The momentum of the government’s economic reform agenda will gather pace this year under the oversight of the joint presidential-National Treasury initiative Operation Vulindlela.
Apart from the reforms in freight logistics and energy, a restructuring of water, sanitation and electricity services provided by local government is also under way and will gather further impetus from the White Paper on local government due to be finalised in April. Changes will be proposed to the local government fiscal framework and the way in which historically underfunded local government is financed, among other things.
The head of Operation Vulindlela and the presidency’s project management office, Rudi Dicks, said the continuity over several years of Operation Vulindlela and of its reform agenda has been a source of confidence for investors who are beginning to regard South Africa in a more positive light. The projects it is steering have and will encourage private sector participation in a range of activities previously the exclusive preserve of the government, thereby creating jobs and reducing poverty.
Operation Vulindlela was launched in October 2020 to remove the structural roadblocks holding back economic growth.
While implementation of the reforms is undertaken by the relevant government departments, Operation Vulindlela tracks progress, ensures time frames are adhered to and holds departments accountable.
It is important, Dicks said, that well-functioning utilities are created at local-government level given the underperformance in service delivery, though he conceded intervention in the sphere is constrained by constitutional provisions related to the three spheres of government and their respective roles.
Local government reforms include ringfencing utilities, the professionalisation of employees and enhancing the delivery of services. While this might take some time to achieve, Dicks stressed that Operation Vulindlela “is not about business as usual. It is about ensuring we are able to fast-track programmes and deal with the challenges facing local government. There is a commitment to move on this fairly fast.”
The National Treasury is driving the Metro Trading Services Reform Programme, a performance-based grant system that incentivises metros to improve service delivery and arrest the decline in the provision of electricity, water and solid waste management due to underinvestment and maintenance. To qualify, the councils of the eight metros have to approve trading service improvement strategies.
The national government is offering a grant incentive of R54bn over six years with the expectation the grant will be matched by own-source revenues of a further R54bn.
On the energy front, a key project in the pipeline this year, said Dicks, will be the launch of the wholesale market for electricity generation, which will require the finalisation of the market code and its approval by the National Energy Regulator of South Africa. Also important will be the unbundling of Eskom into separate distribution, generation and transmission subsidiaries.
In the logistics area, the creation of Transnet subsidiaries is targeted for Transnet Freight Rail and the Transnet Infrastructure Manager, which are now simply divisions.
“Allowing for separation is important for private sector participants,” Dicks said.
Also, the department of transport will finalise the requests for proposals for the private sector to run five priority rail and port corridors based on the submissions received last year for its requests for information.
The Transport Economic Regulator will have to be established and the National Rail Bill finalised to establish a legal framework for a competitive rail sector.
Other economic transformation projects on Operation Vulindlela’s dashboard relate to digital services, spatial inequality, visa reforms and water management. - Business Day
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