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Growing The South African Economy
Operation Phakisa and Operation Vulindlel - Showing Tangible Results
By Jessie Taylor
Two government interventions are driving economic reform in South Africa. Operation Vulindlela and Operation Phakisa were introduced to unlock economic benefits through targeted reforms, and after several years of operation, the projects started to show significant results.
Transforming Key Sectors Through Collaboration
Operation Vulindlela has been instrumental in economic development and could add 2% to future GDP if the momentum for economic reform is maintained. This could see an increase in investment of around R196-billion (22.3%) by 2029.
Operation Vulindlela was established by former Finance Minister Tito Mboweni in 2020 to drive the structural economic reforms required to unleash economic growth.
The first phase focused on reforming energy, logistics, and broadband spectrum networks. Operation Vulindlela works to foster collaboration between different parts of the government, unblock bottlenecks, and facilitate collaboration between the public and private sectors. Phase 1 of Operation Vulindlela has had significant success, with 94% of reforms either completed or progressing well.
Operation Vulindlela has facilitated regulatory changes that resulted in a wave of private energy investment, handling the spectrum auction that has enabled substantial new investment in telecommunications, ensuring the private sector access to the rail network and port operations, and clearing the backlog of water use licences.
Operation Vulindlela has been so successful that it is poised for expansion, with more staff needed to drive new priority reforms.
Energy and logistics will remain part of the Operation Vulindlela programme over the next five years, along with critical new areas for structural reform, such as water provision. A key focus will also be local government and addressing the debt crisis in which municipalities owe agencies and utilities at a national government level. The government has identified the performance of municipalities as a major obstacle to economic growth.
Among the Operation Vulindlela success stories has been the establishment of the Energy Action Plan, created under the National Energy Crisis Committee. This plan outlines a clear path to reduce the severity and frequency of load shedding in the short term and to achieve energy security in the long term.
This has resulted in the accelerating procurement of new-generation capacity and facilitating the procurement of independent power by municipalities, along with driving the unbundling of Eskom into separate entities for generation, transmission and distribution. There has been no load-shedding for more than four months, the longest break in more than four years.
Building An Ocean Economy
Operation Phakisa, launched in 2014, aims to unlock the full potential of South Africa's ocean economy by focusing on key sectors. Supported by political and industry leaders, the initiative is designed to streamline implementation and foster collaborative approaches.
Named after the Sesotho term for “hurry up,” Operation Phakisa draws inspiration from Malaysia’s successful “Big Fast Results” methodology. The programme seeks to engage stakeholders in crafting detailed, actionable plans to accelerate development in these critical ocean economy sectors.
To tap into the vast economic opportunities offered by South Africa's extensive ocean boundaries, Operation Phakisa is set to boost the national economy significantly, potentially creating up to one million jobs by 2033.
Operation Phakisa focuses on six priority growth areas: marine transport and manufacturing, offshore oil and gas exploration, aquaculture, marine protection services and ocean governance, small harbour development, and coastal and marine tourism.
Operation Phakisa has achieved significant milestones, including attracting over R41 billion in investment and generating around 8 000 jobs over a five-year period. In 2021 alone, the initiative drew in approximately R5-billion in investment and created about 7,330 direct jobs, a figure that rises to 11,641 when accounting for indirect employment.
As part of its focus on boosting the ocean economy, Operation Phakisa has overseen the upgrade of 37 ship repair facilities. Additionally, the successful establishment of the Burgan Fuel storage facility in Cape Town’s harbour has brought in over R600-million in investment.
Under Operation Phakisa, the South African Government, aims to grow the Ocean Economy’s contribution to the country’s GDP to R177-billion by 2033. This is expected to provide up to a million new jobs.
To date, the South African government has unlocked investments in the ocean economy of more than US$1.1-billion since the inception of Operation Phakisa.
