Makwetu raises alarm over bleeding Post Office

Sapo posts loss of over R900m

Auditor-general Kimi Makwetu has raised doubts on whether the SA Post Office (Sapo) will be able to return to profitability in the near future after it recorded another loss of more than R900m.

Sapo, which continues to rely on government bailouts to stay afloat along other stateowned entities such as Eskom and SA Airways, recorded a loss of R908m for the financial year to March.

Although this was a marginal improvement from the previous financial year during which it had a loss of R987m, Makwetu painted a bleak picture of Sapo’s financial situation.

Last month, Sapo took over the payment of social grants from Cash Paymaster Services. “The Post Office Group did not generate sufficient revenues to finance its high cost base. These conditions, along with other matters indicate that a material uncertainty exists on the Post Office Group and company’s ability to continue as a going concern,” Makwetu said in Sapo’s annual report which was tabled in parliament at the weekend.

This suggests that the entity will continue to be a drain on the national fiscus.

Under former president Jacob Zuma state-owned entities were plagued by poor governance and financial mismanagement. Government guarantees to state companies amount to more than R450b.

Cleaning up the companies, whose dependence on state guarantees is viewed by credit ratings agencies as among the greatest risks to SA’s economy, is one of the greatest challenges faced by President Cyril Ramaphosa since he took over power.

Sapo received a R3.7b capital injection from the Treasury in October last year which it used to pay creditors and pay down debt.

While Sapo received an unqualified audit, Makwetu found that effective and appropriate steps were not taken to prevent irregular expenditure amounting to just more than R109m. In the report Sapo chief executive Mark Barnes said the Post Office remained solvent with a healthy net asset value in excess of R3.5b as at March 31.