AT THE end of October, the National Treasury further relaxed
exchange control rules. This means that the lifetime limit of R4m for South
Africans sending money abroad has been raised to R5m.
Measures to make South Africa more attractive for investment
have also been introduced. Companies with international headquarters are now
allowed to raise and deploy capital offshore without exchange control approval.
According to the Treasury, South African Reserve Bank (Sarb)
and independent financial planners, there are also wide-reaching benefits for
ordinary South Africans.
Morne Bezuidenhout, an investment planner at the Cape
Town-based Netto Financial Services, says members of retirement funds will now
have additional offshore exposure within their retirement funds.
"It will allow them to participate in the returns of
offshore investments," Bezuidenhout says.
He says pension, provident and retirement annuity funds can
now have up to 25% of their investments in offshore assets. This was previously
limited to 15%.
According to Bezuidenhout, many retirement funds have intentionally
increased their offshore exposure. This is because these markets present
potentially favourable opportunities relative to the South African market, as
offshore assets are undervalued and the rand is still relatively strong.
When Finance Minister Pravin Gordhan announced the
relaxation of exchange controls at the end of October, he also said all
inward-listed shares on the JSE would be classified as domestic assets included
on the JSE Indices.
Previously, SA exchange control rules limited the amount of
foreign JSE-listed assets local individual and institutional investors could
own, and South African investors could not buy these shares.
There are 32 foreign shares listed on the JSE, among them
British American Tobacco [JSE:BTI] and Aquarius Platinum [JSE:AQP].
More relaxed remittance rules
But not only South Africans will benefit. In addition to the
changes made to JSE listing restrictions, rules affecting remittances have also
Besides more than 3 million Zimbabweans, South Africa has
also become home to many people from other neighbouring countries who send
money to friends and family members abroad every month.
Gordhan added that in an effort to reduce the cost of
remittances to neighbouring and other countries, ownership restrictions on
international participation in foreign exchange bureaus would be removed.
Hlengani Mathebula, head of communication at Sarb, says this
will lower the cost of cross-border remittances and will also benefit those who
want to send money to other countries, because it will be less expensive to do
Kershia Singh of the National Treasury says South Africans
who may be receiving money from abroad will also benefit.
"According to the G20 Development Working Group, a drop
in remittance costs can have high potential development impact," Singh
"A 5% reduction of the global average cost of
remittances' flows would translate into an additional $15bn (R118bn) a year for
She adds reducing the cost of money remittances has the
potential to play a significant role in improving the income security of