Saving the South African Post Office

The Department of Communications and Digital Technologies (DCDT) is considering partly privatising the South African Post Office (Sapo) to modernise its operations and increase its competitiveness.

Minister Solly Malatsi says the department has asked the National Treasury for support in forming a task team to “pursue private financial and operational partners” for the Post Office.

“This will enable serious consideration of privatisation scenarios as a preferential option to further funding from the fiscus,” he said.

“It is with the goal of an innovative and competitive Post Office, that it would be strategic to look into its current exclusive license on reserved postal services.”

Malatsi said the Post Office must build public trust without forcing the use of its services.

“This comes at a time when postal services are transitioning away from monopolies,” he said.

“The preferred outcome is for Sapo to get back on its feet by regaining the public’s trust, including public entities, not through compulsory use of its services.”

He said the goal is to foster an open, competitive environment promoting service excellence.

The minister explained that the allocation of funds previously committed to the Post Office will be based on a revised business plan by Sapo’s business rescue practitioners.

He added that further retrenchments or salary withholding must be avoided to attract new talent and improve staff morale.

“There has already been necessary but aggressive downsizing. Now, a motivated and stable workforce is essential to the success of any recovery plan,” said Malatsi.

The minister has hinted at the possibility of private-public partnerships to save the Post Office on several recent occasions.

In a recent interview with CapeTalk, Malatsi said the Post Office is attractive to private sector players due to its infrastructural depth and it being 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.”

However, he said he believes the government must maintain a controlling stake in the entity.

“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 an earlier interview with MyBroadband, the minister said it isn’t financially viable for the government to be Sapo’s sole owner.

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

“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.”

According to the Post Office’s business rescue practitioners, the entity risks running out of money in October 2024 if it doesn’t receive a R3.8-billion injection from the government to fully implement its business rescue plan.

If not, it will 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.

This would result in the termination of all employees, the shutdown of all branches, and the end of a 232-year-old institution.