Operation Phumelela Welcomes Landmark Budget Reforms to Restore South Africa’s Financial Centre Competitiveness
POSTED ON: February 25, 2026 IN PressNational Treasury announces Synthetic Financial Centre and capital markets reforms to bring financial activity back onshore
Operation Phumelela welcomes today’s Budget announcement of a Synthetic Financial Centre (SFC) and reforms to enable fund managers to manage global portfolios efficiently from South Africa. These will significantly improve the competitiveness of the South African financial sector in attracting global investment and managing South Africans’ international savings.
The Budget has partly adopted Operation Phumelela’s proposals that aim to respond to the competitive erosion of South Africa’s ability to attract global capital flows. Johannesburg and Cape Town have slipped to 94th and 92nd globally in the Global Financial Centres Index, while Mauritius, Casablanca and Kigali have risen to 52nd, 56th and 65th by implementing coordinated international financial‑centre strategies.
The reforms announced today will help close the gap with these rising hubs, but they are only the first steps in a process that will need urgent implementation.
What the Reforms Mean
The Budget confirms two major reforms that will enable South Africa to compete with global financial centres:
Synthetic Financial Centre (SFC): Investment institutions will be able to operate funds and management companies in foreign currencies within South Africa’s borders. This opens the way to bring back the asset management activity currently happening in offshore centres. Fund managers will be able to manage global portfolios in currencies other than rand, able to charge fees on those portfolios in other currencies and report to clients in other currencies. This is a big stride toward matching the environments that fund managers experience in global centres. The centre is “synthetic” in that it will not be a physical location but be defined in terms of a category of institutions within the exchange control framework.
Trading of non-rand instruments: Institutions in the SFC will be able to trade non-rand instruments without restriction, enabling them to efficiently manage global portfolios.
The next step will be to enable listing and trading of such instruments on South African capital markets. This would allow issuers and investors to use the SFC to list shares and debt instruments in South Africa rather than being forced to issue these abroad. Such reforms are a logical end point to improving competitiveness and match the capabilities of Mauritius, Dubai and latterly Rwanda, though we anticipate these will take longer to consolidate.
“These reforms are a major step forward for the South African financial sector. They enable us to bring trillions of rands in South African savings – currently managed offshore – back home,” says Leila Fourie, chair of Operation Phumelela and CEO of the JSE. “More importantly, they open the door to comprehensive multi-currency market infrastructure that allows us to compete for global investment flows into Africa. This is about enabling activity and investment to be managed from within the country – activity that has been lost to other centres – creating jobs and tax revenue here.”
“The industry is ready to implement and we have the technical capacity in place,” says Daniel Mminele, Operation Phumelela steering committee member and chair of Nedbank. “What we need now is clarity on the full scope and a timeline. We look forward to engaging further with National Treasury and SARB regarding these proposals to ensure that today’s signals translate into urgent steps for comprehensive reforms.”
Why these reforms matter
“There is a clear opportunity to stimulate employment and taxable revenue in South Africa by enabling the well-regulated and sophisticated financial sector to compete with other financial centres,” says Stuart Theobald, convenor of the Task Team and chairman of consultancy Krutham. “We should aim to reap the dividends of South Africa’s exit from the FATF grey list and improving credit ratings, and these reforms begin a journey toward doing so.”
Finance Minister Enoch Godongwana explained the reasons for the changes in the Budget speech: “One of the main policy objectives is to ensure that the financial sector supports regional integration and the implementation of the Africa Continental Free Trade Agreement,” and noted “This will improve competitiveness and allow South Africa to function as a hub for investment into the continent.”
South Africa’s financial sector generates a quarter of GDP but has been losing ground to rival centres. An estimated R10 trillion of South African savings is currently managed offshore as part of the $70-trillion in global cross border portfolio flows. These reforms create the framework to attract some of that activity to the South African financial ecosystem, generating employment in asset management, fund administration, legal and accounting services, and allied conferencing and hospitality, as well as new tax revenue within South Africa’s borders.
Alignment with national strategy
The reforms support the National Development Plan’s vision of creating a regional financial hub and position South Africa as the gateway for investment into Africa, which is now stimulated by the African Continental Free Trade Agreement.
Next steps
Operation Phumelela will soon convene a Synthetic Financial Centre Lekgotla to support implementation planning to which parties including National Treasury, SARB, the FSCA and the JSE will be invited to consider regulatory frameworks, licensing and operational readiness.
About Operation Phumelela
Operation Phumelela is South Africa’s Financial Sector Competitiveness Taskforce, established in 2024 to enhance the country’s position as a leading international financial centre and gateway for investment into Africa. The task force has been convened by industry leaders to work with government and regulators to implement structural reforms that improve competitiveness, deepen capital markets and support economic growth through enhanced financial sector capabilities. More information is available at its website, www.operationphumelela.org.za.
Operation Phumelela takes its name from the Zulu word meaning “to succeed” or “to achieve,” reflecting the initiative’s commitment to transforming South Africa’s financial sector competitiveness.
For more information or to arrange interviews, please contact:
- For Dr Leila Fourie, Pheliswa Mayekiso, email pheliswam@jse.co.za or mobile +27 84 486 0502.
- For Dr Stuart Theobald, Jennifer Kann, email jkann@krutham.com or mobile +27 83 455 3289.
[ends]
Share
