Structural reforms: Some progress

Early victories for Operation Vulindlela.
Image: Bloomberg

National Treasury says it’s serious about cutting waste and is looking at “merging or closing entities to reduce duplication of functions”.

It says this duplication resulted in “massive inefficiencies in some infrastructure programmes” and this was one of the reasons it was piloting the use of zero-based budgeting, were spending on programmes and projects had to be justified every year.

As things now stand the current system of incremental budgeting allowed for the creation of “perverse incentives to enter into contracts that have high unit costs for the delivery of certain services”.

Aside from zero-based budgeting, Treasury has nothing new to add on what President Cyril Ramaphosa had already pledged to do when it come to pushing through much needed economic reform in his State of the Nation Address a few weeks ago.

It reiterated the president’s commitment to implement Operation Vulindlela – a joint initiative by the Presidency and Treasury – to push through economic reforms.

Operation Vulindlela’s goals are to increase electricity generation capacity, support industrial growth and the rollout of infrastructure and creating and enabling an environment for business.

This will see the implementation of some long-delayed policies and projects like:

  • Moving TV broadcasting from analogue to digital transmission by March 2022
  • Finalising policies to ensure the rapid rollout of 5G infrastructure
  • Reviewing the regulatory framework and processes that make it difficult to import scarce skills
  • Finalising the policy to improve freight and commuter rail
  • Finalising the policy to improve the efficiency and competitiveness of the ports
  • Reviving the Green Drop and Blue Drop programmes to strengthen water quality monitoring

Operation Vulindlela has only been going since October 2020 but it’s already claiming some victories, like allowing municipalities – which are in good financial standing – to source their own electricity from independent power producers.

As part of its efforts to offset the fallout of the Covid-19 crisis, 430 000 of varying duration have been supported through various public employment initiatives. An additional 180 000 are currently being recruited.

It also noted that there is now a pipeline of R360 billion to develop infrastructure in the energy, water, transport and telecoms sectors.

The Small Business Finance Agency has provided R233 million in support to 26 small-scale manufacturers and financial support to 66 local enterprises.

Efforts have also been made to support investments in the poultry, clothing and automotive sectors. In addition, large sugar producers have agreed to buy 80% of their sugar from local growers.

Although some progress has been made, Treasury is aware more needs to be done.

“While some progress has been made, decisive action on structural reforms is critical to strengthen the economic recovery, inspiring investor and public confidence, and improve South Africa’s growth trajectory.”

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In short, to put it into a European, American, Russian, Japanese and Chinese context, the much-hyped Operation Vulindlela entails the current ox-wagon economic structure to be liberated into a donkey-cart economy. A huge improvement in itself. Groundbreaking in its scope, promise and aspiration, but hugely lacking in efficiency and foresight.

While you are contemplating the scrapping of analogue, and the auctioning off of bandwidth, some nations are flying helicopters on Mars guys! You plan to move a locomotive on a rail with coal or diesel power sometime in the foreseeable future! Maybe, with some luck, you will also plan to invent the printing press and the internal combustion engine at some time in the future.

Our members of parliament budget to move people by rail over 30 km and to communicate over 100 km with 5G technology, while other nations are communicating with a landing craft on Mars.

What type of backwardness is required to vote for these imbeciles?

End of comments.

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