Increased risks of cyberattacks, limited skills among Sapo’s challenges

The South African Post Office (Sapo) has a plan in place to turn its business around by 2029. However, several hurdles remain that it must overcome to reach its goals.

In 2023, the state-owned enterprise entered business rescue with R8.7 billion in outstanding debt to creditors.

It requested a R3 billion bailout at the end of 2024 to avoid liquidation, but National Treasury decided against the move.

ALSO READ: Post Office rescue plan is working, but more money is needed

For the financial year 2024-25, Business Rescue Practitioners (BRP) managed to pay creditors R1 billion.

On Tuesday, Sapo presented its corporate plan to the Portfolio Committee on Communications and Digital Technologies, outlining its strategy for turning things around over the next five years.

Sapo’s corporate plan

Acting CEO Fatima Gani stated that the entity is exploring the formation of partnerships with e-commerce platforms and small to medium-sized enterprises (SMEs) to unlock new revenue streams.

Public-private partnerships would also help modernise Sapo infrastructure without requiring full privatisation, she said.

The Sapo hopes to reach the R5 billion mark in revenue; however, this can only be achieved with the help of investments.

ALSO READ: Union fights liquidation of Sapo while govt says it cannot bail it out

“If we had to achieve this revenue stream, there needs to be an investment, whether it’s through a partnership, capital injection, equity injection, or raising funds on our own. We need those investments to make Sapo fit for business, to achieve a diversified revenue stream,” said Gani.

“We are forecasting to be breaking even around 2027–2028, which means working capital stress that we feel, and we keep on coming back to the government to say please help us fund this organisation, will fall away as we are on our investments from our diversified revenue stream.”

Market threats

Among other threats, Sapo will have to outplay increasing competition from more agile and technologically advanced private sector operators amid a decline in demand for traditional postal services.

It will have to find growth amid weak economic conditions and increasing business costs, which will negatively impact Sapo’s operational costs.

There is also a threat of an increase in cyberattacks, which have recently targeted the public sector. Security costs are expected to increase by 6% per annum due to network expansion over the next five years.

ALSO READ: Ramaphosa signs Post Office Bill into law

“This one keeps me awake at night, as it is relevant, and we have seen it happening in the public and private sectors. Unfortunately, if the very clever people put their minds into something positive, we would be ahead of this, but these very clever people join the dark side of the world,” said Gani.

“They are always a step ahead. How do you stay on top of cyberattacks? As a national asset, we hold critical information regarding citizens, including their personal information, residences, and addresses. This is something that keeps me awake at night.”

Escalating operational costs, including employee wages, transport, and security services, exacerbate Sapo’s financial distress.

Employee salaries

Last month, Sapo and the Unemployment Insurance Fund (UIF) reached an agreement to fund employee salaries for the last half of the year.

The Ters scheme will inject R381 million to assist 5 956 employees.

Gani lamented that the Sapo’s slow pace to embrace digital transformation has limited its ability to compete effectively with the private sector.

This is in addition to the limited skills to transform and modernise the entity

“We have multiple vacancies from a leadership perspective. We have limited skills internally.”

The Sapo aims to move from a loss of R1.03 billion in 2025 to a net profit of R1.48 billion in 2029.

READ NEXT: More millions to save jobs at SA Post Office