You're listening to Strictly Business Podcast with Lindsay Williams.
With us today is Puleng Pitsow, who's an investment specialist at 91 in Cape Town.
What we're going to talk about is Operation Vulindlela Phase 2.
Phase 1 has been generally well received, I think.
Phase 2 is terribly important because it really does focus on infrastructure
reform.
And Puleng, I don't think you can...
overstate the importance of infrastructure for any economy, but particularly for an
economy like South Africa's,
which has underperformed economically for so long.
Thanks, Lindsay.
And you're quite correct.
And I think it's important to remember that infrastructure reforms are one of the
most practical levers to support both
economic recovery and long-term structural growth.
And at a more fundamental level, infrastructure underpins economic
activity.
And as you've mentioned earlier, you know, I think reliable electricity, efficient
ports and rails,
as well as well-functioning municipal services form the backbone of a growing
economy.
They really enable businesses to operate productively.
They facilitate trade and export competitiveness and ensure households have
access to essential services.
And when infrastructure fails, you know, costs rise, investment slows,
jobs are not created and growth.
ultimately fails, or stalls is a better word to use.
And infrastructure reforms create those conditions for greater private sector
participation.
By improving regulation and strengthening institutions, reducing policy uncertainty,
reforms really help unlock private capital to complement public investment.
And phase one of Operation Will and Lena really helped unlock that kind of capital.
And it unlocked approximately 500 billion in private sector investment.
And I think that's credible proof that, you know, reforms can mobilize capital.
And this is, again, why now there's a bigger focus.
And now we've really seen a change as we move to phase two,
where reforms are moving more from a diagnosis kind of stand view to more let's
make it actionable and
action on it.
And phase two really represents that shift.
towards execution, institutional capacity and delivery.
We've had a buy-in from the private sector to the tune of 500 billion, which is a
really, really big number.
And that's very encouraging.
So that's phase one has been ticking boxes, is what I understand.
But phase two, you've really got to, and you've hinted at this, you've really got
to go from the policy design,
which has been mooted, to the actual implementation.
And that's a terribly important...
important signal for investors.
The investors are already there, but another signal,
a sign that phase one was just a bedrock and phase two is now a building process,
if you like.
Yeah, that's exactly it.
And for us as investors, the real signal is commitment and credibility.
And in the context of Operation Hulindela, which is why we're here today, you know,
you've rightfully said, you know,
phase one ticks boxes.
And really for us, not only did it do that, but it removed regulatory barriers
that allowed for private investment to
participate.
And to that, you know, there's a real drive towards implementation and phase two
builds on that,
shifting the focus to delivery and creating institutional capacity and scale.
And that really creates conditions to mobilize even greater pools of capital.
If you're an investor, a big investor, and you're looking at this and you've maybe
participated in phase one and it's been good for you,
but now you're looking at phase two and you look at the infrastructure reform
focus, you say to yourself, OK,
which parts of the economy are benefiting the most from phase one and phase two?
Where are the real opportunities?
Can you help us there?
Yeah, I think there are three that stand out for me.
I think the first is energy, and I think energy has been on South Africa's agenda
for a very long time and with reason.
So, I mean, we saw earlier reforms in the energy space really opened up doors for
private generation and
stabilizing the system.
And I think what we're seeing now in phase two is a focus on expansion.
And especially in the transmission and distribution part of this energy value
chain,
we are seeing that more investment is needed and large projects are needed to be
structured with long-term
revenue models.
to become effective, to become bankable.
And so this is where really institutional investors become really, really well
suited for opportunities like this.
I think another sector is transport and logistics.
And I think there has been an underinvestment in this sector for many,
many years.
And we have been constrained as a result of the underinvestment.
We've been constrained in terms of our exports and our growth.
And I think...
There's been a recognition that something needs to change.
The focus now really is on implementation and opening rail to private
operators, strengthening regulation and moving towards frameworks that pilot
concession
opportunities.
And this is where reform really starts to turn into bankable opportunities in the
rail, ports and logistics corridor.
So that's really what's happening there.
And then you have local government infrastructure.
which I think is one of the most important.
Municipals are responsible for essential services like water, sanitation,
electricity,
distribution and roads.
And so improving governance, financial stability,
project preparation at a local government level is absolutely critical to unlock
pipeline that is investable, particularly where public and private models are
required and applied.
Pulling, you've been talking about participation in infrastructure reform
from the state level, from the private sector level,
the high-end private sector level, talking about hundreds of billions.
And then you talked about local municipalities,
and that became interesting because local municipalities filter down to local
communities.
Where does all this leave local communities, the people of South Africa,
or rather, where does it help them?
Does it help with delivery of services like electricity?
Does it help with jobs?
Please tell us.
Yeah, I think you've mentioned quite a few.
Thank you, Lindsay.
And so for us, I think we understand infrastructure investment to be very
direct and have everyday impacts.
And so, like you said, reliable electricity, efficient transport networks,
municipal services.
But in addition to that, I think we see it impacting local businesses.
So it helps support local businesses.
It helps lower costs.
It creates jobs.
And for us, infrastructure really improves economic activity and it makes it or helps
it become more stable,
productive and inclusive.
And I think we also take a look at it from a real project perspective.
When we say, you know, private investment plays a really critical role because its
significance expands the pool of capital.
And that is that allows for better delivery of infrastructure assets.
And given the scale of South Africa's needs and the limitations on the public
funding side,
private sector investment really helps accelerate delivery by complementing
public sector investments
instead of replacing it.
And I think that's a way that people don't necessarily always see, but that's a real
impact.
And so, again, to circle back to how it impacts municipalities and people, you
know,
it supports resilient communities and strengthens growth.
I think while investors' return is important, I think communities benefit
through improved infrastructure,
job creation during the construction and operation of these infrastructure assets,
better essential services that support the livelihoods and economic growth and
opportunities for people.
Right.
It all sounds very encouraging.
If it is successful, what's it going to look like?
If it delivers on its promise, what is South Africa going to look like after
phase two?
After phase two, I think that the landscape should look different.
And I think success would really look like us as a country, as South Africa,
being able to deliver infrastructure projects on a more consistent and stable
basis.
And what I mean by that is that rather than having isolated projects,
South Africa would want to have a steady pipeline of bankable infrastructure
opportunities in the energy sector,
transport and municipal services space.
I think it would also reflect stronger collaboration between public and private
sector,
which really underpins that we have a government or a system that works.
You know, we have clear rules.
We have improved institutions and rising investor confidence.
For private capital, including private credit,
success is the ability to deploy long-term funding into well-governed projects.
And really, that's what it is.
I think for the first time, 2026, the new year ahead, actually looks quite
optimistic.
2025 was good.
I think 2026, from what you've said, Puleng, is going to be even better.
Let's hope so.
Puleng, thank you very much for your time.
That's Puleng Pidso, Investment Specialist at 91 in Cape Town.
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