A licensing change in 2022 opened South Africa’s electricity market to private renewable energy generators, and the investment surge that followed helped end the country’s electricity crisis. That case, National Treasury Director-General Dr Duncan Pieterse told investors, is the template for a wider structural reform programme now reshaping where capital can flow in South Africa.
Speaking at the Old Mutual Investment Group “Tomorrow” Investment Summit in Cape Town on Wednesday, Pieterse said Operation Vulindlela, a joint delivery initiative of The Presidency and National Treasury, is producing decisions this year that will end century-old monopolies, open markets to competition and private investment, and unlock higher productivity and faster growth.
Electricity remains the most instructive market for investors. The constraint has shifted since 2022: the investment drive into new generation continues, but the bottleneck is now the national grid itself. “The constraint is now the national grid itself, which needs more than R100 billion of investment to expand and modernise,” Pieterse said, stressing that most of that capital will have to come from private investors. Returns on it, in his view, depend on market design: a level playing field in which new private generators have equal access to the grid, and a transmission and system operator that dispatches private power on competitive terms with Eskom power, so that prices come down over time.
The institutional machinery for that competitive market is taking shape. The National Transmission Company of South Africa has already been created as a subsidiary of Eskom. The next step is to establish it as a fully independent, state-owned Transmission System Operator that owns and controls the transmission assets and provides open, non-discriminatory access to the grid, enabling generators to compete on equal terms.
Meanwhile, a similar logic is being applied to the ports. Cabinet recently approved the approach to unbundling the ports authority from Transnet, a major step forward. Levelling the playing field for terminal operators across the ports, alongside digital public infrastructure, will reduce the cost of trading with the rest of the world and improve South Africa’s global competitiveness.
Freight logistics is another arena where private capital is being brought in. The market has been opened to private rail operators, and the first privately owned trains have started testing the lines. Government still needs a fully independent Rail Infrastructure Manager, Pieterse said, to ensure a level playing field between Transnet and privately owned operators. Transnet has separately issued a request for qualifications for a strategic partner for the multibillion-rand Manganese Export Corridor.
Beyond transport and energy, the reform agenda touches several other markets that investors watch closely. The Electronic Travel Authorisation system was officially launched in August, improving tourist visa processing and, ultimately, work and study visa processing, while phase two of the Trusted Employer Scheme will fast-track recruitment of highly skilled personnel and make South Africa a more attractive investment destination. In water, the revised water pricing strategy is in place, new raw water use charges have been approved, and progress has been made in implementing the National Water Action Plan and establishing the National Water Resources Infrastructure Agency.
Digital public infrastructure reform is also advancing. Home Affairs has unveiled a digital ID prototype, and MzansiXchange data sharing is being piloted within government. MzansiXchange is not a central data repository; it acts as a secure bridge, a structured and governed exchange allowing departments to retain ownership of their data while sharing it with other authorised entities when needed.
Taken together, the reforms signal a deliberate shift from state monopoly toward competitive markets in electricity, ports, rail and logistics, with the state’s role redefined as regulator and infrastructure owner rather than sole operator. For Pieterse, the through-line is consistent: private investment is the engine, and the task of policy is to guarantee that new entrants compete on equal terms, so that productivity rises and prices fall over time.
Whether the R100 billion in grid capital actually arrives, and on what terms, will be the test of whether that market design delivers.