SA Post Office facing bankruptcy

The South African Post Office (SAPO) is on the brink of collapse and is facing bankruptcy despite receiving R8 billion in bailouts since 2014.

This is a warning from the DA’s shadow deputy minister of communications and digital technologies, Cameron MacKenzie.

According to MacKenzie, there are reports of unpaid rentals and desperate suppliers, postal backlogs, and broken ICT systems.

MyBroadband has recently reported that many landlords have seized equipment and kicked out the SA Post Office from their malls for not paying rent.

Notices on the doors of some SA Post Office branches now state “Closed until further notice” without a clear indication of where people can now get services from.

The Post Office told MyBroadband while the backlog in rental payments on other properties has been settled, the Parkview and Menlyn Main post offices were closed by the property owner as a result of a rental dispute.

“The SA Post Office is currently in discussions with the landlord to resolve the dispute with the intention of re-opening the branches shortly,” it said.

The SA Post Office’s struggles to pay rent comes as no surprise.

A recent High Court judgement revealed that the Post Office’s year-to-date loss as at 31 July 2020 was R1.066 billion. Only 55 of the Post Office’s 1,416 operational branches were profitable.

MacKenzie said in the absence of any further funding and expenses far exceeding revenue, the Post Office is resorting to the only means to stay afloat – stop paying creditors.

“Suppliers are once again being parked in a queue for payment, despite all processes required to effect payment followed, including quotation, purchase order, service delivered, and invoice presented. All that’s missing is the money to pay them,” he said.

He added that SAPO’s IT systems, including the essential on-line ‘track-and-trace’ service, remain non-functional, so customers have no idea of the status of their parcels or mail.

“COVID-19 protocols are virtually non-existent, especially during the peak grant payment periods, putting the health and welfare of staff and customers alike at risk.”

MacKenzie urged the government to start implementing productive public-private partnerships and social compacts to save the SA Post Office.

“The Department of Communications needs a new minister and the SA Post Office a new owner. If ever there was a moment to hang the sign “Under New Management”, that time is now,” he said.

MyBroadband asked the SA Post Office for comment, but it did not reply by the time of publication.

Management challenges at the Post Office
Apart from the usual suspects – corruption, mismanagement, and a bloated workforce – the Post Office has also faced a management crisis since Mark Barnes resigned as CEO.

Barnes started his five-year contract as Post Office CEO on 15 January 2016 with a mandate to turn the struggling state-owned enterprise around.

Barnes, however, resigned as CEO on 1 August 2019 – eighteen months before his contract was set to expire.

“If the government had let management get on with our board-approved, portfolio committee supported strategy, we would’ve completed the turnaround of SAPO by now. Imagine that,” he said.

Since Barnes’ departure the acting CEO, Lindiwe Kwele was suspended and the new CFO, Khathutshelo Ramukumba resigned after barely two months on the job.

Speaking to Newzroom Afrika, Barnes said he could not comment on the current challenges at the SA Post Office since he was not there.

He instead reflected on his time at the Post Office. “I fell in love with the place and the people who work there,” he said.

While on a recent trip through South Africa, he saw scraggly queues of people outside Post Offices in towns waiting to get their social grants.

“The only inclination I had was to get out of my car and go and help them and re-fuel the culture changes we brought about,” said Barnes.

“We needed all the ingredients for the Post Office to complete its turnaround strategy, but those ingredients were not made available to us by the shareholder,” he said.

Looking back at his resignation in 2019, he said it became an easy decision after he looked at the facts.

“There is no Post Office in the world which has succeeded in the new age without access to the national payment system and financial transactions,” he said.

“It is no longer about post. It is about having a government infrastructure – a series of two-way channels – which have huge relevance in the modern world.”

This means when the government decided the Post Office Bank should be held separately, Barnes could no longer promise the delivery of a fully integrated, functional, and financially sustainable Post Office.

Barnes said he believes the government’s current strategy around the Post Office is going to fail, which is why he decided to resign.

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