SAPO turnaround strategy a pathway to nowhere

Issued by Solly Malatsi MP – DA Shadow Minister of Telecommunications and Digital Services
20 Mar 2022 in News

The turnaround strategy of the South African Post Office to reposition the entity into the “Post Office of Tomorrow” is a hopeless pathway to nowhere.

This ambitious document is centred around the lofty goal of moving the Post Office towards a “modernisation and digital transformation strategy to replace legacy systems with modern technologies.”

All of this is solely dependent on application for a National Treasury bail out of R8 billion that the Post Office needs to settle its debts and upgrade its technological infrastructure to compete in the postal and courier services market.

It is astounding that an entire turn around strategy for a collapsing institution could base its entire survival on a bail out when the Post Office has been operating at a loss since 2013.

The Post Office has been a serial dependent on bail outs for far too long without improvements in its declining operations.

The crux of the turnaround strategy is a series of cost cutting measures across the board without a solid plan for profit sustainability.

Some of these cost cutting measure including introducing “Voluntary Severance Package” that will result in reducing the staff from 15600 to 9000 over two years at a cost of R420 million and reducing spending on security and bank charges by R1.5 billion in 2022/24.

Yet that will not be enough to make it profitable given that it’s liabilities stand at R6.7 billion, including a R2.4 billion it owes the Post Bank.

The DA believes that yet another bail out without changing the ownership structure of the Post Office is like feeding a dead horse.

The future of the Post Office lies in dismantling the full state control and making the space for private investment.