South Africa’s removal from the Financial Action Task Force’s grey list on Friday has been met with guarded optimism from investment analysts. The decision restores an important credibility marker and reduces specific frictions for cross-border business, but market participants say much of the benefit has already been priced in and structural reforms and enforcement will determine whether the delisting produces sustained capital inflows.
Immediate market movements were subdued but positive. The rand strengthened modestly to around 17.25 against the United States dollar, while the benchmark 2035 government bond yield declined to 8.88%, suggesting marginally lower borrowing costs for the government and businesses. The JSE’s Top 40 Index, however, dipped by 0.2%, indicating that global economic factors, such as US interest rates and commodity prices, continue to exert stronger influence than the delisting news alone.
Bianca Botes, a director at Citadel Global, says delisting signals that South Africa is committed to maintaining robust financial standards and is a credible and attractive destination for domestic and international investment.
“Delisting will restore faith in the government’s ability to co-ordinate complex multi-agency reforms, deliver on international commitments, and prove that its institutional capabilities can inspire confidence beyond financial regulation. It ultimately shows a political commitment to maintaining international standards despite domestic pressures, and this will be very good for South Africa’s standing in the global financial markets,” Botes said.
“What will be important in the future is to keep demonstrating that South Africa is serious about the independence of its institutions, the prevention of state capture, the prosecution of financial crimes, including corruption, and the continued modernisation of its financial systems and regulatory compliance capabilities.”
Botes said delisting has the following important benefits for the financial ecosystem:
- Reduced transaction costs and faster payments because international wire transfer fees could decline and processing times for routine international transactions will shorten.
- Lower international trade finance and credit costs as letters of credit and trade finance pricing normalise, removing the “greylisting premium” and making trade-related borrowing more affordable.
- Enhanced access for small and medium enterprises to global finance, with less stringent due diligence requirements and improved availability of finance, which had become prohibitively expensive or largely unavailable during greylisting.
- Restored financial connectivity and correspondent relationships will see international banks re-establish connections previously restricted during greylisting, re-opening vital payment corridors and enabling South African banks to diversify partnerships with major United States and European institutions.
- Enhanced capital inflows and foreign investment expected as lower compliance costs make South Africa more attractive for multinationals establishing regional headquarters or expanding operations, driving increased foreign direct investment.
- Renewed portfolio and bond market confidence follow as governance-related restrictions applied to grey-listed countries are removed, potentially triggering passive fund inflows and improving pricing and access for sovereign and corporate international bond issuance.
- Revitalised private equity and retirement fund investment will allow private equity firms to face fewer barriers when allocating capital to South Africa, while large global institutional investors can remove the country from restricted investment lists, expanding access to long-term funding.
- Strengthened regional financial hub positioning will reinforce South Africa’s competitiveness as a financial centre, improving its standing relative to Mauritius, Kenya, and the United Arab Emirates.
Philip Robotham, head of the South Africa client group at global investment manager Schroders, said exiting the grey list should make it cheaper and more efficient for foreign investors to do business in South Africa.
Greylisting made it harder for foreign investors to do business in the country, given its higher-risk status and therefore enhanced due diligence requirements.
Exiting the grey list, together with the steps taken to correct various deficiencies and better detect financial crime, as well as the laws implemented to enforce compliance, should make the country a more attractive destination for capital and prove beneficial for the economy, Robotham said.
International investors will view delisting positively and is likely to increase capital flows into the country. That said, grey listing was not the only obstacle to attracting foreign capital – there is still the global and local economic backdrop to contend with.
“However, it is a step in the right direction to improving investor confidence, alongside other positive developments such as ongoing reform progress, energy stability, and public/private sector engagement. Sustained financial hygiene, coupled with economic stability, is required for ongoing international flows.”
Much of the upside is already priced in
Lenee Green, Lerato Lamola, and Michael Denega, partners at Webber Wentzel, said South Africa’s removal from the grey list will lead to a renewed optimism for increased foreign investment.
To support their view, they drew parallels with other countries that successfully navigated the FATF greylisting process, such as Mauritius (grey-listed in 2020 and delisted in 2022), Botswana (2018 to 2021), Pakistan (2018 to 2022), and Turkey and Jamaica (removed in 2024).
“In each case, market sentiment recovered well before formal delisting once FATF acknowledged progress and timelines became clear. This has established a predictable reform-to-delisting cycle of roughly two to three years.”
They pointed to evidence that the markets had already begun to factor in South Africa’s delisting prior to its confirmation. “By late 2024, fixed-income spreads, the rand, and cross-border capital flow indicators showed that investors were already discounting the likelihood of South Africa’s eventual removal.”
Credit analysts from institutions such as Moody’s, RMB, and Investec characterised the greylisting as a “transitory compliance risk rather than a structural credit issue”.
From the perspective of private-equity investors, the authors observed that although operational adjustments were made – such as strengthening “know your customer” and beneficial ownership verification – there was no material repricing of South African assets for sustained jurisdictional risk.
“Deal execution slowed during 2023 and 2024, but stabilised in 2025, consistent with expectations of an imminent delisting.”
Summarising this dynamic, they assert: “In short, the greylisting penalty has already been priced in and largely amortised over the past two years. Fundraising showed investor caution peaked in 2023 and 2024, but engagement improved through 2025 as international investors viewed the FATF process as nearing completion.”
The compliance costs associated with enhanced AML/CFT processes have become standard operating practice and will remain, irrespective of delisting,
They argue that based on historical precedent and the FATF progress report in June 2025, markets have already internalised South Africa’s likely removal from the grey list. “While the formal announcement will deliver a symbolic confidence boost and may modestly ease transaction-banking friction, it is unlikely to trigger significant capital-market repricing.”
Bastian Teichgreeber, the chief investment officer at Prescient, called the delisting a modest tailwind for sentiment but noted limited scope for big short-term equity or bond returns because the markets had already priced in the delisting.
Kevin Lings, chief economist at Stanlib, emphasised the reputational and operational benefits for investors and households but warned that prosecutions and investigations, including on terror-financing, remain weak spots.
Leila Fourie, the chief executive of the JSE, described the delisting as a watershed that should strengthen South Africa’s position as an African financial hub and improve cross-border integration.
Neal Froneman, the chairperson of Business Against Crime South Africa, welcomed the outcome as one that “unlocks investment and has meaningful benefits for ordinary South Africans”, while noting that continued work is needed.
Wichard Cilliers, the head of market risk at TreasuryONE, said delisting signals strong progress in tightening AML/CFT controls and that international business should become easier and cheaper – even if much of that improvement was already reflected in the currency.
