Post Of­fice ex­pects to re­port an­other R1bn loss this fi­nan­cial year

Pretoria News - - BUSINESS REPORT - DI­NEO FAKU di­[email protected]

SA POST OF­FICE (Sapo) act­ing chair­per­son Colleen Makhubele yes­ter­day flagged that the en­tity was ex­pect­ing to re­port an­other R1 bil­lion loss at the end of the cur­rent fi­nan­cial year.

The an­tic­i­pated loss high­lighted the Post Of­fice’s con­tin­u­ing strug­gle to ad­dress ir­reg­u­lar con­tracts iden­ti­fied by Au­di­tor-Gen­eral Kimi Mak­wetu last year and age­ing in­fra­struc­ture amid fierce com­pe­ti­tion from courier com­pa­nies.

Makhubele said the state-owned com­pany made a net loss of R1.1bn in the 2019/20 fi­nan­cial year and an R1.17bn loss a year ear­lier.

Makhubele told jour­nal­ists in Pre­to­ria yes­ter­day that the board had put in place in­ter­ven­tions as part of a 90-day strat­egy aimed at ad­dress­ing the losses.

“We are look­ing at revenue-gen­er­at­ing ini­tia­tives, and we are look­ing at res­ig­nalling our peo­ple to be more pro­duc­tive,” Makhubele said. “All of th­ese are seek­ing to ad­dress the po­si­tion. Also, we are re­view­ing our cur­rent con­tracts, and we are see­ing a lot of sav­ings out of that. We are an­tic­i­pat­ing revenue com­ing from ini­tia­tives we have em­barked on.”

Sapo has re­ceived a to­tal of R8bn in gov­ern­ment bailouts since 2016.

Makhubele said Sapo had been los­ing money for the past decade.

She said the sus­tain­abil­ity of the busi­ness was also in ques­tion.

“For ex­am­ple, for the past four years, Sapo has recorded a net loss in the region of R1bn. Al­though we have no debt, our ex­pen­di­ture con­tin­ues to ex­ceed revenue. Our staff cost as a per­cent­age of our revenue is high, more than 70 per­cent. Our se­cu­rity costs are more than 80 per­cent of our South African So­cial Se­cu­rity Agency (Sassa) revenue, for ex­am­ple,” said Makhubele.

A new board was ap­pointed last Novem­ber to sta­bilise Sapo, re­store its cred­i­bil­ity and claw back its mar­ket share. Act­ing chief ex­ec­u­tive Ivu­mile Non­gongo said that re­trench­ments were not on the table as an op­tion to re­vive the com­pany’s for­tunes.

“If we can im­prove our revenue, there may be no need to have talks on re­trench­ments. Per­haps Sapo is in­ap­pro­pri­ately staffed. There are ar­eas where staff need reskilling,” said Non­gongo.

Sapo, which is re­spon­si­ble for the dis­tri­bu­tion of Sassa grants to 11 mil­lion ben­e­fi­cia­ries ev­ery month, said it was mak­ing in­roads in its plan to re­view costly con­tracts.

Makhubele said that Sapo since De­cem­ber had re­duced cash-in-tran­sit costs to R519 mil­lion from R800m, with an es­ti­mated cost sav­ing of more than R280m by the end of the fi­nan­cial year.

She said Sapo’s board had in­structed man­age­ment to re­view all its con­tracts to en­sure that they of­fered value for money and that the ser­vices or goods pro­cured through the con­tracts re­mained es­sen­tial.

Makhubele said Sapo was bleed­ing money as a re­sult of some con­tracts.

“Some con­tracts had re­tain­ers paid to sev­eral ser­vice providers with­out per­form­ing any du­ties and the scope not clar­i­fied,” Makhubele said.

As part of its revenue-gen­er­at­ing ini­tia­tives, Makhubele said Sapo was plan­ning to launch its e-com­merce plat­form. She said it would likely part­ner with lo­cal busi­nesses to pro­vide prod­ucts and ser­vices that will as­sist the com­pany to cre­ate value for its clients.

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