SA Govt Releases Q1 2025/26 Report on Operation Vulindlela Phase II Reforms

In a move reaffirming its commitment to inclusive and accelerated economic transformation, the Presidency and National Treasury have released the Q1 2025/26 Progress Report on the implementation of structural reforms under Operation Vulindlela. This marks the first quarterly update since the formal launch of Phase II of the programme, which aims to deepen and expand South Africa’s economic reform agenda in response to persistent structural constraints and emerging challenges.

Operation Vulindlela—a joint initiative between the Presidency and the National Treasury—was launched in October 2020 as a high-impact reform vehicle to unlock economic bottlenecks and lay the groundwork for sustainable growth and job creation. While Phase I concentrated on five key sectors with significant investment and employment potential, Phase II introduces an expanded scope, building on past progress while integrating new focus areas crucial to long-term national resilience.

From Breakthroughs to Momentum: Transitioning to Phase II

Phase I of Operation Vulindlela focused on:

• Electricity sector reform

• Freight logistics modernization

• Water infrastructure and management

• Telecommunications access and spectrum

• Overhauling the visa and immigration regime

These areas were selected for their immediate potential to attract investment, stimulate productivity, and create enabling conditions for entrepreneurship and job creation. Phase I saw landmark developments such as the unbundling of Eskom’s transmission division, spectrum licensing, and visa regime improvements for critical skills.

With many of those reforms now in various stages of execution, Phase II has commenced with a broader lens and deeper institutional engagement. According to the Presidency, this new wave of reforms aims to sustain momentum while addressing systemic barriers to service delivery and economic inclusion, particularly at the local government level.

Q1 2025/26 Highlights: Key Milestones and Reform Progress

The report released by the Presidency highlights several key achievements for the quarter ending June 2025, spanning both Phase I continuity efforts and new reforms introduced in Phase II:

1. Independent Transmission Projects Initiated

• A Ministerial Determination and accompanying regulations have been gazetted, paving the way for the first round of Independent Transmission Projects (ITPs).

• This step represents a critical breakthrough in electricity reform, supporting the unbundling of Eskom and allowing for private-sector financed grid infrastructure, crucial for integrating renewable energy.

2. Private Sector Participation in Freight Logistics

• The Department of Transport and Transnet issued a Request for Information (RFI) to attract private investment and operational capacity in freight corridors.

• This reflects progress toward opening up core rail corridors and ports to private sector involvement, a major objective in revitalising South Africa’s logistics network and export competitiveness.

3. Reform of Municipal Service Delivery

• A comprehensive review of the White Paper on Local Government has been launched to reform the structural and fiscal model of local government.

• Introduction of performance-based financing mechanisms for municipalities to improve water and electricity services is underway, marking a strategic shift in intergovernmental fiscal transfers.

4. Digital Transformation Roadmap Implementation

• The Digital Transformation Roadmap, previously approved by Cabinet, has entered its implementation phase.

• Core initiatives underway include the development of a Digital Identity System and the digitisation of key government services, supporting South Africa’s ambition to modernize public administration and expand digital access.

New Focus Areas Under Phase II

Phase II includes several additional reform tracks, reflecting a broader ambition to tackle deep-rooted structural and service delivery constraints:

• Local Government Reform: Addressing financial sustainability, institutional capability, and accountability of municipalities.

• Infrastructure Finance: Accelerating blended finance models to scale up public-private partnerships (PPPs) for infrastructure.

• Skills and Labour Market Reform: Modernising the skills development landscape to align with the digital economy and future industries.

• Public Sector Modernisation: Enhancing efficiency, transparency, and digital service delivery across government departments.

Institutional Leadership and Reform Architecture

Operation Vulindlela continues to be managed by a technical team within the Presidency and National Treasury, operating in close coordination with departments and regulators. The model ensures reform acceleration through:

• Presidential oversight

• Dedicated interdepartmental coordination

• Monitoring of implementation timelines and milestones

• Technical support and troubleshooting

In its quarterly reporting, the government underscores its intent to maintain reform visibility, public accountability, and evidence-based decision-making as key components of the Vulindlela approach.

Outlook: Reform as a Catalyst for Resilience and Growth

The Q1 2025/26 report comes at a time of challenging global and domestic economic headwinds, including persistent energy constraints, logistics bottlenecks, and municipal service delivery breakdowns. Against this backdrop, Operation Vulindlela serves not only as a platform for reform coordination but as a flagship of national resilience and economic recovery.

“This report demonstrates sustained progress in the economic reform agenda, which serves as a counter to strong economic headwinds,” read the joint statement from the Presidency and National Treasury.

Looking ahead, the implementation of reforms introduced under Phase II—combined with sustained execution in core Phase I sectors—will be critical in shaping South Africa’s investment climate, improving service delivery, and laying the foundation for a more inclusive and competitive economy.