MARK BARNES: My proposal for turning the post office into a national treasure
It is now beyond argument that a new set of solutions needs to be found to save our ailing state-owned enterprise (SOE) matrix. Furthermore, it should be made clear (and public) that there is a will, an energy and capacity (which borders on downright determined patriotism and a desire to succeed) within the mix that is us, the SA people.
Capital is not scarce. In fact, we’ve come through a period globally where money is in abundance, like never before. However, capital is discerning, and commercially driven, and it has choice (particularly foreign capital).
We will not solve our SOE challenges alone, and we will not solve them without at least some of the elements of design that have gone into the establishment of successful public-private partnerships around the world.
It is against this background that it is appropriate to shed light on the following proposal, which was tabled with the government on September 29 2021, more than four months ago. Receipt was acknowledged at the time (by the ministries and departments to which it was sent), but no response beyond that has been received.
Surely there would be virtue and purpose in engagements like the one addressed to communications & digital technologies minister Khumbudzo Ntshavheni and reproduced below?
Proposed Public-Private Partnership: SA Post Office
Honourable Minister Ntshavheni
I trust that you are well, and safe. There has been much written about the SA Post Office’s various challenges in the press lately, particularly with regard to the nonpayment of members’ pension fund and medical aid contributions. Such circumstances suggest that a level of desperation has been reached which, if not dealt with, will put the very existence of the [post office] and the fundamental wellbeing of its employees and other stakeholders at risk.
I read these articles with a heavy heart. Against this background, many people suggest that the post office simply be allowed to go bankrupt (it may be technically insolvent already), and let the private sector pick up the pieces and get on with it. I totally disagree. Private sector players may well provide a selection of these functions that suits them, profitably, but such services will not be accessible, let alone affordable, to the population at large.
I remain convinced that the post office is a strategic asset, of national importance, in which a significant shareholding should be retained by government. I do, however, think the only way to achieve both the commercial and developmental mandates with which the post office is charged, is through a public-private partnership.
In essence, I see the post office as:
- A commercially irreplaceable footprint which, beyond its basic postal functions, can provide channels of delivery between government and the people of SA, however rurally dispersed, for all manner of goods and services, whether by itself or in partnership with specific private sector players;
- A central, protected and again irreplaceable repository of people’s data (beyond just addresses, depositors and grant beneficiaries) which can be utilised virtuously, not exploited, to the advantage of all of our people;
- Still having access to the National Payment System (through Postbank), which is essential to efficiently conduct the kind of businesses the post office can conduct in the modern era; and
- A major employer. The SA Post Office is too big to fail.
I believe I still have the support of all principal stakeholders in the post office, including the employees and unions (despite detractors, as there may still be within the department), and I believe that with an appropriate structure and the right leadership the post office can provide the prospect of economic dignity to its people directly, and be a bridge between government and the population at large, to address poverty, unemployment and inequality in our country, like no other organisation is positioned to do.
I therefore seek your support (and that of government as a whole) in implementing a new deal within the elements of design set out below:
- I, Mark Barnes, will lead a consortium that will offer to purchase at least 60%, but no more than 75%, of the SA Post Office;
- 10% of the total issued shares in the post office will be allocated directly to employees (current and future);
- The purchase price will be the net asset value of the post office, less the present value of the forecast losses, as determined by the auditor-general;
- The consortium, over and above the purchase consideration, will inject a further capital sum into the post office, equal to the determined present value of agreed future losses to be funded, in the form of low-yielding (CPI, say) redeemable, convertible debentures, which will either be repaid or converted into further equity in the post office, coincident with the planned listing and further permanent capital raising in the post office, in three years’ time;
- Certain extraordinary, entrenched rights, required for the post office to operate as an organ of state, will remain intact and attach to the government shareholding for so long as government retains 25%-40% of the post office;
- Postbank will remain an integral part of the SA Post Office, in whichever structure is considered most appropriate, and the National Treasury will continue to guarantee Postbank deposits until such time (if at all) as Postbank is able to successfully apply for a banking licence, regulated by the Prudential Authority within the SA Reserve Bank. This will only be pursued if Postbank wishes to provide loans, which is not the initial intention;
- Mark Barnes will be appointed group CEO, on commercial terms to be agreed, for a term of three years, during which time he will undertake to build a capable executive team to take over. He will be available for a further period of two years, to serve as non-executive chairperson, if required; and
- A new SA Post Office board will be appointed, after consultation between the shareholders, and government will have the right to appoint the initial chairperson.
It will not be possible to raise the required capital for this investment unless the proposed deal is agreed to by government contractually. Once such an agreement is signed, I believe the required capital can be raised (locally and internationally) within three months of the investor proposal and the sale and subscription agreements being finalised.
Mark Barnes will lead the capital raising, with such corporate finance support as will be required, provided within government or the private sector. I look forward to engaging with you further, after what I hope will be a positive response to this proposal.
I would be surprised if many other similar initiatives are not proffered by private sector expertise and capital. I hope we can all find each other.
• Barnes, a former SA Post Office CEO, has had more than 30 years of experience in various capacities in the financial sector.
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