What is 232 years old and still stuck in the last century?
The South African Post Office — which, almost a decade after its unravelling began, may finally be on its last legs.
The decrepit old beast that has leeched billions from the fiscus appalled newly minted MPs last week when the business rescue practitioners now running it declared that unless its next National Treasury bailout — R3.8bn this time — is forthcoming, “day zero” would dawn one month later and it would shut its doors forever.
The business rescue practitioners, Anoosh Rooplal and Juanito Damons, say the government has always known the money was needed — they spelt it out in the high court application that led to the post office being placed in provisional liquidation in June last year.
The decline of the post office over the years has been well documented — it is a prime example of the consequences of neglect, lack of strategic vision, failure to modernise, looting and mismanagement.
Still, a two-century run is not bad for an institution that began operating for an hour each day from a pantry in the Castle of Good Hope. Its footprint expanded to every corner of the country, reaching the most remote outposts, and this is the primary reason the government believes it should be saved. But is it willing to fork out another R4bn-odd to do so?
It had already pumped bailouts of nearly R8bn into the post office over the years, before injecting a further R2.4bn after it entered provisional liquidation.
Rooplal tells the FM there was an understanding at the time that a second tranche of R3.8bn on top of the R2.4bn would be needed. On December 7 2023, the business rescue plan was approved by creditors, on the assumption that the second payment was in the pipeline.
“We depended on both tranches of payments … We started implementing the plan, anticipating that the second tranche would be received,” Rooplal says.
Much has been done to stabilise the institution, he says — 4,874 of the 11,083 employees, or 44%, have been retrenched. This was only the latest round of retrenchments; staff numbers stood at 18,119 in 2018. The capacity of the post office misconduct committee was reinforced, resulting in 250 disciplinary matters being completed.
The branch network was rationalised, again, and 366 offices were closed. Once the process is completed the number of branches still open is expected to be just under 660.
Rooplal says secured creditors supported the write-off of 88% of the debt and by the end of July 98.6% of all creditors had been paid the agreed compromise of 12% of the amount owed them, totalling R842m. Statutory and payroll creditors, such as the South African Revenue Service, the Post Office Retirement Fund and medical aid schemes, will be paid once the promised R3.8bn is received. But in February, when finance minister Enoch Godongwana delivered his budget address, the R3.8bn payment was not allocated. Rooplal describes it as a “confusing moment” for the business rescue team.
The “day zero” scenario caused alarm among MPs who, according to communications committee chair Khusela Diko, were aware that the post office had challenges but did not realise the end was as nigh as it was.
Rooplal says the dramatic “day zero” phrasing was unfortunate. What it meant was a month “is the runway we have left”.
The minister with ultimate responsibility for the post office — Solly Malatsi of the DA, who has the communications & digital technologies portfolio — tells the FM he was also taken aback by the “day zero” reference.
Malatsi says the post office’s financial situation appears to have continued to deteriorate under the ministrations of Rooplal and Damons.
This, he acknowledges, is more likely to be the fault of prolonged neglect, mismanagement and failure to modernise than shortcomings on the part of the business rescue team. But he adds: “Everyone involved in the post office in recent years must take responsibility for how things have unfolded … But the business rescue practitioners must look at themselves in the mirror to determine whether they have done everything possible to resuscitate it.”
Of the post office’s failure to move with the times, he says: “If the present leaves you behind, it will be impossible for you to catch up with the future.”
The business rescue practitioners must look at themselves in the mirror to determine whether they have done everything possible to resuscitate it
— Solly Malatsi, minister
The minister says continuous bailouts do not make sense, given the range of pressing social issues in South Africa that need to be urgently addressed, and it will be up to the Treasury to decide. But the post office has to begin paying for itself.
“We have to ask difficult questions: is it still practical for the state to be the sole owner? We have to be sober and pragmatic. Part of the answer may be to make space for private investment, while still maintaining majority state ownership,” he says.
It is such partnerships that the business rescue team envisages. Among other initiatives, Rooplal and Damons see a role for the post office in supporting digital inclusion in small towns and rural areas.
Responding to Malatsi’s thinly veiled criticism, Rooplal says his team is working within the parameters set out in the early stages of the business rescue process, and both the minister and the Treasury are supporting it.
“They have not yet indicated otherwise to us,” he says. The team regularly meets the Treasury, whose officials exercise oversight over the work being done. He says that when he and Damons began their work, costs far exceeded revenue, and the gap has yet to be fully closed.
The other gap seems to be in communication. Diko tells the FM her committee is in the dark about the turnaround plan for the post office and it “needs that road map”. She agrees with the minister that the state should continue to hold majority ownership in the post office and “key partnerships” should be leveraged to bring in the private sector.
Diko says Rooplal and Damons need to do their bit. “The National Treasury has put in reasonable demands, it cannot keep throwing money down a bottomless pit … It’s in their [Rooplal and Damons’s] hands,” she says.
Rooplal says they have met all the requirements for the first tranche of funding, and they were fully prepared to meet further conditions set by the Treasury.
Whether the post office shuts its doors for good will depend on it receiving further funding. The bigger question is whether it can remain relevant after seeing almost all its functions replaced by smarter, quicker and more competitive offerings by couriers, banks and even retailers.
Perhaps the Treasury has already caught on.
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