The latest BER Reform Barometer shows that South Africa is making real progress in several areas. But the next phase of reform will be defined less by policy announcements and more by whether government can make infrastructure, institutions and services work reliably, particularly as the country heads towards the 4 November Local Government Elections.
There is a temptation, when assessing South Africa’s reform programme, to choose between two familiar narratives.
The first is that reforms are finally bearing fruit: no load-shedding for over a year, private investment in electricity is growing, private-sector participation in logistics is easing congestion at ports, improvements in the visa regime have seen more people visit the country, and digital government infrastructure is beginning to take shape. The second is that little has really changed: economic growth remains weak, infrastructure bottlenecks persist, municipalities are struggling, investment is subdued and the state continues to battle with implementation. Both narratives contain some truth.
The more useful conclusion, however, is more uncomfortable: South Africa has entered a new phase of reform in which the principal challenge is no longer identifying what needs to change but making change work at scale.
That is the central message Frontline Africa Advisory takes from the latest BER Impumelelo Growth Lab Reform Barometer for the third quarter of 2026.
The BER’s assessment is broadly encouraging on electricity, visas and digital infrastructure, while logistics, water and local government remain more mixed. Spatial integration and housing are the clearest laggards. At the same time, the economy itself is sending a warning signal: real GDP contracted by 0.2% quarter-on-quarter in the second quarter, while the RMB/BER Business Confidence Index edged down from 39 to 38 in the third quarter. The BER describes business sentiment as subdued, with firms still waiting for stronger impetus to lift confidence and activity.
This implies reforms have not yet translated into sufficient economic momentum and this is where the latest developments at Transnet, in the metros and in the political calendar become important.
Reform is moving, but the economy is not moving fast enough
The BER’s Reform Barometer is valuable because it asks whether structural reforms are translating into real economic outcomes.
The BER’s June assessment already showed that reforms were slowly bearing fruit, but implementation remained the challenge. Its third-quarter assessment confirms that diagnosis.
Electricity is perhaps the clearest example.
South Africa has gone nearly 500 consecutive days without load-shedding, while private-generation registrations continue to expand. According to the BER, NERSA registered another 124 private-generation facilities in the second quarter, representing 804 MW and approximately R20.2 billion in investment. This represents a structural change in the electricity market. However, there is an important caveat to this; a registered project is not the same thing as operational capacity. The road from registration to implementation can be fraught with challenges, leading many projects never to see light of day.
This challenge captures the wider reform challenge. South Africa has mastered the art of announcing big project pipelines, frameworks, programmes, concessions and policy instruments. Converting those into reality has proven more challenging.
Electricity reform success signals the next problem
The electricity market transition currently underway demonstrates what reform can achieve when policy, regulation, private capital and institutional change begin moving in the same direction.
The entry of private sector players into the market has been hugely supportive of the stability experienced over the last 18 months or so. Reforms introduced by the government over the last decade, and especially over the last three years, have made it possible for businesses to generate or procure electricity outside the traditional Eskom model.
However, electricity reform cannot be separated from municipal reform. These are two sides of the same coin. Generation and transmission cannot succeed without functioning municipalities that are on top of the distribution game. Growing financial pressure on municipalities, including the risk that municipal arrears to Eskom could reach approximately R358 billion by 2031 poses the largest risk to institutionalising the reforms underway.
This is why government is increasingly turning attention to revamping the municipal level of government. Most reforms will fail when they encounter municipal dysfunction and inertia.
The same pattern appears in water.
Water is where the implementation test becomes unavoidable
South Africa’s National Water Action Plan is an important development. So too is the creation of the Infrastructure Finance and Implementation Support Agency, with 14 municipal projects identified as having potential to crowd in more than R1 billion in private investment.
However, the scale of the underlying problem is enormous. The BER notes that non-revenue water averages approximately 47% across municipalities. In other words, almost half of the water entering municipal systems is not generating revenue. That is simultaneously an infrastructure problem, a financial problem and a governance problem.
While the Water Plan may be important, South Africa does not need another strategy telling it that water infrastructure matters. What it needs is the discipline to invest its limited resources where it matters most, build institutional capacity to monitor, maintain, and enforce the systems required to make that strategy work.
This is the lens through which reform success should be viewed. What matters is which reforms are producing measurable improvements in the operating environment, and which remain trapped in the policy pipeline?
Eskom and Transnet offers an important reason for cautious optimism
There is, however, another side to the implementation story. Transnet and Eskom’s latest financial results prove that institutional recovery is possible. The two companies have recently reported admirable financial results. In the case of Transnet, the company returned to profitability for the first time in four years, reporting R4.6 billion in profit after tax for the year ended 31 March 2026, compared with a R1.9 billion loss in the previous financial year. The improvements resulted largely from institutional reforms.
The positive financial results are important as they confirm that institutional reform can eventually produce measurable operational and financial outcomes. Transnet’s recovery is particularly significant because logistics is one of the areas where South Africa’s reform agenda has struggled to translate policy progress into consistent service delivery.
The companies’ improved financial position therefore should be seen as an early indicator that the direction of travel may be changing. The next test is whether improved financial performance is accompanied by sustained improvements in their core business, infrastructure reliability and competitiveness.
The visa reform story offers a more encouraging lesson
Immigration reform provides perhaps the clearest example of what implementation success looks like.
The BER reports that the first phase of the Trusted Employer Scheme reduced visa-
processing times for participating companies from a historic average of roughly 22 weeks to about 20 business days, with 80% of applications processed within the reduced turnaround time. This is a notable service delivery outcome.
For businesses competing for scarce skills, infrastructure expertise and regional headquarters, the difference between waiting months and waiting weeks has direct economic value. The challenge is to replicate this kind of outcome across other parts of the state.
The R5.6 billion question: can government turn funding into functioning metros?
Germany and France have committed approximately R5.6 billion in concessional loans through KfW Development Bank and the Agence Française de Développement to support National Treasury’s Metro Trading Services Reform programme.
The programme is aimed at strengthening electricity, water and waste-management services across the eight metros, which collectively serve more than 22 million people. On one level, this is welcome news. It demonstrates that there is money available to support municipal infrastructure and service-delivery reform.
But it also exposes the central problem. Capital is not the same thing as capacity. A municipality can receive financing and still struggle to maintain infrastructure, collect revenue, manage procurement, enforce bylaws, retain technical skills or provide predictable services. This is why the R5.6 billion should be viewed as an implementation test.
If the funding helps metros improve electricity distribution, water reliability and waste management, it can become evidence that municipal reform is beginning to work. If financial resources continue to disappear into institutional weaknesses without producing measurable improvements in services, it will reinforce the opposite conclusion.
The real reform bottleneck may be local government
The BER’s assessment of local government is appropriately cautious. The forthcoming revised White Paper on Local Government contains a substantial set of recommendations, but many of the proposed changes will unfold over two local government election cycles. That creates a fundamental tension. The institutional reform horizon is long while the economic cost of municipal dysfunction is immediate.
Businesses do not experience municipal failure as a theoretical governance problem. They experience it through unreliable electricity distribution, water interruptions, inadequate roads, slow approvals, deteriorating infrastructure, crime, weak planning systems and unpredictable municipal administration. This means that local government reform should not be treated as an economic-growth reform. Municipal reform is critical to economic success, with appropriate intervention powers emerging as a missing link.
And now there is a political deadline: 4 November
South Africans will go to the polls on 4 November to elect municipal councils. This is effectively the final stretch in which the current municipal administrations can demonstrate that reform can translate into visible improvements in local services.
For voters, what matters is whether political parties can provide reliable electricity, potable water, quality roads and predictable refuse collection, among other things. For businesses, regulations, permitting, infrastructure reliability all mean the difference between hiring more people and closing shop.
This creates an interesting political paradox. The BER points towards a long reform horizon for local government, potentially spanning two election cycles. But voters are being asked to make a judgement on 4 November. The reform process therefore operates on two different clocks: The state works on an institutional reform clock. Citizens vote on a service-delivery clock. The gap between those two clocks could become one of the defining political-economic dynamics of the election.
The election is therefore also a referendum on implementation
It would be simplistic to suggest that the November 4 election will be solely about service delivery. Local elections are shaped by party politics, coalition dynamics, candidate quality, identity, national political sentiment, local grievances and community mobilisation. But service delivery will inevitably be part of the political conversation.
And the reform programme has created a further expectation. Government has increasingly acknowledged that municipalities are critical to the functioning of the economy. Voters will express their opinion on whether this acknowledgement has shifted the lived reality. This is especially important in the major metros.
The country’s economic engines are increasingly dependent on municipal systems that were not designed for the complexity, population growth and infrastructure demands they now face.
Johannesburg, eThekwini, Tshwane, Ekurhuleni and the other metros are not merely local government entities. They are economic infrastructure.
Their performance affects investment, employment, logistics, electricity distribution, water security, property values, business costs and the attractiveness of South Africa as an investment destination.
That means the November election is not only a political event, but also an economic governance event.
The worrying signal is not GDP alone – it is investment. The 0.2% contraction in second-quarter GDP deserves attention, particularly because mining, manufacturing and trade were among the main drags. But GDP is not the most useful way to assess whether South Africa’s reform programme is working. Investment may be the more revealing indicator.
If businesses believe that electricity will be more reliable, logistics more efficient, water more secure, skilled workers easier to attract and government administration more predictable, investment should eventually respond. Yet, the BER notes that investment has remained subdued. This suggests that businesses may be seeing reform progress but are not yet sufficiently convinced that the operating environment has changed permanently.
A business does not invest billions because a reform is announced. It invests because the reform changes the expected return and risk profile of the investment.
South Africa therefore faces a credibility test. This is where the next phase of Operation Vulindlela becomes particularly important. The first phase of reform was largely about removing structural blockages: opening electricity generation to private participation, improving visa systems, reforming logistics, addressing water constraints and creating mechanisms to attract investment.
The next phase needs to be about institutionalising the gains. The turnaround at Eskom and Transnet offers a useful illustration of what this means. The companies’ return to profitability suggests that Operation Vulindlela is achieving its aims. However, it is too early to declare victory. The durability of the recovery is what will ultimately determine success – defined as improved financial performance, reliable service delivery, increased fixed capital formation and improved competitiveness.
The political economy of implementation
Implementation is not merely an administrative challenge. It is political. Reforms create winners and losers. They redistribute market access, capital, institutional power and economic opportunity. Opening electricity generation creates new private-sector participants. Opening rail access challenges established operating models. Port concessions alter relationships between the state and private capital. Municipal reform changes political and administrative authority. Water reform affects tariffs, municipal finances and service-delivery models. Local government elections inevitably introduce another consideration: political incentives can change the pace and character of implementation.
The period before an election can create pressure for visible delivery. It can also create incentives for short-term political interventions at precisely the moment when institutions require disciplined, long-term reform. This is why the period between now and 4 November deserves close attention.
