Is the South African Post Office shutting down permanently?
Will the South African Post Office close all its branches permanently due to liquidation, or will the government provide the necessary funding to keep it running?
The South African Post Office (SAPO) requires an extra R3.8 billion to fully execute its business rescue plan. Does this mean that the Post Office will close all branches’ doors for good as it faces liquidation?
Current state of affairs
As reported by My Broadband, the South African Post Office business rescue practitioners said that unless the Post Office receives a cash injection, its reserves will run out in October 2024. It will most likely then face liquidation. This was during a presentation to the Portfolio Committee on Communications on Tuesday, 3 September 2024.
After suffering significant financial strain, SAPO appointed business rescue practitioners Anoosh Rooplal and Juanito Damons in July last year to formulate a plan in an attempt to rescue it from total downfall.
Should the state grant the SAPO an additional R3.8 billion, the South African Post Office will use it to pay off creditors. In addition, it will pay the balance of retrenchment packages for over 4 000 workers. However, it will reinject the bulk (R2 billion) into the business to recapitalise it.
Branch closures and retrenchments
Markedly, the SAPO has been underperforming for many years and Rooplal and Damons declared it officially insolvent in July 2023.
Prior to implementing a business rescue strategy, the SAPO employed 11 083 workers and operated 1 023 branches. By June 2024, the headcount had been reduced by 4 875, and 366 branches closed down, as reported by Business Tech.
“The Post Office fulfils an important social mandate intended to provide key basic communications services to all households, including the rural areas, where access to Wi-Fi, smartphones and printers are not a given.”
Anoosh Rooplal
What happens in the event of liquidation?
Should the SAPO not get the requested funding from the state, it will be placed in liquidation. The Master of the High Court will then take over the matter and appoint a liquidator.
In the event of liquidation, all current employees will lose their jobs. All business operations will cease, except those that are necessary to finalise the liquidation process. Furthermore, all assets will be sold at forced sale value and any proceeds from these sales will be divided amongst creditors.
Political parties’ opinions on the necessity of the South African Post Office
According to Tech Central, various political parties gave their opinions on whether the country needs the SAPO or not. Following are some of their comments:
DA: ‘SAPO must first sort out its delivery of parcels and mail before proceeding to offer other services.’
EFF: ‘Despite its significance, SAPO has faced severe challenges due to neglect and financial mismanagement, resulting in mounting debt and a decline in service quality. The EFF condemns the deliberate effort by the ANC to undermine public entities, potentially leading to privatisation post-collapse.’
FFP: ‘A postal service is still necessary for economic activity. SAPO is, however, bankrupt beyond the point of saving and should rather be privatised.’