Feb 2024 1st edition

WEF: Structural reforms key for SA Economy

Finance Minister Enoch Godongwana has reaffirmed South Africa’s commitment to engaging in structural reforms that will foster an environment fertile for economic growthworld and competitiveness.

The Minister was speaking during a panel discussion at the World Economic Forum (WEF) Annual Meeting held in Davos, Switzerland. He is leading the South African delegation to the critical meeting.

Structural reforms in South Africa are targeted at, among other things, electricity, infrastructure, water and logistics, and are driven by Operation Vulindlela.

Operation Vulindlela is a joint initiative of the Presidency and National Treasury to accelerate the implementation of structural reforms and support economic recovery. It aims to modernise and transform network industries, including electricity, water, transport and digital communications.

Historical commitment

During the pre-WEF media breakfast briefing held the preceeding week, Minister Godongwana emphasised that structural reforms remain crucial.

“Structural reforms remain crucial to revive medium-term growth prospects amid a constrained policy space. We remain steadfast in carrying out structural reforms to support and accelerate economic recovery.

“As government, we remain resolved to deal with the energy and logistics challenges that are adversely impacting our economy,” he said.

In his Medium Term Budget Policy Statement delivered in November 2023, Minister Godongwana presented the reforms specifically targeted at Eskom and Transnet.

On Transnet, he said: “Rail underperformance is estimated to have cost up to 5% of GDP in 2022, with losses in the region of R50 billion in the minerals sector alone.

“Given the scale of the challenges, the National Logistics Crisis Committee was instituted to broaden reforms in the sector and prioritise reforms aimed at resolving the immediate crisis, while also addressing the structural aspects hampering the sector.”

On electricity, he said: “[We] recognise the potential loss of revenue due to private electricity generation, and the fact that traditional revenue models relied on by public entities like Eskom, face serious disruption.

“It is for these reasons that our electricity reforms are holistic, evidence-based, and geared to find a balanced solution to our electricity supply challenges. They take into account not just a particular entity but the transformation of the sector as a whole.”  –SAnews.gov.za

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