South Africa has been removed from the Financial Action Task Force’s (FATF) grey list, marking a major step forward for Africa’s most industrialised economy and bolstering investor confidence.
The Paris-based watchdog announced on Friday that South Africa – along with Nigeria, Mozambique, and Burkina Faso – is no longer subject to increased monitoring after demonstrating significant progress in combating money laundering and terrorist financing.
Market reaction
The news prompted an immediate market reaction: the yield on South Africa’s benchmark 10-year government bond fell by four basis points to 8.9%, while the rand strengthened 0.6% against the US dollar by late afternoon trading.
South Africa and Nigeria had been placed on the FATF grey list in February 2023, with Mozambique and Burkina Faso added earlier.
The decision to delist them follows reforms that improved financial oversight and enforcement mechanisms across the banking and public sectors.
Analysts say the move reinforces investor optimism.
“This is a boost for institutional strength that may lift sentiment, lower bond yields, and ease debt-servicing costs,” said Jee-A Van Der Linde, senior economist at Oxford Economics.
However, he noted that the change is unlikely to significantly alter South Africa’s growth outlook.
New foreign investment
Prescient Investment Management CIO Bastian Teichgreeber added that while markets had already priced in the decision, the removal remains “crucial for restoring international confidence,” paving the way for new foreign investment and cheaper cross-border money transfers.
Under the leadership of Mexican official Elisa de Anda Madrazo, the FATF has revised its criteria to place greater scrutiny on wealthier member states while easing focus on least-developed nations.
South Africa’s next FATF on-site evaluation is scheduled for April 2027 under the organisation’s updated fifth-round review methodology.
Economists view the delisting as a symbolic and financial win for President Cyril Ramaphosa’s administration, underscoring progress on governance reforms even as the country continues to grapple with sluggish growth, power shortages, and fiscal pressures.
