Post Of­fice seeks R2.7bn in funds

De­spite cap­i­tal short­falls, the paras­tatal’s boss is aim­ing for a two-year turn­around, writes Xolani Mban­jwa

CityPress - - Business -

New SA Post Of­fice (Sapo) boss Mark Barnes is knock­ing on the doors of banks for R2.7 bil­lion in fund­ing to try to turn around the loss­mak­ing paras­tatal. He is un­de­terred that Fi­nance Min­is­ter Pravin Gord­han an­nounced an injection of only R650 mil­lion in cap­i­tal dur­ing his bud­get speech. Sapo had re­quested a re­cap­i­tal­i­sa­tion of just more than R3 bil­lion. “We are in dis­cus­sions with banks to raise R2.7 bil­lion, in ad­di­tion to the R650 mil­lion. That cap­i­tal would be raised against ex­ist­ing but unutilised govern­ment guar­an­tees we have. In two years’ time, we are ex­pect­ing to be trad­ing prof­itably,” said Barnes, who was pre­vi­ously an in­vest­ment banker and the for­mer head of pri­vate equity firm Brait.

Sapo has state guar­an­tees of R4.4 bil­lion, and govern­ment has helped the en­tity raise R1.3 bil­lion against the is­sued guar­an­tees to fund its op­er­a­tions and turn­around.

Barnes also con­firmed that the ail­ing state-owned en­tity will post losses of more than R1 bil­lion when it an­nounces its 2015/16 an­nual re­sults this year.

He has set his sights on bring­ing to book those iden­ti­fied by Pub­lic Pro­tec­tor Thuli Madon­sela as re­spon­si­ble for the R22 mil­lion in ir­reg­u­lar rental pay­ments made for an empty build­ing.

Barnes has been at the helm since Jan­uary 15 and has vowed that no waste­ful ex­pen­di­ture will be tol­er­ated from Sapo staff.

While Barnes ex­pects Sapo to make fur­ther losses next year, he wants to kick-start re­forms by heed­ing the rec­om­men­da­tions made by Madon­sela in her five-year in­ves­ti­ga­tion into a com­plaint, lodged in 2011, by the Com­mu­ni­ca­tion Work­ers’ Union (CWU) against Sapo.

“The Pub­lic Pro­tec­tor will get full sup­port and we will of­fer full dis­clo­sure to take ac­tion as di­rected by her. The law would have to take its course be­cause we want to put the era of waste­ful, ir­reg­u­lar and fruit­less ex­pen­di­ture be­hind us,” said Barnes.

“We will work with any other reg­u­la­tory body to do what needs to be done to get back to ba­sics. We will not en­ter­tain any im­pro­pri­eties; it won’t ever hap­pen again.”

Madon­sela re­leased her re­port, ti­tled Post­poned De­liv­ery, this week, which found a slew of ir­reg­u­lar­i­ties re­lat­ing to a R161 mil­lion lease for Sapo’s new head of­fices in Cen­tu­rion.

Barnes is adamant Sapo will not be pri­va­tised de­spite years of run-ins with work­ers, who have downed tools on count­less oc­ca­sions since 2014, as well as un­sta­ble lead­er­ship and fi­nances.

“Sapo is not dys­func­tional. It is op­er­a­tional, but we have had chal­lenges, in­clud­ing prob­lems with cred­i­tors, sup­pli­ers, labour and fi­nances. That is es­sen­tially what struck down the whole sys­tem.

“We have pos­i­tive things on our side, such as hav­ing the most reg­is­tered clien­tele. Once we have re­stored trust with all our clients and have shown what we can do for peo­ple, we will be on our feet again,” said Barnes.

He is con­vinced that if govern­ment in­cludes bank­ing ser­vices for the “un­banked”, this could turn Sapo into a thriv­ing busi­ness.

“We can of­fer bank­ing ser­vices at most of our build­ings. That ser­vice is unutilised be­cause we would have to go through a lot of reg­u­la­tory ap­proval. We could also of­fer bal­anced fi­nan­cial prod­ucts.

“We could of­fer other ser­vices, such as sav­ings and pen­sions, and could be­come a cen­tre for so­cial grants dis­tri­bu­tion and any set of fi­nan­cial trans­ac­tions,” he said.

“We have big am­bi­tions also in the e-com­merce space, where com­pa­nies like Ama­zon are only now re­al­is­ing that they have to have in­fra­struc­ture to de­liver the goods avail­able on­line. Those com­pa­nies are look­ing for the best ways to ser­vice clients and we be­lieve our bricks and mor­tar in­fra­struc­ture can of­fer a de­liv­ery ser­vice that is on time. “We have the ca­pac­ity for all th­ese of­fer­ings we are think­ing about, but we have been ham­strung by di­min­ish­ing rev­enues,” said Barnes. The fact that Sapo was re­cently un­able to pay salaries means labour costs are high.

“There is no doubt the em­ployee costs are high when you look at the per­cent­age of rev­enue. Our pre­ferred route is to im­me­di­ately in­crease rev­enue.

“We are con­tem­plat­ing start­ing a de­liv­ery ser­vice for chronic med­i­ca­tion and education ma­te­ri­als. The post of­fice could be­come a so­cioe­co­nomic cen­tre with bet­ter util­i­sa­tion.

“Th­ese of­fer­ings are not here cur­rently. We would need a tech­nol­ogy upgrade, and there is le­gal and reg­u­la­tory com­pli­ance we would need to go through. We al­ready have the in­fra­struc­ture. The case for all this is com­pelling,” said Barnes.

He is un­abashedly con­fi­dent that staff, who brought Sapo to its knees in a se­ries of strikes that left mail pil­ing up at its branches, are up to the task of help­ing the postal ser­vice be­come prof­itable again.

“The prob­lem is not with the staff. They have the en­thu­si­asm, but it has been tough. All of us are look­ing at putting in a good day’s work and get­ting back to fix­ing the ba­sics,” said Barnes.

“Get that right, in­clud­ing dis­ci­pline and sound man­age­ment, and we will be a good ex­am­ple of how to turn things around.”

The CWU said it felt vin­di­cated by Madon­sela’s find­ings and cau­tiously gave Barnes their bless­ing in turn­ing Sapo around.

Ve­laphi Zulu, the CWU’s Gaut­eng chair­per­son, said while they sup­ported Barnes’ plans to turn around Sapo, they would keep watch on whether he im­ple­mented Madon­sela’s rec­om­men­da­tions.

“We will give them time to act against those who are cor­rupt, and if they do not, we will lodge crim­i­nal cases against those in­di­vid­u­als our­selves. Barnes is an es­tab­lished in­di­vid­ual, but the cur­rent sit­u­a­tion re­gard­ing fi­nances in that com­pany may make things dif­fi­cult for him. All we want is for him to con­sult us first be­fore mak­ing any labour-re­lated de­ci­sions – just as Madon­sela has rec­om­mended – and just like he has promised,” said Zulu.

Mark Barnes

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