Post-shedding: Does the post office have a future?

Without R3.8bn, the 232-year-old institution will go belly up in October. Are we just throwing good money after bad?
3 mins read

Boom. That’s the sound of another parastatal imploding. This time, it’s the post office, which earlier this month said it would need R3.8bn from government or it will hit the skids in October.

It’s nothing essentially new. The post office has long been on the wrong side of life support, with sudden death on the cards in any given month. It hasn’t turned a profit in more than a decade and had accumulated losses of R19bn by end-September last year; it’s no wonder it was put into provisional liquidation, followed rapidly by business rescue. 

That’s despite the R7.9bn in government largesse it received between 2014 and 2019. Two years on, in 2021, it claimed it would need R8bn in the medium term to keep its head above water. Then there was the R2.4bn lifeline thrown out just last year. Originally destined for the “Post Office of Tomorrow” turnaround plan, it was swallowed up in short order by creditors, retrenchments, salaries and operating costs, according to News24.

It’s no surprise that the funding disappeared faster than Roman Cabanac as a government apparatchik. The company made a loss of R2.2bn in its 2023 financial year, and by end-March it owed R2.4bn to the employees’ pension fund, medical aid, UIF and the South African Revenue Service. As of last September, operating costs exceeded revenue by 200%, and employee costs alone ate up R1.50 of every R1 earned.

So not really a going concern then.

It’s not all that surprising when you consider the post office can’t get the most basic of functions right: delivering the mail. As of last year, its delivery rate sat at 51.6% – down from an already parlous 68% in 2021 and against a regulated target of 92% – and carryover items numbered 5.26-million a month.

Call it post-shedding, if you will.

In fairness, income from letter delivery is on the wane globally; it’s expected to drop to 29% of revenue for postal services in 2025, down from more than 50% in 2005, according to the Universal Postal Union. There is, however, a “new frontier” in parcels and logistics. Pity the post office has only now clocked the opportunities in the e-commerce trend and private partnerships.

And yet, it is wearing water wings in that particular pool too. As it stands, its courier performance rate is at 46.8% – and a measly 39.1% for international parcels. This is not really the company you’d want taking responsibility for your junk mail, let alone delivering your latest swag.

As the business rescue plan tells it, the IT infrastructure is obsolete, the data centre was last updated in 2012, equipment is inefficient and past its lifespan, and the logistics fleet is unreliable. In a digital world, the post office’s logistics management is, astoundingly, reliant on manual, paper-based systems.  

Or, in other words, moving with all the momentum of Jacob Zuma’s corruption trial.

Yesterday, today, tomorrow

It’s not that there aren’t plans to turn things around. There’s the 83-page “Post Office of Tomorrow” strategy. Only, this plan has been on the cards since 2021 – and, three years on, the company is still a step short of being a “Post Office of Yesterday”.

Then there’s the business rescue plan. The business rescue practitioners are quietly optimistic. They plan to turn the company to focus on digitalisation and e-commerce. There’s merit to the point: with a depot network located throughout the country, the post office could be well-placed as a delivery partner to the private sector.

But before they can get to “future-proofing” the company, the business rescue practitioners need to cover retrenchment packages and pay creditors. There’s the sugar-coated “right-sizing”: slashing thousands of jobs – likely the branch level workers, mind you, not “key management” who, with board members, earned a cool R26.7m last year – and closing hundreds of branches.

And whether the Post Office can continue is premised on whether it receives the R3.8bn that government seems to have promised and then promptly forgotten. Given previous experience, though, that looks like a drop in an ocean of ineptitude and amid a paucity of management decisions. Ten years of bailouts make a turnaround about as believable as Carl Niehaus’s family tree.

Treasury has reportedly said it won’t fund any more bailouts unless there’s a concrete and credible business plan on the table. It’s a sensible position; as with SAA, we can’t simply keep throwing good money after bad. This is public money, after all, and there’s precious little of that to go around. 

But good plans are only half the battle won. Someone has to crack the whip to make sure they work. 

Unless the Post Office’s management dramatically ups its game – or is replaced by people of the right calibre to deliver – the clock will wind down on an institution that’s been part of the South African landscape for the past 232 years. The alternative is to keep pouring taxpayers’ money down the drain, and the appetite for that has dimmed in a major way.

Top image: Vaan photography/Pexels/Currency.

Shirley de Villiers

With a background in political science and over a decade in journalism, Shirley de Villiers brings a unique perspective to her writing. As a former deputy editor of the Financial Mail, her columns have become known for their wit and insight. Shirley’s ability to distil complex scenarios into compelling narratives makes her a must-read for anyone interested in South Africa’s political landscape.

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