Private sector investment is accelerating to its strongest levels in over a decade, while public sector investment stalled despite a budget of R1 trillion.
Business Leadership South Africa (BLSA) has warned that although Operation Vulindlela’s wins are real, momentum is slowing. It delivered tangible wins in electricity and visa reform, but implementation slowed on other critical reforms.
Busisiwe Mavuso, CEO of BLSA writes in her weekly newsletter that the launch of Operation Vulindlela’s second quarter report was a reminder of the valuable work it does, but also of how much must still 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, Operation Vulindlela delivered important wins, but critical work remains.”
She says there are clear successes, with the most obvious in electricity for 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 removed a major bottleneck that was holding back private investment.”
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Visa reform a major tangible achievement
Mavuso points out that Visa reform is also a major tangible achievement. The 300 000 application backlog was 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, she says.
However, Mavuso warns that 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 must still be finalised.
“These are all now slated to happen in 2026 and I have faith that the team can make it happen, but we have to be realistic about the blockages and opposition that they face. We have long partnered with Operation Vulindlela where we can help ensure progress and this is an area that we will continue to work hard on.
“However, it will also take political will. We must ensure that all of government is aligned from the top down to drive progress.”
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Local government service delivery
Mavuso says local government service delivery was a new area for Operation Vulindlela after the last elections. “Unsurprisingly, progress has been slow. The performance of local government has become a critical risk to our economy and local services 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 down. The challenges here are immense and that shows in Operation Vulindlela’s assessment with only half of the reforms on track and a quarter facing significant challenges. This is not an area that will change quickly, but one we are committed to seeing through.”
She the critical test of reform success is ultimately whether we can get the economy growing. “While there are some green shoots emerging, we know that the key is investment. The billions 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. Gross domestic product (GDP) figures show gross fixed capital formation has been shrinking since mid-2023. However, 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 the public sector announced no new projects.”
That shows the rhetoric on public sector investment, with over R1-trillion earmarked at the last budget, is not translating into action, Mavuso says. “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.
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Six-point strategy in Construction Master Plan
“The six-point strategy addresses fundamental problems. It includes blacklisting contractors who fail to deliver as the key reason we have half-built hospitals and schools across the country that never get completed.
“The plan also tackles cash flow 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.”
Mavuso says this is a good initiative that will help 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, she says.
“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 moved decisively to position themselves here.”
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Operation Vulindlela shows what is possible
However, she says, it is always important to maintain perspective. “Every country has its challenges and sometimes it takes an outsider to clearly recognise 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 is possible when there are 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.”
