Communications minister Stella Ndabeni-Abrahams says government is doing everything it can to prevent the SA Post Office (Sapo) from being liquidated.
Ndabeni-Abrahams said this as the cash-strapped state-owned entity on Tuesday presented yet another turnaround plan to the National Assembly’s portfolio committee on communications.
The post office wants more money from the state, claiming the Covid-19 lockdown has “devastated” its financial situation. It has already made applications to the national treasury for funding.
MPs heard the situation was so bad that medical aid and pension fund contributions, employee risk benefits contributions and SA Revenue Service obligations have been unpaid for the past four months, and will remain unpaid pending financial assistance.
Payment of employee salaries prioritised
Non-payment of medical aid contributions could result in suspension of membership. Non-payment of suppliers has in some cases already resulted in interruptions of critical services, and will continue to negatively impact on the ability to recover lost revenue and move towards financial sustainability, said acting CEO Reneilwe Langa.
She said payment of employee’s monthly salaries has been prioritised during the lockdown and remains a priority despite the ongoing financial challenges.
The post office was also not able to honour commitments made in terms of the substantive agreement with labour. As a result, labour is aggrieved, MPs heard.
In the main, the commitments could not be honoured due to the cash flow situation.
MPs heard there has been a sharp decline in traditional mail volumes, which are the main contributor to revenue.
The entity said it was also experiencing challenges with regards to transport logistics costs, costs for security, property holding and maintenance cost escalation.
It said with regard to the strategic objectives of its turnaround plan, the key was to acquire funding so key initiatives were resourced.
Acting Sapo board chairperson Tia van der Sandt said the pandemic has devastated its financial situation.
“We have seen it in our revenue numbers that during quarter 1 we could not cover our salary bill. We are seeing a slow recovery of revenue but have not reached our pre-pandemic numbers,” she said.
Van der Sandt said they were concerned that if citizens let their guard down and SA sees a repeat of the hard lockdown phases, this could result in additional costs being incurred to protect staff and customers in the form of personal protective equipment.
She said a key cornerstone in delivering the turnaround plan is to stabilise executive management as they will be held accountable for execution of the plan.
The turnaround plan was developed to address historical inefficiencies and build resilience in the post-pandemic world, said Van der Sandt.
Digitisation is key
She said the plan addresses the turnaround in the short term, and sets up the post office for building a sustainable business in the future with the required technological backbone to support digitisation.
“This is a plan that allows Sapo to gain traction. It will not wipe out our losses within the next year, but it will give resilience against the effect Covid-19 had and place us on the correct trajectory,” said Van der Sandt.
Ndabeni-Abrahams said besides the turnaround plan, the shareholder was also working on a plan which could not be shared at this stage.
“We are aware the post office has not been performing very well, the financial challenges they’ve gone through, the instability in terms of leadership and the money injected by government to make sure they implement the turnaround strategy.”
“These matters have come before the portfolio committee, and the board has tried to work towards a corporate strategy which was presented, including interventions in terms of the turnaround they believe would assist to change the status quo,” said Ndabeni-Abrahams.
Digitising Sapo to make sure post offices are logistics hub in driving e-commerce was also central to the plan, she said.
Ndabeni-Abrahams said while mail was not increasing revenue, it was the one segment sustaining Sapo. She said Sapo delivered more than one million parcels during the hard lockdown.
The entity is operating with an acting CEO and acting board chairperson. Earlier this month, it appointed a new CFO, filling a position that had been vacant for a while.
Ndabeni-Abrahams said the interventions are meant to provide stability at leadership level to provide oversight on executive functions and give strategic leadership.