Lockdown is costing Post Office nearly R800m in losses - so far
The national lockdown has impeded the ability of the SA Post Office to earn revenue, with losses estimated at R798 million by the end of May.
In a briefing to Parliament's portfolio committee on communications on Thursday night, the Post Office's board and management painted a bleak picture for the already troubled entity.
According to Acting Chief Financial Officer Phehello Tsotetsi, the loss of revenue for the five weeks of the initial lockdown (late March to the end of April) amounted to R465 million. The Post Office projects a R333 million loss for May, bringing the total estimated losses to R798 million. Extrapolating the trend for the rest of the year, the Post Office estimates revenue losses of R1.9 billion for the year, said Tsotetsi.
"The bulk of revenue comes from postal services. During the first phase of lockdown, that part of revenue has been dormant," said Tsotetsi. That coupled with losses from the previous financial year had created a problem of cash shortages and a deepening loss of revenue. The Post Office also relies on foot traffic at its branches, and the lockdown has prevented this. The Post Office has submitted a request to Treasury for financial assistance to at least address the revenue losses, he added.
Board chairperson Colleen Makhubele said when the new board was appointed late last year, it had to deal with key strategic and financial risks. The firm was in financial distress and going concern issues. The Post Office's management had to address 180 findings on its reports that were flagged by the Auditor-General.
One of the issues the Post Office faced was that it was not yielding any benefits from distributing social grants. The Post Office instead was faced with carrying direct and indirect costs, while commercial banks were the ones earning revenues.
"This defeats the very purpose of the objectives of government to give the project to the Post office via Sassa so that money can circulate within government and be sustainable," said Makhubele.
The Post Office also had to deal with the issue of obsolete technology, and has lagged behind in e-commerce, which has come back to bite it with the arrival of Covid-19, Makhubele said.
DeputyMinister of Communications Pinky Kekana said the department would meet with thePost office next week as well as Post Bank to address the matter related toSASSA, and other matters related to governance to stabilise the entity.