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A Deeper Look into Public-Private Partnerships with Mark Barnes

Ince hosted the first of its Ince Talks Series, the theme of which was “A deeper look into public-private partnerships”. The guest speaker was the South African Post Office’s CEO, Mark Barnes.

At the time of his speech, Barnes gave insights into the workings at the Post Office, his contributions to helping to turn the organisation around and his optimistic view of what could be achieved if the private and public sectors worked together. Sadly, his tenure will be cut short as Barnes announced his resignation, citing differences with government on forward strategy in relation to the structure of the group, in particular the location of Postbank.

In the talk, Barnes took the audience through a journey of his time at the Post Office, which he described as “quite an extraordinary, overwhelming experience”, followed by an update on the current state of the national postal service or as he refers to it: a commercially irreplaceable network. He also discussed the future he envisions for the institution.

Many will recall Mark Barnes as a former investment banker at Standard Corporate and Merchant Bank and as the former head of private equity firm Brait. So, very well-versed in private sector dealings. In January 2015, he began his foray into the public sector, starting as the CEO of the SA Post Office. “I don’t see it as a post office”, he said. “I see it as a connecting point; every counter we see as a channel between government and its citizens and other people that live in South Africa.”

His objective upon arrival at the Post Office was to “create state capacity by eliminating state dependency”, he said. The National Post Office is “a commercially irreplaceable infrastructure that is owned by the government; that is everywhere and pervasive and available to the citizens of South Africa. That’s what we are: an underutilised infrastructure.” In light of this, he endeavoured to build the institution’s capacity, eliminate corruption and replace dependency on the government by making the Post Office self-sustainable.

Everybody Knows

“The failures at the SAPO were so dire that they started to manifest in life-changing experiences”, such as no toilet paper in the 600-member office, Barnes recalled. When everyone was arriving at work with their own toilet paper, Barnes began rethinking the procurement processes in the institution.

“One of the fundamental flaws in government procurement is that they often get told the price without knowing it.”  It was after the exercise of calculating what it would cost to provide toilet paper for the entire office, that Barnes and his team embraced the concept of fair market value which redefined all the buying and selling processes at the Post Office. “Doing this ensures that there’s not much that goes unaccounted for”, says Barnes.

Barnes uses the musical reference of Leonard Cohen’s ‘Everybody Knows’ to illustrate the path Post Office has taken in combatting corruption in the business. “One of the things that drive us, that’s driven everything that we’ve gotten right, is truth. Upfront, proactive honesty. That’s one of the principles that we abide by at the Post Office is that ‘everybody knows”, he says.

A Change is Gonna Come

When Mark arrived at the Post Office, their delivery standard was 54% of the acceptable delivery standard in the world, he recalls. As of July 2019, it is at 88%, and it will be 92% by the end of the year, Barnes says. “When I arrived at the Post Office, I used to get 3 000 emails a week of complaints. I’m down to 34, last week, that’s an improvement.”

Reflecting on how this improvement was achieved, Barnes remarked that it was made through culture change. “We gave people the prospect of economic dignity”, he said. “We deal in truth.” This is how the organisation has managed to start “changing people’s culture and their self-respect and how they felt about themselves”, Barnes said.

The CEO provided the audience with various anecdotes, both light-hearted and serious, informing them that he and his employees “fight from the same side and we know the truth”.

“Over the last three years, we’ve started paying off the creditors, we’ve started delivering a little faster and people have started telling stories about how our courier service is faster than everyone else’s”, Barnes said.

The organisation has eradicated all debt, has no outstanding National Treasury guarantees and has been taken off the Treasury’s State-Owned Enterprises distress list – the only SOE to achieve this feat. 

Solutions

Barnes also made analogies using South African-specific business and lending models, such as spaza shops and stokvels, that operate on “extraordinary oversight and a demonstrable track record of success” to illustrate his ideas of creating economic dignity for South African society. Barnes shared how he believes building township economies is the key to addressing inequality.

Barnes believes that in the future SAPO will become the employer of choice. South Africans will want to leave their jobs at big corporates, and as the Post Office hopes to create the prospect of economic dignity, employees will go there to “build a life with far-reaching consequences for all South Africans that starts closing inequality gaps,’’ he said.

Going forward, using the SAPO’s vast infrastructure, economic rights and the virtue with which these rights are approached, the organisation will start to inculcate the idea of economic dignity into the South African public. Barnes envisions a future where, through leveraging the responsibilities it has through its custodianship of the South African Social Security Agency, the organisation is responsible for paying student grants, administrating the national lottery, facilitating municipality bill payments, and even the distribution of antiretroviral drugs.

Ever the solution-driven maverick, Barnes mused that instead of sitting around whingeing about the state of the nation, why not get involved? “There are lots of me, and you”. As he has mentioned before, there isn’t another place to go. We need to get together and start understanding each other.

Mark Barnes has since resigned from his position as SA Post Office CEO. He will remain within the SA Post Office fold for some time to help with the transition of the interim group CEO, according to Moneyweb. The SA Post Office board has thanked Barnes for his “enormous service to the SA Post Office and the country during his tenure”.

“In his time at the SA Post Office, Barnes has led the stabilisation of the organisation as well as pioneered its positioning as a relevant access point of government services for our communities,” it said.

The Post Office also assures customers and the SA public that the departure of the outgoing CEO will not negatively impact the organisation’s operations.