President Cyril Ramaphosa: Launch of Operation Vulindlela Phase II

Address by President Cyril Ramaphosa at the launch of Operation Vulindlela Phase II

Programme Director,
Ministers and Deputy Ministers,
Directors-General,
Leaders of state-owned companies,
Representatives of social partners,
Distinguished Guests,

Good afternoon,

Thank you for joining us as we commence the next phase of our economic reform journey through Operation Vulindlela.

We initiated Operation Vulindlela in the aftermath of the COVID-19 pandemic and its devastating economic impact on our country and around the world.

The pandemic arrived just as we were emerging from more than a decade of stagnant economic growth and rising unemployment and from the era of state capture.

When I addressed a joint sitting of Parliament in October 2020, I said:

“In the aftermath of a fire, green shoots begin to emerge.

“The ashes enrich the soil, and new life takes root to replace what was lost.”

Over the past four years, we have seen the green shoots of economic reform.

Through far-reaching reforms in the electricity sector, we have substantially reduced the severity and frequency of load shedding, relieving a constraint on growth which had strangled our economy for years.

These reforms have enabled private investment in energy generation, unlocking billions of Rands in new investment in renewable energy in every part of the country.

We have embarked on a major reform of our ports and rail system through the Freight Logistics Roadmap.

We have opened the rail network to competition and invited private sector participation in port terminals, while ensuring that our network infrastructure remains state owned.

The completion of the spectrum auction enabled significant investment in telecommunications infrastructure while improving network quality and reducing data costs for every South African.

The water use license system, which once served as a barrier to investment, now works efficiently and has allowed projects in forestry, mining and other sectors to proceed.

As of last year, we have implemented an entirely new framework for skilled visas to attract investment and encourage businesses to establish themselves in our country and create jobs.

All of this progress has been made possible thanks to the cooperation and commitment of the relevant government departments, state owned enterprises, public entities and social partners.

I commend in particular, the Ministers, Deputy Ministers, Directors-General and CEOs that have provided leadership to these efforts.

Over the last four years, Operation Vulindlela has become a government-wide initiative.

This is meaningful progress and it will enable higher growth in the years to come.

Yet our economy continues to be held back by structural inefficiencies.

Our economy needs to grow much faster to create the jobs that we need and to achieve prosperity for all.

We need more rapid growth to enable government to spend more on healthcare, education, social grants, infrastructure and other key areas to improve the lives of our people.

Growth is the only way to achieve fiscal sustainability and social progress.

That is why this Government of National Unity is committed to sustaining the momentum achieved by Operation Vulindlela on the economic reform agenda.

We need bold, far-reaching reform to revive and reshape our economy.

Our immediate priority is to follow through on those reforms that are already underway to realise their full impact.

In the energy sector, we will establish a competitive electricity market governed by the Electricity Regulation Amendment Act which came into effect earlier this year.

This will enable multiple generators to compete to produce electricity at the lowest cost and with the greatest efficiency.

To support this, we will complete the restructuring of Eskom and establish an independent Transmission System Operator to create a level playing field for market competition.

To address the lack of grid capacity, the Minister of Electricity and Energy has launched the first round of Independent Transmission Projects to procure more than 1 000 km of new transmission lines.

These reforms will ultimately mean lower costs and a reliable electricity supply for all South Africans.

In the logistics sector, private rail companies will soon be able to operate on our freight rail network, following the publication of the Network Statement by Transnet in December last year.

This will enable massive investment in rolling stock and enable more goods to be transported by rail, helping our export industries to grow.

These reforms will generate significant capital and new revenue streams for Transnet to help stabilise its operations and enable it to invest.

We will establish the National Water Resources Infrastructure Agency as a dedicated entity to own, manage and invest in our water resources.

Through the Water Partnerships Office, we will support public-private partnerships in water infrastructure to reduce leaks, access new water sources and improve wastewater treatment.

To address the root causes of service delivery failures, we will amend the Water Services Act to separate the role of municipalities as water service authorities and water service providers.

The days of standing by and watching while taps run dry or raw sewage runs into our rivers are over. We will take action to make sure that right of every South African to quality drinking water is protected.

On the visa system, we will ensure that the recommendations of the work visa review are fully implemented and introduce an Electronic Travel Authorisation System to support growth in tourism.

The Minister of Home Affairs has already introduced the points based system to make it easier for highly skilled immigrants to come to South Africa and contribute to our economy, while at the same time enforcing our immigration laws more effectively to combat illegal immigration.

Through these measures, we will complete the reform of our network industries that we began in the previous phase and address the binding constraints on growth.

However, that is not enough.

We need growth that is both rapid and inclusive.

We need growth that serves the millions of people in our country who remain unemployed, and the young people who cannot see a way into the labour market.

And we need growth that improves people’s daily lives by fixing the infrastructure that is broken.

That is why, in the next phase of Operation Vulindlela that we are launching today, we will implement reforms in three new areas.

First, we will address the apartheid legacy of spatial inequality, which has forced millions of South Africans to live far from economic opportunity.

The poorest South Africans spend as much as 40 percent of their income on transport to get to work, more than almost any other country in the world.

The structure of our cities has to change to enable people to access work.

That means changing our housing policy so that people can choose where they want to live through demand-side subsidies for home ownership and affordable rentals.

While the millions of homes that we have built since 1994 have given families shelter and dignity at an unprecedented scale, we cannot continue to build houses on the periphery of our cities and towns.

We will accelerate the release of publicly-owned land and buildings for affordable housing, with a particular focus on inner cities.

And we will clear the backlog of title deeds for affordable housing, while making the titling system more accessible and affordable.

This will turn houses into an asset for poor households. It will enable these households to access credit and use this asset to advance themselves.

Finally, we are going to undertake a comprehensive regulatory review to remove barriers to low-cost housing development and incentivise investment in urban centres as opposed to outlying areas.

These reforms will help turn our cities and towns into thriving centres of economic activity.

The second area of reform for this phase of Operation Vulindlela is to improve the performance of local government.

Many of our municipalities are unable to deliver basic services to households and businesses.

Operation Vulindlela has set out a clear agenda for local government reform, which starts with improving the delivery of water and electricity services through professional utilities.

Utilities should have the right technical skills, strong regulation and oversight, and full control of their billing and revenue functions to allow them to invest in infrastructure and maintenance.

Another key step is to strengthen local government administration.

We will work to ensure that capable, qualified people are appointed to senior positions in municipalities, such as municipal managers and CFOs.

This will be done by extending the mandate of the Public Service Commission to local government and taking action against municipalities that fail to comply with minimum competency standards.

The Minister of Cooperative Governance and Traditional Affairs has initiated a process to update the White Paper on Local Government, which includes a review of the institutional structure of local government.

Finally, National Treasury will review the local government fiscal framework, including the design of conditional grants, to ensure that the revenue of municipalities matches their responsibilities.

The third new area of focus for Operation Vulindlela is digital transformation.

Last month, Cabinet approved a Digital Transformation Roadmap to drive the adoption of digital technologies in government and to build digital public infrastructure that can be used by all South Africans.

This will include a digital identity system, rapid payments to expand financial inclusion, and enabling people to access services like applying for an ID or passport online.

The process of reform is never easy. It is often contested, especially by those with vested interests.

Yet we have a simple choice to make.

If we do not reform our economy, it will not grow and we will not create jobs.

Unemployment will rise and poverty will increase.

On the other hand, if we implement these reforms – if we do so swiftly and boldly – we will place our economy on a path of growth and renewal.

There is a generation of South Africans that does not know what it is to live in a country that is growing.

They have never experienced rising incomes, increasing jobs, thriving businesses and expanding opportunities.

It is our intention to ensure that every South African feels the benefits of rapid, sustained and inclusive economic growth.

That is why we will not yield in our efforts to reform this economy, to fundamentally transform it and to remove the constraints on growth.

We have established significant momentum.

We have seen the green shoots of recovery.

It is our responsibility to grow a flourishing crop and to ensure that all South Africans reap the benefits of its harvest.

I thank you.