Trouble for the Post Office

Communication Minister Solly Malatsi has said that it is no longer sustainable for the state to be the sole owner of the South African Post Office (Sapo) and that a public-private partnership (PPP) is the only way to save it from bankruptcy.
However, one company has warned that this is much harder than it may seem.
In September, the Post Office’s business rescue practitioners (BRPs) said the mail carrier would be in danger of closure on 30 October should it not receive a R3.8 billion bailout from the National Treasury.
Soon after, the South African government declared a “tough love” stance toward its failing state-owned entities, leaving Sapo no choice but to explore PPPs.
Sapo has been hesitant to do this in the past, according to Registered Communication (RegCom) operations director Brad Gilmour.
Gilmour said there seems to be a disconnect between the Post Office’s intentions and private companies looking to partner with it.
RegCom, a provider of registered electronic communication services — a service offered by Sapo in a non-digital form, has advocated for a private-public partnership with the Post Office since 2016.
However, Gilmour said talks between the two entities never progressed because of the Post Office’s non-negotiable stance on how it believes these PPPs should be implemented.
When it first approached the ailing state-owned company, RegCom proposed that it provide its services under the Post Office’s name.
This would have offered the Post Office a revenue stream along with an established client base that included numerous banks, attorneys, and schools, he said.
According to Gilmour, this presented an excellent opportunity for Sapo with very little risk.
Sapo would have gained clientele, the partnership would not have required capital expenditure, and it would have received compensation for the use of the Sapo logo.
However, negotiations never took place, and Gilmour said there was no sense of a collective effort to improve the entity’s economic position.
Instead, he said it was one-way traffic.
“Not once has Sapo been willing to physically get around the table and discuss it,” said Gilmour.
“No willingness to understand the offering, no willingness to discuss different ideas, not even a mention of pricing structures or how they see the partnership working.”
However, Gilmour said the eight years of advocating for a PPP did not go unnoticed, as various elements of RegCom’s proposal were included in Sapo’s recent business rescue plan.
Sapo presented it as its own and submitted it to the portfolio committee as a potential revenue stream.
What the Minister has in mind
In an attempt to save Sapo, Minister Solly Malatsi said his 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.