The South African Post Office (SAPO) has been in financial distress for years, which has resulted in hundreds of post offices being forced to close since 2020, resulting in thousands of jobs lost. Despite this, the SAPO has revised billions to stay afloat and has recently been placed under business rescue.
The SAPO has historically been bailed out with billions of rands. According to communications minister Mondli Gungubele, the public postal service received R7.3 billion rand between 2016 and 2019 – which effectively did nothing to turn the embattled SAPO around.
SAPO was placed under provisional liquidation in April 2023, with the company owing billions of rands to its creditors.
It was placed under provisional liquidation following a successful court application by a creditor who was owed money for rent.
Despite this, the government is adamant that the SAPO is an essential service that provides vital services throughout the country, especially in remote areas where the SAPO is often the main link between people in South Africa.
“It uses its countrywide footprint to render such services as the distribution of social grants at its branches, distribution of the medication to those in need, various national and international postal services, etc,” said Enoch Godongwana, the former acting minister of communications and digital technologies.
As a result, the government approached the court to oppose the final liquidation of the post office, instead arguing for it to be put into business rescue. The government budgeted a R2.4 billion bailout for SAPO and has pledged an additional R3.8 billion.
Despite this, the bankrupt SOE has closed 316 branches since the start of 2020. This was revealed by Gungubele in response to a parliamentary Q&A, where he outlined the number of closures – including since 1 April 2023.
A total of 22 branches were officially closed during the 2020/21 financial year. In addition, two branches were closed due to landlords’ forced closures because of rental arrears, he said.
A total of 146 branches were officially closed during the 2021/22 financial year, while a total of 122 branches have been closed during the 2022/23 financial year – with 58 branches as part of amalgamations/optimisation of the branch network, he added.
A total of 24 branches have been closed since 1 April 2023.
|Financial year||No. of Post Offices that closed|
|Since 1 April 2023||24|
The SAPO has been consistently losing taxpayer money for several years, leading to job cuts and branch closures.
Its liabilities exceed assets by R4 billion, with a debt of R8 billion. What’s more, around 6,000 employees, accounting for 40% of the workforce, have been retrenched due to financial constraints. The SAPO’s high wage bill and competition from private courier companies have made its business unsustainable.
Furthermore, SAPO’s business rescue proceedings are now set to put a further 7,000 jobs at risk as the embattled state-owned entity is planning to save R1.3 billion in annual salaries.
No Post Office executives in South Africa have been penalised for their use of funds intended for the state-owned enterprise’s recovery initiative.
“No one was brought to book for the non-investment of monies to implement a turnaround as the usage was linked to the cashflow situation,” said Gungubele.
“The funds were utilised for operating activities, repayment of terms loans and creditors as the severity of the cashflow situation at SAPO intensified.”
“They kept maintaining operations under difficult financial challenges and accumulated debts in the process,” the minister said.
“The past funding allocations which were intended to invest in the turnaround strategy ended up being depleted by operations and debts as the severity of the financial challenges intensified,” he added.