By Lehlohonolo Lehana.
Minister of Communications and Digital Technologies, Mondli Gungubele, has told Parliament that government is working tirelessly to save the South African Post Office (SAPO), which was placed under provisional liquidation.
Gungubele was replying orally to questions in the National Assembly. This after the Pretoria high court appointed provisional liquidators for the Post Office in March.
“We want to assure you that we have been working tirelessly with the entity to explore various options to find an optimal approach within the legal prescripts and confines of the provisional liquidation to save the entity and ensure business continuity,” Gungubele said.
“We will in the next coming week table an approach to Cabinet for approval to ensure business continuity. We want to reiterate that government’s main objective is to ensure that this entity is repositioned, modernised, and continues to serve the millions of South Africans it has been serving over the past 200 years,” Gungubele said.
Over the years, the Post Office has faced myriad challenges, which have threatened the sustainability of the entity.
DA MP Tsholofelo Bodlani asked the minister why the government kept the current Sapo board in place if it hoped to save the entity from mismanagement and the closures of branches.
“We are appointing a new board. What is existing now is the interim measure of a board until a new board is appointed. As we work on that, the existing board must assist us and clarify the underlying conditions that place us where we are now,” Gungubele replied.
ACDP MP Steve Swart asked Gungubele if the department would go to the courts on June 1 with an application to have the provisional liquidation removed to prevent a “fire sale of the entity’s assets”.
Gungubele said the department was assessing its options to find the best solution to prevent the liquidation.
“We are working on the best possible solution and the primary purpose is to make sure that Sapo doesn’t disappear. So the solution or the option we are going to take will be of such a nature that creditors remain confident of the future of the entity,”he said.
The evolving market factors and technological advancements have displaced the need for physical letters. As a result, letter volumes are declining and in tandem, revenue reduced from R3.4 billion in 2015 to R2.6 billion in 2022.
“Additionally, the growth of electronic financial platforms has posed a further threat to the SA Post Office Financial Services segment, as transaction volumes and revenue have also declined.
“In the 2014/2015 financial year, the entity experienced a prolonged and crippling strike, which lasted about five months, from which it has never fully recovered.
“Other contributing factors in the story of the SA Post Office are the ill-conceived decisions from past management, which include the reinstatement of almost 500 employees, who had been dismissed following the illegal five-month long strike,” the Minister said.
During the period between 2012 and 2019, a total of 10 384 part-time employees, who were previously only engaged by mail centres during peak periods, were absorbed on a full-time basis.
Furthermore, monies intended for a turnaround strategy were used for consumption instead of investment in infrastructure and modernisation.
“Therefore, these incidents adversely affected the cost structure of the company. The advent of COVID-19 exacerbated the financial challenges facing the entity, further affecting its ability to pay its creditors. SAPO has seen slow recovery over the past few years, despite interventions from government,” Gungubele said.
The services of a Senior Legal Counsel and external lawyers have been sourced to provide advice and guidance on the optimal option in dealing with these matters.
“Our plan is to get the matters resolved before the 1 June 2023 final court date so that the entity can continue to operate.
“For now, it is vital to assure the public that we are working tirelessly to ensure that the optimal option to mitigate the liquidation is put in place, with the objective being to save the entity. This will ensure that the impact of the liquidation on ordinary South Africans making use of SAPO services is mitigated,” the Minister said.
He said a critical feature of saving the Post Office is to ensure that government repositions and modernises the entity to respond to service needs in the digital era.