BLSA Reform Tracker shows progress, but some institutional reforms are lagging

The Reform Tracker of business organisation Business Leadership South Africa (BLSA) shows that central government reforms are generally progressing, albeit some more slowly, and are broadly moving in the right direction.

However, an important exception is the overall logistics reform programme, says BLSA CEO Busi Mavuso.

The tracker shows a step backwards in the index tracking reforms, which was driven by multiple factors, including the missed deadlines for Volume 4 of the Network Statement, delays in the National Rail Bill and, importantly, the emerging challenges to private-sector participation in the logistics system.

State-owned Transnet continues to design all participation terms and runs all projects, which results in agreements that heavily favour the parastatal over private partners, she points out.

The network access agreements that are supposed to see 11 private sector operators on the Transnet network are struggling toward completion with terms that substantially constrain the ability of private operators to succeed, she adds.

"Logistics reform was showing good promise three months ago, but warning lights are now flashing. We need a competitive, efficient and innovative logistics system for our economy to deliver growth.

"These reforms must be accelerated and the institutional resistance and obstacles need to be tackled decisively. Transnet cannot be allowed to design terms that undermine the entire reform objective," says Mavuso.

Further, the tracker highlighted progress in electricity reform following the review in the first quarter of the year that brought to light decisions on the structure for unbundling the network operator from State-owned Eskom that conflicted with established policy.

Eskom and the Department of Energy and Electricity had proposed an unbundling structure that did not align with the policy objective of creating an efficient, neutral hub for a competitive electricity market.

This institutional deviation from policy could have derailed the entire electricity market transformation, Mavuso notes.

However, President Cyril Ramaphosa decisively put reforms back on track by confirming the policy during his yearly State of the Nation address in February. The BLSA Reform Tracker reflects an improved trajectory as a result of this.

The fact that such an intervention was needed reveals how fragile reform progress remains when institutions deviate from agreed policy, Mavuso asserts.

Meanwhile, municipal reforms have been slower to develop than national reforms. The BLSA Reform Tracker shows progress in separating water and electricity services in municipalities, but progress on other fronts, including greater professionalisation and rooting out corruption, have been flat, says Mavuso.

"Business has a clear and direct interest in municipal performance. Well-functioning councils are essential to business by ensuring production can happen, and employees live in conditions that support a good family life. From local roads to water, the cost of doing business can be heavily affected by service provision," she says.

The Local Government White Paper review process will strengthen the separation between political leadership and the administration, and support the professionalisation of the civil service, as well as introduce a corruption register to ensure dismissed employees do not work for the State again, she says.

Dysfunctional municipalities are a binding constraint on investment and job creation, while functional ones are engines of growth. The problems afflicting municipal service delivery are the central challenge facing South Africa's economic trajectory, says Mavuso.

"On the local government front, and many other fronts, reform implementation will deliver the growth and jobs our country critically needs."