Why Solly Malatsi was right to bury the Post Office monopoly

South Africa has a curious habit of legislating fantasies and then acting surprised when the real economy ignores them. The now-defunct monopoly of the South African Post Office over sub-1kg parcels is a perfect example of this. On paper, the monopoly existed; in practice, it died years ago. Communications minister Solly Malatsi has merely done what government should have done long ago: align the law with reality.

The notion that the Post Office had an exclusive right to deliver small parcels had long become absurd. It became downright farcical as e-commerce exploded, private couriers scaled nationally and consumers came to expect fast, reliable delivery – something the lumbering state-owned Post Office manifestly could not provide. The market moved on; the law did not. Malatsi’s decision to terminate the monopoly simply recognises that pretending otherwise serves no public interest.

There is an instructive parallel here with the liberalisation of South Africa’s telecommunications sector nearly two decades ago. In 2008, Altech successfully challenged the government in court, forcing the regulator to allow companies to self-provide telecoms facilities. The case cracked open a closed market that had been artificially protected in the name of “managed liberalisation”. What followed was an explosion of competition, investment and innovation – and the rapid decline of legacy players that had grown fat and complacent.

Incumbents (most notably, Telkom) warned of job losses and chaos. Instead, consumers benefited from lower prices and better services, while the economy gained from improved connectivity. The lesson was clear: monopolies protected by bad laws don’t preserve public value; they delay inevitable change and increase the eventual cost of adjustment.

The same dynamic has been playing out at the Post Office. For years, the company clung to a theoretical monopoly it lacked the capacity to enforce, let alone exploit. Private couriers simply ignored it, because they had to. Had they complied, South Africa’s e-commerce sector would have been strangled at birth. Consumers would have paid more for worse service, or none at all.

That the monopoly was widely ignored is not an indictment of the market. It is an indictment of the law. Yet the termination of the monopoly has provoked predictable outrage from parts of the political establishment. Khusela Diko, chair of parliament’s portfolio committee on communications, has argued that ending the reserved service threatens the Post Office’s sustainability and undermines its universal service obligations, particularly in rural areas.

Bailouts

This argument assumes the status quo was sustainable to begin with. It was not. The Post Office has required repeated bailouts over more than a decade, has shed thousands of jobs, closed branches and entered business rescue. The monopoly did not save it. It did not even meaningfully support it. To argue that preserving a legal fiction would somehow reverse this decline is magical thinking.

More troubling is the deeper assumption behind the criticism: that state-owned entities are entitled to perpetual protection, regardless of performance or relevance. Business models change. Technology changes. Consumer behaviour changes. Organisations that fail to adapt – whether private or state owned – do not have a divine right to survive.

Read: Malatsi buries Post Office monopoly the market ignored

In functioning economies, governments help workers transition; they do not freeze markets in legal and regulatory stasis. They modernise public services; they do not criminalise alternatives simply because incumbents are failing.

The telecoms comparison is again instructive. When fixed-line voice revenues collapsed, Telkom had to reinvent itself or shrink. No one seriously proposed banning mobile phones to protect the copper network. Yet that is effectively what defenders of the Post Office are arguing for in logistics: limit competition to preserve an institution that has already lost relevance.

There is also a striking lack of imagination in the political response from the ANC. Rather than asking how the Post Office might partner with private couriers, specialise in niche services or leverage its footprint differently, the instinct is to reach for prohibition and protection. This reflex reveals a deeper malaise within the ANC: an inability to think about reform outside the framework of control.

South Africa’s economic challenges are not caused by too much competition. They are caused by too little – and by a political culture that confuses regulation with value creation. Ending the Post Office monopoly does not doom rural communities. What dooms them, and everyone else, is clinging to failed models while pretending the world has not changed.

Read: Gov’t seeks private sector partners to rebuild broken Post Office

Malatsi’s move will not fix the Post Office’s problems. But it removes an impediment to honest reform. Like the Altech judgment before it, it forces the country to confront an uncomfortable truth: laws cannot compel relevance. They can only delay irrelevance – and usually at great cost.  – © 2025 NewsCentral Media