What Consequences Might South Africa Face if Its SWIFT Access Were Compromised?

What is the risk level of South Africa being excluded from the global banking SWIFT system?

According to the South African Reserve Bank, this threat is aimed more at specific individuals than the country as a whole. However, the issue was significant enough that Finance Minister Enoch Godongwana discussed it in a [recent] closed-door meeting with banking officials.

Read: SA treasury, banks fear loss of SWIFT, reports Sowetan
Listen/read: What are the consequences if South Africa loses access to the SWIFT payment network?

The SWIFT [Society for Worldwide Interbank Financial Telecommunication] system is essential for international trade. It acts as a communication channel for banks, ensuring secure transaction processing. Being excluded from SWIFT hampers individuals’ ability to carry out cross-border transactions.

What brought us to this point?

A proposal introduced in the US Congress by Representative John James calls for a review of US-South African trade relations. Although it does not directly demand a SWIFT exclusion, historical trends imply potential ramifications, as noted by Faadil Moti, CEO of payments firm 80eight.

Such restrictions could start subtly and escalate rapidly, similar to the situations faced by Russia and Iran. This comes as South Africa strives to remove itself from the Financial Action Task Force (FATF) grey list by enhancing anti-money laundering and terrorism financing measures.

The US has considerable leverage to enforce compliance among its trade partners, making use of tariffs, sanctions threats, and control over the SWIFT system.

Read: South Africa moves closer to exiting the grey money list in October.

Prepare for possible scenarios

In this podcast, Moti discusses alternatives to SWIFT, such as Russia’s SPFS and China’s CIPS, though these options are generally slower and seen as less secure. Additionally, the Pan-African Payment and Settlement System could be utilized for trade, albeit with longer processing times, he notes.

“I believe a hybrid infrastructure that links traditional payment systems with digital assets, stablecoins, and tokenized liquidity layers will be the most scalable solution in the near future,” Moti suggests.

For specific transactions—like cross-border remittances—mobile money and stablecoins are increasingly common in Africa.

South Africa cannot afford to be passive regarding the SWIFT threat; it must develop contingency plans and alternative strategies, as emphasized by Moti. This requires creating regulatory frameworks for the use of stablecoins in international payments.

Read:
Digital payments in Africa: Can regulation keep pace with rapid innovation?
Yellow Card, Visa agree to accelerate stablecoin adoption in Africa.

“Over the past 18 months, South Africa’s inclusion on the FATF grey list has affected various transactions. For example, individuals using their allowances to send money abroad for cryptocurrency purchases faced limitations on which banks they could use. Since being grey-listed, several offshore banks deemed such transactions high-risk or outright prohibited them.”

Moti asserts that while South Africa’s economy has shown resilience, companies should continue normal operations, keeping in mind the risks if relations with the US worsen.

“Being placed on the grey list was a significant learning experience for South African institutions, pushing them to strengthen anti-money laundering and terrorism financing measures, which are crucial for compliance with international norms and enhancing trade flow.

“However, developing alternatives isn’t just about innovation; it’s also about adoption. South Africa is well-positioned to adopt these alternatives—pending regulatory approval, of course.”

South Africa is not the only country facing challenges from the US. India has faced 50% tariffs on many imports to the US and risks additional tariffs for buying oil from Russia. This highlights how displeasing the Trump administration can have substantial trade repercussions—India is actively pursuing strategies to mitigate these negative impacts.

In this podcast, Moti outlines a variety of potential futures and alternatives, making it a worthwhile listen.

For previous episodes of the Moneyweb Crypto Pod, click here.

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