(Bloomberg) -- A group of finance executives is drafting proposals to allow foreign-currency transactions on stock and bond exchanges in South Africa as the continent’s biggest economy aims to bolster its standing as a regional financial hub.
“We are at an inflection point,” said Leila Fourie, the chair of the newly-formed South African Financial Sector Competitiveness Taskforce. “We have seen a re-rating of South Africa in the international markets and we want to do everything to capitalize on that upturn and to grow and improve our competitiveness on the African continent and as a gateway into Africa.”
The group is seeking to capitalize on improving investor sentiment in the country following the formation of a business-friendly coalition government. Still, despite the ensuing wave of investment announcements, South Africa’s strict exchange controls and volatile currency can sometimes weigh on businesses.
The new taskforce — Operation Phumelela, which means to succeed in isiZulu — will engage the National Treasury and other regulatory bodies on potential capital markets reforms to ease such challenges and boost growth, job creation and services exports. The group aims to a deliver a white paper detailing reform proposals and technical requirements from the private sector next year.
While the country’s financial institutions are regarded as strong and its markets are the continent’s most developed and liquid, a global anti-money laundering and terror-financing watchdog placed South Africa on a so-called gray list in 2023 citing insufficient measures to combat dirty-money flows.
That classification put the nation on par with the likes Syria and South Sudan. Meantime, improvements in Mauritius, Botswana and Rwanda now place those countries among the regions’ most attractive financial markets.
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The new taskforce aims to propose regulatory changes to allow for hard-currency listings, trade and collateral on local bourses, according to Fourie, who’s also the chief executive officer of the operator of Africa’s biggest stock and bond exchanges, JSE Ltd.
The group will also consider reforms that may allow for non-rand funds, reduce the cost of capital for private equity deals and create a onshore mechanism for South African investors and savers to gain foreign exposure in their portfolios.
Such changes would allow South African companies to de-risk their balance sheets to through asset-liability currency matching, and foreign issuers to raise rand- and -hard-currency funding in the country and gain cheaper access to local markets, Fourie said.
Members of the unit include Nedbank Group Ltd. Chairman Daniel Mminele, Old Mutual Ltd. Chief Executive Officer Iain Williamson and Remgro Ltd. CEO Jannie Durand. Its formation comes as South Africa increasingly relies on the private sector to deliver services and help reverse declines partly caused by economic stagnation and an era of endemic government graft, known as state capture.
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