For decades, South Africans have been sending their money offshore, and with it a quiet stream of income that could have stayed at home. An estimated R5 trillion in offshore portfolio assets has been built up by South African investors over the years, and some estimates suggest the true figure could be as high as R10 trillion. The management fees on those assets, billions of rands each year, flow largely to firms abroad, along with the jobs and skills that come with managing that money.
That is the problem a new set of proposals from the South African Reserve Bank and National Treasury is trying to solve. The two institutions are proposing a Synthetic Financial Centre, a framework that would allow approved local firms to manage offshore assets from South African soil, even when the clients and the investments themselves sit elsewhere. The public now has 30 days to comment on the draft proposals, and implementation is expected before the end of 2026.
The idea did not appear out of nowhere. It grew out of Operation Phumelela, an industry-led taskforce set up to sharpen the competitiveness of the country’s financial sector, working alongside National Treasury and the Reserve Bank. For Valdene Reddy, chief executive of the JSE and chair of the taskforce, the effort is about giving local professionals a fair shot at work that has long slipped overseas.
“This is about winning international business, attracting investment mandates and building a financial sector that contributes more to economic growth,” Reddy says. “We developed the SFC because South Africa should be competing for this business, not watching it move elsewhere.”
The obstacle has been regulation rather than ability. The country’s exchange control regime has made it difficult for local firms to handle certain international activities, pushing them to open offices in other countries instead. The proposed centre addresses this by creating a new regulatory category inside the existing exchange control framework, one defined by rules rather than by a physical location. That is what sets it apart from the established financial centres South Africa would now compete with, including Mauritius, Kigali in Rwanda and Casablanca in Morocco.
Under the draft rules, SFC business would have to be separately identifiable and ring-fenced from a firm’s other activities, with quarterly reports submitted to the Reserve Bank. Qualifying institutions would need licences from the Financial Sector Conduct Authority and/or the Prudential Authority, registration with the Reserve Bank’s Financial Surveillance Department, and approval to take part. Existing regulatory obligations would continue to apply, and the 45% prudential cap on the foreign exposure of retirement funds and other institutional investors stays firmly in place, with offshore investments managed through the centre counting towards each investor’s own limit. Private individuals would also be able to invest directly through the centre using their foreign capital and single discretionary allowance.
Daniel Mminele, independent chair of Nedbank and a member of the Operation Phumelela steering committee, sees the human stakes plainly.
“We have a sophisticated financial system,” he says. “The challenge is to translate that strength into investment, exports and jobs. The SFC creates an opportunity to attract international financial business to South Africa, generating employment, growing professional services and strengthening our economy.”
Stuart Theobald, executive chair of research and advisory firm Krutham, agrees that the gap has been regulatory rather than one of talent.
“South Africa has the financial expertise to serve international markets. What we have lacked is the regulatory enablement. The SFC changes that. Two years of work between industry and the regulators have brought us to this point. Now we need to get the final framework right and turn this opportunity into real economic activity.”
For ordinary savers, the benefits could show up in choice, access and, possibly, price. Experience from the UK and European fund markets suggests fees tend to fall over time as competition and regulatory pressure build, though whether firms pass savings on to customers remains an open question.
“The real change is on the management side,” says Wiehann Olivier, global co-head of digital assets at Forvis Mazars. Qualifying institutions would manage ring-fenced foreign portfolios without those client assets consuming their own prudential foreign limit, while non-resident investors could invest through the centre without a South African foreign-investment limit applying to them.
“The opportunity is therefore not simply attracting foreign capital into South African assets, but attracting the management, skills, fees and supporting financial-services activity associated with global capital, while retaining existing safeguards over SA capital flows,” Olivier says.
Meanwhile, a bigger prize lies in the next phase: allowing companies to raise capital locally in foreign currencies, and letting investment firms establish offshore-focused funds in South Africa. That would require reforms to the listing and trading of foreign currency shares and bonds, along with changes to market infrastructure and the tax and legal framework. Krutham says Operation Phumelela will keep engaging policymakers and industry to support implementation, with further reforms, including enabling non-rand listings on South African capital markets, part of the broader competitiveness agenda. The end goal is a financial sector where the fees, the jobs and the expertise stay home. Whether the final framework, due before the end of 2026, delivers that outcome is the question the next 30 days of public comment will help answer.