CONTRAST PostNet results with a failing SA Post Office and perhaps the calls to privatise public corporations and high-level thinking revealed in the medium-term budget policy statement should become a reality – perhaps it is time for Finance Minister Nhlanhla Nene to step forward.
Frankly the Post Office should be privatised and sold to be operated by PostNet.
Mail users are left with no choice as the postal service has hardly been functional for the past three months. This is a case of a state-owned company that has no immediate choices and no resolution for customers, staff and those most in need of the services that it is meant to provide. High-level resolution of the conflict between making profit and providing a service needs commercial as well as state intervention. This is a great opportunity to unlock the current stalemate and return the postal services to a full service organisation and profitability.
Declining mail numbers are a factor facing many state-owned postal service providers around the world. These commercial pressures are accelerated by labour disputes. Every time a strike occurs, mail volumes drop severely and never recover to their pre-strike action levels leaving lower usage rates and falling revenues. Many in the sector are calling for a removal of the protection afforded to it by the Postal Services Act.
Structurally, the Post Office is unable to provide basic services without subsidised support, which then in turn has a twofold impact on private operators.
On the one hand they are able to take advantage of the subsidised service while on the other hand are prevented from operating in the universal service area profitably. This irrational protectionism both disfavours economic activity and runs counter to private and public interests.
Contrast the Post Office with Deutsche Post, which was privatised in 1994 and is now the world’s largest logistics company with operations in 220 countries and generating revenues in excess of €50 billion (R691.5bn).
Step in PostNet, retail division of OneLogix. If ever there was a privatisation deal to be had then this must be it.
A privatised Post Office model, owned and operated as a division of PostNet, could attract substantial investment and benefits to both public and private sector as a commercially run postal company.
PostNet is considered among the best franchise businesses in South Africa, and this would be a commercial success factor that could assist real empowerment and support rural infrastructure development in the heart of every community.
The restructured Post Office (as the mail division of PostNet) would inherit the exclusive right to deliver the universal service obligations and operate the postal services. These might include civic services (permits, licences, duties and stamps), e-mail terminals, remote post boxes, hybrid mail post bank services and restored grant payments. Many of these initiatives are already at an advanced planning stage and were acknowledged by the now dismissed Post Office board as strategic back in 2013.
The writing was on the wall in terms of financial pressure, the then chief financial officer reported on “sharp decline in revenues… lower mail and courier volumes, labour unrest and the loss of the SA Social Security Agency grant payout business… tough trading conditions” in the 2013 Integrated Report.
Countering competitive and disruptive pressures faced by traditional mail as substitute services and platforms have entered the market, repeated labour disputes, declining revenues, loss of market share and the removal of state subsidy would in fairness be considered tough challenges for any board to solve.
Some conditions would need to be in place to ensure universal service obligations (such as rural access to postal services) and also to ensure on-time and on-budget delivery of key strategic infrastructure. Some detractors from this argument would say that the role of state-owned companies in delivering essential services revolves around fixed infrastructure.
While that may be the case in other state-owned companies perspectives it certainly is not the case in terms of addressing the Post Office and the role of the National Planning Committee in both “challenge and opportunity” should not be overlooked in the possible restructuring of state-owned enterprises and achieving a referendum between shareholders, management, and labour, and not least in returning service delivery and the provision of postal services.
The Post Office’s fate has yet to be decided but consumers and dependent sectors such as publishers are calling for the Independent Communications Authority of SA to cancel their licence as their services no longer operate effectively.
To abuse an old saying, perhaps what the minister should be saying is: the sanity check is in the post!
Rob Brine is manager, risk and accounting services at IQ Business.