R381m reprieve for SA Post Office workers

An agreement signed by the South African Post Office and the Unemployment Insurance Fund (UIF) will inject R381 million over six months for nearly 6 000 post office workers.

The funds will be made available through the Temporary Employer-Employee Relief Scheme (Ters), which is for companies facing financial distress.

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This is part of a package of measures intended to rescue the SA Post Office (Sapo), which was placed in business rescue in 2023 owing creditors R8.7 billion. Costs were reported to exceed revenue by 200%, with employee costs alone accounting for 150% of revenue.

Sapo and the UIF have signed an agreement establishing a strategic partnership between the two entities.

“This is a bold and necessary step to protect workers and restore confidence in our public institutions,” says Employment and Labour Minister Nomakhosazana Meth.

“The Ters programme is not just a financial mechanism – it is a strategic tool to stabilise employment, support economic recovery, and ensure that no worker is left behind.”

Meth says the funding will be disbursed in monthly tranches through a dedicated Ters bank account, with strict governance, auditing, and compliance measures in place.

Sapo is required to submit regular reports, maintain transparent accounting records, and implement a detailed turnaround strategy as a condition of the funding.

Sapo today

It operates 657 functional post offices, following the closure of 366 branches in 2024 as part of branch rationalisation. An additional 235 branches were slated for closure, most of them in the Free State and North West.

About 4 800 workers, or 43% of the workforce, were retrenched in July 2023.

The closures are the result of rental arrears, declining mail demand, and efforts to cut costs. Business rescue practitioners have announced their intention to reduce Sapo’s footprint to 600 branches, potentially selling some to Postbank.

It remains to be seen this week whether the government will extend a financial lifeline to Sapo in this week’s Budget 3.0, having failed to receive any support in the previously released Medium-Term Budget Policy Statement, nor was it mentioned in the Minister of Finance’s recent budget speech of 12 March 2025.

In March 2025 it received an injection of R150 million from the Department of Communications and Digital Technologies, sufficient to keep it afloat until the end of April 2025.

Sapo needs R3.8 billion to fully implement the turnaround plan, which includes working capital, infrastructure upgrades, and dividends to certain payroll creditors. It remains uncertain when, and if, it will receive this.

Read: R12.5bn debt headache for SA Post Office business rescue practitioners [Sep 2023]

The dearth of financial support has forced the business rescue practitioners to place a freeze on capital spending such as leasehold improvement and maintenance, as well as IT and building upgrades.

The South African Post Office Amendment Bill was signed into law last year, allowing it to pursue private-public partnerships and wean itself off National Treasury funding.

Read: New bill aims to reboot the ailing SA Post Office [Dec 2024]

Like postal services worldwide, Sapo faces competition from private mail operators and courier services, and there is a steady migration to digital communications.

The Sapo of tomorrow

The revised vision for the post office aims to transform it into a hub for government and other agency services, emphasising the provision of digital services to businesses and communities.

The new bill requires Sapo to continue to provide basic postal services at an affordable price and grants it exclusive rights to courier parcels under 1kg.

The turnaround strategy faces headwinds from the Express Parcels Association, which brought legal action challenging Sapo’s exclusive rights to courier parcels under 1kg.

Business rescue practitioners say the company can be saved provided it receives the needed funds.

Meth says the latest R381 million cash injection follows a rigorous adjudication process by the Ters Single Adjudication Committee, which includes representatives from the Commission for Conciliation, Mediation and Arbitration, and the departments of Higher Education and Small Business Development.

Listen to Jimmy Moyaha’s interview with Sapo rescue practitioner Anoosh Rooplal in this SAfm Market Update with Moneyweb podcast (or read the transcript here):

You can also listen to this podcast on iono.fm here.

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