The South African Post Office (Sapo) wants a R3.4 billion bailout from the government to cover its cash flow deficit and fund the implementation of its turnaround strategy.

Sapo said it requires R1 billion of the funding before 31 March 2023 to help with its cash flow issues, while the remaining R2.4 billion will be used to implement its “Post Office of Tomorrow” strategy.

The Department of Communications and Digital Technologies’ deputy director-general of state-owned enterprise oversight, Omega Shelembe, presented Sapo’s funding requirements at a joint meeting of parliament’s finance and communication & digital technologies committees.

The R2.4 billion for Sapo’s turnaround strategy is required for its implementation during the 2023/24 financial year.

Shelembe indicated that discussions with the National Treasury suggest that Sapo will receive the funding.

“There have been ongoing engagements between the Department, National Treasury, and Sapo on the requirement for funding assistance,” he said.

“These engagements created a reasonable expectation that the funding will be availed to Sapo.”

Shelembe also gave details of Sapo’s liabilities as of 30 September 2022, which total R8.2 billion — R3.2 billion of this is owed to Postbank. The remaining R5 billion comprises Sapo’s liabilities to creditors.

“The idea here is that it is not the responsibility of government to bail out the Post Office to meet the entirety of its liabilities,” he said.

“But the Post Office should add to its revenue through the implementation of the strategy, and then utilise those revenues (sic) to settle its liabilities over a period of time.”

Shelembe explained that the Post Office is projected to transition into a profit-making entity in the third year of the strategy’s implementation.

The “Post Office of Tomorrow” strategy involves digitising Sapo to bring it up-to-date with technological developments in the postal sector.

The entity’s CEO, Nomkhita Mona, said it could unlock Sapo’s e-commerce space, financial technology, logistics capabilities, and courier and freight potential.

However, she acknowledged that the Post Office wouldn’t meet its statutory obligations without a government bailout.