Dear Fellow South African,
The South African economy, like any other economy, cannot function, let alone grow, without efficient and competitive network industries. These industries – which include electricity, water, transport and telecommunications – are the arteries through which the oxygen of the economy runs.
Structural problems in these areas have long been cited as some of the main constraints on South Africa’s economic growth. Inefficiency and the high cost of network services are an impediment to doing business in the country.
A factory can only operate effectively with a reliable and affordable supply of electricity. A farm with irrigated farmlands can only produce food if its application for a water use licence is processed timeously. A mine can only transport its minerals for export if the railways are functioning properly. And a small business cannot thrive if it lacks access to the internet or if the cost of data is too expensive.
To address and overcome these challenges, we set up Operation Vulindlela in October 2020 as an initiative of the Presidency and National Treasury to accelerate structural reforms in these network industries. While the responsible government departments and entities drive these reforms, Operation Vulindlela monitors and identifies challenges and blockages. Where needed, it facilitates technical support to departments.
Today, we are releasing an update report on the work of Operation Vulindlela for the first quarter of 2022. The quarterly report outlines the progress made by Operation Vulindlela and the departments responsible for these reforms.
‘Operation Vulindlela has notched up some significant wins’|
Excellent progress being made with structural reforms, says National Treasury
Across government, our focus is on reforms that are fundamental and transformative; that reshape the way our economy works.
This includes the auction of high-demand spectrum for mobile telecommunications, which was delayed for more than 10 years and finally completed in March. The release of new spectrum will improve connectivity and bring down broadband costs.
Read: Ramaphosa’s reform agenda gets a broadband boost
Listen/read: What does the spectrum auction mean for your phone bill?
The establishment of the National Ports Authority as a separate subsidiary of Transnet last year had been delayed for more than 15 years. This was the necessary first step towards enabling private sector participation and increasing the efficiency of our port terminals.
We have also reinstated the Blue Drop, Green Drop and No Drop system for the first time since 2014 to ensure better monitoring of water and wastewater treatment quality. We have published an updated Critical Skills List, also for the first time since 2014.
These are just some examples where, by focusing effort and attention on a limited number of priority reforms, this administration has been able to drive progress.
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 a number of important, interconnected reforms are underway to change the way that we generate and consume electricity.
Milestones include the raising of the licensing threshold for new generation projects to 100MW, allowing these projects to connect to the grid and sell power to customers. We have revived the Renewable Energy Independent Power Producer Procurement Programme through the opening of new bid windows.
Changes to the regulations on new generation capacity have allowed municipalities to procure power independently for the first time. And legislative reforms will ultimately give birth to a new competitive electricity market, supported by the publication of the Electricity Regulation Amendment Bill and the work underway to amend the Electricity Pricing Policy.
The process of unbundling Eskom is on track, with the entity meeting its December 2021 deadline for the establishment of a National Transmission Company. By December this year we hope to complete the unbundling of Eskom’s generation and distribution divisions.
The quarterly report highlights a number of other important achievements, as well as areas where intensive work is underway.
In the water sector, Operation Vulindlela has been providing technical support to the Department of Water and Sanitation to implement a turnaround plan for the granting of water use licences, with a target to process 80% of all applications within 90 days.
Work is also underway to establish a National Water Resources Infrastructure Agency that will ensure better management of our national water resources.
In the transport sector, inefficiencies in port and rail have severely affected our ability to export goods. Work is underway to establish partnerships with private sector operators to invest in port infrastructure and improve the management of container terminals at the ports of Durban and Ngqura.
The White Paper on National Rail Policy, which was approved by Cabinet in March, outlines plans to revitalise rail infrastructure and enables third‐party access to the freight rail network. Transnet Freight Rail is already in the process of making slots available for private rail operators on the network.
A fully operational e-Visa system has been launched in 14 countries, including some of our largest tourist markets. A comprehensive review of the work visa system is also underway to enable us to attract the skills that our economy needs.
These reforms have been made possible due to better collaboration across government behind a shared reform agenda.
Many of these reforms are complex, involving new ways of working and even the establishment of new institutions. In some cases, it will take time for us to see their full impact. Yet they are the only way to shift our economy from stagnation to dynamism.
I would encourage those who continue to raise concerns about the slow pace of reform to read this latest report. 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.
We call on business and investors to take advantage of the changes that are underway and turn their pledges and commitments into tangible, job creating investments.
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.