End of prime interest rates in South Africa

South African lawmakers are likely to pass legislation needed for the transition to the new Zaronia overnight rate before the end of December, the head of the nation’s Standing Committee on Finance said.

News24, a Cape Town-based news website, reported earlier that a legislator wants the General Finance Laws Amendment Bill to comply with a 17 September Constitutional Court ruling that compels lawmakers to ensure public participation in the legislative process.

The National Treasury has argued that the bill was introduced to parliament on 18 August, before the court ruling.

Zaronia — short for the South African Rand Overnight Index Average — is scheduled to replace the Johannesburg Interbank Average Rate at the end of this year.

In addition to being needed for the implementation of Zaronia, the passage of the legislation is required for the proposed phasing out of the prime rate next year, a benchmark used by commercial lenders for consumer credit.

“I am confident that parliament will pass the General Finance Laws Amendment Bill before it rises in December,” Joe Maswanganyi, the head of the Standing Committee on Finance, said by phone on Wednesday.

“We will not put the country at risk, and we will make sure it passes constitutional muster.”

Lawmakers plan to have meetings “as soon as possible” to discuss the matter, he said.

“Parliament will hear all stakeholders, especially National Treasury and the South African Reserve Bank,” Maswanganyi said.