Desperate call to bail out Post Office

• Failure will be catastrophic — committee chair • Postbank spinoff will dry up revenue source

The chair of parliament’s communications & digital technologies portfolio committee, Boyce Maneli, has urged the government to allocate funds to the struggling SA Post Office, saying failure to do so could be “catastrophic” to service delivery.

Maneli said in a letter to parliament’s finance committee last week that the decision not to allocate funding to the Post Office in the medium-term budget policy statement tabled last month was “erroneous”.

The technically insolvent state-owned enterprise (SOE) has been pushing for a R1.6bn bailout to stay afloat. The Post Office is meant to be a key medium of communication, especially in rural and remote areas, but is in reality just one of a long list of SOEs reliant on constant government bailouts to keep operating.

The most recent Post Office annual report, tabled in parliament in October, said it incurred losses of at least R2.2bn (down from about R3bn the previous year) and its liabilities exceeded total assets by more than R4bn. It could not pay debts when they fell due.

The auditor-general issued a disclaimer — the worst possible audit outcome — and raised doubt about its ability to stay afloat due to crippling losses. Unions have warned of looming retrenchments at the entity, which employs about 16,000 people, with up to 40% of these jobs said to be on the line. The unions urged the government to intervene to avoid job cuts.

In his letter, Maneli said a cash injection would help soften the blow the Post Office is likely to suffer due to separating it from Postbank, a process envisioned in an amendment bill being processed by parliament. The SA Postbank Ltd Amendment Bill could see the government finally realise ANC plans to set up a state-owned bank.

But, taking Postbank from the Post Office’s control will cut it off from a crucial revenue stream. The separation is necessary for Postbank to get a full banking licence, because the Post Office is not in a sound enough financial position to meet requirements for registration as a bank

controlling company in terms of the Banks Act.

Postbank has been operating under limited conditions, such as accepting deposits and offering card-based transactional and savings accounts predominantly to the underbanked and unbanked segments of the population. Its current status precludes it from engaging in the full spread of banking activities, such as offering credit facilities.

Maneli said the success of a turnaround strategy depends on a financial injection from the National Treasury. “The further decline of [the Post Office] is likely to be catastrophic as it will hurt service delivery if funding is not urgently made available. Several … employees and poor communities are likely to be affected adversely by the rapid decline … It is therefore important to rescue this strategic entity, given its historic role, particularly in far rural areas.”

DA MP and finance spokesperson Dion George said the ANC’s real objective is to operate an unsupervised bank that will enable it to further enrich its political cronies and keep patronage networks afloat.

“The only obstacle now is funding the establishment of the bank. [But] finance minister Enoch Godongwana has stated that no funds are available,” George said.

Much money will be required to enable the new, expanded Postbank to be established, and that will require an appropriation via a money bill, which only the finance minister can introduce, he said. “Hence the request for an urgent bailout to the [Post Office] as the Postbank is separated.”

George said the DA will not support expansion of Postbank or any further bailouts.

“The Post Office can only become viable if prudent action is taken to fix the broken business model that has caused every other SOE to fail. A private sector partnership would enable the [Post Office] to become more efficient and financially viable.”