More South African Collapse: SA Post Office wants a R3.4 billion bailout

[I think they might have been bailed out before. They might even have been bailed out more than once. They're a total mess. Jan]

The South African Post Office (Sapo) wants a R3.4 billion bailout from government to cover its cash flow deficit and fund the implementation of its turnaround strategy.

Sapo said it requires R1 billion of the funding before 31 March 2023 to help with its cash flow issues, while the remaining R2.4 billion will be used to implement its “Post Office of Tomorrow” strategy.

The Department of Communications and Digital Technologies’ deputy director-general of state-owned enterprise oversight, Omega Shelembe, presented Sapo’s funding requirements at a joint meeting of parliament’s finance and communication & digital technologies committees.

The R2.4 billion for Sapo’s turnaround strategy is required for its implementation during the 2023/24 financial year.

Shelembe indicated that discussions with the National Treasury suggest that Sapo will receive the funding.

“There have been ongoing engagements between the Department, National Treasury, and Sapo on the requirement for funding assistance,” he said.

“These engagements created a reasonable expectation that the funding will be availed to Sapo.”

Shelembe also gave details of Sapo’s liabilities as of 30 September 2022, which total R8.2 billion — R3.2 billion of this is owed to Postbank. The remaining R5 billion comprises Sapo’s liabilities to creditors.

“The idea here is that it is not the responsibility of government to bail out the Post Office to meet the entirety of its liabilities,” he said.

“But the Post Office should add to its revenue through the implementation of the strategy, and then utilise those revenues (sic) to settle its liabilities over a period of time.”

Shelembe explained that the Post Office is projected to transition into a profit-making entity in the third year of the strategy’s implementation.

BusinessTech reports that the “Post Office of Tomorrow” strategy involves digitising Sapo to bring it up-to-date with technological developments in the postal sector.

The entity’s CEO, Nomkhita Mona, said it could unlock Sapo’s e-commerce space, financial technology, logistics capabilities, and courier and freight potential.

However, she acknowledged that the Post Office wouldn’t meet its statutory obligations without a government bailout.

Earlier in November, Sapo informed its workers that it would be implementing large-scale job cuts at the entity in light of its weak financial position. The entity plans to cut jobs by around 40%.

Speaking to SABC News on 9 November 2022, Communication Workers Union (CWU) president, Clyde Mervin, confirmed that Sapo employees had been served with a section 189 notice on 4 November.

The notice followed meetings between Sapo management and CWU, where the state-owned entity tabled a proposal to reduce workers’ salaries.

“Prior to the 4th of November, we had a number of meetings with the Post Office. In one of the meetings, which was on the 31st of August, the Post Office then came with the proposal that it wants to cut salaries of workers,” Mervin said.

He added that the Post Office proposed that workers would work on a rotational basis of two weeks on, followed by two weeks off.

Mervin said CWU and various other unions rejected the Post Office’s proposal.

“Then we find a notice on the 4th of November that management now wants to start with retrenchment,” he added.

Mervin said CWU and other unions have several grievances over historical issues at the Post Office, including the fact that there have been no ramifications for Post Office management over the fruitless expenditure at the entity.

“I think we must also blame poor management of the Post Office. The AG (auditor-general) report recently has given a clear directive that there have been no consequences for management on fruitless expenditure at the Post Office,” he said.

“The AG found that documentation on this expenditure at the Post Office cannot be found. Today as we speak, none of them have been disciplined.”

Source: https://mybroadband.co.za/news/government/469545-sa-post-office-wants-a-r3-4-billion-bailout.html?utm_source=newsletter

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