Prominent state-owned enterprise on its way out

Former South African Post Office CEO Mark Barnes said previous plans to revive the state-owned enterprise are no longer viable.

Barnes shared his views during an interview on Radio 702 about the state of the South African Post Office (SAPO) and its current business rescue proceedings.

The Post Office has been experiencing significant financial difficulty for many years. It last posted a profit in 2013 and has incurred billions in losses since then.

Barnes had a plan to turn the ailing state-owned enterprise around, and he became chief executive of the Post Office in early 2016.

He unveiled a strategy to modernise the Post Office, transform it into an eCommerce leader, and build it into a banking powerhouse.

When he took the reins, the enterprise had equity of R10 billion. During his time, he strengthened the balance sheet and grew equity to R16 billion.

However, Barnes’ progress in fixing SAPO was cut short due to strategic differences with the government. He resigned on 1 August 2019.

He left the Post Office in good shape. It was on an upward trajectory with more than R5 billion in net assets, and the Postbank had R4.6 billion in cash in Money Market deposits.

Since his departure, the Post Office has collapsed. It became technically insolvent, and the management team failed to execute the turnaround strategy.

On 10 July 2023, the Minister of Communications and Digital Technologies placed the Post Office into business rescue.

The minister highlighted that its financial stability had been undermined by unsustainable costs, operational inefficiencies, and its failure to modernise.

This has been a costly process. In 2023, the Post Office received R2.4 billion in funding from the National Treasury to support the current operations and for the payment of dividends.

Millions more are pumped into the Post Office each month to keep the failing state-owned enterprise alive.

The business rescue practitioners are seeking an additional R3.8 billion in funding from the National Treasury to support their plan.

Former Post Office CEO Mark Barnes shares his views

Barnes has been outspoken about the decline of the South African Post Office following his departure, saying the current problems may signal the end of the company.

He told Radio 702 that it is unlikely that one could still implement his turnaround plan as he envisaged it a decade ago.

“The Post Office as we dreamt about is over. Its demise was assured when you took away its capacity to do financial transactions and pay social grants,” he said.

He added that when he left, the Post Office was solvent, with no debt and no need for National Treasury guarantees.

“The South African Post Office was the only state-owned enterprise, apart from the South African Reserve Bank, which was debt-free and did not need a National Treasury guarantee,” he said.

“Since then, a lot of money has been lost, or somehow disappeared. The bank, which has a net asset value of close to R4 billion, was taken out.”

He said the Postbank has R4.6 billion in deposits, which disappeared after he left. “They lent it to a non-credit-worthy Post Office,” Barnes said.

He said the financial demise of the Post Office was brought about by the misappropriation of funds.

Earlier this year, City Press reported that the South African Post Office’s business rescue had incurred R175.7 million in fees by late 2024.

Over R143 million was paid to a team of consultants, while the two business rescue practitioners, Anoosh Rooplal and Juanito Damons, received approximately R6.7 million.

“That’s equivalent to my salary as SA Post Office CEO for more than 40 years. It is nice work if you can get it. It is a feast on the leftovers of gluttony,” said Barnes.