“We’ve made good progress” – Finance Minister on Operation Vulindlela

Only 9 out of the 26 reforms put forward by the presidency during Operation Vulindlela have been completed since October 2020, when the president first mentioned the undertaking.

This was the report from both the Minister of Finance, Enoch Godongwana, and Minister of Presidency, Mondli Gungubele, during a press briefing that served to inform media about the progress made during Operation Vulindlela.

Operation Vulindlela set out to drive a far-reaching economic reform agenda for South Africa to shift the economic growth trajectory and enable investment and job creation.

Focus areas included stabilising the supply of electricity stabilised, reducing the cost and improving the quality of digital communications, finding a sustainable water supply to meet demand, establishing competitive and efficient freight transport and establishing a visa regime that attracts skills and grows tourism.

So far, the actioning team has managed to raise the licensing threshold for embedded generation, enable municipalities to procure power from independent power producers, complete spectrum auction, revive the Blue Drop, Green Drop and No Drop water quality monitoring system, corporatise the Transnet National Ports Authority (TNPA), finalise the White Paper on National Rail Policy, publish the revised Critical Skills List, review Policy Framework and processes for work visas, and implement e-Visa system in fourteen countries, including China, India, Kenya, Nigeria.

Electricity

Load shedding is the single biggest constraint on South Africa’s economic growth. President Ramaphosa has announced a set of additional actions to address the immediate crisis as well as to end load shedding and achieve long-term energy security. The implementation of these actions will be overseen by a National Energy Crisis Committee (NECOM) comprising all relevant government departments and Eskom, with technical and coordination support from Operation Vulindlela.

Digital communications

The auction of high-demand spectrum has been finalised following a settlement reached between the Independent Communications Authority of South Africa (ICASA) and Telkom. This will enable substantial new investment in the telecommunications sector, including the rollout of 5G networks.

The switch-off of analogue transmission, which was due to be completed by the end of March 2022, was postponed by an order of the High Court to 30 June 2022. The switch-off was, however, unable to proceed as planned due to a subsequent decision of the Constitutional Court invalidating the date gazetted by the Minister of Communications and Digital Technologies for the end of dual illumination.

The Department of Communications and Digital Technologies will communicate a new date for analogue switch-off following consultations with stakeholders in the sector and will ensure that all households which are eligible for a subsidised set-top box to migrate to digital signal are able to register for the subsidy. Government remains committed to completing digital migration as quickly as possible to release low-frequency spectrum.

Transport

The freight transport system is undergoing a fundamental transformation. The Economic Regulation of Transport Bill is expected to be voted on by the National Assembly in its third term and, if passed, will provide for open and non-discriminatory third-party access to the rail network as well as the establishment of a Transport Economic Regulator. In the interim, proposals are due from private operators in August 2022 for 16 slots made available by Transnet on the Durban-City Deep and Pretoria-East London lines.

A Request for Proposals has been prepared by Transnet for private partnerships in container terminals at the Ports of Durban and Ngqura. The RFP is expected to be released on 8 August 2022, for partnerships to be in place by January 2023. This is a major new initiative that will enable private investment in and management of poorly performing container terminals, with significant benefits for the economy.

The Department of Transport is developing a devolution strategy for the future of urban rail in South Africa in alignment with the Integrated Urban Development Framework, which will provide for the devolution of passenger rail to local government in line with the recently gazetted White Paper on National Rail Policy.

Water

Reforms in the water sector aim to strengthen governance and increase investment in infrastructure to ensure a sustainable supply of quality water. As a result of the turnaround plan for water use licenses supported by Operation Vulindlela, the backlog of water use license applications has been cleared as of 30 June 2022.

The Department of Water and Sanitation (DWS) is on track to meet its target of processing 80% of all applications within 90 days. The National Water Resources Infrastructure Agency Bill has been finalised and will shortly be released for a 90-day public consultation.

The revised Raw Water Pricing Strategy will be gazetted in the first week of August 2022. The Water Partnerships Office is now operational through an agreement between the DWS and the Development Bank of Southern Africa (DBSA).

This will enable greater private sector participation in the development and maintenance of water infrastructure while the agency is established. Following the revival of the Blue Drop, Green Drop and No Drop water quality monitoring system through Operation Vulindlela, the department is putting in place a range of measures to improve the quality of water services at municipal level.

This includes creating a public dashboard showing the extent of compliance with national norms and standards for all Water Service Authorities; developing more comprehensive norms and standards for water and sanitation services in terms of the Water Services Act; and providing hands-on support directly to municipalities that fail to meet those norms and standards.

Visa System

A comprehensive review of the work visa system has been completed, with recommendations for reform of the visa regime to attract skills and investment. The report will be published in August 2022.

South Africa’s labour market is characterised by a growing demand for skilled labour alongside high levels of unemployment for unskilled labour. Addressing the skills shortage requires a combination of short and longer-term solutions.

In the short term, we need to attract skills where these are in short supply in order to boost the competitiveness of firms and enable growth and dynamism in the economy. Highly skilled foreign workers create more than one job for South African workers on average and contribute significantly to tax revenues and spending in the economy, as well as to productivity improvements and innovation.

Operation Vulindlela together with the Department of Home Affairs (DHA) undertook a comprehensive review of the regulatory framework and processes for skills visas in South Africa. The review led by Mavuso Msimang sought to identify improvements that could enhance the effectiveness of our visa system.

Its recommendations aim to achieve a balance between the economic benefits of skilled immigration and the need to promote and prioritise the employment of South Africans.

An effective work visa system could contribute significantly to higher levels of economic growth and position South Africa as a globally competitive destination for investment and innovation.