S Africa picks Post Office for contract

THE POST OFFICE was yesterday awarded a multi-million pound contract to help manage and develop South Africa's postal system.

A consortium comprising the Post Office and New Zealand Post has been selected for a three-year contract, worth $5m-$10m a year, to modernise South Africa's post office. The joint venture beat off the French, German and Canadian post offices for the contract.

This is the second major overseas postal management deal won by the Post Office. Two years ago it was selected to help prepare the Argentinian post office for privatisation.

A 12-strong team of executives from the Post Office's British Postal Consultancy Service and New Zealand Post will be based in South Africa, helping to commercialise the postal service and train local managers.

Last year South Africa's post office made an operating loss of 270 million rand (pounds 29m) on turnover of 2.45 billion rand (pounds 266m). The country has a population of 45 million scattered over more than 1 million square kilometres - making the reliability of the postal service highly erratic. Improved communications links are one of the South African government's priorities as it seeks to expand international business links.

The UK Post Office has just won more commercial freedom, which is expected to lead to it acquiring more overseas businesses.