By Carol Paton for News24
Financial services entrepreneur Mark Barnes has offered to buy a majority stake in the SA Post Office to save and modernise the institution, which is in deep financial trouble.
Barnes was CEO of the Post Office from 2014 to 2019. He resigned before his five-year term had elapsed after he failed to win the confidence of political leaders for his vision for the Post Office and its subsidiary, Postbank. The Post Office is in a dire financial position, with losses of R1.76 billion in 2020/21, and has stopped payments to SA Revenue Service (SARS) and medical aids for its employees due to a shortage of funds.
It is also in arrears on medical aid contributions on behalf of its workers to the tune of R600 million.
His proposal, which he made in a letter to Communications and Digital Technologies Minister Khumbudzo Ntshavheni, is that he lead a consortium to raise capital to buy between 60% and 75% of the Post Office in a public-private partnership (PPP) arrangement.
Ten percent of the total issued shares would be allocated directly to employees. The price will be determined by the net asset value less the projected losses, as per the Auditor General. The consortium would, in turn, invest capital equal to projected losses.
It would continue to operate as an organ of state, which would imply – as it does at present – certain entrenched rights and obligations. While it would operate for profit, the rights and obligations – for instance, to provide certain low cost financial and other services – would act as a brake on profit-taking.
Barnes proposes that the Postbank remain a subsidiary of the Post Office and that he be appointed CEO and that a new board be put in place.
While he made the offer some time ago, he has now publicised his proposal in a column in Business Day.
In an interview on Thursday, Barnes said that people have been unable to get their minds around a business model of the Post Office that was different from the “Post Office of yore”.
“There is nothing left like that in the world. The Post Office is a connection between certain services and people. People choose the Post Office because it is convenient, trusted and not exploitative… Yes, if the Post Office goes bankrupt, the private sector will step in. But it step in only to provide services to 10% of the population.”
– Mark Barnes
There are two important things the Post Office can do in a modern era: act as connection point for physical exchange of goods; and act as a virtuous repository of people’s data, he noted.
“No matter how technologically advanced society becomes, a physical connection point for a exchange of goods is still required. Potential investors would like be large, global e-commerce companies which need that physical connection,” he said.
Barnes added:”The future of commerce is data. At the core of the most valuable companies in the world is data. The Post Office is one of the biggest data repositories in the country and has more branches than any entity.”