Donwald Pressly

Inside Parliament: Government should sell off SA Post Office

2015-05-07 14:28

Donwald Pressly

One hopes Nhlanhla Nene, our finance minister, has the SA Post Office in mind as an example of one of the “non-core” state assets that needs to be sold off to prop up Eskom. There is a big express delivery and freight forwarding company - a well-known name in the industry - wanting to buy it.

“Wouldn’t that just change the game?” said one industry player, who still reluctantly shifts thousands of magazines each month via the embattled SAPO. He thought it unlikely as “that would require the government to sell a state-owned enterprise”. Probably an impossible dream.

Indeed, there was not even a mention of hiving off one or more divisions of the company let alone the whole entity when the current group of SAPO executives - most of them in acting capacities - presented themselves to the communications and postal services portfolio committee of parliament this week. So when the acting chief executive officer Mlu Mathonsi and interim administrator Simosizwe Lushaba insisted that a massive turn-around was taking place - including suggesting that the post office can go from a R1.37bn loss in 2014/15 into a tidy profit without two years - maybe they had in mind an outright sale.

But it is most unlikely.

While obviously government would keep negotiations for privatisation secret as long as possible, one guesses that nothing quite so radical is being contemplated. Two weeks ago the acting CEO of Eskom, Brian Molefe, indicated that the home loan book of the state-owned power monopoly would probably be hived off and would probably contribute about R7bn to the coffers.

That is probably the extent of the “privatisation” that we are likely to see. SAPO only spoke about corporatising the Post Bank while Eskom is just very reluctant to lose its vice-like grip on power generation and transmission. Molefe even suggested that electricity distribution could be taken away from municipalities which were not paying Eskom. There just isn’t any political appetite within the ruling ANC for releasing state control over areas of the economy, even if it means shifting control from one entity to a rival government agency. It is caught in an ideological drift as it fights the EFF’s populist socialism on its left and the DA’s social-democratic capitalism on its right. Both are eating into its support base and it just doesn’t know where to turn on economic and fiscal policies.

All the dilly-dallying - hints of privatisation while at once announcing greater state intervention particularly in matter of land ownership - has defined the ANC. It is rendered incapable of doing anything too radical. So it marches on the spot and, in effect, the parastatals and state entities, march slowly backwards.

So we are unlikely to see the post office landing in the hands of the private sector. We are also unlikely to see  its regulator, Icasa, allowing competitors in the field of its service licence. So there won’t be new brightly coloured little post offices owned by the private sector springing up and competing to do its job, at least within "the reserve market" arena. At present the post office enjoys a monopoly  on the latter - postal services of 1kg and below. That means that if you are a mail order company you must go through the post office.

It is estimated that about one million periodicals are shipped through the post office every month. Interestingly the publishers are not required by the reserve market rule to use the post office. But probably about 70% of these deliveries ARE STILL carried out by the post office. That means that the private sector can start turning off this very lucrative tap. The post office can so easily lose the bulk of its business with the private sector in the months ahead if it doesn’t quickly get systems right and ends strike action (Lushaba reported that there had been no strike action since November but acknowledged that the workforce morale was low).

Small companies like Media24’s On The Dot, and Media Support Services, are already coming in to fill the gap. Chris Yelland who publishes various trade magazines says he has to have about 20 000 periodicals delivered every month. He is one of a number of Concerned Specialist Publishers who are converting their delivery data bases to street deliveries for their readers. And he is already beginning to use alternative avenues of delivery to the post office. Converting his data base has cost him about R100 000, he reports.

Yelland still says he desperately wishes the post office could get its act together, but in the absence of anything radical coming from government, the private sector will probably be forced to fill the gaps.

It could mean that private sector companies could (illegally) enter the reserve market area. that would mean the SAPO could take them to court.

But then SAPO has been failing to deliver on its mandate. As Yelland points out: “Would they dare to approach the courts (against private sector companies), to try to enforce their licence conditions in an environment in which they are obviously failing to comply with their licence conditions (themselves)?

It is probably not an ideal environment for private sector competitors, but they will be forced to do what they do best - efficiently and cheaply do business - while the state-owned entity lurches on from crisis to crisis.

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