South Africa’s central bank governor said on Wednesday that he was confident the country would be removed from an international financial crime watchdog’s “grey list” next year, given the work that is under way to fix identified issues.
The International Financial Action Task Force (FATF) last year placed South Africa on a “grey list” of countries under special scrutiny over implementing standards to prevent money laundering and terrorism financing.
Speaking at a financial sector conference, South African Reserve Bank Governor Lesetja Kganyago said being on the watch list had “been a costly episode for us”.
“The lesson is that joint efforts are required to look after the integrity of South Africa’s financial system. We all suffer when this is compromised,” he said.
Last month, the National Treasury said the task force confirmed that five of 22 actions it had identified had been addressed or largely addressed, but that it would be a challenge to address all remaining 17 items by February 2025, when the task force conducts its next review.
Being placed on the list was a reputational setback for Africa’s most advanced economy, and analysts said it could complicate its attempts to obtain funding and support from multilateral development institutions and official lenders, among other negative factors.
South Africa’s economy eked out marginal growth of 0.6% in 2023, with growth inching up just 0.1% in the final quarter.
“We are falling behind. A big reason for this is that other places have functioning rail networks, ports and electricity,” said Kganyago.
At the same time, government debt has risen too fast and is too high, he said.
Inefficiencies at South Africa’s state power utility Eskom and port and freight rail operator Transnet have stifled growth, while a cost-of-living crisis has squeezed consumer spending.
