With President Cyril Ramaphosa’s economic reform programme the only card SA has left to play to raise the growth rate, the presidency and the National Treasury have combined forces in a drive to ensure reform happens.
They have created a joint delivery unit, Operation Vulindlela (OV), staffed with a nimble team of officials to focus on a small number of catalytic reforms, and support and cajole departments until these reforms are pushed over the line.
Only a few months old, the unit has already notched up a few wins. These include raising the licensing threshold for embedded generation, reviving the blue-and green-drop water quality assessment system, getting a National Water Resource Infrastructure Agency established and ensuring that a revamped e-visa system and new critical skills list are delivered.
Without the unit’s behind-the-scenes efforts, Ramaphosa would have been unable to announce these small victories in his recent state of the nation address. But judging from the lukewarm reception his speech received, OV has much work to do to convince a sceptical public that anything has changed.
Some analysts are, however, beginning to take heart. The Centre for Development & Enterprise’s Ann Bernstein says OV signals that the president and his allies "have seriously started to engage with the hard business of reform" and "it would be wrong not to see the importance of this new thrust".
But Intellidex’s Peter Attard Montalto feels that while OV injects "a new sense of burrowing persistence on reform into the government machine", cynicism runs so deep that the unit is unlikely to move the needle much on growth until business sees visible delivery and responds with increased confidence and investment.
To maximise its impact, OV is focusing on reforms to modernise SA’s network industries, including electricity, water, transport and digital communications, as these are essential to restoring competitiveness.
These reforms are also key to unlocking confidence and investment so that SA’s potential growth remains above 3% in the long term, explains OV’s Duncan Pieterse, who also heads economic policymaking in the Treasury (see graph).
But overcoming the obstacles to delivery within the government is proving to be both a hard slog — requiring intense administrative and technical support — as well as a delicate process that needs political finesse.
At OV’s first media briefing this week, CEO Sean Phillips (former head of the infrastructure fund within the Development Bank of Southern Africa) explained that when the problems are technical, the unit draws on numerous Treasury and private sector experts; when they are political, it escalates problems to the cabinet or the president himself.
What is different now — and why implementation should occur when it hasn’t before — is that the unit writes regular independent progress reports on how ministers and line departments are faring, and makes evidence-based policy recommendations to the president, should his reforms become stuck.
In other words, the unit not only keeps line ministers accountable and holds them to a reform timetable, it provides the president with detailed analysis to overcome political contestation when it is slowing down reform.
It would be wrong not to see the importance of this new thrust
— Ann Bernstein
Deputy finance minister David Masondo, who is responsible for OV and is its main champion, identifies several reasons for the slow pace of implementation. The first, he says, is a lack of state capacity, usually due to weak leadership and governance.
Another is policy contention — something that often emerges only after high-level policy approval, during the implementation phase, when the real trade-offs become more apparent.
A third source of resistance to change is what he calls "anti-growth economic interests centred around the protection of turf". These are firms that have sunk costs in a particular path on which they are dependent for profit-making, he says, citing coal mine owners supplying Eskom, which will likely be displaced by producers of renewable energy.
Masondo warns that neither OV nor the state on its own can overcome these opposing economic interests, and calls for a pro-growth coalition to rise up around the reform programme composed of labour, business, the state and progressive civil society organisations.
Ultimately, he says, the resolution of SA’s crisis will depend on "the balance of power between the reformers and anti-reformers".
With confidence in the reform programme, and Ramaphosa’s own credibility, hanging by a thread, OV represents a last-ditch attempt by the presidency and the Treasury to shift the narrative by getting something done. It would be a tragedy if it flounders because society has become too jaded to notice.
Operation Vulindlela is finally ensuring that pro-growth economic reform happens. But it is uphill all the way
— What it means:
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