Thirty-two months have passed since judge Elmarie van der Schyff placed the South African Post Office (Sapo) under business rescue. Her opinion was informed by a statement from the then minister of communications & digital technologies, Mondli Gungubele (ANC), who relayed under oath a promise from the cabinet: the government would invest R3.8bn in Sapo’s rescue on top of the R2.4bn already allocated for retrenchment and stabilisation.
In December 2023 creditors of Sapo approved business rescue practitioners (BRPs) Anoosh Rooplal and Juanito Damons’s rescue plan, which was designed with the R3.8bn in mind — but the money never came.
The portfolio committee on communications & digital technologies sought advice from parliament’s constitutional and legal services office regarding the government’s obligation to furnish the R3.8bn. The committee heard the opinion on February 6 this year.
“The R3.8bn cannot in accordance with our national budget process or the Public Finance Management Act (PFMA) be regarded as a commitment by the department attaching ‘legal liability’,” wrote parliamentary legal advisers Frank Jenkins and Aadielah Arnold. “In our view the facts present a scenario where the ‘commitment’ made by the department can be described as ‘tentative’, ‘provisional’, ‘conditional’, or ‘noncommittal’.”
The Companies Act of 2008, which created the mechanism of business rescue, obliges BRPs to file for liquidation if there is no reasonable prospect of rescue.
On January 30 Rooplal and Damons reported to creditors that “in the absence of funding to further upgrade the infrastructure and digitise the entity [they] must assess their position”. The state is Sapo’s sole source of funding, beyond revenue, which has declined steeply.
Finance minister Enoch Godongwana, unapologetic about his “tough love” stance on state-owned entities (SOEs), did not include the expected R3.8bn in the 2024 or 2025 national budgets. In light of Jenkins and Arnold’s opinion, it is even more unlikely that he will do so in 2026.
This puts liquidation firmly on the table for South Africa’s oldest institution. In that event, Sapo will become the first national postal service in the world to cease operations.
This was affirmed by the BRPs to the portfolio committee on communications & digital technologies on February 3, when asked if liquidation was off the table.
In their January monthly status update, and in accordance with the Companies Act, the BRPs noted that in the absence of a second tranche of funding, they would need to reassess the business rescue termination application and to further evaluate the future viability of Sapo.
It seems the runway is shortening and that there are two divergent views on the matter. The DA appears inclined to liquidate and privatise, while the ANC holds the line on job security and continuity. In the portfolio committee meeting, for example, Gungubele, now deputy minister, was placed on record opposing minister Solly Malatsi’s (DA) handling of the removal of the sub-1kg exclusivity in December.
Sapo is a Schedule 2 SOE similar to Eskom and Transnet. This means it is primarily a self-funded, commercially oriented entity that has a public service mandate. However, a Schedule 3 SOE — such as the South African Weather Service — is provided with state funding to deliver a specific public service.
Though the South African Post Office SOC Ltd Amendment Act of 2024 talks to a structural misalignment between the Post Office’s mandate, where it proposes the reclassification of Sapo from a Schedule 2 to a Schedule 3A public entity under the PFMA, it is not actively being pursued at this time.
But there is hope of partnerships with the private sector. The communications department issued a request for information (RFI) on November 15. The BRPs reported that more than 100 private sector proposals had been received and that joint teams of management, the BRPs, and communications department staff would be evaluating them.
ANC MP Shaik Imraan Subrathie, who sits on the communications portfolio, is optimistic about the future of Sapo. “The silver lining is we’re hoping that out of those 100 proposals, something spectacular will come.”
He is not worried about liquidation. “I don’t think our government is so heartless as to let 6,000 jobs go,” he says. “I believe we will pull this through. We have to find a way of keeping the Post Office alive and, more importantly, making it relevant to the needs of our communities and society.
“We will continue to push for the R3.8bn because ultimately, if that comes through, then what the BRPs want to do in terms of infrastructure and IT will succeed. Our position is we are going to continue to push for it and ask the National Treasury to release those funds.”
The need for universal access to a postal service remains, especially for citizens in rural areas
— Tsholofelo Bodlani
However, the BRPs wrote in their January 30 report that on December 12, three days before the RFI proposal deadline, Malatsi “issued a directive, which was gazetted, amending the Postal Services Act to remove the reserved postal services category for parcels under 1kg. This would effectively eliminate Sapo’s exclusivity on small parcels and is expected to negatively affect Sapo’s future postal and courier operations.”
It has to be said that exclusivity on small parcels has been largely unpoliced, because private courier companies have simply included that traffic as part of their operations. Even so, the BRPs have pointed out that this legislated exclusivity — a form of legal monopoly widely used by postal services around the world — is among the core “intangible assets” underwriting Sapo’s value in a digital world.
The BRPs welcomed unsolicited proposals even before the department issued the RFI, but the financial constraints on the rescue plan’s implementation prevented critical infrastructure and modernisation investments. Without those investments, Sapo would be undervalued in partnership negotiations.
To complicate matters further, BRPs overseeing an SOE rescue are guided procedurally by the Companies Act. But unlike private entities, SOEs are governed by the PFMA, which trumps the Companies Act.
The BRPs have therefore not been allowed to structurally change the balance sheet, which means no assets can be sold. No additional funding or borrowing is allowed without the permission of the minister. As things stand, the only funder available to Sapo is the government — which refuses to pay what it promised to Sapo.
DA MP Tsholofelo Bodlani, who also sits on the portfolio committee, says: “The need for universal access to a postal service remains, especially for citizens in rural areas. The fact is Sapo failed to invest and reinvent its operations, and it has failed to move with the developments of the sector.
“We continue to ask relevant questions to officials. We agreed to request a briefing from the Treasury as we need to understand their official position on the funding of Sapo. Partnerships with the private sector remain a viable option as Sapo remains a strong brand with a footprint across the country.”
The great mystery is why Malatsi removed Sapo’s protection regarding handling goods under 1kg, thus further weakening the organisation’s business case. The ministry did not respond to requests for comment on this.
The mystery is matched by a great irony. Mark Barnes, former CEO of Sapo, had a visionary plan to save Sapo, which he set out for an FM cover story in June 2025.
Barnes envisioned a unified model where Sapo and Postbank would handle mail, e-commerce, logistics, postal banking and financial services. At the time, Postbank could only take deposits. Barnes wanted it also to offer unsecured loans, insurance, credit for SMEs and more — all delivered affordably via Sapo’s vast network.
He saw huge potential in leveraging the more than 6-million existing Postbank customers and Sapo’s extensive branch presence to serve the “unbanked masses”, particularly in rural and low-income areas. Sapo, he says, had a “commercially irreplaceable footprint”. Every post office was also a Postbank branch.
But the government opposed his vision, insisting on separating Postbank from Sapo, apparently due to risk and governance concerns. Barnes resigned, believing that without integration, neither entity could thrive.
Now the government is wanting partnerships, but in the period since Barnes made his proposal the network of Sapo outlets has been much reduced and market share has drained away.
Even if the finance minister is prepared to change his mind about granting Sapo the R3.8bn promised in court, it is hard to see how the organisation can survive in a form capable of discharging its universal mandate.
