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South African Post Office Presentation to Communications Portfolio Committee By Mr. M. Manyatshe Group Chief Executiv - PowerPoint PPT Presentation

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South African Post Office Presentation to Communications Portfolio Committee By Mr. M. Manyatshe Group Chief Executive Officer. Objectives of the Presentation. The objective of this presentation is to share with members of the Committee our current efforts and future plans in terms of;

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South African Post OfficePresentation to CommunicationsPortfolio Committee ByMr. M. ManyatsheGroup Chief Executive Officer

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Objectives of the Presentation

  • The objective of this presentation is to share with members of the Committee our current efforts and future plans in terms of;

    • The changing nature of our business and the challenges faced by SAPO

    • Where we are in our turnaround efforts

    • Achievements to Date

    • Progress in meeting Shareholder Expectations and Universal Services Obligations (USO)

    • Future Strategic Direction of SAPO

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Role of SAPO in the Economy

  • An important medium of communication for business and commerce.

  • A courier facilitating the movement of goods (Packages , Legal Documents etc) between business and government and citizens.

  • A one stop shop for government information and transactions

  • A financial services centre, enabling citizens in rural and urban areas to transact safely and efficiently.

  • A preferred authentication service provider facilitating electronic communications and transactions

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Role of SAPO in the Economy

  • SAPO provides citizens in underdeveloped areas with access to state of the art technology e.g. email, digital certificates etc.

  • This helps to bridge the digital divide that currently exists in South Africa

  • The principle function of the Post Office is to provide postal and related services inside and outside South Africa.

  • Having a post office in almost every major South African town ensures that the South African Post Office is an integral part of the economy

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Business Overview

Annual Turnover: R 4bn Company

Mail Operations R2.2bn

Postbank R1.5bn

Financial Services R14bn

Retail R1.2bn

Properties R200m – R300m

Courier & Freight Group R600m

Others Philately, International

All the above will be on the top 50 of the JSE

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Business OverviewMail Business

  • Historically the core business of the South African Post Office.

  • However mail volumes are declining due to changing trends in the communication sector worldwide

  • SAPO’s extensive mail processing network handles 6 million letters on average per day

  • Delivered to 10 million addresses country wide.

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Mail Business Cost Analysis

Period Data: 01-10-2001 – 31-03-2002

Mail Operations National Average - Standard Letter

2001/02 % 2003/04

Mail Operations: R0.26 19%

National Transport: R0.14 10%

Regional Transport: R0.31 23%

Delivery: R0.64 48%

Total Cost: R1.35 (excl Vat) R1.48 (excl Vat)

Total Income: R1.23 (excl Vat)R1.40(excl Vat)

(Loss) (R0.12) (R0.08)

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Business OverviewMail Business

Other mail related activities include the following:

  • Mailroom management

  • Securemail

    • Established with the full co-operation of major financial institutions to minimise credit card theft and fraud.

    • A safe delivery method for high-security items such as shares certificates and credit cards.

    • It handles more than 2,5 million credit cards a year.

    • Received an award from the International Association of Financial Crime Investigators for the standard of its work.

  • International Mail

    • Handling and distribution of inbound and outbound international mail.

    • A transit hub for mail destined for and originating in the SADCC countries.

    • International relations (other Postal Administrations, UPU, PAPU etc

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Business OverviewCourier, Express, Parcels business

  • Speed Services Couriers

  • Speed Services Couriers provides the most extensive domestic overnight express courier network in Southern Africa.

  • Service options include door-to-door delivery, counter-to-counter and same day delivery.

  • Through the counter-to-counter service the Post Office is able to provide courier services to rural communities.

  • Speed Services Couriers also has an international service, consisting of door delivery (only) to over 200 international destinations.

  • Distribute documents and parcels up to 30kg per item.

  • Parcelplus

  • Provides counter-to-counter parcel service for delivery to any other post office counter in the country.

  • Parcels are be delivered within two to five days

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Business OverviewCourier, Express, Parcels business

  • CFG (Courier Freight Group)

  • The Courier Freight Group is a subsidiary of the Post Office and is made up of the following companies:

  • XPS Courier Services

    • XPS reaches 3 200 destinations daily with parcel tracking at every stage ensuring total control of freight.

    • Options include:

    • • Collection and delivery of abnormal or incompatible consignments on the same day

    • • Drop-box service for clients in main centres who need regular after-hours collections

    • • After-hours service with 8:00 delivery

    • • Optional coverage against loss, damage or pilferage

    • • Proof of delivery supplied on request

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Business OverviewCourier, Express, Parcels business

  • PX Courier Services

    • PX focuses on moving consolidated loads of up to three tons between larger centres in Southern Africa.

  • Docex

    • Docex moves mail exclusively between Docex members and other relevant points.

    • Docex services its members through a network of 200 exchanges throughout the country.

    • Currently concentrates on legal, medical profession as well as travel industry

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Business OverviewRetail Services

  • SAPO has the largest retail network in Southern Africa

    • 2588 postal outlets

    • 6500 counters

  • The following services are offered through the retail network

    • Cash Collections

      • 4.3 Million transactions valued at 12 billion are handled on behalf of third parties e.g. Telkom, municipalities, customs etc

    • Cash Payout

      • 500000 pensions are paid every month

    • Electronic filling

      • Approximately 1 million transactions involving data capturing are handled on behalf of government e.g. licence applications for SABC, motor vehicle and fishing licences

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Business OverviewPostBank

  • PostBank operates as a division of the South African Post Office.

  • PostBank is exempt from the Bank Act and governed by Section 52 on the Post Office Act

  • PostBank’s operations are limited to deposit taking

  • Has a total of 2.3 million account holders with a savings portfolio of R1.4 billion

  • Account Profile

    • 50% of PostBank Accounts are deposits of R50 and Less

    • It costs roughly R30 to service each account every month

    • Accounts of R50 or less will therefore only service themselves for a single month and the remaining 11 months are subsidised by the Post Office to the tune of R396 million (1.2 Million Accounts times R30 times 11 months)

  • Being positioned to be a key player of national significance in the provision of financial services

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Operating Environment : Mail Industry

  • Key Drivers of Change

    • Technology

      • Email –Increased usage of this medium as a alternative to sending hard copies

      • Internet – As this technology becomes available on a wider scale, people are using it a as alternative to acquire information

      • Cell Phones – There is a migration from sending hard copy messages to SMS messages

    • Competition

      • Increased competition eg PostNet, Knock and Drop, Insert Market etc

    • Liberalisation

      • The reduction of the monopoly from 2kg to 1kg

      • Allows private companies to compete in this environment

      • Growing number of fly by night operators

      • The regulator will undertake a review of the monopoly and if the reserved area is reduced further, it would mean the South African Post Office would suffer further losses due to it’s Universal Service Obligations (USO)

    • Universal Service Obligations (USO

      • The post office must provide affordable postal and financial services to all South African citizens

      • This includes the remote areas of South Africa which are non profitable by nature.

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Operating Environment : Courier, Express, Parcels Industry

  • Face increasing competition from international players eg DHL, TNT etc

  • Government Courier Tender lost to Skynet

  • Trends in the Courier Industry

    • Network expansion has been based on acquisitions, alliances and partnerships and has occurred across national boundaries.

    • Upward linkages with integrators combining with airlines, or parcel operators linking up with warehousing enterprises

    • Downward linkages with logistics operators acquiring couriers to service home deliveries

    • Combining (vertically) under one management several process in the supply chain i.e. 4th Party logistics.

    • Moving to the “one stop shop” and single sourcing strategies, especially in an environment in which outsourcing is a strong trend.

    • Improving profitability through higher efficiency or sale of new services.

    • Robust track and trace and streamlined return processes

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Operating Environment : Banking Industry

  • Dominated by five major banks - SBSA, Absa Group, First Rand, Nedcor, Investec

  • Approximately 70 foreign banks operating in the local market

  • Formal banking sector focused on providing finance to the top end of the market.

  • Majority of the population unbanked

  • Between 60% and 80% of countries economically active people are unbanked. According to census data this translates to ±12 million employed people.

  • Only 30% of the black population hold a bank account.

  • Savings products offered by most commercial institutions do not meet the specific needs of rural communities

  • Channels of access for savings are limited.

  • The cost of savings is very high contributing to the low level of savings in South Africa

    This provides a unique opportunity for PostBank to be a key player in the financial services industry

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Shareholders Expectations

The issues to be addressed by the Post Office to meet shareholders expectation of an affordable, accessible, efficient and effective postal service are as follows:

Service delivery policy

  • To improve delivery performance standards and to provide delivery to postal addresses for all households on an equitable basis.

  • To re-balance the post office network by reducing post offices in serviced areas and increasing and upgrading post offices in under serviced areas.

    Financial mandate

  • To secure economic growth, investment and employment.

    Economic empowerment of historically disadvantaged South African

  • To transform the procurement and tendering process.

    Human resource development

  • To develop human resources capacity and create continuous learning opportunities.

  • To combat the threat of HIV/Aids.

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Shareholders Expectations

Impact of technology on postal services

  • To protect the Post Office market share from the threat of electronic substitution.

    International relations

  • To be recognised as the key player in the global postal market within Africa.


  • To develop Postbank as the bank of first choice for the lower income groups.

    Postal Security

  • To eliminate postal crime and corruption in all its forms, restore public confidence in the integrity of the mail, and enhance the image of the Post Office as a trusted service provider.

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Reduction in Operating losses over the past years

Key Achievements


584 Million Loss


371 Million Loss


215 Million Loss



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Turnaround in performance of acquired courier business

Key Achievements

  • PX (Fast Forward) was acquired from Transnet in 2001

    • R450 million loss making entity

    • Transnet paid SAPO R100m integration grant

  • XPS acquired in 1998 from Rennies Group

    • Approximately R50 million loss making company

  • These businesses have been integrated into the courier and freight group (CFG)

  • Now forecasting only a R40-45 million loss in financial year 2002/2003 compared to the R450 million loss in 2001

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Key Achievements

Permanent Staff Reduction over the past 2 years

Staff reduced from 26000in 2000 to 18380 in 2003

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Fleet Reduction over the past 2 years

Key Achievements

A total reduction of 376 vehicles

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Contracts Terminated over the past 2 years

Key Achievements

  • SMP

  • Mapkas

  • Q Data

  • ICL

  • National data system

  • Gentroncis

  • Permarep

  • SF

  • Airworld

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Key Achievements

Improvements in the Control Environment

  • Unqualified audit Report (2001\02)

  • E Procurement

  • Reduction in number of bank accounts

  • Firewall between Sapo & Postbank

  • Financial Statements (1997 - to date)

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Business Development over the past 2 years

Key Achievements

  • Telkom IPO

  • Money Transfer Services – pin based money transfer services

  • Products:

  • Payments on behalf of 25 local Governments

  • Payments on behalf of 20 other parties

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Business Development over the past 2 years

Key Achievements

  • Agreements finalized and in the process of implementation:

    • Western Union Money Transfer Services – International transfer

  • Agreements negotiated and in process of sign-off:

    • EBPP (Electronic bill presentment and payment)

    • Financial and data switch

  • RFQ’s and RFP’s submitted and awaiting outcome:

    • Dept of Justice – Payment solution for maintenance, bail, fines

    • UIF – Collection and payment of UIF

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Business Development over the past 2 years

Key Achievements

ECT enablement

  • Implementation of dedicated ECT counters with peripherals

  • Brits pilot project.

  • Already 2500 pensioners have been registered at Brits

  • All 10 fingerprints and ID details are taken and Postbank accounts are being opened.

  • Details are being forwarded to Home Affairs to assist in building of HANIS database.

  • Interactive reporting is done via Web to all relevant role-players.

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Key Achievements

Business Development over the past 2 years

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Key Achievements

Business Development over the past 2 years

  • Trust Centre

  • Operational centre created in Grabouw and technical centre in Sandton to provide:

    • Legal Certainty

      • Foundation for trust

      • Facilitation and regulation of electronic communication and transactions

      • Encourage the use of e-government services

      • Human resource development in electronic transactions

    • Digital Certificates

      • A special file that binds an individual’s identity to an encryption key

      • The identity of an individual or organisation is verified by the Certification Authority (CA) before issuing a digital certificate

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Key Achievements

Service delivery improvements from 84.46% to 90.83%

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Employment Equity and BEE

Key Achievements

  • Equalisation of apartheid salaries

  • Top Management in South African Post Office is predominantly black and has 4 females at executive committee level

  • Black Economic Empowerment equals 35.03 % of total spending

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Human Resource Development

  • 60 different training programmes under different learning portfolios namely:

  • Technical/Job specific functional,

    • People management,

    • Business management,

    • Management Development


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Crime and Fraud

Key Achievements

  • Breakthrough at Purchasing Material Management (PMM) regarding corruption in ordering of stock.

  • Increased surveillance security on the trucks transporting the stock from Silverton to Post Offices.

  • The establishment of armed response vehicle at Courier Services which has resulted in a positive decline of the hijacking of XPS and Speed Services trucks.

  • The introduction of two armed response vehicle to monitor Post Office trucks carrying mail.

  • The reduction of Bulkmail fraud around Wits and Wiptspos

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Key Achievements

Crime and Fraud

  • Decrease in armed robberies during the festive period. This was achieved through the combined strategies on robbery between SAPO and SAPS .

  • The investigation at CFG head office which led to suspension of 5 executives. These executives are currently facing charges of fraud and corruption.

  • The development of the New Database for the Security and Investigation which is in line with the business. This will give accurate crime reporting to business units.

  • Implementation of Fraud Prevention and Mail Violation Strategies within the organization. These strategies form the basis of combating fraud, corruption and mail violation within the company.

  • The establishment of Special Investigation unit which focuses on white collar crime within the organization. This is another initiative to stamp out zero tolerance to crime within the company.

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Key Achievements

Statistics on Criminal Offences

  • The incident of robberies decrease by 11,4%. This trend should prevail after the Improvement of security at Post Offices.

  • The achievements are due to crime awareness initiatives to inform the employees of their responsibility towards the prevention of robberies.

  • Coastal regions like KwaZulu Natal, Eastern Cape and Western Cape have improved on robberies.

  • New Projects on Mantrap Doors, Counter Screens, Drop Safes, CIT and Guarding Services are all aimed at decreasing the robberies against the Post Office.

  • The decrease in carrying too much cash at post office outlets is resulting in the increase of CIT robberies. Post Offices are encouraged to carry less cash

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Robbery – Reduction in Financial Losses

Key Achievements

Crime and Fraud

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Key Achievements

Crime and Fraud

Reduction in the number of Hijackings

  • More than 90% of Post Office cars are recovered. This success is attributable to :

    • Installation of Vehicle Tracking System on most of the trucks and vans.

    • Armed Response vehicles monitoring the vehicles with high value items.

    • SAPS support in investigation of hijackings.

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Collaboration with the SAPS

Key Achievements

Crime and Fraud

  • Across the Country major partnerships and effective relationships with the SAPS has been established

  • SAPS personnel have obtained a better understanding of the Postal Act

  • At Corporate level a sound understanding between the SAPS executive management and SIS has been established

  • A Service Level Agreement between the SAPS and SAPO for the secondment of 6 detectives for a period of 3 years is reaching it conclusion and should be implemented by May 2003

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National Fraud Prevention Plan

  • A National Fraud Prevention Plan has been deployed in the Post Office

  • The Executive Committee forms the National Fraud Prevention Committee

  • Business Unit Fraud Prevention Forums are being established nationally

  • The Fraud Prevention Plan is critically directed at

    • - increasing employee responsibility and accountability

    • - employee education through an Awareness Campaign throughout SAPO

    • with an emphasis on the Ethical Code of Conduct

    • - the CEO Road Show will be rolled out at 21 major centres from May 2003 onwards

    • - Reviewing of Company Policies and Procedures

    • - security audits

    • - re-training of employees at problem offices

  • National Mail Violation Strategy Linked to the Fraud Prevention Plan the

  • has been deployed

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Sapo Image“The improvement in the SAPO Brand”