The SA Post Office is losing at least R60 million a month from distributing social grants to millions of citizens, who rely on the government’s welfare net for survival, reports the City Press.
The report attributes this loss to the high fees the SA Post Office must pay to cash-in-transit and security fees to ensure that hard cash delivered to pay points.
The social grants deal was originally seen as a big opportunity for the struggling SA Post Office to earn more revenue.
“The Sassa project won by the Post Office has proved to be a loss-making initiative that the Post Office continues to subsidise at its own risk of financial viability, going concern, and reckless trading,” Refilwe Kekana, Chief Information Officer of SA Post Office, said in an internal memorandum.
In October, the SA Post Office told parliament that its estimates show it could earn R1.9 billion in gross revenue from its Sassa project per year.
In last year’s financial results, Sapo reported a net loss of R1.17 billion despite its subsidiary Postbank reporting a R496 million in net profit for the year, up from R296m reported a year earlier.
Meanwhile, SA Post Office chief executive Lindiwe Kwele was placed on suspension after a mere four months on the job, together with Sapo’s head of supply chain management Mothusi Motjale.
Business Day first reported on Monday that Kwele was suspended in early December 2019. Mabuza confirmed the suspension.
Advocate Eric Mabuza who is representing Kwele, called the charges against her “frivolous”.
Mabuza told Fin24 on Monday that the suspension is being challenged and has been referred to arbitration. According to Mabuza the Post Office’s board is delaying the process.
He said Kwele was suspended about two weeks after the new board of the state-owned entity was appointed in November last year.