Post Office begs for another R3.8 billion

The South African Post Office (SAPO) stated in its business rescue application that it needs R3.8 billion of funding in addition to the R2.4 billion it received from National Treasury in the budget.

It said that additional funding is needed to execute its turnaround strategy, with the Cabinet having already agreed to more funding for SAPO.

This is despite the state-owned enterprise having already been given over R10 billion in bailouts since 2014.

The Cabinet has stated that any additional funding would be provided only if the Post Office goes into business rescue and is not liquidated.

Additional funding will be used to pay off the Post Office’s debts, fund its cash-flow deficit, turnaround strategy, and staff reduction plan.

Minister of Communications and Digital Technologies Mondli Gungubele claimed there is a good chance of the Post Office successfully turning around.

Gungubele also argued that SAPO could not be allowed to be liquidated as it is a strategic asset for the delivery of local and international post and the distribution of social grants.

SAPO was placed under provisional liquidation in February, with debts running into the billions.

The minister estimated that creditors would get 10c on the rand from a successful business rescue process. This assumes that the Post Office will receive additional funding from the government.

Nomkhita Mona, Group CEO of the South African Post Office

According to unaudited management accounts filed in court, the Post Office posted a preliminary loss of R2bn for the 2022/23 year. The loss in 2021/22 was R2.18bn.

CEO Nomkhita Mona says in her affidavit that the cash-flow projection for 2023/24 reflects a deficit of R1bn.

The Daily Maverick reported that Finance Minister Enoch Godongwana is willing to amend the Budget he presented in February to free up more funds for the SA Post Office.

Godongwana said the government might consider adjustments to the Appropriation Bill to allow money from the National Revenue Fund to be appropriated to bankroll the government’s spending priorities for 2023/24.

MyBroadband reported last week that over 300 Post Office branches were closed in the last three years.

That is according to a response Gungubele gave to a question in Parliament raised by Democratic Alliance MP Dianne Kohler Barnard.

Gungubele revealed between 1 April 2020 and 5 May 2023, 314 branches were permanently closed.

Before the Covid-19 pandemic, there were roughly 1,300 Post Office branches nationwide.

This article was first published by Daily Investor and is republished with permission.

Now read: Goodbye Post Office — over 300 branches closed in three years

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Post Office begs for another R3.8 billion