Turnaround plans at the South African Post Office do not include any talk of privatisation, says the state-owned company’s new CEO.
Cabinet on Thursday approved the appointment of Mark Barnes as group CEO of the Post Office, with his five-year term expected to start on 15 January 2016.
Barnes is currently the biggest shareholder in and executive chairman of investment and trading solutions company Purple Group. He was also previously an investment banker at Standard Corporate and Merchant Bank and former head of private equity firm Brait.
Government has launched a “turnaround” process at the Post Office, which last month announced that it’s struggling to pay staff salaries after it reported a preliminary net loss of about R1,1bn earlier this year.
Barnes said on Thursday that he sees the Post Office as ultimately becoming profitable by adapting to the Internet age and not just “delivering letters”.
But he added that privatisation is not on the cards.
“What we’re going to do now has got nothing to do with privatisation; it’s just got to do with turning a business around in accordance with their strategic turnaround plan and making it a viable business-connected business,” he said.
One key advantage that Barnes plans to tap at the Post Office is the “legislative protection” it has as a state-owned entity, its “very low cost of capital”, and its wide reach across the country.
“I put the proposition forward to government some time ago that actually the way out of the difficulties at the Post Office is growth not restraint and that it is rather well positioned if you think of it as not just the Post Office but as this organisation with an extreme reach in terms of its representation in the country with something like 2 500 points of representation, 1 500 branches,” Barnes said.
“Inside the Post Office is a bank with a seriously low cost of capital and it’s a very close to most of the population of our country,” Barnes said.
These features could be adapted to help it take on courier competitors as well, Barnes added.
Barnes takes the reins after instability has dogged the company. A months-long strike in 2014 over temporary workers’ pay resulted in postal services being disrupted. After the strike ended in November 2014, the board resigned and government put the company under administration.
Barnes now takes over from acting CEO Trevor Ndlazi after the company’s former permanent CEO Christopher Hlekane’s contract was terminated in September 2015. — Fin24