The latest BLSA Reform Tracker showed governance reforms making progress, but setbacks in electricity and freight logistics pushed the overall reform completion index slightly lower.
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South Africa's economic reform programme lost momentum for the first time since monitoring began, with setbacks in the energy sector outweighing progress in governance and visa reforms during the second quarter of 2026.
The latest Business Leadership South Africa (BLSA) Reform Tracker, compiled by research consultancy Krutham, showed the overall reform completion index slipped marginally to 71.5 during the April to June period from 71.7 in the previous quarter. Despite the decline, the index remains 26% above its March 2024 baseline.
The tracker monitors 247 reform deliverables across economic, governance and criminal justice categories, with more reforms declining than advancing for the first time since the index was introduced.
BLSA Chief Executive Busisiwe Mavuso said the latest results highlighted emerging challenges in the implementation of key reforms.
"This quarter is the first time we've seen more reforms lose ground than gain it," Mavuso said.
She pointed to growing setbacks in electricity reform, noting that challenges extended well beyond Eskom's unbundling process.
The electricity reform score declined from 69.1 to 67.5 during the quarter despite Eskom forecasting no load shedding this winter as improved plant reliability and lower demand created generation surpluses of more than 5GW.
However, the report found that aggressive curtailment of renewable independent power producers had created a compensation backlog of about R2 billion, while some producers experienced revenue shortfalls of around 9%.
Progress also slowed on virtual wheeling after the finalisation of electricity trading rules missed its April deadline, delaying broader participation by private electricity traders. Municipal debt owed to Eskom climbed above R114 billion, while the rollout of new transmission infrastructure also fell short of planned targets.
Freight logistics also recorded a slight decline, with the reform score easing to 68.8. The report noted encouraging progress after Transnet's Rail Infrastructure Manager signed rail access agreements with 11 newly qualified private train operating companies, expanding the network from one operator to 12 and creating the potential for an additional 24 million tonnes of freight annually.
However, broader reforms continued to face delays, including the National Rail Bill, while concerns remained over rolling stock availability.
The report found stronger progress in governance reforms, with that category improving from 54.4 to 55.1 during the quarter.
The implementation of the Public Service Amendment Act and the Public Administration Management Amendment Act, which transfer administrative powers from executive authorities to heads of department, recorded the strongest governance improvement during the period.
Visa reforms also advanced, supported by continued progress on the Electronic Travel Authorisation system, while infrastructure reforms benefited from further digitalisation of the Deeds Office.
Criminal justice reforms remained broadly stable following progress made after South Africa's removal from the Financial Action Task Force grey list. The introduction of the Extradition Bill into Parliament also contributed to modest improvements.
Despite these gains, BLSA warned that continued delays in energy and transport reforms risk undermining broader economic growth.
The organisation said it remained concerned that Transnet continued to oversee many of the processes intended to introduce competition into the freight rail sector while the Transport Economic Regulator was not yet operational.
It also highlighted delays in establishing an independent Transmission System Operator, warning that a competitive electricity market could not function effectively without it.
BLSA said implementing reforms successfully remained essential to improving South Africa's long term growth prospects.
"Efficiently functioning energy and transport and logistics markets, as well as water systems and municipalities that can deliver services, will provide a strong foundation from which the economy will be able to grow at meaningful rates. And that is what will enable the country to be in a much better position to address the many urgent areas of need, particularly the high unemployment rate," the organisation said.
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