Investors signal optimism on Operation Vulindlela structural reforms

Operation Vulindlela, the joint initiative between National Treasury and The Presidency aimed at accelerating structural reforms that will encourage greater private sector participation, has been partly credited by the two ministries for the country’s resilience and ability to weather the current geopolitical shocks.

If it weren’t for some of the progress made through the initiative, the economy would be worse for wear, they say.

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Operation Vulindlela aims to remove blockages to economic growth through structural reforms. It was established in 2020 under former finance minister, the late Tito Mboweni, in response to the impact of the Covid-19 pandemic on the economy.

Since then, there have been two other major global disruptions that have introduced new pressures to the global economy – the Russia-Ukraine war and the latest conflict in the Middle East.

But the Operation Vulindlela progress report for the fourth quarter of 2025/26, released on Wednesday, indicates that South Africa is on reasonably solid ground.

Officials from National Treasury and The Presidency say despite the challenging global economic environment, strong and sustained progress in implementing growth-enhancing structural reforms has lifted confidence and positioned South Africa to attract higher levels of investment.

The reforms currently underway aim to reduce input costs, improve competitiveness, and create opportunities for private investment in key sectors of the economy.

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During this quarter, government further reported progress in the electricity sector, with the establishment of the Eskom restructuring task team to lead the move toward a fully independent state-owned transmission entity.

Reforms in the electricity distribution industry still need some intervention.

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Rudi Dicks, head of the project management office in The Presidency, says the pace of reform needs to be improved for the country to continue pulling through global ructions.

“If you don’t do this, it will be worse. It’s like when we were [battling with] load shedding – if we didn’t deal with those things then, we would probably be in worse territory now,” says Dicks.

Read: Eskom projects no load shedding this winter, warns of lingering risks

He adds that the reforms lay the basis, and “when we get through the global economic challenges” it will be easier for things to take off with regards to economic growth. He says that this will however take time.

“We’ve got to temper our expectations, you’re not going to see 5% or 6% growth next quarter, this is a process of consistency and maintaining momentum.”

Positive momentum in investment

Despite the reform progress, the country’s growth challenge remains significant. But Dicks says the spur in confidence by domestic and international investors is encouraging.

One of government’s key target is for gross fixed capital formation to reach 30% of gross domestic product (GDP) by 2030, with public sector investment reaching 10% of GDP.

Treasury estimates that at least 20% gross fixed capital formation is needed to reach 3% of economic growth, a sweet spot for much-needed job creation.

The highest level reached so far is 22% of GDP in 2008, in the lead up to the 2010 Fifa World Cup.

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Gross fixed capital formation grew 1.3% in the quarter ended December 2025, the second consecutive quarter of growth.

While it remains low, government says sustained progress in implementing reform commitments has strengthened policy credibility and supported growing investor confidence in South Africa’s growth trajectory.

But it does take some time to feed into growth numbers.

“Confidence doesn’t pay the bills, but confidence is an important part, [indicating] that people trust that we’re moving in the right direction,” says Dicks.

“You see that now coming through now, [with] board members of different companies that have billions of rands making decisions and saying ‘Okay, we’re going to let go [of these funds] and we’re going to physically build structures’.”

Government has earmarked a R1 trillion spend over the next three years on infrastructure, with the private sector also expected to continue pumping funds into key projects.

Listen to Dicks speaking on the MoneywebNOW podcast with host Simon Brown in January (or read the transcript here): 

You can also listen to this podcast on iono.fm here.

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