Post Office plan to milk online shopping in South Africa

South African Post Office (Sapo) management in KwaZulu-Natal believes the state-owned company can generate sufficient income to sustain itself if it protects its monopoly on deliveries under 1kg and focuses on online shopping.

This is according to Sibongiseni Vilakazi, a member of the Portfolio Committee for Communications and Digital Technologies, who paid oversight visits to state-owned entities under the communications department.

Vilakazi noted a strong commitment to the Post Office and belief in its sustainability among the leadership team.

“There was an animated discussion on income generation, with many in attendance believing that it is possible for Sapo to generate sufficient income to sustain itself,” he wrote in his report.

“Securing the legislated advantages would help improve income.”

In this regard, Sapo’s management team in KwaZulu-Natal says South Africa must protect the Post Office’s legislated monopoly for packages less than 1kg.

The Post Office has repeatedly emphasised that it has the sole right to deliver packages weighing under 1kg, as allowed by a 25-year licence issued under the Postal Service Act of 1998.

Sapo’s KwaZulu-Natal management team also believes municipalities and government departments at local, provincial, and national levels should exclusively use Sapo for their postal needs.

“Currently, there are too few services to generate significant revenue,” Vilakazi wrote in his report.

Management said Sapo should also focus on e-commerce deliveries like other postal services.

Given the outcome of Vilakazi’s visit to the Durban Central Post Office, MyBroadband asked Sapo’s business rescue practitioners about the importance of its monopoly over deliveries under 1kg.

However, it didn’t answer our questions by publication.

The Post Office has been experiencing significant financial difficulty for a decade, having last posted a profit in 2013. Since then, it has posted over R19 billion in losses and accumulated substantial debt.

It entered business rescue in July 2023.

In May 2024, Business Rescue Practitioners Anoosh Rooplal and Juanito Damons revealed that maintaining Sapo’s monopoly over deliveries under 1kg is critical to its survival.

In February 2024, former communications minister Mondli Gungubele announced that he would review the exclusivity period granted to the Post Office for reserved services, including the small parcel monopoly.

“We are hopeful that we will be granted the allocation,” Rooplal told MyBroadband.

South Africa’s current communications minister, Solly Malatsi, recently revealed that his department was considering partially privatising Sapo and ending its exclusivity over deliveries under 1kg.

The Minister believes Sapo should focus on bolstering public trust rather than enforcing such a monopoly.

“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,” said Malatsi.

However, the Portfolio Committee for Communications and Digital Technologies believes Malatsi’s department must renew the exclusive licence.

Portfolio Committee chair Khusela Diko and Malatsi clashed over their opposing views, with Diko publishing a media statement strongly opposing the Minister’s plan to abolish the licence.

While she agreed with Malatsi’s support for public-private partnerships, she said government should preserve, protect, and extend Sapo’s competitive advantage.

She said it was “concerning” that Malatsi’s statement suggested privatising the post office.

“Sapo is a strategic state institution with an important mandate to connect people to one another and to the government in a fast-evolving technological age,” said Diko.

“As such, it must remain in the hands of the state, not beholden merely to commercial interests but committed to delivering on its universal services obligations espoused in the Postal Services Act of 1998.”

However, it is important to highlight that Malatsi emphasised that government must maintain majority control of the Post Office.