South African Post Office Demands R3.8 Billion in Rescue Funds

The South African Post Office (Sapo) is pressing the government for the R3.8 billion it was promised for its business rescue plan. Deputy Minister of Communications and Digital Technologies, Mondli Gungubele, affirmed the government’s commitment to this funding, highlighting that it is essential for the Post Office’s survival.

Previous Bailouts and Current Needs

Gungubele clarified that while Sapo previously received a R2.4 billion bailout, this amount was allocated before the possibility of liquidation was considered. The funds were granted when Sapo unveiled its “Post Office of Tomorrow” strategy. However, the R2.4 billion was not intended to cover potential liquidation scenarios, and the R3.8 billion is still under discussion with the Treasury.

“The R3.8 billion is a commitment from the government that is still being finalized with Treasury,” said Gungubele. This funding is crucial for implementing the Post Office’s business rescue plan and avoiding imminent liquidation.

Urgent Financial Needs

In early September 2024, the Post Office’s business rescue practitioners (BRPs) warned that without the additional R3.8 billion, the entity could run out of money by October 2024. The risk of liquidation looms large if the necessary funds are not secured.

During a presentation before the Portfolio Committee on Communications, the BRPs outlined the critical need for these funds. The Post Office was placed into business rescue in July 2023, with Juanito Damons and Anoosh Rooplal appointed to steer the rescue efforts.

Impact on Employees and Operations

The business rescue plan has already led to significant changes within Sapo. The entity has retrenched 4,875 of its 11,083 employees. The BRPs reported that two of the three retrenchment package payouts have been processed, with the final payout scheduled for November 2024. Additionally, Sapo plans to close 366 branches, reducing its network from 1,023 to 657.

Despite these cuts, the BRPs emphasize that Sapo’s social mandate to serve all South Africans remains a priority. The restructuring plan includes focusing on providing essential services like Wi-Fi, printing, scanning, and training in rural and township areas, while not neglecting urban centers.

Union Perspective

David Mangena, general secretary of the South African Postal Workers Union, expressed hope that the Post Office could be revived if the promised funds are received. Mangena pointed out that a court order had previously mentioned the R3.8 billion allocation, making it clear that this funding was a crucial part of the rescue plan.

“We see progress in the Post Office since the BRPs took over. The Post Office can be resuscitated with the funds that were promised,” Mangena asserted.