SA Post Office to review operating model

The SA Post Office (Sapo) will review its business operating models, according to the 2015/16 budget documents tabled in Parliament on Wednesday.

Its focus over the medium-term was on stabilising business operations and aligning business models with the challenges it faced, the Estimates of National Expenditure stated.

“In this transition period, while delivering on government’s social mandate, the post office will adapt to its rapidly changing environment by reviewing postal policy, increasing productivity, improving business operations, and improving financial performance.”

It aimed to achieve these goals by improving cash flow management, reducing costs around infrastructure and procurement, and improving service delivery.

Additional funding of R64.9 million was approved for 2015/16 to implement a new delivery model.

“The new model involves a combination of mobile units and retail postal agencies as opposed to brick and mortar structures, and is expected to lower the cost of postal services delivery in under serviced areas.”

The Sapo was paralysed by a strike last year.

Its books reflected a deficit of R682m in the new financial year, based on revenue of R6.93 billion and expenses of R7.61bn.

It was estimated that the deficit would be reduced to R350m in 2016/17.

Revenue was generated from providing postal and courier services as well as from interest income and financial transaction fees.

Non-tax revenue was expected to grow at 4.3 percent over the medium-term due to difficult trading conditions, declining mail volumes, and increased competition.

Expenditure on salaries and wages was expected to grow at 1.3 percent and decrease as a proportion of total expenditure.

To this effect, staff posts would be reduced from 23,775 in 2015/16 to 22,831 in 2017/18 “due to the expected rationalisation of staff in line with the turnaround plan”.

The organisation was in negotiations with the Independent Communications Authority of SA to temporarily suspend or reduce its universal service obligations over the medium-term, due to difficult trading conditions.

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SA Post Office to review operating model