At least 27 branches of the South African Post Office have reopened around the country after being closed due to non-payment of rentals.
The South African Post Office [Sapo] which services millions of citizens has been plagued by financial woes. This has resulted in about 55 branches being closed earlier this year due to rental arrears.
In March, City Press reported that Sapo submitted to Parliament that its total debt to creditors – which includes service providers and landlords – totaled R1,8 billion at the end of September. It was further reported that over a period of seven years, Sapo received a total of R7 billion in government bailouts.
On Monday [May 10] minister of communications and digital technologies Stella Ndabeni-Abrahams welcomed the reopening of most branches across all provinces that were temporarily closed following extensive negotiations with landlords.
In a statement, the department of communications and digital technologies confirmed that a total of 27 branches had been reopened in all nine provinces.
It said negotiations are continuing with landlords of the Post Offices that are still closed with the hope that they too, will re-open as soon as an agreement is reached with property owners. This is expected to be within coming weeks.
The department attributed some of the financial troubles plaguing Sapo to the Covid-19 pandemic and subsequent economic downturn which it believes had a marked effect on the revenues of the Post Office.
However, the Post Office has for years not been financially viable. The last time Sapo made a profit was in 2006.
Its financial losses grew significantly during the year to 31 March 2020, with the state-owned entity recording financial losses of R1.76 billion. Its current liabilities exceed assets by R1.49 billion.
This has rendered the company technically insolvent.
Sapo owns 458 buildings and rents 954 premises.
Ndabeni-Abrahams said Sapo still has an important role to play in improving access to basic services.
“The South African Post Office is a key stakeholder in delivering on government’s developmental objectives of improving access to basic services in previously under-served communities. Its network is currently the largest point of presence nationally and is able to connect government, businesses and citizens anywhere in South Africa,” the minister added.
Auditor-General Tsakani Maluleke found that Sapo was commercially insolvent, giving the parastatal a disclaimer opinion.
This is because Maluleke was unable to obtain enough audit evidence "due to the poor status of the accounting records" to confirm the reasonableness of management’s assessment of the group’s viability for the foreseeable future.
In a statement following the release of the Auditor-General’s report earlier this year, Sapo Group CEO Nomkhita Mona noted the state-owned entity’s obsolete business model.
“Indeed, SA Post Office’s major challenges in the recent past, are well documented. These have come about as a result of a number of factors - both exogenous and endogenous - including an obsolete business model. These were exacerbated by the advent of the Covid-19 pandemic.
“When considering the future of SA Post Office, it is worth noting its critical role in servicing the multitude of citizens who otherwise would not have access to critical basic services. Most of these are based in far-flung, remote rural, as well as the urban and peri-urban areas. The SA Post office fulfills a critical role in servicing the needs of the indigent - and indeed a large section of the populace, owing to its footprint in the lengths and breadth of the country.”
Mona said the Post Office’s opportunities “include participating in the highly lucrative e-Commerce space, Digitisation of our processes, the courier space, as well as those activities which fall within SA Post Office’s legal mandate (e.g. the distribution of parcels with a mass of up to 1kg)”.