Workshop on Global Financial Reform and its effect on SACU Trade in Financial Services

This report documents a workshop held on August 31, 2010, regarding the impact of global financial reforms—specifically the G20's push for Basel III—on trade in financial services within the Southern African Customs Union (SACU) and the Southern African Development Community (SADC). The discussions highlight the dominance of South Africa as a net exporter of financial services in the region and the potential for new regulatory barriers to emerge as South Africa implements global standards, which may reduce funding for riskier African prospects and infrastructure projects.

• The global financial crisis was driven by macro-economic imbalances, loose monetary policy leading to asset price bubbles, excessive leveraging via regulatory arbitrage, and a non-transparent derivatives market. This resulted in a significant decline in global trade due to demand shocks and a freeze in trade finance as inter-bank trust collapsed.
• The G20's adoption of Basel III principles aims to strengthen capital and liquidity requirements, regulate OTC derivatives and financial conglomerates, and introduce countercyclical capital buffers to replace the procyclical nature of Basel II.
• Basel III is expected to make long-term infrastructure loans, mortgage loans, and equity-related exposures more expensive for banks to hold. This may shift investment bank focus toward short-term financing and risk management services, potentially limiting asset growth.
• South Africa is the dominant financial services provider in the region, acting as a net exporter. Its banking assets represent 120% of GDP, and its insurance penetration is the highest globally at 16% of GDP. The Johannesburg Stock Exchange (JSE) is the largest among emerging markets by market capitalization.
• The implementation of Basel III via South Africa's G20 membership may create new trade barriers in the region. Higher capital requirements for riskier prospects could lead to reduced funding in Africa, a decreased appetite for infrastructure financing, and a bias toward better-rated countries, resulting in more onerous lending terms or reduced cross-border lending.
• The financial crisis caused significant economic contractions in the region: Botswana's real GDP growth fell to 2.9% by the end of 2008 from a previous high of 10%, and South Africa entered a recession in 2009, with exports falling by 24% in the first quarter of that year.
• There is a significant gap in supervisory capacity and skills within SADC central banks regarding macro-prudential regulation and the supervision of cross-border financial conglomerates. For example, while South African banks operate in 17 African countries, the South African Reserve Bank (SARB) only has MOUs with two African countries.
• While financial services trade in SADC is largely unidirectional from South Africa, innovation in areas like mobile banking is occurring outside South Africa, specifically in Kenya, due to a lack of an appropriate regulatory framework in South Africa.

APA

Thomas, R. (2010). Workshop on Global Financial Reform and its effect on SACU Trade in Financial Services. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2010/08/dttp_workshop_report_global_financial_crisis_and_sacu_20100831.pdf

Chicago

Thomas, Ros. Workshop on Global Financial Reform and its effect on SACU Trade in Financial Services. South African Institute of International Affairs, 2010. https://saiia.org.za/wp-content/uploads/2010/08/dttp_workshop_report_global_financial_crisis_and_sacu_20100831.pdf.

Wikipedia

{{cite report |last1=Thomas |first1=Ros |title=Workshop on Global Financial Reform and its effect on SACU Trade in Financial Services |publisher=South African Institute of International Affairs |date=31 August 2010 |url=https://saiia.org.za/wp-content/uploads/2010/08/dttp_workshop_report_global_financial_crisis_and_sacu_20100831.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{thomas2010workshop, author = {Thomas, Ros}, title = {{Workshop on Global Financial Reform and its effect on SACU Trade in Financial Services}}, institution = {South African Institute of International Affairs}, year = {2010}, month = aug, url = {https://saiia.org.za/wp-content/uploads/2010/08/dttp_workshop_report_global_financial_crisis_and_sacu_20100831.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }