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Post Office set for financial leg-up from proposed bill

Government wants all state entities to use Sapo

Bekezela Phakathi phakathib@businesslive.co.za

The government is proposing that all state institutions use SA Post Office (Sapo) services and infrastructure wherever possible in a bid to improve the stricken state-owned entity’s finances.

While the institutions, which include national and provincial departments and municipalities, will not necessarily be forced to provide Sapo with business, the proposal could give the struggling parastatal a leg up against private players as it battles to remain relevant and stay afloat.

The postal service is a key medium of communication, especially in rural and remote areas, and one of a long list of state-owned entities that rely on government bailouts to keep operating. Sapo has accumulated financial losses for the past 16 years — it last reported a profit in 2006 — that together with management problems have brought it to the brink of collapse. Sapo is currently pushing for a R1.6bn government bailout.

According to the South African Post Office SOC Ltd Amendment Bill, which was gazetted for public comment on Wednesday, the government also wants Sapo to play a more central role in providing financial services across the country, including money transfers and remittances, cash on delivery services, payment and prepaid services, and ticket sales.

The gazette notes that Sapo’s business model and legislated mandate are no longer financially sustainable since it is overly reliant on the mail business that has largely become redundant since the advent of digital alternatives.

Sapo’s current mandate is limited to traditional postal services such as written mail, postcards, printed matters, small parcels, courier services, provision of postbox and street addresses and the issuing of postage stamps. “Most of the above services have drastically declined if not become altogether redundant and replaced by the emergence of technologies,” says the gazette.

The intention with the proposed amendments is to widen Sapo’s mandate to include value added services in line with current technology and global trends.

“The revised duties will ensure that the Post Office expand on its business offerings to create more revenue generating streams and encourage the efficient and effective utilisation of the Post Office infrastructure ... to assist in eliminating overreliance on government funding,” the gazette says.

The amendment bill proposes that the definition of financial services is included in the act to ensure that Sapo is enabled to provide them, in addition to those by Postbank.

In the gazette, the department of communications says Sapo is still the most accessible infrastructure that many people, especially in rural and underserviced communities, use for their postal and related needs.

“Private operators mostly operate in the affluent areas and cherry pick where they could make profit as there is no obligation imposed on them,” the department says. “Their services are not accessible to many, especially those in the rural and other communities since they still need to travel to town to access the services which becomes even more expensive,” the department said.

The department emphasised that the objective of the proposed amendments is to ensure that besides basic postal services Sapo is empowered to provide other value-added services to generate additional revenue and to position itself as a facilitator in the provision of government services.

Allowing a fee-based utilisation of Sapo infrastructure by government departments will help offset losses and reduce the need for government financing, the department added.

“In this regard, Sapo should be seen as an extension arm of the government and as such should be considered the preferred supplier of certain services, especially in the rural areas,” according to the gazette.

Interested parties have 30 days to comment from the date of publication of the gazette.

PRIVATE OPERATORS MOSTLY OPERATE IN AFFLUENT AREAS AND CHERRY PICK WHERE TO MAKE PROFIT AS THERE IS NO OBLIGATION ON THEM

NATIONAL

en-za

2022-04-22T07:00:00.0000000Z

2022-04-22T07:00:00.0000000Z

https://bd.pressreader.com/article/281595244085855

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