SA Post Office SOC Ltd A/B: DCDT briefing, with Deputy Minister

Meeting report

Opening Remarks by Deputy Minister
Mr Phillemon Mapulane, Deputy Minister of Communications and Digital Technologies, explained the context behind the Amendment Bill. The South African postal landscape has experienced fundamental changes over the years. Introduction of digital technologies and the era of the internet have significantly altered the postal landscape. More people have moved from letter post to other forms of communication. Since the introduction of digital communication and internet, the South African Post Office (SAPO) has struggled to position itself. SAPO is currently on business rescue because of revenue loss. One of the creditors approached the court seeking the liquidation of the Post Office and the Department stepped in and placed it under business rescue. The SAPO business rescue plan was presented last year and approved by its major creditors.

The Minister and Director General are briefing the Cabinet Committee this morning to discuss the progress report and the rescue plan. Rescuing the Post Office will require a financial injection. The Amendment Bill was introduced with the intention of responding to the change in the market conditions. The plan is to build the Post Office of tomorrow.

Ms D Tshie, DCDT Director for Postal Policy Development, presented the briefing on the SAPO SOC LTD Amendment Bill which included:
- Background and Rationale
- Strategic focus
- Objectives
- Process in the finalization the Bill
- Detailed Amendments to the Act.

Discussion
Mr M Magwala ((EFF, Western Cape) asked if the Bill covers all the aspects of the Post Office expanding its mandate and services. Will South Africans ever see the Post Office go down and is the plan to be able to save the Post Office for life?

Ms W Ngwenya (ANC, Gauteng) asked why the Bill is not making it compulsory for all government and state-owned companies to use the services provided by Post Office to accelerate service delivery.

Which other countries had similar experiences as SA, where their Post Office has gone under business rescue? Have the services in the Bill been costed; if yes, what are the estimated costs?

Ms L Bebee (ANC, KZN) asked for examples of stakeholders and partnerships to fulfill the objectives of the Bill. Will the Amendment Bill have any impact on the ownership of the South African Post Office?

Mr Z Mkiva (ANC, Eastern Cape) asked for details of the business rescue plan. Who are the business rescue administrators and how will they be compensated? Will the financial injection be used in the operation of the Post Office or go to the administrators?

Mr Mkiva asked the Deputy Minister to ensure there is engagement with the leadership of the Congress of South African Trade Unions (COSATU) to avoid misunderstandings.

DCDT response
On the plan for the Post Office, the Bill is part of the interventions government is taking to repurpose the Post Office to ensure it is sustainable. The amended legislation will be a monitoring tool to ensure the Post Office implements the services it is supposed to.

In Clause 7 of the Amendment Bill, government departments and state-owned entities will utilize the Post Office for service delivery thus ensuring the Post Office gets money to function.

There are many countries facing similar challenges as South Africa who are financially strained. South Africa is part of the Universal Postal Union which is the international body under the United Nations responsible for the postal sector globally. There are 192 member countries involved and there are reports of post offices globally that are financially struggling. They do not require business rescue yet but are facing similar challenges such as providing outdated services. 

On partnerships, the Amendment Bill indicates SAPO needs to form partnerships with other service providers such as e-commerce. The Post Office should be at the centre for delivering goods we order online. SAPO will remain 100% state-owned.

The Deputy Minister said SAPO needs to reposition itself to stay relevant. In Japan the postal services have been privatized, the state has less control over the market. The United States’ postal service survived because there is strong state support. If SAPO were to be privatized, what will happen to the underserved communities and those in the rural areas? SAPO can partner with partner with private operators in the e-commerce and logistics sectors.

On the business rescue plan, the Deputy Minister suggested a meeting be scheduled to explain the business rescue after the Cabinet briefing today. The court-appointed joint business rescue practitioners are Mr Anoosh Rooplal and Mr Juanito Damons. They published the business rescue plan on 23 November 2023. On 7 December 2023 a meeting of all the creditors was held and the majority adopted the business rescue plan.
 
The Deputy Minister said the Minister has made a commitment to engage with the unions.

The cash injection funds will be used to settle creditors, to build the Post Office of tomorrow and refurbish the physical and communication infrastructure for post offices. There are ongoing conversations with National Treasury to help.

The meeting minutes of 15, 25, 29 November  and 7 December 2023 were adopted.

The Chairperson thanked everyone for their contribution to the meeting and reminded them to watch the budget speech.

The meeting was adjourned.