DAVID MASONDO: Structural reforms are on track and will boost inclusive growth

The only way we will achieve a fundamental shift in our growth trajectory is by transforming the structure of the economy.

Operation Vulindlela was established as a joint initiative of the presidency and National Treasury in October 2020 in pursuit of this imperative. Its aim is to support departments and entities to accelerate the implementation of reforms that will unlock growth and create jobs.

There is intensive work under way across the government on a wide-ranging reform agenda, which has already shown significant progress.

In his state of the nation address in 2021 President Cyril Ramaphosa said: “We will continue to work relentlessly and without pause to create a more modern, efficient and competitive economy that is more open to all South Africans.” Each of the commitments the president made in that address has been met.

Achievements of Operation Vulindlela so far, and immediate plans

The president committed to raising the licensing threshold for new electricity generation projects to unlock new capacity. In June, we raised the threshold from 1MW to 100MW. The president said we would complete digital migration by the end of March 2022, and proceed with the auction of high-demand spectrum. The government is on track to meet that milestone.

The president committed to revive the Blue Drop, Green Drop and No Drop monitoring system to improve the quality of our water supply. The system has been reinstated, and the first reports will be published in March.

The president spoke about repositioning the ports of Durban and Ngqura, and shifting freight cargo from road to rail. Transnet will have private partnerships in place at both ports in October, and soon the first steps towards enabling third-party access to the freight rail network will be taken.

The president said we would roll out an eVisa system to grow the tourism sector. The eVisa is now live for 14 countries.

These are concrete examples of progress, of a government that is following through on its commitments. Anyone who claims that the reform agenda is not moving is not paying attention.

Future significance of these reforms

It is important to reflect on why we are implementing these reforms, and what difference they will make to the lives of all South Africans. In a few years’ time, energy reforms will mean there is competition in electricity generation, with adequate supply to meet demand and no more load-shedding.

The independent grid operator will buy electricity at the lowest price from Eskom and private generators. SA will establish a world-class freight logistics system, meaning more jobs in export industries, lower costs for all of the goods we buy, and less congestion on our highways.

The release of spectrum will reduce data costs, increase broadband speed and quality and expand network reach across the country. Stronger institutions in the water sector will mean better maintenance of our water infrastructure, fewer disruptions to water supply, and long-term water security in the face of climate change.

Reforms to the visa system will ensure that we can access the skills and resources that our economy needs while protecting and increasing the employment of South Africans, especially in low-skilled and semi-skilled work.

Growth with redistribution

Inclusive economic growth can only be realised if both growth and redistribution take place simultaneously, not sequentially. Growth and redistribution are not polar opposites. Instead they complement each other.

The distribution of productive assets such as land and housing enables the poor to engage in productive economic activities. This year the government will be prioritising the issuing of title deeds for subsidised housing as part of the key reforms to realise economic growth with redistribution.

The government has built almost 4.8-million houses since the beginning of democracy as part of our commitment to provide housing for the poor. The housing subsidy programme is one of the most directly redistributive of all government programmes, transferring assets from the state to low-income households.

However, the potential of many of these properties is not realised because of a complex and inaccessible system for issuing title deeds. Title deeds should enable the poor to secure access to finance for other productive economic activities.

As part of our structural reform agenda the government has established an interdepartmental task team to expedite the issuing of title deeds for subsidised housing and clear the backlog. This intervention will unlock more than R200bn worth of value in properties built by the government since 1994, and place these assets on the balance sheets of low-income households.

Financing infrastructure

The government is implementing several reforms this year that will unlock new investment in infrastructure by the private sector. The process to amend regulation 28 of the Pensions Fund Act to enable retirement funds to invest in infrastructure has been completed, and the finance minister will gazette the amended regulations later in February. These amendments introduce more effective maximum limits for the trustees of retirement funds to invest for the long term, in various forms of infrastructure projects.

Our reform agenda is at the heart of a new consensus — a consensus that pairs structural reforms with expanded social protection and redistribution to confront the challenges we face. Through this new consensus we will build a dynamic economy and a society in which all can live with dignity.

• Dr Masondo is deputy finance minister and political head of Operation Vulindlela.