Green Paper on
Postal Policy

July '97 

The Ministry for Posts, Telecommunications & Broadcasting

Contents 

Foreword 
Introduction 
Facts & Figures 

1. Postal Services and Development in South Africa 
2. Market Structures in the Postal Sector 
3. Ownership, Investment & Financing 
4. Regulatory Framework for the Postal Services Sector 
5. Economic Empowerment of Historically Disadvantaged South Africans 
6. Human Resource Development 
7. International Relations 
8. Postbank 
9. Legislative Reform

Foreword

It is my pleasant duty to place this Green Paper on Postal Policy before the South African public and to invite you all to respond to its contents. The Green Paper poses a wide range of questions regarding all aspects of postal policy. Your responses will assist the Government in formulating policy on postal issues for the future.

The postal service is the most basic and most common means by which messages can be communicated and goods delivered. Postal services is a basic link serving the entire population, it also serves as an important medium of communication for business and commerce. Government is committed to facilitating the healthy development of this sector and to ensuring the provision of a universal postal service to all South Africans irrespective of race; class; gender; age or geographic location.

South Africa has inherited a postal policy framework and consequently postal service provision which has been distorted by:

1. an apartheid legacy which is characterised by inequality in access to postal services, particularly, although not only in the former black communities, rural areas and the former TBVC areas; and
2. a monopoly mentality which has translated into poor customer service and an unhealthy reliance, by the South African Post Office on an external government subsidy.

The situation is both undesirable and unsustainable. A South African Post Office which continues along this path will require a continued subsidy from government, have difficulty improving and extending services, employ staff with low morale and experience more customer dissatisfaction and defections. Unless the national postal administration transforms, it faces a bleak future. By embarking on a process of reform, we believe that, postal services could benefit significantly from the explosive growth in overall communications world-wide. Moreover, there is increasing evidence, albeit in high-income countries; that careful enterprise reform can bring about greater access; equity; efficiency and enhanced quality of service.

The Green Paper is therefore an important element in the reform process in so far as it contributes to creating an effective macro policy framework. It is neither possible nor desirable to legislate on all the ills of the Post Office. Equally important, in our view, is the restructuring of the enterprise at the micro-level. In response to the immediate financial crisis and consequently, as part of our plan to address the deeper structural and institutional inefficiencies, which impact upon and constrain both the efficiency and the sustainability of the enterprise, it has been necessary to focus resources at the micro level and give more serious consideration to reforming the enterprise. The outcome of this exercise together with the comments on the Green Paper will inform the White Paper on Postal Policy and consequently new legislation, i.e., the new Postal Services Bill scheduled for 1998. Our strategy of combining institutional and enterprise restructuring is designed to reform postal services in order to ensure a more accessible; equitable; efficient and effective postal service for all citizens and business. A process, which we envisage, will transform the postal service into a vital and dynamic component of our communications infrastructure and a valuable national asset.

Our policy must reflect the interest of all citizens and I wish to invite you to participate in this crucial postal policymaking process.

Jay Naidoo
Minister for Posts, Telecommunications and Broadcasting

Introduction

What is a Green Paper?

A Green Paper is a consultative document. It is designed to pose the questions that need to be answered in order for Government to formulate policy. The Green Paper is not itself a statement of Government policy. A White Paper formulates Government Policy.

A Green Paper is not an academic thesis nor is its function educational. It is designed to stimulate responses from the public and interested parties. It needs to provide a framework of focused policy issues for discussion. Everything about a Green Paper can form the basis of response, including the framework of issues, options and questions.

The Green Paper on Postal Policy

The main reason for producing a Green Paper on Postal Policy is to provide an instrument for revising and strengthening the policy framework governing the postal sector in general and the universal service provider, South African Post Office, in particular. By asking the public as well as interested parties through the Green Paper for their views on postal policy before producing a White Paper, the Government can be sure that all possible views have been canvassed.

The Postal Green Paper is divided into nine broad policy issues. Each policy issue contains a number of paragraphs that place each issue into context. A broad range of questions is posed in relation to each issue - from the general to the specific.

The responses to the questions raised in the Green Paper will form the basis of the Government's policy on Post. The Government's policy on post will be presented in the form of a Postal White Paper. If the policy in the Postal White Paper is broadly acceptable, the National Assembly will prepare legislation on the postal sector for consideration.

How to Respond to the Postal Green Paper

The Ministry for Posts, Telecommunications and Broadcasting invites written submissions from the public and interested parties on the questions contained in the Green Paper. In your written submission, please make reference to the questions that you are answering.

The Green Paper on Postal Policy has attempted to identify the most important issues, options and questions that need to be answered in order to formulate a broad postal policy for South Africa. If you think that there are issues or questions that have been left out of the Green Paper, please feel free to formulate your own question and answer it.

The written submissions will be available to the public at the cost of photocopying them. If you want to include any information, which you regard as confidential, please mark it as such and attach it separately to your submission.

The closing date for submissions is: 12 September 1997

Submissions should be sent to:

Provide the following detail:

Name
Postal Address
Telephone
Fax and Email address

Facts and Figures

Background to the South African Post Office

SAPOS LIMITED (End of 1995/96 operating year)
 
 Finances

Fixed Assets: R881, 4 million

Turnover: R1 974,1 million

Capital Expenditure: R226, 553 million

Legal Status

With the creation of the Union of South Africa in 1910, the provision on postal services was formalised through a state department. In 1968, the Post Office was given greater financial autonomy and a Post Office Staff Board was created to take over the functions of the Public Service Commission with respect to personnel. In October 1991, the Post Office Amendment Act, (1991) separated the traditionally combined Post and Telecommunications services and provided for two corporatised companies to be formed. Telkom SA Ltd. was formed to provide telecommunication services and the South African Post Office Ltd (SAPOS). to provide postal and savings bank services.

In respect of postal services the postal company is constituted as a limited liability company under the Companies Act and is wholly owned by government. The Minister of Post, Telecommunications and Broadcasting holds the shares, on behalf of the state. A Board of Directors governs the company, which is appointed by and responsible and accountable to the Minister as owner. The role of the Board, which can consist of up to 15 Directors, is to decide the policies to be implemented and to ensure that the functions of the company are properly and profitably carried out. The Board also appoints the Managing Director (MD) who is responsible for the management of the company and the staff.

Mission & Mandate of the Post Office

The principal function of The South African Post Office is to supply postal services within South Africa and to places outside of South Africa. The South African Post Office may also conduct subsidiary and incidental businesses and activities relating to postal services. Consequently its mission is defined as follows:

"The South African Post Office is committed to rendering quality postal services to all its clients and ensuring the financial sustainability of the business"

Volume

SAPOS services over 40 million South Africans and numerous public and private institutions. In 1995/6 it processed 2,1 billion mail items for delivery to over 6,25 million delivery points. Volumes in letter mail have been declining and the Post Office has also lost significant market share in the highly competitive express and parcel markets.

Mail Volumes: 1992/93 - 1996/97

Network

At March 1997, SAPOS has one of the widest retail networks with 2440 postal outlets countrywide; 27 mail processing centres and currently employs a total of 30 342 staff, including 1 582 part-time employees and 1 471 contract workers.

Different Types of Outlets: March 1997

Source: SAPOS  

Number of Postal Service Points 1993 - 1997

Source: SAPOS

The Post Office has extended its retail network and contained costs, by reducing the number of traditional post offices, while increasing the number of retail post offices and postal agencies. The increase in traditional post offices and postal agencies, in 1997, is due largely to the incorporation of postal services from the former TBVC areas.

Number of Inhabitants per Postal Outlet by Postal Region: 1997

Despite the increase in the size of the network, access to postal outlets remains low and unevenly distributed between and within postal regions. The South African average of inhabitants per postal outlet is 1:16 659 compared with the European Union (EU) average of 1: 3 484 citizens.

Services & Products

SAPOS core business is postal services, which account for 85 % of its revenue. In addition to letter mail and parcel services, SAPOS offers a range of other mail services, courier; international; etc, agency services such as pension payments and the collection of third party payments on behalf of organisations like Telkom; SABC; Local Authorities etc, as well as savings and money transfer services through the PostBank.

Selected products and services offered by SAPOS

Key Financial Data

Since corporatisation, Post Office expenditure has exceeded income with a growing, rather than diminishing reliance on state funding.

Income, Expenditure & Subsidy: 1993/94 - 1996/97

Distribution of Income by Key Categories: 1995/96

The traditional mail volume service represent 73% of total income. Total revenue is a function of (tariff * volume) and mail volume has declined significantly over the last few years. This had a direct effect on total revenue, and therefore profit/loss.

Distribution of Expenses by Key Categories: 1995/96

Traditionally staff expenditure represents the biggest portion of total expenditure. International comparisons show on average staff expenditure between (58%-65%) of total expenditure, such as Australia 59% and the UK 62%.

Employee Productivity

Mail Volume per Employee

Declining mail volumes per employee provides yet another indicator of declining productivity in the Post Office, particularly over the past two years.