HILARY JOFFE: Operation Vulindlela chooses its battles carefully

In an election for SA’s national and provincial governments, many people voted against the governing party because of service delivery failures that are the terrain of local government — from water and electricity outages to collapsing roads and rubbish collection.

The crisis in local government not only affects people’s lives and their political choices: it is also a major constraint on economic growth. SA’s dysfunctional municipalities are not able to provide basic services that factories, farms, mines and service businesses need if they are to invest. They often can’t provide even simple regulatory approvals needed for businesses to expand and grow. And the municipal investment in public infrastructure that used to add growth and jobs has dried up, despite plenty of private appetite to finance it.

Which is why local government is on the agenda as one of the items Operation Vulindlela is thinking of adding to its list of priority reforms. And the case of local government touches on some of the issues facing Operation Vulindlela and its political principals as the three-and-a-half-year old unit looks ahead to Operation Vulindlela 2.0.

A first, crucial issue concerns focus. The unit is a joint Treasury/presidency initiative that originally emerged from Treasury work on the reforms needed to “unblock” constraints to growth, reforms that required the president’s political clout to implement. Key to its effectiveness, and its ability to get the president’s attention and support, is that it focuses on a limited number of priorities with the potential to have maximum macroeconomic impact.

Energy and logistics have been the core reform areas, but also water, digital spectrum and visas. Within each priority area Operation Vulindlela targets a limited set of reforms that can be measured. It works with a range of government departments and state-owned enterprises that have to actually implement the reforms. It doesn’t do everything.

The priorities it chooses are not just those with maximum impact but also those that lend themselves to the Operation Vulindlela “delivery unit” methodology of collaborating across departments to overcome resistance or inertia or help with skills and capacity, and getting the president to intervene if reforms get stuck.

Most of those reforms are structural and systemic: changes to rules and regulations, new legislation, new institutions and new frameworks to open up sectors such as energy and logistics to competition.

Those changes are generally just the start of the reforms, which still have to be implemented by real people in real departments. So, while the unit has ticked off most of the items on its original list, it still has a huge amount of work to do to ensure those changes happen. In its own words it must deepen the Operation Vulindlela reforms. It must also be selective in adding any new ones.

Local government reform has the potential for macroeconomic impact. How it’s framed in a way that lends itself to the Operation Vulindlela methodology will be interesting, especially given the wide range of entities involved — and the wide and difficult range of systemic reforms required.

One is institutional reform: SA’s two-tier local government system of district and local municipalities creates duplication and spreads scarce skills and resources way too thin, as does the fact that there are so many municipalities altogether, many of which are simply not viable. Another would be to strengthen management and capacity, with a public service commission for local government that would provide independent regulation and oversight — instead of the current situation in which local councils tend to have carte blanche over hiring and firing.

New legislation has already been tabled that would enable national or provincial government to intervene more effectively. Then there’s the thorny question of municipalities’ constitutional right to distribute water and electricity. Though nobody is necessarily trying to take that away, it could make a big difference if municipal providers of water services, for example, had to be licensed by an independent regulator that could withdraw the licence if it failed to deliver and instruct the municipality to contract the service out to a competent provider.

Local government reform is just one of the options on the table for Operation Vulindlela 2.0. Others include tackling spatial inequality by addressing housing and transport in cities, as well as digital transformation and possibly even basic education.

Detailed proposals to deepen existing reforms and add any new ones will have to be taken to the new cabinet for decisions that will be incorporated into a new programme of action for the next five years, which President Cyril Ramaphosa will set out in his state of the nation speech at the opening of the new parliament next month.

Any successful initiative tends to get overwhelmed with requests to do more, and the political support Operation Vulindlela’s reform efforts has had from the government of national unity partners could be a mixed blessing. It will be important for the unit to stay focused and selective. Other parts of government must run with the many other items that need fixing.

The Operation Vulindlela unit will be challenged as it has to build relationships with new ministers in its priority reform areas, the more zealous of whom might want to reinvent the wheel and could risk taking reforms backwards. While domestic and foreign investors have fallen in love with the Operation Vulindlela reforms over the past year, with many calling for it to communicate more loudly, that too would be a big risk.

This kind of unit works best when it works quietly behind the scenes to persuade ministers and officials to make difficult changes, letting them take the credit when these yield tangible successes. Those tangible successes take time. Which is why careful choices are needed to keep the process on track.

• Joffe is editor at large.