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Tech investment crucial to post office’s future

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 03 Oct 2023
SAPO’s liabilities totalled approximately R12.5 billion as at 31 July.
SAPO’s liabilities totalled approximately R12.5 billion as at 31 July.

Investment in technology is critical to the South African Post Office’s (SAPO’s) turnaround, say its business rescue practitioners.

This,as the state-owned entity battles dire financial straits, with liabilities totalling approximately R12.5 billion as at 31 July.

Furthermore, the embattled entity is faced with a waning branch network due to lack of rent payment to landlords, IT issues and forced manual operations because of outstanding electricity bills.

In an update, Anoosh Rooplal and Juanito Damons − joint business rescue practitioners of SAPO − say they are dealing with a myriad of issues, including investigating SAPO’s affairs, business, property and financial situation.

The practitioners say to turn the company into a factual solvent position, revenue must improve, and an effective and efficient cost structure must be attained.

“We have been working with management to address the decline in revenue, generate additional sources of revenue, reduce costs, effect key structural changes in the SAPO business model, and consider key investment in technology and infrastructure to drive performance,” says Rooplal.

“The success of the SAPO business rescue is predicated on arresting the cash flow bleed, while also allocating capital to facilitate the company being able to service clients effectively.”

Rooplal and Damons were appointed after the ailing entity was placedunder supervision and in business rescue in July.

There have long been calls for the national postal service to up its digital strategy, in order to turn its fortunes around.

However, the entity of the Department of Communications and Digital Technologies (DCDT) has remainedbehind the digital evolution curve and burgeoning e-commerce space over the years.

Despite its troubles, former and incumbent DCDT ministers have been determined to hang on to the ailing entity, saying government has no intention to sell the post office.

Former communications minister Khumbudzo Ntshavheni noted that if properly harnessed, SAPO’s postal network holds great potential to position the institution as a strategic contributor to economic and digital inclusion in South Africa.

At the time, Ntshavheni said SAPO has the potential to contribute to SA's social and developmental goals by providing postal, logistics, ICT and government services via its far-reaching postal network.

The business rescue practitioners say they are considering the extent and structure of the branch network, which they describe as the cornerstone of SAPO.

As a result, a team has undertaken an extensive review and analysis of the branch network, which included a wide range of criteria of the individual branches, including profitability, geographical reach to customers, universal service obligations to keep certain branches opened, and services like motor vehicle licencing, financial services and SASSA grants payouts from the Postbank.

Rooplal notes: “We are aware that certain branch conditions are not optimal and we are looking to rectify this going forward. This will, however, take some time as we try and navigate the entity out of the financial distress it is currently experiencing.

“A one-size-fits-all in determining which branches need to be reopened and which should be closed is difficult to undertake. The post office services include the universal service obligations in rural areas, and so a mere profitability metric or cost centre metric would be trite.

“A solvent efficient and effective post office will therefore need to be considered, with the input of multiple stakeholders, including the ministry of communications and digital technologies and creditors for the ultimate benefit of South Africans, many who live in rural areas and make use of the post office.”