WEBVTT

1
00:00:00.380 --> 00:00:04.523
You're listening to Strictly Business
Podcast with Lindsay Williams.

2
00:00:05.785 --> 00:00:10.688
With us today is Puleng Pitsow, who's an
investment specialist at 91 in Cape Town.

3
00:00:10.750 --> 00:00:14.617
What we're going to talk about is
Operation Vulindlela Phase 2.

4
00:00:14.695 --> 00:00:17.312
Phase 1 has been generally well received,
I think.

5
00:00:17.391 --> 00:00:22.516
Phase 2 is terribly important because it
really does focus on infrastructure

6
00:00:22.516 --> 00:00:24.516
reform.

7
00:00:24.516 --> 00:00:24.641
And Puleng, I don't think you can...

8
00:00:24.880 --> 00:00:30.226
overstate the importance of infrastructure
for any economy, but particularly for an

9
00:00:30.226 --> 00:00:32.226
economy like South Africa's,

10
00:00:32.226 --> 00:00:33.472
which has underperformed economically for
so long.

11
00:00:34.347 --> 00:00:35.050
Thanks, Lindsay.

12
00:00:35.909 --> 00:00:36.909
And you're quite correct.

13
00:00:37.230 --> 00:00:44.066
And I think it's important to remember
that infrastructure reforms are one of the

14
00:00:44.066 --> 00:00:46.066
most practical levers to support both

15
00:00:46.066 --> 00:00:47.206
economic recovery and long-term structural
growth.

16
00:00:47.941 --> 00:00:51.612
And at a more fundamental level,
infrastructure underpins economic

17
00:00:51.612 --> 00:00:53.612
activity.

18
00:00:53.612 --> 00:00:57.723
And as you've mentioned earlier, you know,
I think reliable electricity, efficient

19
00:00:57.723 --> 00:00:59.723
ports and rails,

20
00:00:59.723 --> 00:01:03.008
as well as well-functioning municipal
services form the backbone of a growing

21
00:01:03.008 --> 00:01:05.008
economy.

22
00:01:05.008 --> 00:01:06.868
They really enable businesses to operate
productively.

23
00:01:07.532 --> 00:01:14.157
They facilitate trade and export
competitiveness and ensure households have

24
00:01:14.157 --> 00:01:16.157
access to essential services.

25
00:01:16.157 --> 00:01:19.688
And when infrastructure fails, you know,
costs rise, investment slows,

26
00:01:19.797 --> 00:01:21.750
jobs are not created and growth.

27
00:01:22.376 --> 00:01:26.220
ultimately fails, or stalls is a better
word to use.

28
00:01:26.963 --> 00:01:32.806
And infrastructure reforms create those
conditions for greater private sector

29
00:01:32.806 --> 00:01:34.806
participation.

30
00:01:34.806 --> 00:01:38.752
By improving regulation and strengthening
institutions, reducing policy uncertainty,

31
00:01:39.345 --> 00:01:44.298
reforms really help unlock private capital
to complement public investment.

32
00:01:44.877 --> 00:01:50.220
And phase one of Operation Will and Lena
really helped unlock that kind of capital.

33
00:01:50.628 --> 00:01:54.272
And it unlocked approximately 500 billion
in private sector investment.

34
00:01:54.614 --> 00:02:00.575
And I think that's credible proof that,
you know, reforms can mobilize capital.

35
00:02:00.598 --> 00:02:03.137
And this is, again, why now there's a
bigger focus.

36
00:02:03.739 --> 00:02:08.872
And now we've really seen a change as we
move to phase two,

37
00:02:09.325 --> 00:02:16.247
where reforms are moving more from a
diagnosis kind of stand view to more let's

38
00:02:16.247 --> 00:02:18.247
make it actionable and

39
00:02:18.247 --> 00:02:20.247
action on it.

40
00:02:20.247 --> 00:02:22.247
And phase two really represents that
shift.

41
00:02:22.247 --> 00:02:24.393
towards execution, institutional capacity
and delivery.

42
00:02:24.472 --> 00:02:29.897
We've had a buy-in from the private sector
to the tune of 500 billion, which is a

43
00:02:29.897 --> 00:02:31.897
really, really big number.

44
00:02:31.897 --> 00:02:33.897
And that's very encouraging.

45
00:02:33.897 --> 00:02:35.600
So that's phase one has been ticking
boxes, is what I understand.

46
00:02:35.624 --> 00:02:41.991
But phase two, you've really got to, and
you've hinted at this, you've really got

47
00:02:41.991 --> 00:02:43.991
to go from the policy design,

48
00:02:43.991 --> 00:02:45.772
which has been mooted, to the actual
implementation.

49
00:02:45.788 --> 00:02:46.819
And that's a terribly important...

50
00:02:46.832 --> 00:02:48.332
important signal for investors.

51
00:02:48.333 --> 00:02:50.992
The investors are already there, but
another signal,

52
00:02:51.332 --> 00:02:57.457
a sign that phase one was just a bedrock
and phase two is now a building process,

53
00:02:57.457 --> 00:02:59.457
if you like.

54
00:02:59.457 --> 00:03:01.457
Yeah, that's exactly it.

55
00:03:01.457 --> 00:03:03.598
And for us as investors, the real signal
is commitment and credibility.

56
00:03:04.410 --> 00:03:09.863
And in the context of Operation Hulindela,
which is why we're here today, you know,

57
00:03:09.863 --> 00:03:11.863
you've rightfully said, you know,

58
00:03:11.863 --> 00:03:12.020
phase one ticks boxes.

59
00:03:12.480 --> 00:03:18.763
And really for us, not only did it do
that, but it removed regulatory barriers

60
00:03:18.763 --> 00:03:20.763
that allowed for private investment to

61
00:03:20.763 --> 00:03:22.763
participate.

62
00:03:22.763 --> 00:03:25.841
And to that, you know, there's a real
drive towards implementation and phase two

63
00:03:25.841 --> 00:03:27.841
builds on that,

64
00:03:27.841 --> 00:03:30.942
shifting the focus to delivery and
creating institutional capacity and scale.

65
00:03:31.724 --> 00:03:35.739
And that really creates conditions to
mobilize even greater pools of capital.

66
00:03:36.616 --> 00:03:42.781
If you're an investor, a big investor, and
you're looking at this and you've maybe

67
00:03:42.781 --> 00:03:44.781
participated in phase one and it's been
good for you,

68
00:03:44.781 --> 00:03:48.624
but now you're looking at phase two and
you look at the infrastructure reform

69
00:03:48.624 --> 00:03:50.624
focus, you say to yourself, OK,

70
00:03:50.624 --> 00:03:54.398
which parts of the economy are benefiting
the most from phase one and phase two?

71
00:03:54.429 --> 00:03:55.914
Where are the real opportunities?

72
00:03:55.960 --> 00:03:56.820
Can you help us there?

73
00:03:57.414 --> 00:03:59.585
Yeah, I think there are three that stand
out for me.

74
00:03:59.632 --> 00:04:05.945
I think the first is energy, and I think
energy has been on South Africa's agenda

75
00:04:05.945 --> 00:04:07.945
for a very long time and with reason.

76
00:04:07.945 --> 00:04:13.770
So, I mean, we saw earlier reforms in the
energy space really opened up doors for

77
00:04:13.770 --> 00:04:15.770
private generation and

78
00:04:15.770 --> 00:04:17.770
stabilizing the system.

79
00:04:17.770 --> 00:04:20.614
And I think what we're seeing now in phase
two is a focus on expansion.

80
00:04:21.098 --> 00:04:27.598
And especially in the transmission and
distribution part of this energy value

81
00:04:27.598 --> 00:04:29.598
chain,

82
00:04:29.598 --> 00:04:35.052
we are seeing that more investment is
needed and large projects are needed to be

83
00:04:35.052 --> 00:04:37.052
structured with long-term

84
00:04:37.052 --> 00:04:39.052
revenue models.

85
00:04:39.052 --> 00:04:41.052
to become effective, to become bankable.

86
00:04:41.052 --> 00:04:45.152
And so this is where really institutional
investors become really, really well

87
00:04:45.152 --> 00:04:47.152
suited for opportunities like this.

88
00:04:47.152 --> 00:04:49.214
I think another sector is transport and
logistics.

89
00:04:49.574 --> 00:04:54.292
And I think there has been an
underinvestment in this sector for many,

90
00:04:54.292 --> 00:04:56.292
many years.

91
00:04:56.292 --> 00:04:57.933
And we have been constrained as a result
of the underinvestment.

92
00:04:58.214 --> 00:05:01.027
We've been constrained in terms of our
exports and our growth.

93
00:05:01.589 --> 00:05:02.289
And I think...

94
00:05:02.971 --> 00:05:05.933
There's been a recognition that something
needs to change.

95
00:05:06.175 --> 00:05:12.218
The focus now really is on implementation
and opening rail to private

96
00:05:12.718 --> 00:05:18.484
operators, strengthening regulation and
moving towards frameworks that pilot

97
00:05:18.484 --> 00:05:20.484
concession

98
00:05:20.484 --> 00:05:22.484
opportunities.

99
00:05:22.484 --> 00:05:27.320
And this is where reform really starts to
turn into bankable opportunities in the

100
00:05:27.320 --> 00:05:29.320
rail, ports and logistics corridor.

101
00:05:29.320 --> 00:05:31.320
So that's really what's happening there.

102
00:05:31.320 --> 00:05:31.726
And then you have local government
infrastructure.

103
00:05:31.999 --> 00:05:34.441
which I think is one of the most
important.

104
00:05:35.322 --> 00:05:41.205
Municipals are responsible for essential
services like water, sanitation,

105
00:05:41.205 --> 00:05:43.205
electricity,

106
00:05:43.205 --> 00:05:45.205
distribution and roads.

107
00:05:45.205 --> 00:05:46.314
And so improving governance, financial
stability,

108
00:05:46.853 --> 00:05:52.814
project preparation at a local government
level is absolutely critical to unlock

109
00:05:53.580 --> 00:05:59.861
pipeline that is investable, particularly
where public and private models are

110
00:05:59.861 --> 00:06:01.861
required and applied.

111
00:06:01.861 --> 00:06:06.478
Pulling, you've been talking about
participation in infrastructure reform

112
00:06:06.478 --> 00:06:08.478
from the state level, from the private
sector level,

113
00:06:08.478 --> 00:06:10.158
the high-end private sector level, talking
about hundreds of billions.

114
00:06:10.744 --> 00:06:13.423
And then you talked about local
municipalities,

115
00:06:13.424 --> 00:06:18.830
and that became interesting because local
municipalities filter down to local

116
00:06:18.830 --> 00:06:20.830
communities.

117
00:06:20.830 --> 00:06:25.502
Where does all this leave local
communities, the people of South Africa,

118
00:06:25.502 --> 00:06:27.502
or rather, where does it help them?

119
00:06:27.502 --> 00:06:28.252
Does it help with delivery of services
like electricity?

120
00:06:28.283 --> 00:06:29.299
Does it help with jobs?

121
00:06:29.361 --> 00:06:30.061
Please tell us.

122
00:06:30.427 --> 00:06:32.428
Yeah, I think you've mentioned quite a
few.

123
00:06:32.649 --> 00:06:33.389
Thank you, Lindsay.

124
00:06:33.850 --> 00:06:40.440
And so for us, I think we understand
infrastructure investment to be very

125
00:06:40.440 --> 00:06:42.440
direct and have everyday impacts.

126
00:06:42.440 --> 00:06:46.838
And so, like you said, reliable
electricity, efficient transport networks,

127
00:06:46.838 --> 00:06:48.838
municipal services.

128
00:06:48.838 --> 00:06:52.588
But in addition to that, I think we see it
impacting local businesses.

129
00:06:52.651 --> 00:06:54.916
So it helps support local businesses.

130
00:06:55.526 --> 00:06:56.729
It helps lower costs.

131
00:06:56.854 --> 00:06:58.182
It creates jobs.

132
00:06:59.099 --> 00:07:05.366
And for us, infrastructure really improves
economic activity and it makes it or helps

133
00:07:05.366 --> 00:07:07.366
it become more stable,

134
00:07:07.366 --> 00:07:07.526
productive and inclusive.

135
00:07:08.268 --> 00:07:13.151
And I think we also take a look at it from
a real project perspective.

136
00:07:13.534 --> 00:07:20.362
When we say, you know, private investment
plays a really critical role because its

137
00:07:20.362 --> 00:07:22.362
significance expands the pool of capital.

138
00:07:22.362 --> 00:07:25.706
And that is that allows for better
delivery of infrastructure assets.

139
00:07:26.115 --> 00:07:32.243
And given the scale of South Africa's
needs and the limitations on the public

140
00:07:32.243 --> 00:07:34.243
funding side,

141
00:07:34.243 --> 00:07:39.028
private sector investment really helps
accelerate delivery by complementing

142
00:07:39.028 --> 00:07:41.028
public sector investments

143
00:07:41.028 --> 00:07:43.028
instead of replacing it.

144
00:07:43.028 --> 00:07:44.489
And I think that's a way that people don't
necessarily always see, but that's a real

145
00:07:44.489 --> 00:07:46.489
impact.

146
00:07:46.489 --> 00:07:49.598
And so, again, to circle back to how it
impacts municipalities and people, you

147
00:07:49.598 --> 00:07:49.970
know,

148
00:07:49.970 --> 00:07:53.395
it supports resilient communities and
strengthens growth.

149
00:07:53.823 --> 00:08:00.091
I think while investors' return is
important, I think communities benefit

150
00:08:00.091 --> 00:08:02.091
through improved infrastructure,

151
00:08:02.091 --> 00:08:04.591
job creation during the construction and
operation of these infrastructure assets,

152
00:08:05.216 --> 00:08:11.263
better essential services that support the
livelihoods and economic growth and

153
00:08:11.263 --> 00:08:13.263
opportunities for people.

154
00:08:13.263 --> 00:08:15.263
Right.

155
00:08:15.263 --> 00:08:17.263
It all sounds very encouraging.

156
00:08:17.263 --> 00:08:19.263
If it is successful, what's it going to
look like?

157
00:08:19.263 --> 00:08:20.872
If it delivers on its promise, what is
South Africa going to look like after

158
00:08:20.872 --> 00:08:22.872
phase two?

159
00:08:22.872 --> 00:08:26.042
After phase two, I think that the
landscape should look different.

160
00:08:26.062 --> 00:08:30.730
And I think success would really look like
us as a country, as South Africa,

161
00:08:30.785 --> 00:08:36.152
being able to deliver infrastructure
projects on a more consistent and stable

162
00:08:36.152 --> 00:08:38.152
basis.

163
00:08:38.152 --> 00:08:40.378
And what I mean by that is that rather
than having isolated projects,

164
00:08:40.785 --> 00:08:47.144
South Africa would want to have a steady
pipeline of bankable infrastructure

165
00:08:47.144 --> 00:08:49.144
opportunities in the energy sector,

166
00:08:49.144 --> 00:08:49.660
transport and municipal services space.

167
00:08:50.671 --> 00:08:56.195
I think it would also reflect stronger
collaboration between public and private

168
00:08:56.195 --> 00:08:58.195
sector,

169
00:08:58.195 --> 00:09:01.805
which really underpins that we have a
government or a system that works.

170
00:09:01.806 --> 00:09:03.102
You know, we have clear rules.

171
00:09:03.422 --> 00:09:08.086
We have improved institutions and rising
investor confidence.

172
00:09:08.727 --> 00:09:11.305
For private capital, including private
credit,

173
00:09:11.727 --> 00:09:16.617
success is the ability to deploy long-term
funding into well-governed projects.

174
00:09:17.320 --> 00:09:18.523
And really, that's what it is.

175
00:09:19.583 --> 00:09:25.203
I think for the first time, 2026, the new
year ahead, actually looks quite

176
00:09:25.203 --> 00:09:27.203
optimistic.

177
00:09:27.203 --> 00:09:29.203
2025 was good.

178
00:09:29.203 --> 00:09:31.726
I think 2026, from what you've said,
Puleng, is going to be even better.

179
00:09:32.125 --> 00:09:32.906
Let's hope so.

180
00:09:33.007 --> 00:09:34.382
Puleng, thank you very much for your time.

181
00:09:34.406 --> 00:09:38.023
That's Puleng Pidso, Investment Specialist
at 91 in Cape Town.

182
00:09:39.570 --> 00:09:46.507
The views and opinions expressed in these
podcasts are those of Lindsay Williams and

183
00:09:46.507 --> 00:09:48.507
various contributors and do not reflect
the policy,

184
00:09:48.507 --> 00:09:51.021
position, or opinion of any other agency,
organization, employer,

185
00:09:51.363 --> 00:09:55.225
or company associated with
StrictlyBusinessPodcast.com.

186
00:09:55.686 --> 00:10:02.654
Assumptions made on the analyses are not
reflective of the position of any other

187
00:10:02.654 --> 00:10:04.654
entity other than the speaker or the
author.

188
00:10:04.654 --> 00:10:08.834
And since we are critically thinking human
beings, these views are always subject to

189
00:10:08.834 --> 00:10:10.834
change, revision,

190
00:10:10.834 --> 00:10:10.975
and rethinking at any time.

191
00:10:11.287 --> 00:10:13.709
Please do not hold us to them in
perpetuity.
