The South African Post Office (SAPO) says that it is working on a turnaround plan after the country’s auditor-general declared that the organization was ‘commercially insolvent’.
According to the report, Maluleke’s audit review of the Post Office Group’s annual results noted it had incurred losses of over R1.7 billion in the 2019/2020 financial year, with its liabilities exceeding assets by R1.5 billion.
Gugulethu Mfuphi spoke to an analyst, Dr. Thokozani Chilenga-Butai from the Department of Political Studies, School of Science at Wits University about the latest developments.
Listen to the full conversation here:
Chilenga-Butai spoke about how the announcement means that the South African Post Office is unable to pay its debts to drive new revenue streams. At the same time, it is seeing mounting debt as it faces ongoing economic pressures as well as in the labour market.
There is also currently a leadership problem following the exit of its CEO.
“In terms of leadership the CEO left, what this means is that internally there might be issues of disagreements with regards to how to run the Post Office, how to keep it profitable. We also know that the Post Office similar to other parastatals is quite an old institution, sometime there are legacies within these institutions, which either need to be reformed or worked out.”
A recent presentation at the Parliamentary Portfolio Committee on Communications revealed how, in three months, the service had posted a net loss of R429 million, while its year-to-date net loss increased to R1.354 billion. In addition, creditors and accruals as of 30 September 2020 had increased to R1.774 billion.
The Post Office has stopped paying rent at certain locations and had to close around 55 branches due to arrears. Employees’ pension fund and medical aid contributions, which are deducted from workers’ salaries, were not being paid over to the relevant institutions.
Chilenga-Butai added that even though the government may be overwhelmed by other priorities, it is important for them to put more effort into resolving issues faced by the Post Office before it is too late to save it.