In black and white: what SA’s removal from the greylist means
South Africa has checked off all items on the action plan dictated by the Financial Action Task Force (FATF) to get off the greylist. A recent statement issued by National Treasury explains that the final step in the process is an on-site visit from FATF officials to verify that the implementation of relevant reforms has begun and is being sustained. The delegation, expected to visit later in 2025, will also investigate whether the necessary political commitment remains in place to sustain the implementation of the measures in the future.
In light of this development, a number of questions need to be answered. What impact will delisting have on South Africa’s interest rate? Will investors and stakeholders have more faith in the South African economy and local businesses? Will the expected increase in lending and bonds come to fruition? 3Cube Property Solutions unpacks the implications of being removed from the greylist.
Expected impact on South Africa’s interest rate
South Africa’s interest rate has been on a downward trajectory since September 2024, with a cumulative 100 basis points having been cut. While some economists are predicting further drops in the second half of 2025, others have voiced concerns that the emerging conflict between Israel and Iran could cause the South African Reserve Bank to hesitate over making further cuts.
While the potential exodus from the greylist has not yet been factored into these decisions, a look at what has happened in other countries paints a positive picture. Countries that have been removed from the greylist often experience positive economic impacts, including lower borrowing costs and improved investor confidence. However, it needs to be borne in mind that other macroeconomic factors – such as escalating global conflict – also play a significant role in decisions around the interest rate.
A glance at the example of Mauritius shows that the interest rate did not immediately change when the island nation was removed from the greylist. However, the country’s financial services sector, especially offshore banking and investment, saw renewed inflows.
Similarly, when Turkey was removed from the greylist in June 2024, the Central Bank opted to maintain its policy rate at 50%, where it had landed after a series of aggressive hikes since mid-2023. The aim of keeping the interest rate high was to bring about a sustainable decline in inflation.
In South Africa’s case, experts have noted that the Rand has already firmed since greylisting was implemented in mid-2023, and delisting would likely reinforce this trend as risk perception diminishes. While removal from the FATF greylist won’t automatically trigger interest rate cuts, it should gradually lower borrowing costs and reduce upward pressure on the interest rate over time.
Greater faith in South African businesses and the economy as a whole
Being on the greylist signals that a country’s financial system is vulnerable to money laundering and terror financing. Removal, on the other hand, tells the world that we have implemented stronger regulatory frameworks and that financial institutions now meet global compliance standards. As a result, the credibility of South African businesses is boosted in global trade, banking and investment networks.
A great example of the effects of removal from the greylist can be found in Pakistan. When Pakistan was removed from the FATF greylist in October 2022, a range of positive economic impacts resulted. Over time, Pakistan’s risk premium declined, which in turn began to ease capital inflows into government debt and infrastructure projects. Pakistani businesses viewed the move as a green light for cross-border operations and partnerships, which opened the doors to a more promising economic future.
Expected increase in lending and bonds
Being removed from the greylist makes South Africa a lower risk country – and that means a higher investment appetite. For as long as we’re on the greylist, international banks and asset managers must apply enhanced due diligence when lending to or investing in South Africa, which raises transaction costs and risk premiums. Once delisted, this costly scrutiny will no longer be needed. Our removal from the greylist will also mean that South Africans can borrow from global institutions at lower interest rates.
To capitalise on the upcoming advantages of South Africa’s delisting from FATF’s greylist, your business needs to be ready to scale up operations. To do this, you need the right premises. Get in touch if your business needs commercial, industrial or retail space in Gauteng or the Western Cape.