As developments across South African capital markets continue to gather pace, an expert panel speaking at SA Trade Connect delved into the impact of the South African Financial Sector Competitiveness Taskforce (known as Operation Phumelela).
Vuyo Ntoi, managing director at African Infrastructure Investment Managers, explained that the taskforce has a “single, urgent goal”: securing South Africa’s position as the leading financial hub in Africa.
Vuyo Ntoi, Derrick Msibi
“The JSE has over the years been the largest capital market on the continent but the problem we’re seeing at the moment is that this position is slipping,” he said. “New centres such as Mauritius, Casablanca, Kigali have been rising up in the rankings, and Johannesburg and Cape Town have been falling. As a result of this, they’ve come together to address this.”
When it came to the biggest gaps which Operation Phumelela is attempting to fill, Derrick Msibi, chief executive, STANLIB Asset Management, touched on a core issue which remains front of mind – the increasing number of local investment activities going off shore.
One topic which should be addressed, Msibi explained, is the “long standing issues around how money moves in and out of South Africa which has caused friction.
“We as practitioners need to update the regulators and the policy makers in understanding how we have to deal with foreign exchange movements.”
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The focus going forward, Ntoi added, should be on truly tangible goals which can be quickly realised.
“A set of interventions is needed. Not deep structural interventions, but practical and quickly implemented interventions that can assist in bringing back a lot of what’s currently being lost. So it’s not just about rankings, it’s really about that kind of loss of capital activity in South Africa.”
The Operation Phumelela initiative took inspiration from other efforts including the UK’s Capital Markets Industry Taskforce which was initially set up to improve the competitiveness of the City of London.
An official announcement in November 2024 during the launch of the taskforce highlighted that the initiative was set to specifically focus on “improving efficiencies, reducing frictions and enabling financial institutions in the country to better manage investment and capital formation on behalf of domestic, regional and global investors and issuers.
“It will work to improve the competitiveness of South Africa as an attractive capital raising and investment destination, both on public and private markets.”
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Removing elements of friction in the pursuit of the further advancement of South Africa’s capital markets is demonstrably front of mind. Against this backdrop, Msibi believes the region is, in actuality, in a highly privileged position, comparable to other developed markets.
“Look at the number of CFAs, look at the number of investment bankers, look at the structuring capability, and capabilities when it comes to a resident in South Africa being able to execute on whatever investment product […] I think that probably even places like London and New York are not too far ahead of where we are.”
Looking ahead towards future success, the panellists enthused that there is a clear sense of optimism across South Africa. What is key, said Msibi, is that the region continually looks ahead.
“Unfortunately, as South Africans, at times we only react when there’s a crisis […] Whereas here we’re trying to change the mindset and say ‘let’s think about long term’.”