SA Post Office to make R1-billion loss

The SA Post Office expects to make a loss of about R1 billion for the financial year ending 31 March 2020.

This aligns with the previous two years’ results, which also saw the national postal service suffering losses of around R1 billion.

Major reasons for these losses include cash-in-transit and security costs, said acting CEO Ivumile Nongogo at a press briefing in Pretoria.

The SA Post Office is looking into developing new revenue streams – such as its new ecommerce platform – as it seeks to solve its financial issues.

Historical poor management

SA Post Office Chairperson Colleen Makhubele said the SA Post Office has not been using its strategic advantages optimally and needs to stem its continued loss of customers.

“Even in our obvious areas of growth – such as ecommerce – we have been slow to capitalise on our competitive advantage,” said Makhubele.

Makhubele said that the new board – which took up its role in December 2019 – found that no new initiatives had been launched by the previous leadership, and that general performance was a major issue.

“The board realised that in order for us as a business to take advantage of the great opportunities facing us, we first needed to get our house in order.”

“The SA Post Office is an organisation that has been losing money for the last decade,” said Makhubele.

Dealing with irregular contracts

Makhubele also highlighted that the SA Post Office has been revisiting all contracts to determine which need to be cancelled or renegotiated.

“Most contracts run for three years and over, and in such a long period a lot can change. SAPO is bleeding money through some of the contracts we have entered into,” said Makhubele.

She said that major irregularities had also been found in some of these contracts.

This included partners being paid retainers without any work being done or scope being clarified.

One contract was found to result in a service provider receiving R20 million per month for services not provided.

Clauses in this contract included a R250-million exit penalty for the SA Post Office, while the service provider only faced a penalty of R10,000 for non-delivery.

Now read: The plan to fix the SA Post Office

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SA Post Office to make R1-billion loss