‘Decayed and on the point of death’
THE South African Post Office has borrowed R3.2-billion in recent weeks from local lenders on the basis of government guarantees, CEO Mark Barnes said this week.
Barnes, who stepped into the position in January this year, said the Post Office had been in a cash bind earlier this year and had needed about R900-million to pay creditors.
“We’ve got a decayed organisation on the point of death,” he said.
Barnes hoped to pay creditors by the end of this month.
“Six weeks after that, expect us to be fully functional,” he said.
The nonpayment of creditors affected the supply of basics such as paper, ink and toilet paper, he told an audience at the Gordon Institute of Business Science.
The Post Office recorded a R1.5-billion loss last year following a crippling strike in 2014 that led to it losing business to competitors such as courier companies.
The Post Office, which derives more than 60% of its revenue from mail services, received R650-million from the National Treasury in the 2016 budget tabled in February.
Barnes, chairman of Purple Group, has a deal with the government to turn the Post Office around in five years.
He aims to wean it off financial dependence on the government in three years.
This could mean the Post Office issues its own bonds, he said.
Barnes has also mooted partnering with e-commerce companies for the delivery of online purchases, establishment of a state bank, and providing unsecured loans at nominal rates through Postbank. He said Postbank had 5.4 million depositors.
Barnes said he aimed to change the Post Office’s revenue stream so that it derived about a third of its revenue from mail services, one third from financial services and the balance from ecommerce services.
“We are changing ourselves to be outward focused. We are going to our clients and recognising there are sources of income that have got nothing to do with post.”
Barnes said that about one in three Post Office workers could become redundant if the organisation failed to adapt to a new model that was less reliant on mail services for income.
Internally, he is altering reporting structures to allow for faster decisionmaking, which will improve service delivery.
“I’ve asked for the entire organogram to be redrawn from scratch . . . We are going to have an organogram that is functionally representative of the flows . . . rather than the authorities of the organisation.”
The overhaul of the Post Office also means that contracts have been reviewed.
Barnes said the Special Investigating Unit was seeking to recover money spent fraudulently on, among other things, the illegal lease of the Post Office head office in Centurion.
“We’re hoping that this [the Post Office revamp] will be a case study for state-owned entities.”
But he said SAA was “an exceptionally complex organisation” that could require a tailormade solution.
Last week, S&P Global Ratings flagged SAA as a financial drain and a risk to South Africa’s fiscal outlook because it might be “unable to obtain financing without additional government support”.