Operation Vulindlela turning the economic tide

Friday, May 13, 2022

South Africa’s economic reforms are beginning to set the country’s economy on a growth trajectory, an Operation Vulindlela (OV) progress report has revealed.

OV was established in October 2020 as a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms.

It is a government‐wide approach through which Ministers, departments and entities implement structural reforms and a Vulindlela Unit in the Presidency and National Treasury monitors progress, addresses challenges and actively supports implementation.

OV sought to accelerate structural reforms in five key areas:

  • Stabilize the supply of electricity and noting how critical this is for economic growth and development.
  • Reducing the cost and increasing the quality of digital communications.
  • Ensure a sustainable water supply that meets demand in the short and long terms.
  • Ensure a competitive and efficient freight transport regime.
  • Ensure a visa regime that attracts skills and grows the tourism sector.

In the first quarter of 2022, OV recorded progress in various areas.

These, said Guma, included the conclusion of the spectrum auction.

She said: “There was some concern that pending litigation from one of the players in the market would stymie the result and that would have been negatively impact that result. However, we've seen the settlement between industry players and the regulator reaching finality and bringing finality to the auction outcome. We're expecting a further flurry of investment to support this allocation in that sector”.

Renewable energy program

In the energy sector, OV in the quarter opened bid window six of the renewable energy program.

“Preferred bidders [from bid window five] have been announced and expected to reach financial close soon,” she said.

In the same period, there was publication of the draft electricity regulation amendment bill that open for public comments.

“The aim here is to ensure a more competitive electricity market. This reform is occurring alongside the unbundling of Eskom, which is proceeding according to schedule,” she said.

This period also saw the white paper National Rail policy approved by Cabinet, providing clear policy direction on critical third party access and the devolution of passenger rail.

Water progress

On water progress, Guma said OV had revived various water quality monitoring systems.

“We've had the green draft report published recently for the first time since 2014. This allows for better monitoring of water and wastewater treatment quality and allows for greater accountability and allows for government to assess where municipalities may need support in implementing and improving water quality,” she said.

During this quarter, the revised critical skills list was published for the first time since 2014, allowing for government to reflect the current skills shortages in the economy, and where necessary, allows businesses to attract the skills from outside the country in the short term.

Achievement and progress

Minister in the Presidency, Mondli Gungubele, said the achievement were examples of the commitment of the sixth administration to overcome inertia and drive progress on the economic reform agenda.

He said OV was playing an important role in providing a clear policy direction and ensure policy certainty in several areas.

“Departments and entities themselves remain responsible for the implementation of the reforms. Operation Vulindlela does not replace their role but rather provides active support for implementation, especially where capacity is lacking,” he said.

One of the most important roles of the operation is to ensure effective coordination of the reform agenda across government, especially where there are multiple departments involved in the single reform, said the Minister.

He added that government had significant progress since OV was established to accelerate the implementation of reforms that are needed to lift economic growth.

However, he said, there was still much work to be done and not “sugarcoat the challenges”.

Job creation

Finance Minister, Enoch Godongwana, said well implemented reform programs could raise confidence levels supporting a market easing of sovereign risk and borrowing cost.

This, he said, could free-up much needed fiscal space.

“In this way with the net it enables greater job creation, support fiscal sustainability and spare the economy, even in the short term. We can raise economic growth significantly beyond this anaemic levels and create over 1 million jobs relative to a scenario without reforms.”

Structural reforms

A total of 26 structural reforms were prioritised to modernise and transform network industries including electricity, water, transport and digital communications and to attract key skills and promote growth in tourism through reforms in the visa regime.

Of the 26, eight reforms had been completed while another 11 progressing.

The Minister said some reforms were already bearing fruit in digital communication.

“In rail, estimates suggest that the industry will invest over R50 billion. In transport, the successful implementation of third party access to the rail network can spend an additional investment of R8 billion.

In electricity, were government and the private sector were working together to unblock the remaining challenges to free-up embedded generation, R54 billion investment could be realised, he said.

He said: "While we welcome the progress of OV, this has seemingly been misinterpreted as premature for ignoring the very real frustrations on the ground that are not progressing well. In the case of restoring Eskom's energy availability to 70% seem completely unattainable.

"We're mindful of these reforms, and over the coming months, we'll redouble our efforts to resolve the energy crisis and ensure that reforms facing implementation challenges access the support they need to progress. Because we're committed to unlocking the dynamism of this economy, and placing our growth on a permanently high and trajectory.” – SAnews.gov.za

 

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