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- Both the SA Post Office and the SABC have requested financial support from the Treasury, given the impact of Covid-19.
- The post office is at risk of collapse if it is not restructured and reused, says the Treasury.
- The Department of Communications and Digital Technologies may need to put the Post Office under administration.
South Africa’s post office is in dire need of restructuring and repurposing, or is at risk of “collapse,” according to the National Treasury.
Treasury officials briefed the Standing Committee on Appropriations on Tuesday on the first-quarter expense report. They also gave a brief description of the state-owned companies, including Eskom, Denel, SABC, and the post office, among others.
Both the SABC and the SA Post Office (SAPO) have requested additional financial support of R1.5 billion and R4.9 billion respectively, due to the impact of Covid-19. Airports Company South Africa has requested a guarantee of 3.5 billion rand for three years and has also requested a capital injection of 3.5 billion rand for 2020/21.
The chief director of supervision for the Treasury sector, Ravesh Rajlal, noted that the Post Office had not achieved its financial sustainability goals for the first quarter, as a result of the national shutdown due to the Covid-19 pandemic. A net loss of R2.1 billion is projected for the year, compared to the initial budget projected loss of R177 million.
Of the R4.9 billion requested for Covid-19 support, R2.7 billion is needed for operations, R1.4 billion is for liabilities owed to Postbank and R300 million for voluntary severance packages and the R525 million remaining are for other liabilities.
“SAPO is at a critical juncture. If the shareholders department acts to restructure and reuse the entity, SAPO will collapse,” the Treasury filing said.
“The government must decide if SAPO has a role to play as a handover arm to the government; if not, then SAPO must be drastically restructured as the entity will not be able to continue in its current form without annual government funding to cover its losses.. “
The Treasury also said that the Department of Communications and Digital Technologies has not done enough to reuse the Post Office. “The SAPO bill has not yet been approved. This bill deals with a revised mandate for SAPO and solidifies its strategic intent as a post office for citizens,” the Treasury filing reads.
The Treasury said the department may have to put the SAPO in management to restructure it.
Rajlal noted that SAPO’s management is in “disarray,” with top executive positions – COO, CFO and CEO – all positions in office. “There has been no accountability regarding the poor implementation of their strategy.”
As for SABC, the national broadcaster has R 1.7 billion remaining from the R 3.2 billion recapitalization it was allocated in 2019/20.
The SABC anticipates a revenue loss of R1.5 billion for the 2020/21 financial year due to Covid-19 and the posting costs of public service announcements. SABC has had to provide additional coverage of current events, leading to displacement of its content line and a loss of advertising revenue. It has also had to provide educational content on its platforms, according to Treasury.
SABC has requested 1.5 billion rand in financial support. It has said it would prioritize and accelerate a number of initiatives to improve revenue. This includes restructuring your sales teams, adding new revenue lines, partnerships, and moving to digital platforms to distribute your content.
According to the Treasury, the SABC also aims to recover some of the costs paid for sports rights, for events that were canceled due to Covid-19.
Treasury said the SABC will have to downsize to be sustainable and the department will have to review its mandate, which is “too broad and unclear.”
The issuer reported a preliminary loss of R489 million for the year ended March 2020. Its full annual loss is budgeted at R1.22 billion.
