With no firm bailout commitment from National Treasury, the South African Post Office’s (SAPO’s) business rescue practitioners (BRPs) have expressed their intention to file for the liquidation of the beleaguered entity.
This was revealed by the communications department in a statement issued on Friday, saying minister Solly Malatsi received a letter from the BRPs signalling what is next for SAPO.
However, the minister believes a path forward that will result in liquidation is “premature”.
Says Malatsi: “It is my view that any talk of liquidation, at this stage, is premature given the extensive ongoing conversations within government, particularly between the department and National Treasury, regarding the prevailing situation at the SA Post Office.
“These engagements are focused on finding a way forward that balances the urgency of the post office’s situation, the welfare of the staff and the responsible use of limited public funds, in the best interests of the country.”
Bailout implications
In the 2024 Medium-Term Budget Policy Statement (MTBPS), National Treasury documents revealed that bailouts had cost government R520 billion from the 2008/9 financial year, to date. Treasury maintained that government’s stance is to not provide further bailouts to state-owned entities.
SAPO is one of 11 state-owned entities within the communications department’s portfolio and is among several that have received billions of rands in bailouts from the state.
It was placed under business rescue in 2024, because of its dire financial status.
Once considered a key institution, the post office has been brought to its knees due to poor governance controls, mismanagement, staff retrenchments and inadequate investment in IT systems. Additionally, the state-owned entity’s once wide branch network has significantly shrunk over the years.
The BRPs preciously indicated they would need R3.8 billion to return SAPO to full solvency and liquidity, warning of a “day zero” scenario if the funding was not received.
In 2023, the entity received a R2.4 billon funding allocation from Treasury.
However, amid austerity measures, the post office was shown “tough love” that resulted in no funding allocation in the 2024 MTBPS.
Malatsi said in Parliamentary reply that to keep SAPO afloat, his department has utilised current legislative funding mechanisms within government.
Among these is the relief of R150 million received from Treasury in February 2025, assisting it to address immediate financial pressures. Last May, the entity also received income support of R381 million via the Temporary Employer/Employee Relief for its employees over a six-month period.
Mark Walker, director at T4i, says the BRPs have narrowly focused on the financial and operational viability of the current SAPO and are questioning whether it makes sense to continue bailing out the current entity to enable sustainable operations in future.
“The BRPs likely considered the feasibility of traditional post office operations, while considering the reality where typical SAPO services have been replaced by digital communications, taken over by private service providers, or reassigned to other state entities.
“Considering these realities, the outlook for current SAPO operations and therefore its financial viability, look unsustainable. This view assumes that SAPO operations will continue along the current trajectory and eventually need to be bailed out again in a few years.”
Where to next?
To save one of the state’s oldest establishments, department heads have touted plans to pursue private financial and operational partners for the post office.
There was also a time when government expressed e-commerce aspirations for the ailing entity, despite the fact that it would operate in a hotly-contested space.
Walker says to potentially compete in a digital economy would require significant strategic re-evaluation of current SAPO products, services and an overhaul of operations, including financial performance, human assets and real estate.
“Options include ending non-viable products and services, finding commercial partnerships to accelerate viable products, and identifying new services that leverage the SAPO’s existing retail footprint, especially in rural areas. Over 100 proposals for partnerships were received by the BRPs from South African corporates during the BRP process.”
He advises that the minister should consider an approach that allows for the implementation of a new strategic direction, based on clear timelines and milestones. “This plan should be driven in a timeline-focused and highly-transparent manner.
“Alternatives could include partnerships to exploit SAPO infrastructure and retail locations and leveraging of government services provided by other departments. Ultimately, SAPO services should not rely on regulatory protections but should be able to compete effectively based on their own.”
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