An ambitious plan to turbocharge the economy calls for a “big bang” approach to the implementation of critical reforms needed to get the economy growing at 3.5%.
The Sunday Times has seen snippets of the draft document — titled “Growth and Inclusion Strategy (GAIN): a framework to revive growth and create jobs in South Africa" — advising the government to rapidly implement reforms to unlock faster growth and create new jobs.
The reforms, some of which are already in motion, include:
- Completing Eskom’s restructuring and introducing a competitive wholesale electricity market;
- Enabling private investment in electricity transmission infrastructure;
- Opening access to the freight rail network and encouraging private sector participation in port terminals;
- Enabling private sector participation in water infrastructure;
- Shifting to a utility model for delivering electricity and water in the big metros;
- Ramping up public infrastructure investment;
- Easing regulatory barriers to more private sector employment; and
- Assisting small businesses and easing their access to capital.
- Intensifying investments in the green and digital economies, which have been identified as the labour-intensive growth sectors of the future.
To boost industrial capacity and stabilise manufacturing, the plan calls for support to the steel and ferroalloys sectors through a 25% tax on chrome-ore exports, as well as preferential energy rates from Eskom to keep smelters —which have been shedding thousands of jobs — running.
The draft plan notes that South Africa’s informal sector is heavily regulated and suppressed by restrictions on trading, lack of access to financing, and heavy-handed enforcement
The draft plan notes that South Africa’s informal sector is heavily regulated and suppressed by restrictions on trading, lack of access to financing, and heavy-handed enforcement. To increase the sector’s contribution to employment and unlock its growth, it proposes removing restrictions on informal traders through:
- changes to zoning and land-use regulations;
- reducing or eliminating the cost of trading permits for informal businesses; and
- expanding non-bank lending to small enterprises.
The informal sector came into focus this year when former Capitec CEO Gerrie Fourie sparked a row after suggesting the unemployment rate in South Africa was closer to the 10% mark because the success of the informal economy was being underreported in statistics. This assertion was vehemently denied by Stats SA.
A raft of packages to support small and medium enterprises (SMEs) is also being suggested. Among these is a reform of the National Credit Act (NCA) to enable SMEs to more easily access credit. This would be done “to ensure alignment between the NCA and regulations on the consideration of future revenue flow in affordability assessments”.
To support smaller businesses that employ not more than 50 people, the plan calls for the channelling of public monies, in conjunction with financial institutions, to a first-loss capital guarantee fund. The fund would reduce the risk for financial institutions that extend loans to small businesses at scale.
It also calls for the inclusion of fintech players to digitise payments for informal traders and small businesses.
State capacity has also been identified as an impediment to the quick implementation of reforms. To build a capable state, an office to be known as the head of the public service should be established to manage an independent appointment process for senior government officials and manage their career progression. A graduate recruitment scheme should be set up to attract skilled talent to the public service.
The National Treasury on Friday refused to comment on the plan to speed up reforms. Presidential spokesperson Vincent Magwenya also refused to comment, saying the draft plan had not been presented to cabinet yet but would be tabled before ministers in the coming weeks.
The ball has already started rolling on some of the major reforms. The first phase of opening the freight rail network to third-party operators was completed when the department of transport announced the conditional awarding of slots to 11 private-sector operators in August. Requests for proposals from private-sector companies interested in operating port terminals will be issued in March.
The right reforms have been identified through Operation Vulindlela, but implementation in several key areas remains slow and incremental
— GAIN draft document
The unbundling of Eskom is already under way and is expected to be completed by April. A request for proposals for the R440bn transmission infrastructure expansion programme to build 14,000km of new lines will go out in October 2026. To facilitate private investment in electricity generation, the energy regulator, Nersa, has finalised fair grid-access rules, and wheeling (transmitting electricity from a generation source to an end-user) is now permitted across the grid for third parties.
Operation Vulindlela, a joint initiative between the Presidency and the Treasury to unlock impediments to reforms, has been hamstrung by slow implementation. This challenge extends to the energy sector, where early momentum is now stalling owing to internal resistance and capacity constraints.
According to the draft report, the economy could have grown by 4.5% each year if the current raft of reforms had been implemented from 2010. GDP, now at R7.5-trillion, would have reached the R12-trillion mark had the economy been deregulated, with the opportunity cost of not implementing reforms between 2010 and 2025 calculated at a staggering R5-trillion.
“The right reforms have been identified through Operation Vulindlela, but implementation in several key areas remains slow and incremental. We need a ‘big bang’ approach to reform to achieve a meaningful impact on growth. In the energy sector, early reform momentum is stalling due to internal resistance and capacity constraints. This is holding back potentially large investment that should be the main driver of growth over the next three to five years.”
Turbocharging the implementation of reforms would move economic growth from a projected 1.4% in 2025 to 3.5% by 2030 and drive gross fixed capital formation (investments in fixed assets such as buildings, equipment and machinery) towards 20-25% by 2030. Employment would grow by 4.2% a year — enough to achieve a 50% reduction in unemployment by 2035.
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