SA Post Office Turnaround Plan and SASSA Cash Payments; with Minister

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Communications and Digital Technologies

13 October 2020
Chairperson: Mr B Maneli (ANC)
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Meeting Summary

Video: PC on Communications, (NA) 13 Oct 2020

The Committee convened on a virtual platform to be briefed by the South African Post Office on its turnaround strategy. The Minister gave input on the role that the team which has joined the Post Office has played.

The Minister introduced a background of issues that the Post Office has faced, including the instability on leadership and financial difficulties and the entity’s chairperson elaborated on these and spoke on the allegations in the media such as the alleged R2 billion tender. The acting group CEO then presented the detailed turnaround strategy to the Committee while emphasising on its short-term effects and its prime focus on the modernisation and digitisation of the Post Office to align it with the modern technological age. The turnaround strategy focused mainly on revenue growth and the programme plans that are crucial for achieving the overall plans as well as the continued need for oversight.

For revenue growth – given that the Post Office does not have capital at the moment – the Department will be looking into forming partnerships where the entity is not required to outlay upfront investment or funding. The property portfolio is where SAPO has most potential to gain revenue, the value of entity’s properties is at R2.8 billion; it also has 641 company-owned and 1 120 leased buildings. These range from turnaround funding (which is the stage it is currently in) to improve financial stability and acquire R1.6 billion and SASSA prefunding to organising the workforce which will reduce staff costs by R211 million per annum, property asset optimisation as mentioned already, organisational restructuring and stakeholder engagement.

The Committee raised concerns which include how there have been many turnaround plans by the Post Office for the past six years or so which do not differ much; the need to work on the low staff morale beyond the mere filling in of positions and other operational issues.

Members remarked that in this time of increased focus on corruption and state capture, it is time for the Minister and Department to conduct themselves in a manner that is upright. But instead the media on nepotism and stories of boardroom battles, preference in tenderpreneurs, desperately low staff morale.

Members also asked about the COVID-19 challenges faced by Post Office. When the entity was working with whatever they needed to assist the public, did they manage to do whatever needs to be done on issue of procurement?

The Minister responded to the corruption allegations floating around in the media by saying it is procedure to have a turnaround plan every time government coughs up money, they are expected to outline how this money will help Post Office that time around. With regards to allegations, she reiterated the fact that she has no control over what the media publishes and the board of Post Office was here to clarify allegations as best as they can. The Minister engages with concerns as far as her team’s oversight is responsible but leaves the rest of the operational issues to the board. She affirms that it is in their interest as guided by the government party to make sure that they rid government of corrupt activities. They have gone to an extent of asking such evidence be reported because corruption destroys the moral fibre of society.

The board responds to the remaining concerns and reaffirms that Ms Lindiwe Kwele’s suspension was ruled substantially fair but procedurally unfair by the arbitrator.
 
The news in the media about the South Africa Social Security Agency (SASSA) payments and SAPO needing funding from Postbank is partly true in that, to ensure that there is money to pay out grants by 08:00am, Post Office needs the funding five days prior since the payment from the treasury is not upfront and then this money goes back to Postbank as they hold an interdependent relationship. There has been a fraud case opened on the Blue Label matter.
 

Meeting report


Opening Remarks by the Chairperson
The Chairperson opened the virtual meeting, welcoming the Committee Members, Minister and Deputy Minister, as well as the South Africa Post Office delegation. He stated that given the fact that the Members have heard the initial and updated presentation, the allocation of time for the upcoming discussion is to be divided as follows: forty-five minutes between the Minister and the South African Post Office (SAPO); the remaining two hours and fifteen minutes will be for the actual engagement of the Committee.

The Minister speaks on the Department’s role in the SAPO intervention
Ms Stella Ndabeni-Abrahams, Minister of Communications, first thanked the Committee for affording her an opportunity to join the South African Post Office (SAPO), which is an entity reporting to the Department of Communications and Digital Technologies. The team, as represented by the board, led by the Director-General, will get into the specifics of the work that they are about to represent. In relation to the subject matter that SAPO will be presenting to Portfolio Committee, there are a few issues she wishes to highlight. The Department is aware that Post Office has not been performing very well; the entity has had financial difficulties and leadership instability and the money that has been injected by government in ensuring the implementation of the turnaround strategy. These matters have come before the Committee and the board has tried to work on a corporate strategy which was presented, including the intervention of the turnaround which they had believed would assist in changing the status-quo. Last year, as part of the re-configuration of the Portfolio (which she is responsible for), there was a big announcement made which is what has been tabled in the budget bill, which is that that the Department will be re-configuring entities that must be responsive to the Department’s mandate and they made mention of the separation of the Post Office and Postbank. It also spoke on the issue of making sure that the digitisation of Post Office is done to make them the logistic hub in driving the economy.

In March 2020, before the national lockdown, she issued ministerial directives that SAPO will be responsible for certain aspects needed to be handled in respect to COVID-19 and essential services. The Post Office did well during this period; more than one million parcels were delivered by Post Office and positive responses were received from those who relied on the services of Post Office during this difficult time. Mail has actually been the one that sustained Post Office more than the courier and other services. What needs to be done now is to look into the areas that can be improved and acknowledge services that customers are not happy about in their complaints. This also highlights the duty that Department team has is to instill a culture of excellence and make sure trust and confidence is regained and there is efficiency of services provided. As the Department plays its oversight role, it will look into these different areas of growth. Key projects that are an intervention and not just the core business of Post Office are also what they look into. In doing this, the entity asks itself how to address challenges and attend to the tasks given to it. The Chairperson of SAPO and management attending will be speaking to these.

Lastly, she spoke to the issues that have also been in the public domain – including the removal of the then acting CEO, Mr Nongogo, by the Board. The Board has since then written a letter to the Minister to request that the Department appoint the acting CEO; Ms Reneilwe Langa was appointed. The Department also filled the position of the Chief Financial Officer which had been vacant for too long as they were trying to stabilise the Post Office. Many vacancies have been filled, like that of Chairperson and Deputy Chairperson.

The Minister handed over to the Chairperson and Board who will update the Committee on the matters that have been reported in the media and tender allegations.

SAPO Board and Chairperson present on identified issues and the execution of the turnaround strategy
The Board wishes to give context. The world was in lockdown and South Africa was not immune to the impact on the economy. Most economic activities were halted; the same way most businesses suffered, so did SAPO. The pandemic has devastated the financial position of SAPO; estimations were that major economies will lose at least 2.4 % of their GDP. SAPO saw this during their quarter one revenue numbers when they could not even cover their salary bill. They are seeing a slow recovery of revenue but they still have not reached pre-COVID numbers. Amidst all of this SAPO has also seen an influx of negative media articles in the past couple of weeks; these are from disgruntled people and media houses have failed to publish SAPO’s responses in entirety and, in some cases, do not even give SAPO opportunity to respond. Some of these articles are written with the sole intention of creating a crisis through panic which could have created a disaster for SAPO should those beneficiaries chosen to storm into offices.

With reference to the R2 billion tender allegations that the Minister referred to, the Board wishes to confirm to the Committee know that it did not approve of the tender. A tender of such value has not been put in front of the Board for approval. The key cornerstone of the turnaround plan is to stabilise the executive management who will be held accountable for its execution. Some feedback on some other matters:
- The Chief Operations Officer, Ms Lindiwe Kwele, has been suspended following the whistleblower report. She has decided to take the matter to arbitration and the outcome of this process is two-fold. SAPO was substantially far in suspending her and that the Board was well within its rights to suspend her on the basis of the whistleblower report. Second, it was found that the Board was procedurally unfair; when Ms Kwele was suspended she was given 48-hour notice to indicate why she should not be suspended. The then Chairperson did not allow the full 48 hours awarded to Ms Kwele before announcing the appointment of the then acting CEO, Mr Nongogo.
- The filling of the group CEO position is at an advanced stage with interviews and the results will be presented to the Board on the evening of this meeting for approval.

The turnaround plan was designed to respond to inefficiencies and build resilience in the post COVID world. The Department is aware that this plan addresses a turnaround in the short term. However, it sets SAPO up for building resilience and setting the trajectory.

Acting Group CEO, Ms Tia van der Sandt, presented the turnaround strategy. By way of introduction, she reiterated what the objective of the plan is – to restabilise the entity. The Board has acknowledged that SAPO does need a longer turnaround plan which they will be working on to make sure that when they work on the corporate plan for the next financial year; they can incorporate the strategies elements into it. The key focus is on revenue generation, cost production and financial stabilisation. The financial challenges that SAPO experienced in the then presentation presented to the Committee last month remain the same. Due to the lockdown regulation, the performance of SAPO deteriorated and this current turnaround plan is basically a recovery plan that will assist SAPO while they work on the longer plan. For context, the issues that have been highlighted such as cash flow and financial challenges – those are still challenges currently and SAPO was not able to honor statutory payments due to this. Also due to the cash flow, SAPO was not in a position to honor its agreements with labour. She did not speak further on the issues already highlighted by the Chairperson.

The strategic objectives which are crucial for achieving the turnaround outcomes include:
- Acquiring funding so that all key initiatives are fully resourced;
- Reduce fixed costs comprehensively and finally;
- Eliminate organisational duplications and inefficiencies;
- Providing business opportunities to existing employees affected by cost reduction initiatives;
- Increasing revenue growth and diversification by launching new products, services, and solutions through strategic partnerships;
- Improving the customer experience by responding to the real needs of customers;
- Rebuilding the brand to be trusted in the marketplace;
- Total employee engagement at all levels;

In transitioning SAPO’s Business Model, the entity will be looking into, mainly, digital modernisation amongst others:
- Modernising the traditional Post Office and Relevance to be in line with the current age of technology
- An Omni-channel (EAP) platform is currently in procurement and planned launch later this year.
- The Post Office is currently in the process to launch its e-Mall platform to the market.
- Monetise the large amounts of data that exist within the organisation, to mine existing data in compliance to privacy laws;

Under the infrastructure collaboration model:
- Launch an owner-managed branch model
- An owner-driver model to provide distribution services to the organisation and the market; reduction in operating costs.

Logistics Business Recapitalisation:
- Establish strategic partnerships with willing investors to recapitalise and revive the organisation’s courier and logistics business segment.
- Consolidation of the Docex subsidiary as well as the Courier and Freight segments of the business. Scale up the Logistics business capability

Delivery on Demand:
- Implement a delivery platform as an aggregator for owners of vehicles (Trucks, light commercial vehicles, and sedans) to undertake deliveries on demand. Greater delivery access and speed for customers;

Cash Pay Point Model:
- The social beneficiary payments at physical pay points are a significantly demanding operation.
- The SA Post Office is exploring partnering with industry experts to alleviate operational demands facing the organisation currently.

Government Business:
- The Post Office has the largest footprint in the South Africa that provides greater access to all citizens.
- Use the Intergovernmental Relations Framework Act (No. 13 of 2005) instead of the normal tender process. The Post Office commits to rendering an efficient service that will meet the expectations of citizens.

With regards to the partial exemption from PFMA prescripts, what they are looking at is how they can improve their procurement processes:
- Increasingly competitive environment requires organisational agility to ensure financial sustainability.
- Consider Revenue Share Partnerships to bring digital solutions and investments into the organisation
- Exemption from certain clauses of the Public Management Finance Act (No. 29 of 1999) to reduce the reliance on public funding by the entity.

The envisaged potential benefits that the execution of the turnaround plan will come with included reduced operation costs due to the infrastructure collaboration model, optimised property portfolio, mail processing optimisation, institutional intelligence through the digital capabilities and reserved market oversight; employee wellness and skills development as well as an improved brand and customer experience coupled with environment sustainability. The Total Baseline revenues forecasted for this year until March 2021 are R3.3 billion and comprise of Baseline revenue at about R3.194 billion and revenue recovery of R170 million, with R30 million motor vehicle licence, textbook distribution at R20 million and other medium-term things that can be done.

For revenue growth – given that SAPO does not have capital at the moment – the Department will be looking into forming partnerships where SAPO is not required to outlay upfront investment or funding. There are also a number of revenue opportunities available to SAPO such as selling property or leasing property. Property Portfolio is where SAPO has most potential to gain revenue, the value of SAPO owner properties is at R2.8 billion; it also has 641 company owned and 1 120 leased buildings. The programmes of work show the actual different initiatives of how the turnaround plan will be carried out. These range from turnaround funding (which is the stage they are currently in) to improve financial stability and acquire R1.6 billion and SASSA prefunding to organising the workforce which will reduce staff costs by R211 million per annum, property asset optimisation as mentioned already, organisational restructuring and stakeholder engagement. The implementation of this turnaround program is underpinned by the following critical success factors:

- Adequate funding to be made available to settle historical liabilities and fund the operations whilst the initiatives are being implemented;
- Funding to support the revenue projects, cost optimisation and capital projects;
- Secure consistent and timeous prefunding and approval for the SASSA grant cash distribution;
- Programme committees and management have the requisite delegation of authority to execute the portfolio of projects contained within the programme;
- Programmes will be adequately resourced with the skillsets, staff and other tools deemed essential to executing the programme;
- The market situation will not deteriorate beyond the current economic situation.
- There is sufficient stakeholder support to successful implement this turnaround program.
- The statements of work submitted by divisional executives have been sufficiently assessed and planned, in conjunction divisional management teams, to produce the anticipated benefits articulated in this plan.
- Procurement streamlining to provide sufficient visibility of the prioritised initiatives and mobilise a special procurement team to fast track the approvals of these specific initiatives, without compromising on the financial soundness of the initiative business cases.
- An effective organisational change management program to mobilise employees for implementation

On issues of strengthening the leadership, the new executive vacancies filled will go a long way and achieve some stability. There will be members that have committees that will provide oversight and ensure the carrying out of these programs.

Touching on SASSA payments, in terms of the presentation with SASSA, they are reflecting on the payment and report up to the end of August because the September report is not yet available. In terms of where SAPO is responsible, the statistics of what was paid through the Postbank, IGPS and Mzansi show a growth overall in what was paid through the different channels. Using a breakdown of provinces, 219 631 beneficiaries were paid at Cash Pay Points up to the period end of August, there are 1 634 Cash Pay Points on 769 routes. During July, SAPO continued to pay out Covid19 SRD payments, a total of 3 284 166 beneficiary accounts were active and operational. The challenges that SAPO has faced include damages done by burglary, hardware failure, network connectivity and armed robberies. The existing collaboration with SITA will also help SAPO with price gains and cost reduction.

Discussion
Ms P Faku (ANC) reckoned that the presentation gives the Committee a chance to reflect on what it has heard in the media. The acting chairperson of the board has answered to the allegations adequately. She hopes that the new board understands the mandate that is on its shoulders. It is very important to engage employees so that the employees know what the board is seeking to achieve.

She wishes to congratulate SAPO on the cashless pay points that reduce the lines at the post offices but asked who is responsible for these pay points. She also has a question on the motor vehicle revenues: can SAPO please consider doing this online and partnership with home affairs in this? On the issue of armed robberies that have been happening at SAPO, she hears that some staff members are involved in this and wishes to get some clarity on their involvement.

Mr C Mackenzie (DA) said that in this time of increased focus on corruption and state capture, it is time for the Minister and Department to conduct themselves in a manner that is upright. But instead the media on nepotism and stories of boardroom battles, preference in tenderpreneurs, desperately low staff morale. The SAPO is in shambles and it is in the Minister’s watch. Mr Mackenzie does not quite understand how the Minister can talk about a culture of excellence or stability at leadership level, when he is the one that caused this with the Department’s intervention at SAPO; SAPO was on track. There is not even a track or trace system in South Africa; customers can never access where their parcels are and the helpline numbers are not answers. There is no customer service at SAPO. When is another strategic plan being presented? There have been so many presented in the last six years and there is always only one thing that is different – the driver partnership. The chaos that is SAPO at the moment is the Minister’s fault.

He asked where Ms Lindiwe Kwele is. Is she back at work, currently being paid or has she been suspended again? He said that he was told that Postbank would remain in the Post Office group and now she has said something entirely different. Most postal operations worldwide make these two one entity and he has no idea why they are removing the Postbank from the Post Office entity without taking the consequences into account; the acting CEO has spoken about this briefly.

The Minister should have answered on these before taking that decision the timeline is also important. If the Postbank is to be separated, how will the Minister stop the Post Office from being liquidated if she removes the Postbank ownership from its balance sheet? The SAPO is then bankrupt if this is done, according to laws and regulations, the SAPO cannot keep running as an organisation.

Mr Mackenzie asked if SARB has approved the notion of a government department being the Postbank’s controlling company. He pointed out that the e-commerce initiative has been running for almost three years and asked how close Post Office is to finally delivering this Holy Grail.

When SAPO refers to running out of man, the assumption is that this involves cash at branches. Is there also any truth to the SAPO borrowing R100 billion from Postbank? He wishes to get some truth and clarification on this as well as the tender allegations and updates on cash solution contracts in light of the court judgment.

From Mr. Mackenzie’s understanding, the concept of prefunding SASSA grants is about making cash available at branches and if this is the case, he wishes to know how this will come to fruition and the roles that will be played to ensure this. There was a letter he sent to the Department to find out whether there was indeed a contract between this Blue Label Company and Post Office but he was told no and the name of this company keeps popping up in relation to Postbank; he wants to know what their involvement is – whether the Post Office systems are handled in-house or if they have an external company, who are they and what sort of service-level agreement is in place.

Lastly, does South Africa remain on the United States listed UPS countries or not? How are things looking in terms of the mail backlog?

Mr L Molala (ANC) has many questions but it is hard to direct these to newly appointed people. The Minister has indicated the areas that SAPO is not doing well in – mail being one component that sustains the Post Office but the report presented says something else and he wishes to get some clarification.

He also wants to know about the higher fixed costs and how SAPO is indicating how they are lowering them but they are not speaking on operation costs in terms of staff; the two issues are related and he needs to know what this will mean for operation costs in relation to staff. COSATU is on strike but the presentation says they are engaging on this issue of the collective agreement. Is the union involved in the strike while simultaneously negotiating?

With regards to what they are not choosing to call a bail out, they need a separate plan which can hold SAPO accountable in future. The Minister spoke about stabilising the executive management, so many things happen in SAPO such as leakage of information, what needs to be attended to are the causes of this instability beyond just appointing new people all the time.

Mr T Gumbu (ANC) asked if SAPO sees itself as an organisation that will be able to pay salaries to staff members in the near future because of their financial situation. Secondly, he noted that the delegation was speaking of very low staff morale; he wants to know what the main causes of this are and what the plans to improve this situation are. They are also saying that the filling in of the position of the CEO is in its final stages and he wants to know an exact time as to when they are going to conclude this process because this position is very critical. In the presentation, the entity revealed that it has 641 company owner buildings. Are these buildings used by SAPO branches or rented out to different tenants? Lastly, are the burglaries happening where there are no security personnel?

Ms N Kubheka (ANC) first asked about the COVID-19 challenges faced by SAPO. When the entity was working with whatever they needed to assist the public, did they manage to do whatever needs to be done on issue of procurement? The Minister has clarified on the instability that indeed exists within SAPO, but it seems as if they are trying to attend to these matters. On the executive side of things, there seems to be some progress but without an executive, nothing can run efficiently.

On the side of security, she asked who is responsible for security when there is a payment grant and whether there is any plan that is being made on this crisis of burglaries. She is also happy when the acting chair clarifies on the tender allegation.

On the side of connectivity, Ms Kubheka recognised that SAPO seems to be doing its level best. She also asked if Ms Lindiwe Kwele is still suspended or back at work. On the side of the portfolio, she wanted to know if there is anything that can boost the SAPO revenue in this.

Responses
The Minister started by indicating that the Board would respond to the questions raised by Ms Faku because they relate to work on the operational level and not oversight.

She responded to Mr. Mackenzie’s statement, saying that the last time these matters were raised; she did say she was working on updates and would come back and give an account. With regards to the issues on the media, the issue on the removal of the then chairperson of the Post Office which is a matter that is at court and she cannot get into the details right now.

Next are the allegations of corruption which Mr Mackenzie got into, including asking for some documentation or responses to that. As she has already said in all the platforms that she has been engaging in, all the eleven portfolio organisations that report to the Department were given the same message that she will be giving right now - that it is in their interest as guided by the government party to make sure that they rid government of corrupt activities. They have gone to an extent of asking such evidence be reported. Corruption destroys the moral fibre of society and deprives our people of quality services and opportunities they could get. Unfortunately, she is not responsible for what happens in media. She does not analyse media; all instances that Mr Mackenzie makes mention of, the Minister has brought Post Office to respond to these very matters.

SAPO is indeed running out of cash for a number of years now; government has put about R8 billion rand into SAPO and that is why there are this number of turnaround plans to outline how they plan to change that which did not work for them previously. Those that are responsible then come up with these strategies, whether they are being executed is another question. The board will answer to questions of where the money has been going.

Contrary to what Mr Mackenzie said, SAPO has been running out of money for a number of years, even during Mark Barnes’ time. This is what the board chairperson has authority to speak on. What happened to the previous plans is a question of why the implementation did not work; it is not that there was no attempt at all. This is why they felt the need to stabilise the executive that will drive this.

The board will also respond on Ms Kwele’s matter. The reserve bank has approved the separation the entities and that is why the money bill was amended in Parliament. She does not make these decisions herself; she did not choose to remove Postbank. They are doing everything to make sure Post Office does not get liquidated and those strategies have been detailed. They are also working on a commercial organisation and they will brief the Committee. The move to separate the Postbank from the SAPO arises from resolutions of governing parties; it is a process.

On the e-commerce platform, Post Office will respond to this.

Last clarification, at no stage was Dr Nxaba brought forward into any procurement processes or any other procurement process; they are very clear of what is expected of them. Pre-funding concern will also go to operational answers.

With regards to the Blue Label company allegation, even SAPO cannot answer to what the media is putting out but she wishes for Mr Mackenzie to bring the contract that he says he is aware of, forward.

Mr Mackenzie said that this is not what he said; he just asked for clarification as to why their name is constantly popping up in media and what their involvement with the Post Office or Postbank is.

The Minister thanked Mr Mackenzie for this correction and said that SAPO will answer to it. She is not involved in present or upcoming contracts. Stabilising the executive management was very important in order for things to be properly executed.

In responding to Mr Molala, the Minister reiterated that they are trying to go deeper into why strategies are not being implemented or rather not working – whether it is the lack of willingness or lack of capability or confidence. For things like low staff morale linked to leakage of information and the causes, the Department is looking for interventions. Post Office currently does not funding to conduct some investigations.

She responded that low staff morale is consequential to an environment that is not stable; an organisation is likely to experience such where people are not certain whether they will get their medical aid money or pension money.

Most of the burglaries happened during the R350 grant distribution. SAPO want to ensure that the staff members are safe in carrying out their jobs.

She indicated that the filling in of the CEO position is currently in process. She explained that when it comes to the Department oversight over SAPO, they look at all adherence and corporate governance and then it is a procedure before presenting to Cabinet. Anything in the media will be covered by the board.

The board acknowledged that there have been a number of questions relating to Ms Kwele; they confirmed that she indeed is suspended but she claimed that there was procedural unfairness. However, the arbitrator found it to be substantially fair because she has been paid for the last couple of months. In response Mr Molala speaking on the incurring of unnecessary costs if there is no case, the board said that there is indeed a case and it was right to suspend her.

In clarifying on the Postbank report mentioned by Mr Mackenzie, SAPO said that when they signed a contract with SASSA, what was understood was that the payments will be paid into the beneficiaries’ accounts straight from the treasury and not as an upfront payment. The previous supplier that worked with SASSA used to receive the money about five to eight days before payment had to happen. Some of the funds they can source internally but they require Postbank to assist them at least five days prior before so that they are ensured the money is at the branches by eight o’clock and that is where media has distorted the story because yes, they do require funding but it is paid back when treasury pays the money back.

On the Blue Label Company matter, the Board explained that this company has not been presented to the board. There is a fraud case opened in connection with the letter that Mr Mackenzie is referring to. The COO or acting CEO will answer on that.

The acting CEO will be answering some of the questions that have been left out with assistance of COO. Just to clarify prefunding issue with regards to the speculation that has been in the media, the CEO explained that the articles were distorting the information to create panic which they have addressed through press releases and responding to media. When contracts of grants were given to SAPO, it was based on the relationship that SAPO has with Postbank which interdependent with Postbank and one of the arrangements is for Postbank to assist with prefunding.

In terms of building on the prefunding going forward, there currently is an agreement between SAPO and PostBank which manages the overall business relationship and they are also in the process of entering into a service level agreement to be able to manage the prefunding matter.

As far as green rods involvement, it was not involved at all and their involvement would require a corporate process. The Blue Label matter was covered in the past PC meeting and COO did say there is no contract with Blue Label. Mail is still critical indeed and the priority is still given to make sure domestic and international parcels are being delivered.

On the backlog, the stats as far back as July are as follows; in July, R5.3 million was recorded as the backlog; in August, about R12 million, September R5.9 million and currently in October R3 million so they are working on clearing this backlog.

Within the building portfolio, they are looking at the disposal of non-core assets. There are 99 properties that have been identified as non-core and out of those they are already in advanced negotiation stages on the JD property. The market valuations have been done. Given the cash flow situation, what they are also looking at is to prioritise buildings that they can immediately lease. The COO will go into the specifics regarding these. Due to SAPO’s issue with cash flow, they have not been able to abide by the collective agreements. They understand that labour is a very critical stakeholder.

Ms Refilwe Kekana, Acting COO of SAPO, said that the only thing remaining now is the internal integration with Postbank and figure out how money will be managed; once this is established, they can roll out the cashless ATM’s to where people are based. This will benefit the SME’s more than anyone.

In terms of e-commerce, during the lockdown the team worked hard to build a model and it has been completed and they are waiting to roll it out and launch it. There was a question on the IT systems and whether SAPO owns them or are they owned by other system operators; SAPO has proprietary software which they do not own but have contracts with them and in-house built solution; it is a hybrid of solutions.

With regards to security, there are different levels of security – those at branches (they are assisted by SASSA) as well as time-delay security device where if there is money left overnight at the Post Office, it will dye the money and make it useless. Unfortunately, these devices have not been rolled out to every branch but they are in the process.

With regards to personal protective equipment, like any other entity during the lockdown, they had to go into emergency procurement and bypass procedures. So far, there has been one complaint that was raised by a whistle blower but their internal SMI is working. The backlog was covered.

Ms van der Sandt then went back to the question about the G4S & Fidelity. Concerning that, the matter has been given to legal services to ensure SAPO comply with the court ruling.

The Chairperson checked whether all questions have been answered and if the Deputy Minister is still with them and if there are any closing remarks she would like to emphasise on.

Ms Pinky Kekana, Deputy Minister, said that from the presentation that was done, the Minister’s office and the Department should monitor the turnaround strategy and also give help and support to SAPO because it in their best interests that it becomes a viable entity.

The Chairperson thanked the Members, the Ministry and the rest of the guest delegation for attending the virtual meeting.
           
The meeting was adjourned.
 

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