Plan to save the Post Office — but there’s a catch

South Africa’s Minister of Communications and Digital Technologies, Solly Malatsi, says the Post Office is attractive to private sector players due to its infrastructural depth.

However, he says the state must maintain majority control in the organisation.

Speaking to CapeTalk, Malatsi said the South African Post Office (SAPO) has a depth of infrastructure far greater than any other government-owned company in the country.

“There will be interest in the Post Office from the private sector because it is a major strategic asset. It has a depth of infrastructure that no other state-owned entity has,” the minister said.

“It is more accessible to millions of poor South Africans that no other mode of basic service delivery is accessible to.”

While he believes that public-private partnerships could be a possible solution to save the Post Office, Malatsi says the government must maintain majority control, at least for now.

“I think it is important for the state to maintain some control in the Post Office. At this stage, the state should maintain majority control of the Post Office. It is necessary because it is a strategic asset,” he said.

In a recent interview with MyBroadband, the minister hinted at the possibility of public-private partnerships to save the SAPO. He said it isn’t financially viable for the government to be the sole owner of the entity.

“The biggest conversation about the future of the Post Office is: we have got to relook at the model of its ownership,” said Malatsi.

“In this day and age, I can tell you for free: it is both not prudent and not financially sustainable for the state to continue to be the sole owner of the Post Office.”

“We have to look at strategically opening it up for some private partnerships in that space so that we leverage its infrastructure in order to be competitive and commercially viable in the sector,” he added.

The Post Office’s business rescue practitioners (BRPs) recently warned that the organisation faces liquidation if it doesn’t receive a R3.8-billion bailout from the National Treasury.

The BRPs told members of Parliament that it requires the massive cash injection to avoid a “Day Zero” in October 2024, when it will run out of money and be forced into liquidation.

“The consequences of liquidation are fatal for the SAPO. The estate will be placed in the hands of the Master of the High Court, who will appoint a liquidator to wind up the estate,” they said.

The result would be the shutting down of all branches and the termination of all employees, marking the end of an institution that has existed for 232 years.

Deputy communications minister Mondli Gungubele recently told SABC News that the government had committed to providing the Post Office with a R3.8-billion bailout.

“Government committed to fund that rescue for no less than R3.8 billion. Already at that time, R2.4 billion had been allocated not in anticipation of liquidation,” said Gungubele.

“Both these were allocated towards SAPO for rescue. The reason the business rescue practitioners have been able to actually run the Post Office is because of the R2.4 billion.”

“R3.8 billion is what is still being discussed with Treasury, which the government made an undertaking to do,” the deputy minister added.

However, Gungubele also told members of the portfolio committee on communications that the National Treasury requires more proof that the funds won’t be squandered.

Although the business rescue practitioners had cut the company’s costs significantly, he said they must show a clear business case to return SAPO to profitability.

At the same time, a Treasury spokesperson said that Parliament had the power to appropriate money for each financial year.

They said Treasury did not allocate funding to government departments or state-owned entities directly.

Therefore, it is unclear exactly where the hold-up is in allocating the funds.