S Africa Post Office borrows one billion rand

The South African Post Office has
borrowed as much as 1 billion rand of depositors' money held by the Postbank in
a bid to ease its crippling cash-flow problem and deliver social infrastructure
to the poor, Business Day reports. South African Post Office management moved
on Tuesday to assure account holders that their money was not at risk. CEO
Maanda Manyatshe said that depositors' funds had been guaranteed by government.
* * *
This has led to another bout of speculation that government will have to
step in and help the ailing organization by re-instituting subsidies halted in
2000-01.
The Postbank is estimated to have more than two million account holders,
and a book of several billion rands. Its customers include pensioners,
unemployed people, migrant laborers, rural dwellers and students.
Manyatshe, who took over as head of the organization last year, said the
finances of the South African Post Office and the Postbank are so closely
interlinked that it is difficult to distinguish between the two.
Money had always flowed freely between the two, due mainly to poor
financial controls, and had been repaid in March or April when government's
subsidy was paid out. The problem had arisen with the halting of the subsidy
earlier this year.
The South African Post Office is due to announce a loss of more than 800
million rand in the year ended March 2001, the year in which it was scheduled
to break even under the now defunct management contract with New Zealand's
Transend Worldwide.
It is expected to remain in the red for several years to come, raising
questions about how the money will be repaid without assistance from
government.
South African Post Office spokesman Sandile Madolo said that since the
beginning of this year, steps had been taken to tighten financial controls and
separate the courier and Postbank businesses from the holding company.
Government announced some time ago that it planned to "corporatize" the
Postbank, or establish it as a separate legal entity. The aim was at to
increase the number of outlets to more than 3,200 from the current 2,600 by
next year, and increase the range of services provided.
Robert Nkuna, the communications ministry spokesman, said government was
now moving ahead with separating the South African Post Office from the
Postbank and its other entities.
Nkuna said the South African Post Office had borrowed the funds to deliver
on its universal service obligations, which included providing postal services
to the population and rolling out addresses to rural and nonviable areas.
"We inherited infrastructure that was close to collapsing. (It is important
that) the South African Post Office meets its social obligations and addresses
the struct
ural imbalances of the past," Nkuna said.
He said the department was tackling alleged corruption and financial
irregularities at the Post Office, and had appointed forensic firm Kroll
Associates.
Democratic Alliance spokesman Mike Waters said on Tuesday that the
necessity of the 1 billion rand loan had to be motivated and justified by
Communications Minister Ivy Matsepe-Casaburri.
The minister and her director-general needed to explain how the parastatal
had degenerated to the point of needing such a large loan, "seemingly without
warning signals of a pending financial crisis".
"It is incomprehensible that the department's budget of just a few months
ago did not reflect nor predict the problems currently being experienced," he
said.
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