There is confusion over why a R3.8-billion bailout intended to prevent the South African Post Office (SAPO) from closing in October 2024 has not been allocated to the struggling postal service.
Deputy communications minister Mondli Gungubele recently told SABC News that the government had committed to providing a R3.8-billion bailout to the Post Office.
That came after SAPO’s business rescue practitioners (BRPs) shocked members of Parliament when they explained the need for the massive cash injection to avoid a “Day Zero” sometime next month, when the entity would be forced into liquidation.
“With no additional funding, the BRPs will be legally obliged to place the SAPO in liquidation as directed by section 141 of the Companies Act,” their presentation said.
“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.”
All of the Post Office’s branches would be closed and all jobs lost, bringing an end to a 232-year-old institution.
Gungubele subsequently told members of the portfolio committee on communications that National Treasury required more proof that the funds would not be wasted.
While the business rescue practitioners had cut the company’s costs significantly, they have supposedly have yet to show a clear business case to return SAPO to profitability.
Confusingly, a Treasury spokesperson told News24 that Parliament had the power to appropriate money for each financial year, and that the Treasury did not allocate funding to government departments or state-owned entities directly.
Therefore, it is unclear exactly where the hold-up is in allocating the funds.
Progress made so far
SAPO already received a R2.4-billion bailout at the start of its business rescue process in July 2023.
That is in addition to a combined R8 billion in historical bailouts from 2014.
The entity used the last emergency funding to settle debts, cover its operating costs, and to pay severance packages.
The BRPs have also reduced SAPO’s headcount from 11,083 to 4,875 and closed 366 branches, with 657 remaining.
As a result of these drastic measures, the BRPs claimed that SAPO’s net asset value swung from a negative R7.9 billion in June 2023 to a positive R840 million by June 2024.
The BRPs hope to use about R800 million to settle concurrent creditors and retrenchment packages, while R2 billion is supposed to be used to upgrade its IT systems infrastructure, mail processing, and logistics.
The BRPs have outlined a future Post Office with more revenue from digital channels and financial services, as well as courier and parcel services.
It would take a lot of hard work for SAPO to see tangible gains in the latter, which will require regaining the trust of the South African public after establishing an infamous reputation for late and missing deliveries.
MyBroadband itself tested SAPO’s ordinary and registered mail services in 2022, sending a total of four packages between Centurion and Gqeberha.
The shortest time that a package took from sending to the notice of arrival was six working days, while two other packages took 32 and 57 working days, respectively, to reach their destinations.
The last package was returned to the centre after 163 working days (238 calendar days) of travelling between numerous Post Office branches.
However, the experience was not nearly as bad as the Hanekom family from the Upper Highway area in Durban, who waited 13 years for a package sent from New York.
In its last financial year, its mail delivery performance stood at 51.62%. That means just over half of its packages were delivered within five business days.
The late and missing delivery issues date back nearly a decade, as SAPO has been unable to meet a mandated mail delivery performance target of 92%, reduced from 95%, since at least 2015/2026.
Despite this being a requirement for its exclusive licence as a postal service in South Africa, the Independent Communications Authority of South Africa has not issued any form of penalty or punishment for the failures.
The graph below shows the proportion of the Post Office’s package deliveries made within five business days since 2015/2016.