Post Office calls for R4.1bn to get through year

…. article dated 1 October…..

Treasury reports of poor management at SAPO….

The parlous situation at the SA Post Office (SAPO) came under the microscope during a meeting of Parliament’s Standing Committee on Appropriations, during which it emerged that lack of leadership mainly accounted for the fact that SAPO is projected to have a book loss of R2.1bn by the end of the current financial year, a loss obviously contributed to by the current pandemic.

Some R4.9bn is needed by SAPO to see the year out.

Consequently, both National Treasury and SAPO were before the Appropriations Committee to explain the call on the Minister of Finance in time for the mid-term Budget, the meeting being ahead if the SAPO presentation the following week.  Speaking a few times in the virtual meeting was the Deputy Minister of Communications of Communications and Digital Technologies, Pinky Kekana, who is also deputy secretary general of the ANC.   Minister Ndabeni Abrahams was noticeably absent.

Poor management

National Treasury’s chief director on SOE oversight, Ravesh Rajlal, told Parliament’s standing committee on appropriations that the main issue in Treasury’s opinion for the lack-lustre performance was that SAPO appeared totally unable to effect any turnaround plans with which had been provided. By such terms, one had to assume the he was referring to the previous direction given by past CEO, Mark Barnes.

Rajlal put this down to the fact that SAPO still had an acting CEO and an acting CFO.   He told parliamentarians, “There is no real permanent management team, so there really has been no accountability in terms of the poor performance of the turnaround plans.”

On leadership, MPs must have been aware, as is the public, that Minister Stella Ndabeni-Abrahams is involved in an intercine war with SAPO-demoted chairperson, Colleen Makhubele.  Matters involve tenders, personal relationships and political infighting between the two.

Past saga

Historically, SAPO has seen more than its due in problems with crippling strikes, hopelessly outdated systems and the seemingly torturous journey of state social payments being distributed for SASSA by private sector CPS under Bathabile Dhlamini, to SAPO’s main subsidiary, Postbank.

This change-over has involved the difficult  task of replacing over ten million payment cards needed for such a switchover but at the same time having to maintain regular monthly payments to folk on the breadline.  On top of this, PostBank is now dealing with a major security breach of the new card system.

Half a bank

Postbank’s board chairperson, Phumzo Noxaka,  told MPs that Postbank was still  operating with an exemption under the Bank Act, the banking licence application process for which started with the Reserve Bank in 2017 under Mark Barnes, but which was still was not complete.    MPs in question time demanded to know why the Minister appeared to have had no political will to see this matter completed.

Phumzo Noxaka continued,  “I must tell you, a lot needs to be done in terms of repositioning the Post Office, part of which is setting up PostBank properly to gain market share.  The shareholder (i.e. the Minister) needs to assist the entity in terms of its mandate and with what the Post Office is actually meant to achieve.”

Such a licence also involves motivating a Bill amending the South African Postbank Ltd Act which has been tabled in Parliament, Ms Noxaka said, which the Reserve Bank needed if forward movement was to happen.

Covid casualty

On financials, Ravesh Rajlal told the Appropriations Committee that the Post Office had been expected to register a financial loss of around R177m for the current year this being before the Covid-19 crisis had worsened the outlook dramatically, hence the current situation.

Last year, he said, the Post Office lost around R1bn.    It was his view and that of Treasury, that in reality SAPO should in fact be placed under business rescue or even be liquidated but in terms of its founding act, but the entity had to be saved to perform a national duty. He concluded that over the past 12 years, R11.6bn in support has been paid over to the Post Office.

All ship, no sail

The acting CEO of Postbank, Hannes van der Merwe, obviously trying to separate Postbank from SAPO’s overall problems, commented that “Postbank’s value proposition was not competitive without lending and without the ability to provide bank assurances.” This they could not get from SAPO.

Once again, the lack of the implementation of a planned turnaround strategy was referred to.

The crisis of the pandemic had been a wake-up call to provide the support services needed to the poorer section the community under stress.  He said that Postbank had traded itself through of the worst part of the Covid restrictions despite all the difficulties, quoting the necessity to purchase some R2m in laptops, PPE and data to equip and enable home use, and the waiving of R9m in transactions fees to assist SASSA beneficiaries over the period.


Van der Merwe told the committee that the financial position at Postbank was anticipated to decline for the next two years, based on its capacitation at present and modernisation plans hoped for in the same period and in the light of a modest recovery in the economy expected.

In terms of straight turnover, he said that there would probably be also modest growth, mainly as a result of the accounts Postbank has opened for the beneficiaries of the Covid-19 unemployment relief fund.      Over 6.3 million unemployment grant disbursements and credit transactions were undertaken by Postbank to the value of over R3.2bn.

Asking for funds

The Appropriations Committee will now set the facts before the Minister of Finance in a report expressing parliamentary viewpoints and the Post Office itself will come before Parliament the following week to set out its case.

Of interest is this 2017 article when Mark Barnes was in charge.

Barnes prepares SAPO for SASSA – ParlyReportSA (2017)


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