Has the post office used up its nine lives?

‘The post office is slowly coming to an end, it’s just dying, and the private sector has taken over many of those functions by the post office. So I don’t think that the post office will really be able to come back strongly,’ says economist, Dawie Roodt.

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JEREMY MAGGS: Let’s start with this, and a very warm welcome, the South African Post Office (Sapo) business rescue plan has now been endorsed by creditors, following the business rescue practitioners meeting with them. However, the plan does come with substantial job cuts. We are hearing something in the region of 6000.

Read: Post Office rescue plan gets the green light

I’m going to talk now to economist Dawie Roodt on the impact and the response. Dawie, first of all, National Treasury allocating R2.4 billion to the post office, an additional R3.8 billion anticipated. How do you assess the financial feasibility and sustainability of this plan?

DAWIE ROODT: Good afternoon to you. Well, that’s what the business rescuers are telling us. They tell us that if they’re going to use this more than a R2 billion that the Minister of Finance (Enoch Godongwana) gave them already at the beginning of this year, plus an additional R3.8 billion or R3 billion that has not yet been approved by the Minister of Finance, as far as I know, and of course, the creditors approved this plan. Well, if everything goes according to plan, then I guess there’s a possibility of the post office being rescued, or a much smaller post office will be rescued. There will be much less left of the post office.

But I’m afraid there are two major issues here. First of all, the Minister of Finance needs to approve this additional request by the business rescue practitioners, and remember, the finances of the state are in very, very deep trouble as it is.

Secondly, I’m not so sure even if the post office can be rescued, that it will really survive for that much longer because as long as it’s under the control of government, then I’m afraid, like most other state-owned enterprises, they simply come to an end, and this is what’s happening to the post office. The post office is slowly coming to an end, it’s just dying, and the private sector has taken over many of those functions by the post office. So I don’t think that the post office will really be able to come back strongly. I doubt whether the post office will be able to survive really over the longer term.

JEREMY MAGGS: Dawie, unions are unhappy as well. There is a general sense that we might be throwing good money after bad money. There are concerns around governance and gatekeeping as far as these funds are concerned. It’s all a very, very risky and dangerous mix, isn’t it?

DAWIE ROODT: Without a doubt. Like I said earlier, that the state’s finances are in very deep trouble and I cannot overemphasise that. If you look at the fiscal deficit of the …. finance, if you calculate that correctly, then the fiscal deficit will probably be close to 7% of GDP and not 4.9% that the minister has indicated. We’re talking about debt levels reaching already at record high levels and continuing to go up and we are heading for financial crisis.

We simply cannot afford to spend one more cent on the state-owned enterprises.

If you look at what’s happening to the other state-owned enterprises, Transnet will need huge amounts of money. They already got an additional guarantee of R47 billion. Eskom will need even more money. We can’t just keep on throwing good money after bad. If I had this choice, the decision here, then I would’ve simply liquidated the post office. I don’t think we should try to save the post office.


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JEREMY MAGGS: So I’m wondering why then there is the fixation on saving this entity. It certainly isn’t about jobs because potentially 6000 people lose their livelihood. Is it all just about hubris and pride, do you think?

DAWIE ROODT: Ja, it is about the ideology of government. We’ve got a government that believes they should control everything. We’ve got a government that believes they can run businesses better than the private sector. But the reality is that we’ve got a government with really bad policies. We’ve got a government that is in many instances simply incompetent at running these sorts of things, and quite often we’ve got a government that’s corrupt.

So no, I think it’s got to do with ideology, and I don’t think we should try to save the post office. What is probably going to happen to the post office is exactly what has happened to South African Airways (SAA) already, and it came to an end. We’re waiting for South African Airways to enter into some sort of privatisation deal and that seems to be also going nowhere. So, no, I think the best answer here is that the taxpayer, certainly I as a taxpayer don’t want my money to be thrown after the post office.

JEREMY MAGGS: Dawie, of course, there might be some advantage in a trimmed down mechanism. For instance, you have a lot of Sassa (South African Social Security Agency) grants being paid in rural areas. For some people it does surely add some benefit to their lives, or not?

DAWIE ROODT: No, in the case of the Sassa grants, for instance, you can go to Pick and Pay, you can get your Sassa grant there, as an example. But the post office already indicated, and part of the rescue plan is that they will stop paying the Sassa grants in any event. So the Sassa grants is not a reason for that. It’s much easier, it’s much cheaper, much more efficient to get your grant at some of these retail stores in any event. So Sassa grants is not the reason for that.

But you’re right, many people will lose their jobs, which is really unfortunate, especially in an environment where the economy is just not growing. But that’s what you get if you have the mismanagement of state-owned enterprises, people eventually do lose their jobs, and that’s what’s happening today.

That is what is going to happen to Eskom as well and that’s going to happen to Transnet as well. They are, because of the mismanagement of those institutions, people are going to lose their jobs, and that’s what happens if you mismanage institutions like these.

JEREMY MAGGS: So the post office is coming back and saying it has now a shift in focus towards other revenue streams, like bulk mail, hybrid mail, motor vehicle licencing services. But again, none of that makes an enormous amount of sense from a large revenue generating perspective, does it?

DAWIE ROODT: No, it’s not going to work, and you have to start competing with the private sector. Look, for example, at the motor car licences, what I do to get a motor car licence, I’ve got somebody who delivers it to my office, for example. I don’t even go into the post office or anywhere to get a licence like this.

Many of the other things, like for example, bulk delivery of post as an example, the private sector is doing that already. I know it’s illegal in many instances for the private sector to deliver post, but the private sector is doing that in any event because the post office is simply not working. Now if the post office wants to come back and start competing with the private sector, the private sector is so far ahead I don’t think they will be able to establish a proper business after this.

JEREMY MAGGS: And there you have it, Dawie Roodt, thank you very much indeed.

Roy Walsh

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