Cape Town – South Africa is moving ahead with proposed rules that could allow financial institutions to manage international investment portfolios from within the country, in a move aimed at attracting investment, creating jobs and strengthening its position as a financial hub for Africa.
According to BusinessTech, which cited Bloomberg, the South African Reserve Bank (SARB) published a draft framework on Wednesday, 21 October, outlining the first phase of the proposed Synthetic Financial Centre (SFC).
The framework would allow approved institutions to manage qualifying foreign portfolios and conduct related foreign-currency investment activities from South Africa, without necessarily establishing offshore operations to perform those functions.
The Business Day reported that the proposal could help bring investment-management activities currently conducted abroad back to South Africa. The Johannesburg Stock Exchange (JSE) has estimated that the reforms could unlock up to R10 trillion in investment over time.
Major step
BusinessTech reported that an estimated R10 trillion in South African savings is currently managed offshore, according to Operation Phumelela, a public-private initiative established to improve the competitiveness of the financial sector.
“These reforms are a major step forward for the South African financial sector,” Leila Fourie, then chief executive officer of the JSE and chair of Operation Phumelela, said when the plan was announced in February.
“They enable us to bring trillions of rands in South African savings – currently managed offshore – back home,” she said.
The Moonstone Information Refinery reported that participation would depend on institutions meeting eligibility, licensing and approval requirements, with approved activities conducted through ring-fenced arrangements.
Domestic financial markets
The proposal would not remove individual investors’ existing offshore investment limits. Investors would remain subject to applicable foreign-investment allowances and prudential requirements.
The initiative forms part of broader efforts by National Treasury and the SARB to modernise South Africa’s financial regulatory framework and attract international investment-management business that might otherwise be based in competing financial centres such as Mauritius, Dubai and Rwanda.
The draft framework is open for public comment until 30 November 2026, after which the SARB will consider submissions and may revise the proposals.
The authorities hope the reforms will deepen domestic financial markets, attract investment activity, support skilled employment and strengthen South Africa’s role as a gateway for investment into the rest of Africa.
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Compiled by Betha Madhomu
