Post office branches shrink to 600 amid job cuts

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 05 Apr 2024
Business rescue practitioners proposed retrenching 6 000 SAPO employees.
Business rescue practitioners proposed retrenching 6 000 SAPO employees.

Communications minister Mondli Gungubele has remained mum on the number of jobs to be shed by the South African Post Office (SAPO) as part of its ongoing business rescue plan (BRP).

This is despite a Business Day report indicating that 4 700 SAPO employees have been issued retrenchment letters.

Last year, the SAPO business rescue practitioners announced plans to retrench 6 000 employees at the bankrupt state-owned enterprise as part of the BRP adopted by majority creditors.

Yesterday, the Department of Communications and Digital Technologies (DCDT) minister Gungubele – the SAPO shareholder on behalf of the state – briefed media on the performance of his department’s and its entities.

Turning to embattled entity SAPO, the minister said government’s aim is to save the entity and ensure business continuity.

Asked to clarify the number of jobs that will be lost by SAPO employees, Gungubele said the business rescue practitioners are better placed to provide the exact number.

“A business rescue plan is a statutory plan and under the control of the practitioners. In the plan adopted in December, a number was indicated but there is a negotiation with the workers, where we’ve been encouraging that everything be done to reduce that number.”

Once considered a key institution, mismanagement and outdated systems have brought the post office to its knees. The state-owned entity is in dire financial straits, with liabilities totalling approximately R12.5 billion, as at 31 July 2023.

The BRP aims to stabilise the company, restore it to solvency and enable SAPO to operate sustainably as a going concern without total reliance on government funding in the future.

Gungubele said, as announced by the minister of finance during the 2023 budget speech, SAPO has been allocated R2.4 billion to assist in bringing stability. No further budget allocation was given in 2024.

“Saving the South African Post Office and turning it around into an effective, innovative and financially viable entity remains the foremost priority of this government. The restructured post office will be agile and cost-effective.

“The BRP continues to engage labour representatives to ensure a seamless process on all labour related issues. The branch closures will be effected in a manner that does not compromise the universal service obligations of SAPO.”

Another symptom of SAPO’s ills is that its previously large branch network has significantly shrunk over the years, due to lack of rent payment to landlords, IT issues, and forced manual operations, because of outstanding electricity bills.

DCDT deputy minister Philly Mapulane said the business rescue practitioners have indicated a need to further reduce the branch network.

Prior to the COVID-19 pandemic, the post office reportedly had roughly 1 300 branches nationwide.

The BRP will see just over 600 branches remain that continue to service the public, revealed Mapulane. “What they’ve said is that in addition to those branches, there will be points-of-presence. This means that even if there are no branches, there will be a service that will be offered where branches have closed.”