By Jessie Taylor
At the heart of plans to drive economic growth in South Africa are a series of reforms, targeting key industries such as electricity, water, transport and telecommunications.
The reforms, to be implemented under a specialised unit called Operation Vulindlela, will aim to address structural problems in South Africa’s economy – and are already starting to show success.
“The South African economy, like any other economy, cannot function, let alone grow, without efficient and competitive network industries,” says President Cyril Ramaphosa.
“Structural problems in these areas have long been cited as some of the main constraints on South Africa’s economic growth.”
Transforming network industries
Operation Vulindlela is the joint delivery unit of the Presidency and National Treasury. The unit, which was established in October 2020, seeks to accelerate the implementation of structural reforms and support economic recovery.
Operation Vulindlela aims to modernise and transform network industries, including electricity, water, transport and digital communications. These network industries form the foundation of an internationally competitive economy. Under Operation Vulindlela, 19 priority reforms have been identified.
While government departments drive these reforms, Operation Vulindlela monitors and identifies challenges and blockages.
These reforms are expected to place South Africa on a new trajectory of high and sustained economic growth, creating new opportunities for investment.
Of the reforms proposed under Operation Vulindlela, eight are completed and 11 are on track. Some of the successes of Operation Vulindlela include the completion of the spectrum auction process, the introduction of an e-visa system, and increased reforms in the energy sector.
In the digital communications sector, the release of new spectrum will improve connectivity and bring down broadband costs. The conclusion of the high-demand radio frequency spectrum auction added more than R14-billion to the national fiscus, according to the Independent Communications Authority of South Africa. This should improve connectivity and bring down broadband costs, as well as enable mobile operators to expand their services to include next-generation technology such as 5G.
“Inefficiency and the high cost of network services are impediments to doing business in the country,” says President Ramaphosa.
Some of the major achievements of Operation Vulindlela include:
- The National Ports Authority was established as a separate subsidiary of Transnet. The move is the first step towards enabling private sector participation and improving port terminal efficiency.
- The Blue Drop, Green Drop and No Drop systems – which monitor water and wastewater treatment quality – have been reinstated for the first time since 2014.
- The government has updated its Critical Skills List.
- The Department of Water and Sanitation has received technical support with a turnaround plan for the granting of water use licences.
- The establishment of a National Water Resources Infrastructure Agency, to manage national water resources, is underway.
- Cabinet has approved a White Paper on National Rail Policy. The plan aims to revitalise rail infrastructure and enables third‐party access to the freight rail network.
- A fully operational e-Visa system has been launched in 14 countries and a review of the work visa system is also underway.
A number of important, interconnected reforms have been achieved in the electricity sector, to address the way South Africa generates and consumes electricity.
“Through Operation Vulindlela, we have also been able to take a more focused and holistic approach to reforms, ensuring better coordination where multiple departments and entities are involved. The best example of this is in the energy sector, where several important, interconnected reforms are under way to change the way that we generate and consume electricity,” says President Ramaphosa.
Some of these successes include raising the licensing threshold for new generation projects to 100MW. This has allowed these projects to connect to the grid and sell power to customers.
Under Operation Vulindlela, the government has also revived the Renewable Energy Independent Power Producer Procurement Programme and opened new bid windows. In addition, changes to the regulations on new generation capacity have allowed municipalities to procure power independently – a first for the country.
Legislative reforms, such as the Electricity Regulation Amendment Bill and the Electricity Pricing Policy will improve competition in the electricity market. Added to this, the process of unbundling Eskom is on track and the entity has established a National Transmission Company. The unbundling of Eskom’s generation and distribution divisions is expected to be completed by the end of this year.
“Across government, our focus is on reforms that are fundamental and transformative; that reshape the way our economy works,” said President Ramaphosa.
He added that some reforms may take time before the public sees their full impact.
“What has been achieved by Operation Vulindlela and the respective departments in a relatively short space of time should demonstrate the commitment of government to implementing reforms that are necessary to inject growth into our economy and inspire confidence in the business and investor community,” said President Ramaphosa.
“The reform agenda is moving and its momentum is unstoppable. Together, let us build on this progress and translate economic reform into growth, opportunity and employment.”