Financial Mail

Turning the SA Post Office around: A not-too-distant dream

With a new team and an expanded business model, the Post Office of the future will have relevance, resilience, reliabilit­y and reach.

-

The SA Post Office (Sapo) has for many years now been regarded as yet another state entity that is unable to adapt to market changes and grow revenues.

Sapo became complacent, as a place of lifetime employment, virtually a protected monopoly in a declining industry.

It was safe- guarded from competitio­n by reg- ulation, and this hampered the necessity to remain competitiv­e in a changing market. The door was open for private sector competitor­s to come in, and they did.

However, CEO Mark Barnes, who joined the organisati­on in 2016, has a far-reaching and ambitious vision for the post office which, if realised, will lead to the organisati­on being transforme­d into a vital cog in government’s service delivery mandate with a self-sustainabl­e funding model in place.

Barnes has long held the view that the key to Sapo’s turnaround is to make it more relevant to the modern age rather than allowing it to continue to offer outdated services. Sapo has been beset by leadership and operationa­l challenges for the past decade.

A decline in traditiona­l mail volumes — in line with similar declines experience­d by the majority of postal operators across the world — has led to it steadily becoming less and less profitable as traditiona­l physical mail is replaced by electronic alternativ­es such as email.

Despite this decline, mail services have continued to account for the bulk of Sapo’s revenue streams, something which Barnes and his team realise will simply not sustain its growing cost base.

In 2011 government cut all universal service obligation (USO) subsidies to the organisati­on — Sapo is required to deliver to remote areas, regardless of commercial viability — and a protracted strike in 2014 resulted in the company losing 30% of its turnover as well as a sizeable customer base An e-commerce platform is one of the main innovative services that make up SAPO’S turnaround plan appeared to indicate Sapo’s death knell.

The situation was further worsened by mismanagem­ent and allegation­s of corruption prior to a new guard arriving to turn the situation around.

“The 2014 strike crippled the organisati­on,” says Barnes. “The bottom line is that if you’re not generating sufficient revenue, you cannot invest to grow and upgrade the business. Against a global background of postal service providers rapidly diversifyi­ng revenue streams and technology platforms, Sapo was lagging behind.”

The new world, of postal services infrastruc­ture, he adds, is all about financial services, logistics and channels for last mile delivery for e-commerce platforms, rather than traditiona­l mail delivery, which has declined globally.

In Sapo, Barnes saw what few others did: a government-owned entity which, ironically because of its public service mandate, is required to have physical representa­tion throughout the country, which gives it a unique footprint in both urban and rural areas. Sapo already had an establishe­d bank. Key to his vision for Sapo is the need to stop thinking of it as a traditiona­l post office but rather as a centre of exchange, a channel for the provision of, particular­ly, government services.

“In this context, Sapo’s primary mandate is to provide efficient services, retaining economics within the fiscus while replacing expensive, private sector dependenci­es

What it means:

 ??  ?? Mark Barnes: Taking over expensive private sector services will entrench Sapo’s position as a key government partner
Mark Barnes: Taking over expensive private sector services will entrench Sapo’s position as a key government partner

Newspapers in English

Newspapers from South Africa