The South African Post Office (SAPO) is forecast to make a R2.1 billion net loss for the 2022/2023 financial year, despite multiple government bailouts over the past few years.
The National Treasury revealed this in a Parliamentary presentation on state-owned enterprises (SEOs) and government departments. In this presentation, the Treasury provided a financial update for the SAPO as at 31 March 2023.
According to the Treasury, the SAPO has “historically struggled with defining its strategic role as a commercial enterprise, operating within a rapidly changing ICT environment, whilst balancing its distinct developmental mandate”.
The enterprise has been in financial decline for a decade and was placed under provisional liquidation earlier this year for failing to settle its enormous debt.
The SAPO is technically insolvent and has lost money since 2013. It has been forced to close branches nationwide for years and has had to cut thousands of jobs.
Its provisional liquidation came shortly after the National Treasury allocated R2.4 billion to recapitalise the enterprise.
From 2014, the SAPO has received more than R10.39 billion in government bailouts.
The SAPO’s creditors currently amount to R5 billion as of March 2023, and its statutory obligations total R2.4 billion.
The statutory obligations include R1.1 billion due to the Post Office Retirement Fund, R539 million to SARS, R596 million to Medipos, and R108 million to UIF.
The Post Office’s staffing remains a significant problem for the enterprise, as staff costs of R3.6 billion for the year contributed 70% to its expenses.
To address this problem, the Post Office announced earlier this year that it would have to cut 6,000 jobs. It was later decreased to 1,724.
According to the National Treasury, “Although a number of reforms have been implemented and SAPO’s mandate was strengthened to provide the basis for its turnaround, the entity continues to struggle with its commercial revenues due to the failure of the board (current and previous to successfully implement turn around strategies.”
SAPO’s revenue for the financial year was R2.6 billion, while its expenses totalled R5.1 billion. While the enterprise’s expenses were 24% under budget, its revenue was 46% – almost double – under budget.
While SAPO currently has no government guarantees, the Department Of Communications and Digital Technologies (DCDT) has “developed a strategy to deal with the provisional liquidation which has been submitted to cabinet for consideration”.
The plan is intended to form part of the response to the court judgement and will be tabled in court on 01 June 2023.
In consultation with the DCDT, the SAPO has also finalised a new strategy for the enterprise, which aims to “turn the business around in light of the technological changes that had forced the entity to lag behind”.
However, the Treasury said the strategy remains “challenged” due to a lack of funding for key projects.