SA Post Office, Post Bank face R7bn funding crisis as rescue practitioners prepare exit
This comes as the SAPO Business Rescue Practitioners prepare to exit the process, leaving the entity with a R1.7bn paper profit.
Image: Independent Newspapers Archives
Banele Ginidza
Uncertainty surrounds the funding of about R7 billion needed to recapitalise both the South African Post Office (SAPO) and the Post Bank after National Treasury firmly ruled itself out as an option.
This comes as the SAPO Business Rescue Practitioners prepare to exit the process, leaving the entity with a R1.7bn paper profit.
During a briefing to Parliament's Portfolio Committee on Digital Technologies and Communications on Tueaday, SAPO's Group acting CEO, Fathima Gany, expressed the urgency of the situation.
Gany said SAPO required R3.8bn to efficiently run its extensive network of 657 branches while integrating necessary digitisation capabilities.
"The magic number is R3.8bn. It could be anything else, unfortunately the fiscus doesn't have the ability to give us that and we have to appreciate that. How do we get SAPO fit for business to operate in this futuristic space that's digitalised?" Gany said.
"We don't know what the funding model will be as we go out to the market. It has to be a hybrid because if it's not a hybrid and we turn only to the fiscus and the answer is no, then its a futile discussion on how to get SAPO ready for business."
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Gany said the Post Office had settled all historical and outstanding debt through the business rescue process in a compromise that saw 12 cents to the rand paid out to the creditiors, with the remainder flushed into the profit and loss account.
She said SAPO looked like it made profits but those were none cash profits, and they were on the back of expenses while there were some creditors in dispute and immaterial amount.
Gany said SAPO was close to finalising a service-level agreement with the Post Bank in the services it delivers to it, and some of the commercial revenue streams envisaged from postal branches.
Meanwhile, Post Bank acting CEO Nikki Mbengashe said it was unclear how the bank could structure the at least R3bn required for it to serve the identified niche.
Mbengashe said one of the options was to obtain guarantees from the National Treasury to enable the bank to raise funding without necessarily diluting the shareholding.
"How much funding do we need? A lot if we really want to build branches, if we want to build digital presence. We dont have ATMs, branches and the infrastructure we need to have to provide digital capabilities," Mbengashe said.
"The minimum is R3bn. We have done that exercise, we are engaging with the board in our next meeting. We have no intention of privatising the Post Bank, but we do need funding therefore we need to find options. We have gone to the National Treasury three times and three times the National Treasury has said no."
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