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Debate On Vote 32: Telecommunications and Postal Services by Hon Nokuzola Ndongeni

10 May 2016

Honourable Chairperson
Ministers and Deputy Ministers
Honourable Members
Officials of the Department
Distinguished Guest and Fellow South Africans

Hon. Chairperson: this budget debate takes place barely three months before the Local Government elections take place and it is important that we report to the society at large what the ANC led government has done and achieved so far.
The South African Post Office is mandated through its Universal service obligations licence agreement to provide postal and communication service to all South Africans at affordable price. The post office has faced some including a disruption of services labour unrest, intermittent strikes, and failure of good governance. There are some reason for this state of affairs including but not limited to poor management, the decline in revenues as a result of mail substitution. However, there is a government plan to stabilise the post office and ensure the implementation of a turnaround strategy to address the short to medium term challenges. To allow the organisation to attract funding and improve revenue, R650 million is allocated for in 2016/17 for the recapitalisation of SAPO. Again SAPO has been tasked with the responsibility of managing the distribution of set-set-top boxes and antennae for the broadcasting digital migration project and received an additional R480 million from the Department of Telecommunications and Postal Services over the medium term for this. The SA post remains a monopoly entity in the reserve mail business, which constitutes the biggest component of its business. The global trend has seen a steady decline in the letter mail volumes as other forms of communications pervade the market. The postal industry has been going through transformation to adjust to structural changes in its core mail business. The committee interacted with the leadership and management of the post office and we are happy with the development so far. The post office is on its way to recovery. The provision of broad band is crucial for economic development and must be extended to rural and underserviced areas so as to improve access, uptake and usage of ICTs to address the digital divide.

The ANC support budget vote 32 for Telecommunication and Postal Services. This budget talks to the need to be build capacity of the state by mobilising resources for the SITA and the committee to come closer to SAPO. Both the App and budget are aligned to the NDP.

The primary focused areas as outlined by the DTPS for SITA are e-government, data security and cleaning up procurement processes from the governance administration point of view. The e-government programme has been reviewed to making it simpler and getting results much quicker.

Hon. Chairperson

The approach on the issue of ICT security will be mainly to look and improve the skills that are required to implement effective data security. The first order of business is fixing all the government websites. SITA is at the end tail of the programme which will take all the government websites and put them in a secured area.

The procurement processes have been reviewed and what is now needed is to focus on is the implementation. The improvement on the turnaround time on the procurement of services from SITA will also be streamlined. The SITA regulation requires that a project plan for the implementation is provided within ten days once a service has been procured from SITA and this requirement will be adhered to.

SITA is also looking at all the systems hosted within their data centres and a full review has been completed and most of the systems are quite old. The approach is first to consolidate and stabilise the existing system while designing the new ones for later implementation.

The customer service management is also another focused area. There was a customer survey in 2013 and the results were below 40% of customer satisfaction even though the SLA reporting on the network uptime had been more than 95%. There is a clear disjuncture on the customer perception and the operations management of the organisation.

Hon. Chairperson,

For SITA to achieve and maintain the anticipated profitability, the organisation plans to focus on the following during the 2016/17 financial year:

* Service Delivery: the goal is to provide high-quality IT services to enable Government to deliver efficient and convenient services through the use of ICT.
* Infrastructure: to optimize the provision of SITA's IT infrastructure services in order to increase availability, flexibility, scalability, predictability and security.
* Procurement: to address all issues relating to delayed procurement turnaround times, removing customer pain points, and transforming the procurement function.
* Financial Sustainability: to ensure an effective and efficient financial management and ensure financial growth and sustainability
* Organization: to build and maintain organizational capability to enable SITA to achieve its strategic imperatives and becomes an employer of choice within the ICT industry.
* Governance and Administration: to provide leadership, strategic management, governance risk and resources management in line with government-accepted norms and standard.

Hon. Chairperson

We need to further highlight that the total number of targets for SITA in the financial year 2016/17 is about 25 and the company believes that with streamlined internal processes, it will deliver on the set goals. A lot of work has been done regarding strengthening internal capacities to deliver on these focused areas.

South Africa Post Office (SAPO): The Postbank had a critical role in the financial service environment of South Africa, especially as it concerned economically marginalised citizens and those who were not in reach of the banking sector. Within this broader theme of universal service and access, the Postbank would lead the expansion of access to banking services to the majority of citizens, mainly in rural South Africa.
Thus, SAPO will continue with the restructuring and corporatisation of Postbank to meet South African Reserve Bank requirements so that it can operate as a bank. Over the medium term, the organisation will focus on continuing to provide for access to postal and related services, and increasing the number of addresses to allow wider access to postal and financial services in under-serviced areas. The organisation expects to roll out 1,5 million community addresses over the medium term to allow both new communities and existing communities without street or postal addresses to receive mail.

Hon. Chairperson

The modernisation and adaptation of postal services is crucial to ensure their continued relevance and value, such that the existing postal infrastructure should be leveraged to provide an expanded range of goods and services to South Africans. Despite the declining trend in letter volumes, the postal services sector remains an important component of the economic sector in South Africa. SAPO is therefore an important national strategic asset, and its turnaround and sustainability is important to SA's broad long-term developmental goals. Furthermore, the SAPO's infrastructure has a far greater depth of reach to the citizenry than any other entity.

Hon. Chairperson

SAPO will aim to adapt to the rapidly changing environment, increase productivity, and improve business operations and financial performance while delivering on government's social mandate of providing postal services to areas that were traditionally neglected. Sisondeze inkonzo zeposi kweza ndawo zifana neNkantolo eBizana, eCungcwini eDutywa nako Hluleka eNgqeleni oku kukukhuthaza oosomashishini abancinci nokopolotyeni, bakwazi ukusebenzisa inkonzo zeposi.

Nogogo notatomkhulu bafumane imali zabo zendodla kufutshana. Nolutsha likwazi ukuthumela izicelo zomsebenzi nokufumana ingxelo zezifundo zabo. Olu hlahlo lwabiwo mali luthetha ngqo kwingxaki ezi jongene nabasebenzi kwelisebe lezeposi.

The focus of SAPO over the medium term will be on implementing the revised business operating model, corporate plan which has incorporated some of the key projects from the strategic turnaround plan. This will stabilise business operations and engagements with stakeholders to improve and strengthen the organisation's position as the national provider of postal and related services.

For SAPO to achieve and maintain the anticipated profitability, the organisation plans to focus on the following during the 2016/17 financial year:

  • Increasing and diversifying revenue streams.
  • Cost Management.
  • Improving operating efficiency.
  • Foster a modern and performance driven organisation.

Hon. Chairperson

The ANC appreciates the appropriation of the R650 million for the 2016/17 financial and this is the much needed cash injection to ensure the entity is back to sustainability and profitability. However, it has to be emphasised that additional funding will have to be raised and put into the system in order to complete the implementation of the turn-around and corporate strategy. The organisation is therefore considering other funding measures such as commercial banks for additional funding and the response has been very positive. Once the funds are secured, SAPO will be in a position to settle debts from the past which will further stabilise its operations and then focus on implementing revenue generation initiatives. This could not have been possible without the much needed government support and guarantees.

SAPO is confident that the viability of the organisation to turn-around will be in the 2017/18 financial year for the entity to return to profitability. This is a base case and it can be far exceeded. It has to be emphasised though that part of ensuring the success of the turn-around of the organisation will be doing business with some of the government departments.

Hon. Chairperson

In conclusion, it has to be noted that considerable progress has been achieved on the stabilisation of the department and SOCs, particularly at the human resources level with a clear understanding of challenges faced by the sector. I am therefore confident that 2016/17 financial year will be even a greater year.

Xa sibambisene siluluntu norhulumente singenza ngcono # sishota ngawe.

Thank you.

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