Operation Vulindlela: progress, but at glacial pace

One of the most important positives from Operation Vulindlela is that it has provided a sense of momentum for a reform process that had long been stalled. The joint presidency-Treasury unit, formed in late 2020 to “unblock” key structural reforms the government had long promised to boost economic growth, released a quarterly report that showed encouraging, albeit slow, progress.

Vulindlela focuses on five objectives in electricity, communications, water, freight transport and visas, and a 26-item list of related reforms. It now boasts it has completed nine of these and is on track with a further 11. The rest are “facing challenges”, as they say in the government, or not happening at all.

The government clearly has managed to make a start on the reform path in the almost three years since Operation Vulindlela was established. The auction of broadband spectrum after more than a decade of waiting has been widely hailed. Likewise, the liberalisation of licences for new electricity generation and the reopening of the government’s bid windows for new renewable energy. Transnet has sought private operators on certain rail lines. A new critical skills list has finally been published.

So too have a number of bills, white papers, strategies, reviews and other reports in areas such as water, transport, electricity and visas. What’s more, Vulindlela counts among its achievements in the latest quarter the National Energy Crisis Committee (Necom), established to oversee implementation of the energy crisis plan President Cyril Ramaphosa announced recently.

“Operation Vulindlela has been able to open the way for the reform agenda in a short space of time, and has enabled the implementation of reforms which will have a real impact on investment, growth and ultimately jobs,” said finance minister Enoch Godongwana at the launch of the report.

Some economists have taken to including upbeat reform updates in their notes to clients; some are even starting to factor in the potential boost these could provide to economic growth in the medium to long term.

However, there a number of reasons not to get too excited yet. The signs of progress are welcome and important, but it is an excruciatingly slow and often contested process.

It may be churlish to point out that many if not most of the reforms the president’s much trumpeted Necom has been set up to implement are the very same ones Operation Vulindlela was supposed to make happen when it first began. Three years later and the sixth reform —“Improve energy availability factor [EAF] to over 70%” has gone nowhere except backwards, with Eskom’s EAF barely exceeding 60% on a good day.

In communications, too, SA has yet to realise the benefits of the crucial spectrum auction because that has been mired in legal issues. And SA’s freight railways and ports are as much of a constraint to growth as before, while demand for SA’s coal is booming, even if Transnet claims to be enabling private participation.

No doubt Vulindlela has to work hard to overcome the “blockages” within government departments and state-owned enterprises. And over time, its efforts will yield tangible results in terms of investment and growth. But, it is going to be slow.

A second reason is that most of the structural reforms on Operation Vulindlela’s list are just that: structural. They are items such as corporatising the National Ports Authority or finalising the white paper on national rail policy, or establishing an independent economic regulator for water or reviewing the policy framework for work visas. They may be necessary as enablers of private participation or skills imports, but that is all they are — necessary but not sufficient conditions for things to be done differently in ways that will improve economic outcomes.

Third, and most troubling, is that none of this tackles the deep dysfunction in the government that makes it necessary to have an initiative such as Operation Vulindlela in the first place. It is essentially an attempt to tackle the symptoms, not the cause.

If the president really wants an effective reform programme he needs to be willing to take on the ministers and departments that do not buy into his reform agenda and fix those that lack the will or ability to implement it.

IT IS ESSENTIALLY AN ATTEMPT TO ADDRESS THE SYMPTOMS, NOT THE CAUSE