Operation Vulindlela, President Cyril Ramaphosa’s structural economic reform agenda — the great hope for South Africa to grow the economy, create jobs and boost private sector investment — has clocked up a few wins since its inception in October 2020. Still, bottlenecks remain.
After 18 years of inaction, digital spectrum was auctioned. Regulatory changes are opening the electricity market to renewable energy and bringing private sector players onto railway tracks for the first time in more than a century of state monopoly. The backlog for water use licence applications has been cleared.
Reforms are under way to make South Africa one of the least restrictive countries for skilled visas, to tackle governance dysfunction at municipalities and to address the country’s spatial inequality.
This is being done through the second phase of Operation Vulindlela, a joint initiative between the presidency and the National Treasury that seeks to support and motivate government departments to change the fabric of the economy by implementing a small number of pro-growth and investment reforms.
Implementation is tracked quarterly, and the report for the fourth quarter of 2025 shows a mixed bag of progress and stagnation: 67% of the 30 reforms are on track, while nearly 30% of reforms in energy and logistics are in need of intervention.
On energy, the pain point is the unbundling of Eskom into three parts — generation, distribution and transmission. This is arguably the most important economic reform since 1994. The unbundling would pave the way for the establishment of a fully independent transmission system operator (TSO) with ownership and control of electricity grid assets, enabling a competitive wholesale electricity market where multiple electricity generators compete to drive down prices through market discovery rather than regulated pricing.
But the unbundling process has been mired in confusion, adding to delays in implementation. During his state of the nation address in February, Ramaphosa overturned an Eskom unbundling plan unveiled in December 2025 that had been endorsed by electricity & energy minister Dr Kgosientsho Ramokgopa. That plan proposed that the National Transmission Company would remain a subsidiary of Eskom, meaning the valuable transmission assets — such as high-voltage power lines, substations, transformers and grid infrastructure — would stay inside Eskom.
However, Ramaphosa announced that the transmission assets would be moved out of Eskom to create a “fully independent state-owned transmission entity” that would own and control the grid. Business groups had raised serious concerns about the December plan, warning that it would create a conflict of interest — with Eskom controlling both electricity generation and the grid — and deter private investment.
During the recent Operation Vulindlela quarterly briefing, Aalia Cassim, acting chief director of the microeconomic policy team at the Treasury, said all stakeholders are now aligned on the unbundling after Ramaphosa’s February announcement, which was seen as a resolution of this policy confusion.
While the establishment of an independent TSO is now targeted for December 2027, the process is still fraught with complexity and cannot be rushed, she said. “The long-term objective is to establish an independent TSO responsible for grid operation, system planning, market administration and transmission asset ownership.”
An Eskom restructuring task team, under the national energy crisis committee (Necom) chaired by Treasury director-general Duncan Pieterse, is now operational to oversee the unbundling processes. Necom is to brief Ramaphosa at the end of May about the unbundling and provide him with an implementation plan with full timeframes by the end of August.
We don’t have time. We have already spent many years not reforming the economy
— Rudi Dicks
Rudi Dicks, head of the project management unit in the presidency, goes further, explaining why full independence is non-negotiable: “If you want to create a competitive market for generators to participate in, you cannot have an entity that is a subsidiary. For us to create market conditions for competition and eventually bring down electricity prices, we must create a separate, completely independent entity.”
The freight logistics sector faces even bigger challenges. Cassim was blunt, saying: “Transport reforms have moved quite slowly.” Still, there have been some gains. Transnet rail volumes are expected to reach 168Mt this year, up from 160Mt last year. But the government’s medium-term target of 250Mt is still a long way off, unless faster action is taken.
The unbundling of Transnet to allow private companies onto the rail and port network is also moving slowly. The plan is for an independent, state-owned National Ports Authority that owns the port infrastructure, while opening terminal operations to private competition. “I think the building blocks are being put in place, which is important to mention,” said Cassim.
A key next step is setting up the Transport Economic Regulator, a new body that will oversee economic regulation across South Africa’s transport sector, including rail, ports and pipelines. The regulator will oversee rules that let private operators run trains on Transnet’s network. Its network statement details access terms, tariffs and how to balance risk between private operators and Transnet — essential for making projects attractive to investors. The regulator entered its initial phase of operations on April 1 2026, but full implementation is expected only from the 2027/2028 financial year.
The private sector has warned that its full participation in rail reforms and the rollout of further investments hinge on the rules being finalised.
For example, private rail operator Traxtion is set to invest R3.4bn in 46 locomotives and 920 heavy-haul wagons in preparation for deploying them on Transnet’s rail network. A further R2.4bn in future investment is planned, but Traxtion wants clarity on the participation rules. CEO James Holley has argued that “private capital flows when government policies create confidence and clarity for the private sector to invest”.
The delays in getting reforms over the line can be explained by Operation Vulindlela’s mandate. Operation Vulindlela cannot implement reforms or take over government functions. But it provides oversight of the government’s work and provides skills and technical support to unblock obstacles to microeconomic reforms.
When Operation Vulindlela was launched, cabinet ministers were initially reluctant to embrace it, often leading to delays in the implementation of reforms. Lack of state capacity owing to weak leadership and governance, along with intense policy contention, often led to Vulindlela being snubbed.
Dicks says Vulindlela is now receiving overwhelming support. “We don’t have time. We have already spent many years not reforming the economy.” He says full implementation of reforms could potentially lift economic growth to 3.5% by 2029. The biggest contributor would be investment by the private sector as confidence rebounds.
On growth targets, Cassim confirmed that achieving 3% economic growth would require gross fixed capital formation — a measure of investments including new infrastructure projects — to reach 18%-20% of GDP, up from the current level of about 15%. Current gross fixed capital formation levels have languished for more than 15 years and fall far below the 30% of GDP envisaged by the National Development Plan.
The target of lifting growth to 3.5% by 2029 was modelled before the US-Israel attack on Iran and other global disruptions. Despite this, Cassim said the target remains a stated objective and might even be revised during the medium-term budget policy statement later this year to include “an upside scenario”. In other words, even incorporating current global crises, the modelling around the economic growth potential “hasn’t detracted too much from the growth gains that we’ve seen”, she added, pointing to the underlying resilience of the South African economy.
Dicks urged realistic expectations. “You’re not going to see 5% or 6% growth in the next quarter. This is a process of consistency, maintaining momentum.”
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