Good news for people who need the South African Post Office

The Department of Communications and Digital Technologies (DCDT) has asked National Treasury to reallocate unused funds from the SA Connect programme to the Post Office.

Communications minister Solly Malatsi’s spokesperson, Kwena Moloto, revealed the development following a warning from the Communications Workers Union (CWU) that the Post Office could shut down at the end of February.

CWU national bargaining coordinator Nathan Bowers recently said the Post Office’s business rescue practitioners had told them that government was dithering on a promised R3.8-billion bailout, placing operations and workers’ salaries in jeopardy.

In response, Moloto told MyBroadband that the department had approached Treasury to redirect funds originally allocated to the State IT Agency for SA Connect.

SA Connect is the implementation of the national broadband policy that was approved by former President Jacob Zuma’s cabinet in 2013.

Moloto warned that the bailout was not a lasting solution.

“The reality is that the DCDT’s budget simply cannot sustain repeated bailouts,” he said.

“To secure the Post Office’s future, the focus is on finding practical, long-term solutions that modernise its operations and make it more competitive.”

Moloto said this includes exploring strategic partnerships that bring in financial and operational expertise, and reviewing existing regulations to ensure they support a more innovative and efficient postal service.

Malatsi previously said the communications department had asked the Treasury for support in forming a task team to “pursue private financial and operational partners” for the Post Office.

His vision includes government retaining a majority stake in the Post Office, while ending its monopoly as a reserved postal service in South Africa.

“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.”

This latter statement from Malatsi refers to the Post Office’s unenforced monopoly on certain services, including parcels weighing less than 1kg.

Before its provisional liquidation, which the courts overturned and converted into a business rescue based on the promise of a government bailout, the Post Office had attempted to enforce its legislated monopoly over small parcels.

In other words, the Post Office wanted control over most e-commerce deliveries in South Africa.

This resulted in a legal challenge from private courier companies through the South African Express Parcel Association.

Although the Post Office had no intention of delivering all small parcels itself, it wanted private couriers to pay it a licensing fee to act as its designated agents.

Malatsi’s proposal for the Post Office to relinquish its monopoly is at odds with the business rescue practitioners’ plan to stabilise the state-owned enterprise.

However, it would also be a necessary step for the Post Office to be partially privatised. It can’t be a for-profit entity and enjoy a legally-protected monopoly.

The Post Office was placed into business rescue in July 2023, and business rescue practitioners Anoosh Rooplal and Juanito Damons were appointed to formulate a plan, which was adopted in December of that year.

As part of being placed into business rescue, the Post Office received a R2.4 billion injection from Treasury, which it used to cover operations, settle debts, and pay salaries and severance packages.

In early September, the SA Post Office reported that 4,875 people had been retrenched out of the 11,083 total staff.

Of its 1,023 branches, only 113 were profitable, so 366 were closed. This left 657 branches nationwide.

Its debt to secured creditors was reduced by 88% to R842 million. By the end of July, it had paid 98.6% of this.

Rooplal and Damons also reduced the state entity’s liabilities from R8.7 billion upon entering business rescue to R440 million by the end of June this year through deep compromises.

Statutory and payroll creditors will be paid an additional 18 cents per rand dividends when Sapo receives the R3.8 billion from the Treasury.

Damons and Rooplal previously warned that the Post Office would reach day zero on 30 October 2024 should it not receive a promised R3.8 billion bailout from government.

This was the same day finance minister Enoch Gondongwana delivered his medium-term budget policy statement last year. He vowed that the Post Office would not receive further bailouts.

“By the way, they told us D-day for the post office is today. But there’s no money in the adjustment as we speak,” Godongwana said in a press conference following the speech.

“We are hoping that the Department of Communications and Digital Technologies will find ways of reorganising and reprioritising their budget to deal with that question.”

Malatsi previously said his department’s budget does not have the resources available to rescue the Post Office and suggested public-private partnerships as the long-term solution to its financial problems.