Run on Numbers: The South African Post Office: your cheque is definitely not in the mail
Minister of the Department of Communications and Digital Technologies (DCTC) Mondli Gungubele had raised concerns about the liquidation of the SA Post Office and “demanded” answers from the top governing structures.
He said the government had opted to pursue business rescue to save the cash-strapped Post Office. And this is exactly what is wrong with state-owned enterprises in South Africa.
Why is the general not in the trenches fighting with his troops? If he were, then he would have known what was going on. Instead, he sits in one of his lavish homes, surrounded by security personnel, and is driven from one conference to another in one of his many luxury vehicles.
This minister, like many others, should be fired and never be allowed to head a government organisation. The Post Office dilemma was not caused by an asteroid from space. It developed slowly, slipping gradually, while its demise was there for the whole of South Africa to see.
Earlier this month, the DCT filed an application with the Gauteng High Court, Pretoria Pretoria to place the Post Office in business rescue in a bid to save it from liquidation. The Post Office, which received a R2.4 billion bailout from the government earlier this year, is reported to be R4.4bn in debt. The department's draft business rescue plan includes steep staff cuts to reduce the Post Office’s salary bill, which has far outstripped revenue. The embattled entity was placed under provisional liquidation in April, after a successful application from one of its creditors.
The Master of the High Court issued a certificate of appointment to Kaap Vaal Trust on March 30, 2023. The company has been in business for almost 60 years and some of its more well-known liquidations are Motor Racing Enterprises (Kyalami), Aurora Empowerment Systems, the ANC Youth League, Triomf Fertilizer and the Bank of Lisbon. The application is due to be heard on July 4, while the application to liquidate the Post Office was postponed until October 30.
Last week, the Post Office was back in the news with a bittersweet event that made one wonder whether to laugh or cry. A Durban woman was shocked when a parcel she was expecting from the US, 13 years ago, finally arrived.
The latest along this path is the splitting of the Post Bank from the Post Office, via the Postbank Amendment Bill. ‘‘The object of this Act is to provide for the incorporation of the Postbank Division of the Post Office as a [legal person] Company and bank controlling company, with the aim of the Company’’; rendering [Transactional] financial and banking services and lending facilities through, amongst others, [existing] the infrastructure of the Post Office and any other means of delivery the Company may deem appropriate for its operational need.
But the government is not even finished setting up the new bank, but had placed the Post Office where the bank must operate from, in business rescue to buy some time due to the liquidation calls from creditors. On its website, it claims that there is a Postbank inside every Post Office nationwide. At the same time, each operating bank building is under business rescue as it belongs to the Post Office. Surely even Gungubele can see the anomaly?
The Post Office had delivered an uninterrupted service to its clients for centuries. The story of Post Office operations began in a small office in Cape Town in 1792. A mail boat service was introduced between England and the Cape in 1815. The first steamships were commissioned in 1925 and covered the distance between England and the Cape in 58 days. Mail was transported by motor car for the first time in 1911. The first overseas airmail service was introduced in 1932. The first mail-sorting machine was installed in Pretoria in 1967. In 2018, the Post Office began a partnership with the South African Social Security Agency for the on-boarding of new social grant recipients, and the issuing of new bank cards to beneficiaries.
The business rescue plan, which Cabinet has approved, is centred on cutting 7 000 of the Post Office’s roughly 11 000 staff in order to save around R1.5bn a year. The Post Office has been making losses of more than R2bn a year for the past three years. Of its 1 108 branches, only 193 make a profit. A total of 146 branches were closed during the 2021/22 financial year, with 55 of them being amalgamations. Profitable branches remained low, with only 303 branches, or 23.9%, regarded as profitable out of 1 266 branches, while 963 branches proved to be unprofitable at the end of March 2022, as the graph shows.
However, the problem is not about profit. It is about providing a service in a cost-effective manner. One of the big users of the postal service is the SAPS, state hospitals, the high courts and the magistrate’s courts across the country. The departments of education and health, and the chapter nine Institution under the Constitution, like the Office of the Public Protector, also need access to the Post Office’s Franking machine – a device that prints a postage stamp and/or a company logo on an envelope or label to indicate that postage has been paid. The machines can be remotely loaded with money to function. Tragically, there are government departments that do not have internet access to enable them to load their machines.
There must be a better way forward. A good place to start would be to ensure that each government department pays its bills to and from the Post Office. Establish a fair price and implement it throughout all customers. By spreading the load, one could ensure the future of the essential service.
We often hear about government departments not paying their utility bills. A thorough investigation of this aspect alone could bear fruit. Just as SAPS and the SANDF do not have to make a profit, so should it be for the Post Office provided, they operate at maximum efficiency.
Kruger is an independent analyst.
PERSONAL FINANCE