 and June 2024, the Sapo has turned its net asset value from a negative R7.9 billion to R840 million, bringing it into solvency.

“The turnaround of the Sapo to solvency at a net asset value of R840 million came at an enormous sacrifice of the workers.

“Over 4 875 employees, 43% of the work force, lost their jobs. If it is liquidated the consequences will be devastating for the working class, most of whom are in rural areas.”