The complicated and difficult, yet labour and tech friendly future of the Post Office
Updated | By Pieter van der Merwe
The South African Post Office has failed to turn a profit for the last three years. The parastatal's financial woes first became apparent when it recorded a net profit loss of R337 million in 2013.

This was further exacerbated by a strike at the parastatal that lasted five months. By the end of the 2014/15 financial year net profit was R1, 497 billion into the negative (the billions lost to wasteful expenditure and corruption not withstanding) and the company faced a very uncertain future as competitors moved to fill the gaps. But the newly appointed Group CEO Mark Barnes has different plans for the Post Office; it includes modernising its delivery methods and resolving historic challenges with employees. But before the once proud parastatal can restore its former glory, Barnes said, the company must first regain the public's confidence.
The Post Office is still trying to clear the backlog created by the prolonged strike and hopes to do so within the next few weeks. According to Barnes the company has only been able to start paying its creditors this month after securing a cash injection. Coupled with a changing landscape of private competitors offering reliable and cheap alternatives, the task might prove too big. But Barnes, who left the banking industry for the Post Office, said he is optimistic and that the future story of SAPO is a story of growth.
The management team, after a long and honest discussion, decided on a number of strategies to turn the parastatal back into a profitable business. Firstly, the company decided to become a work place not just of workers, but for workers as well. "No casual labour anymore, a lot of the legacies in the past there were addressed," he said, adding, "We raised capital for a new forward strategy, which is a growth strategy not a containment strategy, not a retrenchment strategy."
The next step is to turn the Post Office into a functioning, profitable business. While Barnes and his team is open to modern methods of delivery, he is adamant that the company should first get the basics right. "You can order anything you like [on the internet] but someone's got to deliver it to your door... we've got the best infrastructure - it's bought and paid for - and we own the last mile in people's delivery life," he said.
But the Post Office's infrastructure has been gathering dust and that is where the hard work lies. "We want to take that back from the competitors who've been able to get into our space, because we haven't been able to deliver."
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The Post Office no longer dominates the increasingly competitive market. It will have to prove itself if it wants to keep the doors open and possibly adopt unorthodox methods. At the end of the 2014/15 financial year, shortly before Barnes was appointed, the Post Office announced its Strategic Turnaround Plan. This plan has now again been reworked and includes "three principle revenue areas." It has started modernising its mailing delivery systems, which now includes hybrid mail, and will continue to deliver traditional post, only more effectively.
The Post Office also plans to become a competitor in e-commerce, an industry growing faster than the Post Office is currently able to clear its backlog. The Post Office will be able to use its existing structures to compliment the new ventures. "We are the deliverer of anything that goes from A to B, and we've got the best installed footprint... So anything in the modern world that is capable of being delivered should be part of the post office strategy," he explained.
The Reserve Bank has recently allowed SAPO to apply for a banking licence. Postbank is set to be the embodiment of the company's financial services, which Barnes believes is at the heart of South Africa's transformation discussion. "We need to find a solution to bank in rural areas; we need to find a solution to bank the unbanked at a reasonable cost of capital, not at the sort of rates that unsecured lending are taking place at the moment," he said.
E-commerce and financial services is where Barnes believes the company will see the most growth. He added the company is open to unorthodox methods but he does not want to give away any possible business strategies.
How will the Post Office look 10 years from now?
The future of any traditional business is uncertain, but a successful business, the saying goes, has a vision. The vision of the Post Office's future is still somewhat obscured, abstract and is most likely to be subjected to constant change.
For Barnes it includes a range of services. "In 10 years' time I see us as something of a socio-economic melting point for South Africa. So you will have these modern facilities that are widespread as a logistics footprint," he prophesised. In this future South Africans will be able to get anything from chronic medication to a pension or a loan, to students downloading university documents and investors checking terminals on the stock market.
These strategies come with risks and how many mistakes the Post Office can still afford to make before it masters modern delivery systems remains to be seen. Barnes' first big review is also coming up. The 2015/16 financial results are expected to be released soon where the proof will be in the first financial figures released since Barnes' appointment. But his team has greased their elbows and are ready to get the beleaguered parastatal back on the right track. "It's not going to be a magic wand that's going to save the post office, what's going to save the post office is if every day we just do a little bit better and do some things that we didn't do right yesterday, today," he said.
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