Structural reforms remain key for SA economy – Godongwana

Finance Minister Enoch Godongwana has reaffirmed South Africa’s commitment to engaging in structural reforms.

These reforms are aimed at fostering an environment fertile for economic growth and competitiveness.

Godongwana was speaking during a panel discussion at the World Economic Forum (WEF) annual meeting in Davos, Switzerland on Tuesday, where he is leading the South African delegation.

Structural reforms are targeted at electricity, infrastructure, water and logistics, among others, and are driven by Operation Vulindlela.

The operation 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.

The objectives of the reforms are aimed at:

  • Stabilising the electricity supply;
  • Reducing the cost and increasing the quality of digital communications;
  • Providing sustainable water supply to meet demand;
  • Providing competitive and efficient freight transport; and
  • Fostering a visa regime that attracts skills and grows tourism.
Logistics sector poses challenge

Godongwana told the panel: “There are a number of things we are doing to deal with structural reforms. One of the perennial problems we’ve had has been on the energy front. Massive structural reforms … are dealing with that question.

“A new challenge has been the logistics sector, where we are investing a lot in it. We have been trying to change the skills composition to the extent that we don’t have and we have provided an environment where we can import skills with ease.

“So, there are a lot of structural reforms that we have engaged in to make sure that we can grow the economy and be competitive.”

During the pre-WEF media breakfast briefing held last week, Godongwana emphasised that reforms were necessary for growth stimulation.

“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.”

Budget policy statement

In his medium-term budget policy statement delivered in November, 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 [gross domestic product] 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.”

Speaking on electricity, the minister explained: “[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, evidenced-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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