Next Phase of Operation Vulindlela to Be Launched by the South African Government

The South African government is set to launch the next phase of Operation Vulindlela, aimed at accelerating structural reforms critical for enhancing the country’s economic growth prospects. This initiative, detailed in the recent Medium-Term Budget Policy Statement (MTBPS) released by the National Treasury, emphasizes the need for reforms to boost competitiveness, productivity, and investment.

In its initial phase, Operation Vulindlela implemented 35 reform actions across five key network industries. These included efforts to reduce power outages, enhance the logistics system, lower data costs, improve water supply, and attract essential skills to the country. The upcoming phase is focused on driving higher medium-term growth necessary for expanding employment, with new initiatives targeting the reversal of local government decline, addressing spatial inequality, and advancing digital government to improve service delivery.

The initiative is a collaborative effort between the Presidency and National Treasury, designed to facilitate structural reforms and support economic recovery. One of the key priorities identified is the restructuring of Eskom, aimed at establishing a vibrant energy market with a sufficient supply to support economic growth. Notably, the cumulative effects of previous reforms have included improved performance of power stations, resulting in no load shedding since March 26, 2024. The Electricity Regulation Amendment Bill, signed into law in August 2024, alongside the establishment of the National Transmission Company of South Africa on July 1, 2024, is pivotal in laying the groundwork for a competitive electricity market.

The MTBPS highlights ongoing efforts under the Energy Action Plan to restore energy availability and secure new generation capacity, with over 8,500 megawatts of project registrations reported to the energy regulator by the end of August 2024.

Transport reforms also play a crucial role, particularly with the opening of the freight rail network to private operators, aimed at reducing inefficiencies and costs, which will in turn help businesses offer lower prices and stimulate economic growth. The Economic Regulation of Transport Bill, signed into law in June 2024, facilitates this access.

Progress in the transport sector is evident, with Transnet’s freight volumes increasing from 149.5 million tonnes at the end of the previous financial year to approximately 151.7 million tonnes by March 2024, aided by a recovery plan initiated in October 2023. Port cargo handling has stabilized compared to 2023 levels.

Reforms in the water sector are also identified as vital for economic growth and security. The National Water Resources Infrastructure Agency Bill, signed on August 27, 2024, establishes an independent agency to manage bulk water resources. Furthermore, the Water Services Amendment Bill, which aims to intervene in failing municipalities, is pending Cabinet approval following public consultation.

Operation Vulindlela’s water sector reforms focus on addressing supply and infrastructure challenges through independent regulation, enhancing local water services, enforcing legal compliance among municipalities, and implementing trading services reforms. These reforms include governance and financial improvements to essential services, supported by a new performance-based grant. The National Treasury is collaborating with the Water Partnerships Office to explore private sector involvement, particularly in addressing non-revenue water challenges caused by leaks in infrastructure.

Additionally, the Department of Home Affairs has reformed the visa system to attract skilled individuals and boost tourism, while the rollout of 5G infrastructure has led to reduced data costs, increased connectivity, and improved access to network services.

Overall, the next phase of Operation Vulindlela aims to create a more resilient economic landscape by addressing critical areas in energy, transport, water, and human capital, ultimately fostering a conducive environment for sustainable growth.