South Africa’s Post Office disaster – 400 branches shut down as another state company tanks

The South African Post Office’s (SAPO) liabilities exceed its assets by a country mile, forcing it to close 80 more post offices nationwide this year, bringing the total closures to almost 400 since 2020.

The SAPO was placed under business rescue by the court order of 10 July 2023, which nullified
the provisional liquidation order set against it.

Last week, however, the SAPO Business Rescue Practitioners (BRPs), Anoosh Rooplal and Juanito Damons, revealed that SAPO’s liabilities had reached R12.5 billion.

With only R4.5 billion in assets, the Post Office is technically insolvent with negative equity of R7.9 billion – meaning it is hopelessly insolvent and will need tremendous assistance to survive.

The Post Office has blamed several factors for its dire position, including its customers’ migration to digital alternatives and non-payment from suppliers, who have stopped providing services.

As a result of the growing concern around the SAPO’s financial position, the Minister of Communications and Digital Technologies, Mondli Gungubele, was asked during a parliamentary Q&A for the total number of post offices have had to shut their doors since the day the court placed the SAPO under business rescue.

In response, Gungubele noted that 80 branches have been closed from 1 June 2023 to date. However, in an earlier Q&A from July, Gungubele further revealed that 316 branches had been closed since 2020 – bringing the total number of closures to 396.

Before the Covid-19 pandemic, there were roughly 1,300 Post Office branches nationwide. This means that close to a third of all post office branches in the country have now shut down in just a few years.

22 branches were officially closed during the 2020/21 financial year. In addition, two branches were closed due to landlords’ forced closures because of rental arrears, he said.

He added that 146 branches were officially closed during the 2021/22 financial year, while a total of 122 branches were closed during the 2022/23 financial year – with 58 branches as part of amalgamations/optimisation of the branch network.

A total of 104 branches have been closed since 1 April 2023, including those that were shut down from 1 June 2023 to date.

The SAPO has been consistently losing taxpayer money for several years, leading to job cuts and branch closures.

The SAPO has historically been bailed out with billions of rands. According to communications minister Mondli Gungubele, the public postal service received R7.3 billion rand between 2016 and 2019 – which effectively did nothing to turn the embattled SAPO around.

Furthermore, SAPO’s business rescue proceedings are now set to put a further 7,000 jobs at risk as the embattled state-owned entity plans to save R1.3 billion in annual salaries.

No Post Office executives in South Africa have been penalised for their use of funds intended for the state-owned enterprise’s recovery initiative.

“No one was brought to book for the non-investment of monies to implement a turnaround as the usage was linked to the cashflow situation,” said Gungubele.

“The funds were utilised for operating activities, repayment of terms loans and creditors as the severity of the cashflow situation at SAPO intensified. They kept maintaining operations under difficult financial challenges and accumulated debts in the process,” the minister said.

Despite this, the government is adamant that the SAPO is an essential service that provides vital services throughout the country, especially in remote areas where the SAPO is often the main link between people in South Africa.

“It uses its countrywide footprint to render such services as the distribution of social grants at its branches, distribution of the medication to those in need, various national and international postal services,” said Enoch Godongwana, the former acting minister of communications and digital technologies.

As a result, the government budgeted a R2.4 billion bailout for SAPO and has pledged an additional R3.8 billion.

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