South Africa: A new step to attract more investment

Written by: Ayman Ragab

South Africa is moving to implement a broad package of reforms to the old rules governing the flow of funds, in a move aimed at strengthening its position as a financial center on the continent and attracting more investment.

Key proposals

The Ministry of Finance’s proposals for restructuring the financial system include raising the ceiling on discretionary foreign transfers for individuals, regulating crypto assets, and easing restrictions on capital movement, according to a report by Africa News.

The Johannesburg Stock Exchange estimates that these changes could attract investments of at least 10 trillion rand, equivalent to about $608 billion, in the long term.

Fokele Davidson, Deputy Director General for Fiscal Policy at the National Treasury, said in a press statement on Monday that a large part of the legislation being amended dates back to 1961, while some of its provisions date back to 1933.

Davidson explained that exchange controls were previously used to address a wide range of issues beyond managing capital flows, including protecting the domestic tax base, curbing illicit financial flows, and ensuring the stability of the financial sector.

Updating the financial system

He added that this general instrument is currently being replaced by more specific reforms, referring to South Africa's move towards modernizing its financial system and adopting a more open approach to managing cross-border capital flows.

The National Treasury of South Africa had released the draft circular on these reforms for public comment on April 17.