Who really needs the Post Office anyway?

Johannesburg -  The South African Post Office (Sapo) is on a brink of terminal decline as its workers’ strike enters the 11th week with no signs of a solution.

Seven months after the year-end the Post Office has not yet published its financial results – a clear indication that the company is struggling.   

With the growth of Postnet and the increase in the use of email, who really needs Sapo?

The future is paperless.

Snail mail is no longer relevant to majority of South Africans as messages can be sent faster through social media platforms, such as Facebook, Twitter, Google+, Whatsapp, etc.

Furthermore, smartphones now allow people to have emails and private couriers are diminishing the importance of traditional postal services.

If Sapo were still relevant, the strike and its effects would have been trending on social media.

So what’s important that you get through the snail mail now?

It’s mostly bills (customers could opt to receive them via email to save the trees), traffic fines (which are not being collected by offenders) and parcels (which could be sent faster via courier companies).

The Post Office also gets business when local firms sell shares to the public and when it processes car licence disc renewals. All of these things can be outsourced, and private firms are already doing a great job.

Continued problems at Sapo must be sending a signal to its main shareholder the South African government that it needs to make a decision about the future of this ailing entity.

The Post Office is one of the country’s biggest employers with about 23 000 people in its employ, and shutting it down will be dire for our economy.
 
However, keeping the Post Office open in its present state is clearly an unnecessary risk to government coffers.

The company’s net loss has risen to R359m for the year up from R337m the previous year, according to a report in the Business Day.

According to an unpublished draft of the annual report obtained by Business Day, the total salary bill for the four executive directors on the parastatal’s books, together with the 20 senior managers, jumped to R32.5m in the year ended March. That is a 26% increase from the R25.8m paid to the executives the previous year.

If this report is accurate, the executive remuneration committee, against logic, must have decided that management had performed well.

A bold decision needs to be taken about the Post Office.

The government could start by selling some of the Post Office assets, such as the real estate where postal services offices are situated. This would immediately bolster the balance sheet.

Some of the postal services offices could be turned into multipurpose community centres to bring government closer to the people; they could also be used to bring services to communities.

The state could sell the postal services infrastructure to private company Postnet, which is already providing a great service. If a sale is not seen as an option, a partnership could help Sapo.

This approach will be in line with Finance Minister Nhlanhla Nene’s strategy to seek to enlist private sector help to prevent state-owned enterprises (SOEs) from collapsing.

“We need a combination of the two which are able to justify to the nation to say we are going to carry this one because it fulfils a particular development agenda,” Nene recently told the Sunday Times in an interview.

“If it doesn’t, we should be brave enough also to go to the public and say this isn’t part of what we are supposed to do. Whether we sell or… get somebody to run it on a commercial basis is something else.”

The Post Office is a perfect example of an SOE that needs urgent attention.

Some among us might argue that the Post Office is here to perform public services, such as delivering mail to communities in far-flung areas such as Kakamas.

But the truth is that the state doesn’t have enough cash to carry the Post Office.

If Postnet, for example, is made a partner to run the Post Office the delivery of mail or parcels to Kakamas would be more efficient.

However, the government, especially the telecommunications and postal services ministry under Siyabonga Cwele, needs to deliver e-government to far-flung areas such as Kakamas. Such a development would diminish the need for the loss-making Post Office.

So, if Nene and his team are serious about saving SOEs, they must make moves to clinch a deal with a private sector company to manage or buy the Post Office outright.

Perhaps a resolution to the strike is to remind the workers that our economy is not doing well and the Post Office faces closure. Keeping Sapo the way it is does not make good business sense - it is something that negatively affects customers, workers and the government.

 - Fin24

*Gugu Lourie is a former correspondent for Thomson Reuters, Business Report, Finweek magazine and Fin24 (writing a blog titled 'Googled'). He is the editor of techfinancials.co.za. Views expressed are his own. Follow him on #twitter @LourieGugu.
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