SA Post Office closing branches because it cannot pay rent

The South African Post Office (SAPO) is on the verge of financial collapse and has closed numerous branches after failing to pay rent.

A recent presentation at the Parliamentary Portfolio Committee revealed just how big a financial mess the Post Office is in.

Over the last three months, the Post Office posted a net loss of R429 million, while its year-to-date net loss increased to R1.354 billion.

“The year-to-date revenue recovery remains sluggish and insufficient to meet all operating costs,” the SAPO said.

“The revenue shortfall contributes to cash deficits to pay suppliers and service providers, including employee benefit contributions.”

The South African Post Office’s creditors and accruals as of 30 September 2020 increased to R1.774 billion.

One of the results of this financial crunch is that the SA Post Office is not paying rent and has closed around 55 branches because of arrears.

Some landlords have even seized equipment and kicked out the Post Office from their malls for not paying rent.

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

The SA Post Office previously told MyBroadband it is in discussions with the landlords to resolve the disputes with the intention of re-opening the branches.

Employees are also suffering. Pension fund and medical aid contributions are deducted from workers’ salaries, but this money is not paid over to the relevant institutions.

David Mangena, general secretary of the South African Postal Workers Union, told Rapport the Post Office has failed to make payments for some workers as far back as March 2020.

Mangena added that communication with the institution has broken down and that they had to hear via the media about the new Post Office CEO.

The financial collapse of the Post Office should, however, not come as a surprise.

DA’s shadow deputy minister of communications and digital technologies, Cameron MacKenzie, warned earlier this year the institution was on the brink of collapse.

MacKenzie said the Post Office was struggling with unpaid rentals, desperate suppliers, postal backlogs, and broken ICT systems.

The SAPO, MacKenzie said, is facing bankruptcy despite receiving R8 billion in bailouts since 2014.

He 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.

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

Nomkita Mona

The SA Post Office is hanging its hat on its newly appointed CEO, Nomkhita Mona, to solve these problems.

Mona has served as the CEO of the Nelson Mandela Bay Business Chamber since December 2017, following three years at the helm of the South African Forestry Company (SAFCOL).

She has also been CEO at various other organisations – including The UDDI, Inkezo Land Company, and the Eastern Cape Tourism Board.

MyBroadband asked the SA Office for comment about its financial challenges, but it did not respond by the time of publication.

Now read: SA Post Office on the brink of collapse

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SA Post Office closing branches because it cannot pay rent