Dear South African,
South Africa’s economy, like any other economy, cannot function, let alone grow, without efficient and competitive grid industries. These industries, which include electricity, water, transportation, and telecommunications, are the arteries through which the oxygen of the economy passes.
Structural problems in these areas have long been cited as one of the main constraints to South Africa’s economic growth. Inefficiency and high cost of network services are an obstacle to doing business in the country.
The plant can operate efficiently only with reliable and affordable electricity. A farm with irrigated agricultural land can produce food only if its application for a water use license is considered in a timely manner. A mine can transport its minerals for export only if the railway is functioning properly. And a small business cannot thrive if it lacks Internet access or if the cost of data is too expensive.
To address and overcome these challenges, we organized Operation Vulindlela in October 2020 as an initiative of the President and the National Treasury to accelerate structural reforms in these network areas. While the responsible government agencies and structures are implementing these reforms, Operation Vulindlela monitors and identifies problems and obstacles. Where necessary, it contributes to the technical support of departments.
Today we release an updated report on Operation Woolindle for the first quarter of 2022. The quarterly report describes the progress made by Operation Woolindle and the agencies responsible for these reforms.
“Operation Vulindlela has yielded several significant victories.”
Excellent progress has been made in structural reforms, says the National Treasury
In all governments, our focus is on fundamental and transformational reforms; changing the way our economy works.
This includes a high-demand auction for mobile communications, which was postponed for more than 10 years and finally ended in March. The release of the new spectrum will improve connectivity and reduce broadband costs.
Read: Ramaphosa’s reform program has improved broadband access
Listen / Read: What does the spectrum auction mean for your phone bill?
The creation of the National Ports Authority as a separate subsidiary of Transnet last year was postponed for more than 15 years. This was a necessary first step towards private sector involvement and improving the efficiency of our port terminals.
We have also restored the Blue Drop, Green Drop and No Drop system for the first time since 2014 to provide better water and wastewater quality control. We have published an updated list of critical skills, also for the first time since 2014.
These are just a few examples where, by focusing efforts and focusing on a limited number of priority reforms, this administration has been able to make progress.
A holistic approach
Thanks to Operation Wolindle, we have also been able to take a more focused and holistic approach to reform, ensuring better coordination involving multiple departments and agencies.
The best example of this is the energy sector, where a number of important and interrelated reforms are underway to change the way electricity is produced and consumed.
Key milestones include raising the licensing threshold for next-generation projects to 100 MW, allowing these projects to connect to the grid and sell energy to customers. We have resumed a program to procure independent energy producers from renewable energy sources through the opening of new rate windows.
Changes in the regulations on new production facilities have allowed municipalities to purchase electricity for the first time. Legislative reforms will eventually lead to the creation of a new competitive electricity market, backed by the publication of a bill on changes in electricity regulation and work on changes to electricity pricing policies.
The Eskom branch process is on track and the organization is meeting its deadline to establish a National Transfer Company in December 2021.
By December of this year, we hope to complete the unbundling of Eskom’s production and distribution divisions.
The quarterly report highlights a number of other important achievements, as well as areas where intensive work is being done.
- In the water sector, Operation Vulindlela provides technical support to the Department of Water Supply and Sanitation to implement a turnaround plan for the issuance of water use licenses in order to process 80% of all applications within 90 days. Work is also underway to establish a National Agency for Water Infrastructure that will provide better management of our national water resources.
- In the transport sector, the inefficiency of ports and railways has severely affected our ability to export goods. Work is under way to establish partnerships with private sector operators to invest in port infrastructure and improve the management of container terminals in the ports of Durban and Ngkura.
The White Paper on National Railway Policy, approved by the Cabinet of Ministers in March, outlines plans to rebuild the railway infrastructure and gives third parties access to the freight network. Transnet Freight Rail is already opening slots for private rail operators in the network.
- The fully operational e-Visa system has been launched in 14 countries, including some of our largest tourism markets. There is also a comprehensive overhaul of the work visa system so that we can bring in the skills our economy needs.
These reforms have been made possible by better cooperation between governments as part of a common reform agenda.
Many of these reforms are complex, involving new ways of working and even creating new institutions. In some cases, it will take us a while to see their full impact. But this is the only way to translate our economy from stagnation to dynamism.
I would urge those who continue to express concern about the slow pace of reforms to read this latest report. What Operation Vulindlela and the relevant agencies have achieved in a relatively short period of time should demonstrate the government’s commitment to the reforms that are necessary for the growth of our economy and inspire confidence in the business community and investors.
We encourage businesses and investors to take advantage of the changes that are taking place and turn their promises and commitments into tangible investments that create jobs.
The reform program is moving, and its dynamics cannot be stopped.
Let us roll out this progress together and translate economic reform into growth, opportunity and employment.