Operation Vulindlela Phase 2 to Accelerate Economic Reform and Inclusive Growth

South Africa has entered a new chapter in its economic reform journey with the official launch of Phase Two of Operation Vulindlela (OV) by President Cyril Ramaphosa. The initiative, originally introduced in 2022, is a joint venture between the Presidency and the National Treasury. It was created to address structural constraints that have hindered economic growth and development, and to position South Africa on a trajectory toward rapid, inclusive, and sustainable economic prosperity.

During a technical briefing in Pretoria on Wednesday, National Treasury Director-General Dr Duncan Pieterse outlined the vision and strategic direction of this second phase, emphasizing that the next stage of Operation Vulindlela will not merely add new priorities but also deepen the implementation of ongoing reforms introduced in Phase One.

“Phase Two builds on the momentum of the first phase, which laid a solid foundation for stronger performance over the medium term,” Pieterse said.

Phase One Achievements and Foundation

Phase One of OV focused on foundational reforms necessary for long-term structural change. It catalyzed policy action in areas such as energy, logistics, telecommunications, water infrastructure, and skilled migration. These reforms aimed to eliminate key bottlenecks across economic sectors, from easing load shedding and reducing data costs to improving logistics and public infrastructure.

Focus Areas of Phase Two

Phase Two will continue these efforts with added emphasis on practical implementation and expanding the reform agenda to address emerging challenges and growth barriers. According to Pieterse, the priorities for this phase include:

• Alleviating load shedding through energy reform and better electricity transmission.

• Improving the performance of logistics systems to ensure efficient movement of goods and people.

• Reducing the cost of mobile data to make digital connectivity more accessible.

• Enhancing water supply systems to support both public welfare and industrial needs.

• Attracting critical skills to boost human capital and competitiveness.

Pieterse was candid in his view that South Africa’s economic stagnation is primarily a structural issue, not a cyclical one. He asserted that lasting change must come from addressing these systemic constraints, a process that may take time but will result in more durable economic gains.

“The economic impact of the implementation of these reforms becomes visible over time, rather than immediately,” he added.

New Reform Areas: Inclusion, Modernization, and Spatial Integration

In addition to strengthening existing reforms, Phase Two will introduce three new strategic areas that are essential for fostering inclusion, resilience, and spatial equity:

1. Strengthening local government service delivery, particularly in metropolitan areas, to enhance basic infrastructure and responsiveness.

2. Leveraging digital public infrastructure to modernize the capabilities of the state and improve public service delivery while also enabling broader economic participation.

3. Driving urban densification and spatial integration to lower transport costs and bridge the gap between people and economic opportunities.

These new focus areas acknowledge that economic opportunity and resilience must be geographically inclusive and digitally enabled.

Implementation Strategy: Lessons from Phase One

Pieterse emphasized that the effectiveness of Phase Two depends not only on “what” is implemented but “how” it is executed. Key elements of the revised implementation strategy include:

• Embedding theories of change tailored to each reform area.

• Setting measurable targets and tracking progress with clear metrics.

• Optimizing coordination via sectoral task teams—particularly in energy and logistics—to ensure alignment across departments and stakeholders.

• Expanding access to technical expertise, drawing from both within the government and external experts.

• Improving risk management by adopting a more dynamic and responsive approach to challenges in reform execution.

One of the most pressing challenges, according to Pieterse, is implementing reforms at scale.

“We need to mobilise the full capacity of the state, crowd in the private sector, and create the conditions for markets to work more effectively,” he noted.

Alignment with Upcoming Budget

In a notable highlight, Pieterse confirmed that the upcoming national Budget—expected to be tabled later this month—will directly reflect the strategic imperatives outlined under Operation Vulindlela.

From a fiscal standpoint, Treasury is developing enhanced financing instruments to support the reform agenda. This includes blended finance models and updated guarantee frameworks, particularly aimed at sectors like electricity transmission, freight rail, and water infrastructure.

“Ultimately, Operation Vulindlela is about building and reinforcing credibility—credibility that government can deliver on its reform agenda, that institutions can collaborate effectively, and that reform commitments lead to real improvements: jobs, infrastructure, service delivery, and a more resilient economy,” Pieterse concluded.

As Phase Two of Operation Vulindlela gets underway, all eyes will be on the government’s ability to translate policy into measurable outcomes and position South Africa on a path toward sustainable growth and improved livelihoods.