If the SA Post Office were a purely commercial entity, it would have been wound up long ago.
In parliament this week, the deputy minister of communications and digital technologies, Philly Mapulane, said SAPO faced collapse unless government gave it a new cash injection of, wait for it, R8bn.
SAPO, he said, had been hoping for a windfall from Treasury in finance minister Enoch Godongwana’s medium-term budget policy statement. The money was not forthcoming, as the minister announced his intention to close the funding tap for public entities. Instead, “we were listening to the minister saying this is tough love”, Mapulane lamented.
The request for R8bn would have been on top of the R8.6bn government has poured into the entity in the last 10 years, the operation not having shown a profit since 2006.
The problems that have led to the post office’s sorry financial state constitute a case study of a failed business.
It has progressively lost its share of what was once its core business, moving post and parcels. As the world of communication changed, it also failed to adapt and upgrade its technological capacity, or to respond adequately to the decline in demand for physical letter mail.
Propped up by government financial support, it twiddled its thumbs as its competitors — the many profitable courier companies that have mushroomed — ate its proverbial lunch. The performance of the courier businesses proves that the market itself has not disappeared, but has moved to competitors which can provide a prompt and more reliable service.
If government chooses to keep the post office alive, it should consider changing how it has been run up to now, and perhaps partner with the private sector.
This is a business that has faced progressively dwindling revenues — yet salaries and perks gobble up more than 70% of the income.
Of course, when a company — any company — loses its way as the post office has over the years, it raises questions about the role of its shareholder (in this case government) and management. SAPO has been bedevilled by management instability for much of the time it fell into decline.
It is unthinkable that a shareholder, which spent its own money, would have allowed the business to implode as it has done. In this case, of course, it is taxpayers’ money that is being put into what has become a bottomless pit.
The situation has become so dire that the business has defaulted in payments to the SA Revenue Service and its share of contributions to the staff’s medical aid.
The only thing standing between SAPO’s liquidation and its continuance is its mandate to provide a public service of sorts, maintaining a presence even in remote and unprofitable places.
But given the fiscal pressures faced by government, it will be hard to justify pouring billions into the entity, despite that mandate.
A solution to the company’s predicament will not come via another multi-billion rand cash injection. That would merely be throwing good money after bad — unconscionable in a country with so many critical needs and limited means.
If government chooses to keep the post office alive, it should consider changing how it has been run up to now, and perhaps partner with the private sector, which has shown the business acumen to profitably service a market that once was the post office’s sole domain.
Perhaps the post office will become the test case for Godongwana’s new, “tough love” approach to spending scarce financial resources on non-performing entities, that test his and government’s resolve. We shall wait in anticipation.
