No­tice of Post Of­fice as pri­va­tised en­tity should be in the post

The Star Early Edition - - OPINION & ANALYSIS - Rob Brine Rob Brine is man­ager, risk and ac­count­ing ser­vices at IQ Business.

CON­TRAST postnet re­sults with a fail­ing SA Post Of­fice and per­haps the calls to pri­va­tise pub­lic cor­po­ra­tions and high-level think­ing re­vealed in the medium-term bud­get pol­icy state­ment should be­come a re­al­ity – per­haps it is time for Fi­nance Min­is­ter Nh­lanhla Nene to step for­ward.

Frankly the Post Of­fice should be pri­va­tised and sold to be op­er­ated by postnet.

Mail users are left with no choice as the postal ser­vice has hardly been func­tional for the past three months. This is a case of a state-owned company that has no im­me­di­ate choices and no res­o­lu­tion for cus­tomers, staff and those most in need of the ser­vices that it is meant to pro­vide. High­level res­o­lu­tion of the con­flict be­tween mak­ing profit and pro­vid­ing a ser­vice needs com­mer­cial as well as state in­ter­ven­tion. This is a great op­por­tu­nity to un­lock the cur­rent stale­mate and re­turn the postal ser­vices to a full ser­vice or­gan­i­sa­tion and prof­itabil­ity.

De­clin­ing mail num­bers are a fac­tor fac­ing many state-owned postal ser­vice providers around the world. Th­ese com­mer­cial pres­sures are ac­cel­er­ated by labour dis­putes. Ev­ery time a strike oc­curs, mail vol­umes drop se­verely and never re­cover to their pre-strike ac­tion lev­els leav­ing lower us­age rates and fall­ing rev­enues. Many in the sec­tor are call­ing for a re­moval of the pro­tec­tion af­forded to it by the Postal Ser­vices Act.

Struc­turally, the Post Of­fice is un­able to pro­vide ba­sic ser­vices with­out sub­sidised support, which then in turn has a twofold im­pact on pri­vate op­er­a­tors.

On the one hand they are able to take ad­van­tage of the sub­sidised ser­vice while on the other hand are pre­vented from op­er­at­ing in the univer­sal ser­vice area prof- itably. This ir­ra­tional pro­tec­tion­ism both dis­favours eco­nomic ac­tiv­ity and runs counter to pri­vate and pub­lic in­ter­ests.

Con­trast the Post Of­fice with Deutsche Post, which was pri­va­tised in 1994 and is now the world’s largest lo­gis­tics company with op­er­a­tions in 220 coun­tries and gen­er­at­ing rev­enues in ex­cess of € 50 bil­lion (R691.5bn).

Step in PostNet, re­tail di­vi­sion of onelogix. If ever there was a pri­vati­sa­tion deal to be had then this must be it.

A pri­va­tised Post Of­fice model, owned and op­er­ated as a di­vi­sion of PostNet, could at­tract sub­stan­tial in­vest­ment and ben­e­fits to both pub­lic and pri­vate sec­tor as a com­mer­cially run postal company.

PostNet is con­sid­ered among the best fran­chise busi­nesses in South Africa, and this would be a com­mer­cial suc­cess fac­tor that could as­sist real em­pow­er­ment and support ru­ral in­fra­struc­ture de­vel­op­ment in the heart of ev­ery com­mu­nity.

A pri­va­tised Post Of­fice model, owned and op­er­ated as a di­vi­sion of postnet, could at­tract ben­e­fits to both the pub­lic and the pri­vate sec­tor.

The re­struc­tured Post Of­fice (as the mail di­vi­sion of PostNet) would in­herit the ex­clu­sive right to de­liver the univer­sal ser­vice obli­ga­tions and op­er­ate the postal ser­vices. Th­ese might in­clude civic ser­vices (per­mits, li­cences, du­ties and stamps), e-mail ter­mi­nals, re­mote post boxes, hy­brid mail post bank ser­vices and re­stored grant pay­ments. Many of th­ese ini­tia­tives are al­ready at an ad­vanced plan­ning stage and were ac­knowl­edged by the now dis­missed Post Of­fice board as strate­gic back in 2013.

The writ­ing was on the wall in terms of fi­nan­cial pres­sure, the then chief fi­nan­cial of­fi­cer re­ported on “sharp de­cline in rev­enues… lower mail and courier vol­umes, labour un­rest and the loss of the SA So­cial Se­cu­rity Agency grant pay­out business… tough trad­ing con­di­tions” in the 2013 In­te­grated Re­port.

Coun­ter­ing com­pet­i­tive and dis­rup­tive pres­sures faced by tra­di­tional mail as sub­sti­tute ser­vices and plat­forms have en­tered the mar­ket, re­peated labour dis­putes, de­clin­ing rev­enues, loss of mar­ket share and the re­moval of state sub­sidy would in fair­ness be con­sid­ered tough chal­lenges for any board to solve.

Some con­di­tions would need to be in place to en­sure univer­sal ser­vice obli­ga­tions (such as ru­ral ac­cess to postal ser­vices) and also to en­sure on-time and on-bud­get de­liv­ery of key strate­gic in­fra­struc­ture. Some de­trac­tors from this ar­gu­ment would say that the role of state-owned com­pa­nies in de­liv­er­ing es­sen­tial ser­vices re­volves around fixed in­fra­struc­ture.

While that may be the case in other state-owned com­pa­nies per­spec­tives it cer­tainly is not the case in terms of ad­dress­ing the Post Of­fice and the role of the Na­tional Plan­ning Com­mit­tee in both “chal­lenge and op­por­tu­nity” should not be over­looked in the pos­si­ble re­struc­tur­ing of state-owned en­ter­prises and achiev­ing a ref­er­en­dum be­tween share­hold­ers, man­age­ment, and labour, and not least in re­turn­ing ser­vice de­liv­ery and the pro­vi­sion of postal ser­vices.

The Post Of­fice’s fate has yet to be de­cided but con­sumers and de­pen­dent sec­tors such as pub­lish­ers are call­ing for the In­de­pen­dent Com­mu­ni­ca­tions Au­thor­ity of SA to can­cel their li­cence as their ser­vices no longer op­er­ate ef­fec­tively.

To abuse an old say­ing, per­haps what the min­is­ter should be say­ing is: the san­ity check is in the post!


The van­dalised ex­te­rior of the Sauer Street post of­fice in Jo­han­nes­burg seems to mir­ror the Post Of­fice’s short­com­ings.

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