According to Kevin Lings, Chief Economist at Stanlib, the country had been on the brink of a major economic win.
“It’s a distinct possibility. We were put on the grey list in February 2023 and have been systematically addressing the 22 issues FATF identified since then,” Lings said, referring to South Africa’s expected delisting at the FATF plenary meeting scheduled for October 24.
A successful site visit by FATF officials in July raised expectations that South Africa would soon be cleared.
But optimism has since dimmed following explosive findings from a new commission of inquiry into the country’s policing system, which uncovered fresh evidence of corruption and mismanagement.
“There’s a twist to the story. The latest commission has revealed additional significant issues relating to corruption and maladministration.
“This is exactly the type of thing FATF flagged as inadequate when we were first grey-listed,” Lings warned.
He cautioned that the revelations could lead the FATF to delay South Africa’s removal from the list.
“There’s a risk they look at this and say, ‘Let’s hold off and see how South Africa responds to these findings.’ They’ll want assurance that real action follows, not just another report that gathers dust,” Lings cautioned, according to The Africa Report.
Economic costs and reputational risks
“It’s added a meaningful layer of cost to doing business, particularly internationally.
“More than half of South Africa’s GDP is trade-related, so every transaction now involves more paperwork, longer delays, and higher costs,” Lings explained.
For investors, the symbolism has been just as damaging.
“Being on the grey list is a red flag. You’re lumped in with countries like Nigeria, South Sudan, and Syria—not exactly places that inspire investor confidence. For a G20 country like South Africa, it’s an embarrassment,” Lings noted.
Noting that the impact has been tangible, he said, “we’ve seen reduced investment in our bond and equity markets, less foreign direct investment, and overall sluggish economic performance.”
Hope, uncertainty, and hard questions
Should South Africa be removed from the list later this month, the benefits could be significant.
“It would improve our international standing and possibly boost confidence, especially as the government tries to address other issues like low growth and poor service delivery,” Lings said.
However, the renewed corruption scandals cast doubt on the country’s ability, and willingness, to enforce reform.
“Have we got the ability? Have we got the will? How far does it reach? Is the president implicated? All of these questions are going to come up,” Lings said.
