Operation Vulindlela represents incomplete reforms until lived experiences improve – Bernstein

While South Africa has made progress since forming the Government of National Unity (GNU) in 2024, particularly in electricity and logistics reform, these incomplete achievements fall short of building the deep credibility needed to convince investors and businesses that the future will be meaningfully better, says public policy think tank Centre for Development and Enterprise executive director Ann Bernstein.

There are some areas of progress and the GNU deserves credit, but the question is not whether some things are better than they were, but whether the country genuinely believes it is on a trajectory that will lift investment, growth and employment; none of which has improved meaningfully.

"The economy is driven by what people expect to happen in the future. Confidence in the future derives from much deeper issues of policy and political credibility. Having been subjected to decades of misgovernance, deep suspicions about the quality of current and future governance are hard to turn around," she says.

Operation Vulindlela is the most frequently cited evidence of the progress of reform, but listing achievements is not enough to persuade businesses and households that the future will be materially better than the present.

Much more potent is the lived experience of businesses and households. This has improved, as loadshedding has declined and as ports have become more efficient. However, people must believe that progress is being made on vital issues, like crime and corruption, school quality and local governments' performance, Bernstein notes.

"Operation Vulindlela has made progress in some domains, although deep challenges in others will continue to hold back growth. Additionally, the roots of Operation Vulindlela's successes are not nearly as deep and healthy as they need to be," she adds.

For example, in terms of the liberalisation of generation, the erosion of State-owned Eskom's monopoly and the entry of private power producers marks a decisive break with the past. Loadshedding has receded and investment in renewable generation has surged.

"While these are real reforms, the electricity market is still incomplete and prices continue to rise rapidly. Grid capacity constraints remain binding, wheeling rules are unresolved and the wholesale market has not begun to operate.

"Electricity and Energy Minister Kgosientsho Ramokgopa is also reportedly walking back vital commitments to make the transmission company independent of Eskom," she points out.

South Africa has moved from crisis management to reform, but does not yet have a fully functioning, competitive electricity system. Execution risk remains high amid pushback on some reforms by industry players, including Eskom, Bernstein says.

Another frequently cited example of Operation Vulindlela's success is the opening of rail access to private operators and improvements in port performance, which represent meaningful progress after years of decline. Reduced vessel waiting times and increased private-sector participation are important achievements.

However, State-owned Transnet remains financially fragile and operational monopolies in key sectors persist. Concessions and private participation are only beginning and the infrastructure backlog is enormous.

Exporters cannot yet rely on rail and ports with confidence, and investment decisions presumably reflect that reality, she points out.

Further, while the GNU is making some progress, the risk of destabilising policy changes in the medium and long term is real. It is also not really clear whether that risk is rising or falling.

Crime, corruption, government failure, infrastructure decay and weak execution capacity continue to exist and undermine confidence, she emphasises.

Many reforms are vulnerable to delay, dilution or reversal – whether now or if a new President is elected – while others depend on institutions that have yet to...