In the February 2020 Budget, the Minister of Finance, Tito Mboweni stated that the current exchange control regulations will be replaced with new less stringent regulations. On 28 October 2020, it was announced that the government will be pursuing steps to promote investment into South Africa. The following measures were announced:

Inward listing

All remaining foreign classified debt and derivative instruments as well as exchange traded funds referencing foreign assets, that are inward listed on a South African exchange, traded and settled in Rand, will be reclassified as domestic. In the past, these instruments were classified as foreign, and as such, institutions could only invest in them as far as their prudential limits allowed. Inward listings attract foreign direct investment to South Africa, increase market capitalisation and liquidity of South Africa’s capital markets, support the new partnership for Africa’s development initiative, and support the enhancement of foreign investment diversification through domestic channels.

Loop structures

The restrictions formerly placed on loop structures will be removed to encourage inward investment into South Africa, subject to reporting to the Financial Surveillance Department of the South African Reserve Bank (FinSurv). A loop structure arises when a South African exchange control resident holds an interest in a foreign structure which also directly or indirectly owns assets in the Common Monetary Area (being South Africa, Eswatini, Lesotho and Namibia).

This reform will be effective from 1 January 2021 for companies, including private equity funds, subject to the requirement that the entity is a tax resident in South Africa.

Corporate foreign borrowings

South African corporates (excluding State Owned Companies) may borrow offshore by way of bond and/or note issuances with recourse to South Africa, without prior approval from the FinSurv. This is subject to reporting conditions determined by the Reserve Bank.