By Prof. Busisiwe Mavuso
- Operation Vulindlela has delivered tangible wins in electricity and visa reform, but implementation has slowed on other critical reforms.
- Private sector investment is accelerating to its strongest levels in over a decade, while public sector investment has stalled despite R1-trillion budgeted.
- The new Construction Action Plan addresses fundamental problems like contractor failures, cash flow issues and lack of professional capacity that have left hospitals and schools half-built.
- An outside perspective from South Korea – which chose Johannesburg for its sub-Saharan office –reminds us that we have strong foundations, but must maintain momentum on pending reforms.
The launch of Operation Vulindlela’s second quarter report last week was a reminder of the valuable work it does, but also of how much still must be done. To me, success is measured only when there is a real, tangible difference on the ground, changing the way we do business. By that standard, OV has delivered important wins, but critical work remains.
There are clear successes in that respect. Most obvious is in electricity – the major development of renewable energy projects, Eskom’s return to profitability after eight years, and the 14,500MW of new energy production already registered with Nersa. The vast improvement in registration turnaround times to just 11 days has removed a major bottleneck that was holding back private investment.
Visa reform is also a major tangible achievement. The 300,000 application backlog has been cleared and the electronic travel authorisation system is now up and running, boosting tourism and business travel. These are the kinds of practical improvements that directly enable economic activity.
The BLSA Reform Tracker, available free online, tracks over 200 reforms like these and accords with the progress that Operation Vulindlela shows.
However, implementation timelines have slowed on other critical fronts. Critical infrastructure like the Transport Economic Regulator, the independent water regulator and the unbundling of Transnet’s National Ports Authority are still on the “to do” list, despite being on the agenda for years. In most cases, the legislation is done, but we await the follow-through with the implementation of the institutional reforms. Even on electricity, where progress has been remarkable, vital rules and regulations to enable wheeling, grid capacity and electricity trading are still to be finalised.
These are all now slated to happen in 2026, and I have faith that the OV team can make it happen, but we have to be realistic about the blockages and opposition that they face. We have long partnered with OV where we can help ensure progress, and this is an area that we will continue to work hard on. But it will also take political will – we need to ensure that all of government is aligned from the top down to drive progress.
The other area OV has been working on is local government delivery. This was a new area of focus for OV following the last elections. Unsurprisingly though, progress has been slow. The performance of local government has become a critical risk to our economy and local services have collapsed in metros like Johannesburg through to small towns.
Many are obviously affected, including businesses which either have to relocate, invest in expensive substitute infrastructure, or close. The challenges here are immense and that shows in OV’s assessment – only half of the reforms are on track and a quarter are facing significant challenges. This is not an area that will change quickly, but one we are committed to seeing through.
Ultimately, the critical test of reform success is whether we can get the economy growing. While there are some green shoots emerging, we know that the key is investment. The billions being spent on electricity generation are a good example, but we need it to be happening across the economy from logistics infrastructure through to factories.
Here the picture is mixed. GDP figures show gross fixed capital formation has been shrinking since mid-2023. But figures from a project database Nedbank produces show that private sector investment is actually accelerating, and we should be getting the strongest private sector spending in over a decade based on the value of announced projects. The problem is that there have been no new projects announced by the public sector.
That shows the rhetoric on public sector investment, with over R1-trillion earmarked at the last budget, is not translating into action. This is why I welcomed the South African Construction Action Plan launched last week by the Department of Public Works and Infrastructure. Minister Dean Macpherson’s plan represents a new approach to fixing the poor delivery of public infrastructure.
The six-point strategy addresses fundamental problems. It includes blacklisting contractors who fail to deliver – the key reason we have half-built hospitals and schools across the country that never get finished. The plan also tackles cash flows to be able to pay contractors on time with full transparency. It proposes a proper digital asset management system and procurement war rooms to track performance. Finally, it aims to fix audit quality and professionalise all public works engineers, architects and project managers.
This is a good initiative that will help us to make South Africa a construction site. If executed well, it could be the catalyst that turns the public sector investment figures around and starts delivering the infrastructure our economy desperately needs.
It is easy to be frustrated and defeatist given these challenges. But sometimes it helps to look at our situation from the outside. Last week BLSA attended the launch of a trade promotion office for the South Korean government in Johannesburg. It was refreshing to hear why the Koreans chose Johannesburg and how quickly they acted to establish it to lean against the fractious global trade environment we find ourselves in.
Hearing them tell it, Johannesburg was a no-brainer location for their sub-Saharan African office because the infrastructure is far superior to that elsewhere on the continent. The biggest South African export to Korea is teachers – there are over 11,000 there teaching English. The Koreans see a huge opportunity in increased trade between the two countries, and they have moved decisively to position themselves here.
It is always important to maintain perspective. Every country has its challenges and sometimes it takes an outsider to recognise clearly our strengths. We do have a great base to work from, but we must keep up the energy and focus to get fundamental reforms done. Operation Vulindlela has shown what’s possible when there is coordination, political backing and partnership between government and the private sector. We need that same intensity applied across all pending reforms. That is when our economic story will turn around and we can really deliver the quality of life South Africans deserve.
