Riza Moosa | Director | Head | Banking & Finance | CMS South Africa | mail me |
Mbali Nene | Associate | Banking & Finance | CMS South Africa | mail me |
The South African financial landscape is currently undergoing one of its most significant structural shifts in decades. As a result, businesses must prioritise navigating the transition from the Johannesburg Interbank Average Rate (JIBAR) to the South African Overnight Index Average (ZARONIA) with urgency and precision.
We are moving toward the permanent discontinuation of JIBAR on 31 December 2026. In addition, the “no new JIBAR” milestone is approaching in March 2026. Therefore, the transition to the ZARONIA is no longer a distant line item on a risk register. Instead, it has become a strategic imperative.
From estimates to reality
Much like the transition from London Interbank Offered Rate (LIBOR) in international markets, South Africa’s shift to ZARONIA follows a global movement. Specifically, this movement aims to strengthen the reliability of benchmarks that underpin financial systems. At its core, this reform represents a fundamental shift in how we measure the cost of money.
For years, JIBAR operated as a forward-looking term rate. It often relied on indicative quotes rather than hard data. In contrast, ZARONIA is a backwards-looking benchmark. It is grounded in observable market activity. This distinction is central to navigating the transition from JIBAR to ZARONIA effectively.
ZARONIA reflects actual, unsecured overnight wholesale funding transactions. These transactions draw from a deep daily pool reported to exceed ZAR460 billion.
By using a volume-weighted methodology on completed transactions exceeding ZAR 20 million, ZARONIA delivers transparency and auditable integrity. Consequently, it represents a clear step up from JIBAR. This is not just a technical change. Instead, it strengthens the robustness of the entire financial ecosystem.
The legacy hurdle
Crucially, ZARONIA is not a direct plug-and-play substitute for JIBAR. Because it is an overnight rate rather than a term rate, the transition requires deliberate re-engineering. Specifically, institutions must rethink how they calculate and document interest.
Despite these benefits, a significant legacy problem remains. As we entered 2025, the South African Reserve Bank highlighted that JIBAR-linked exposures still totalled approximately R45 trillion.
Furthermore, the global LIBOR transition showed clear lessons. Late engagement led to congested amendment processes, spiked advisory costs and strained contractual relationships. These risks reinforce the importance of proactively navigating the transition from JIBAR to ZARONIA.
The role of market participants
Many South African corporates still view themselves as bystanders in this process. However, this perception is inaccurate.
ZARONIA is underpinned by wholesale funding transactions involving large corporates, SOEs and asset managers. Therefore, these entities are not only users of the benchmark. They also contribute to the data pool that determines it. The focus must now shift from understanding ZARONIA to operationalising it.
To avoid an operational cliff-edge at the end of this year, businesses should prioritise the following strategic pillars:
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Halt new JIBAR exposure
From March 2026, any new instrument referencing JIBAR becomes a self-inflicted addition to the legacy problem. Therefore, proactive firms are already adopting ZARONIA-linked alternatives.
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Conduct a full audit and scope
Identify every contract, including loans, bonds, and derivatives, that matures after 2026. Then, quantify exposure by value and tenor. This step forms the foundation of effective mitigation.
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Review fallback provisions
Many legacy contracts lack effective mechanisms for automatic transition to a new rate. As a result, firms must address these gaps early.
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Ensure systemic readiness
Update internal treasury and accounting systems to support compounded overnight rate calculations. This process requires coordination across legal, tax, and risk functions.
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Prioritise strategic education
Ensure that senior management and stakeholders understand a critical point. JIBAR cessation marks the end of the process, not the beginning.
The way forward
The balancing act for South African businesses lies in managing this transition without disrupting commercial momentum. Ultimately, success will depend less on technical tools and more on early, deliberate engagement.
The market no longer has a choice about whether to move. Instead, the choice lies in how to move. Institutions can act deliberately or reactively. As with all major financial reforms, the market will adjust. However, it will adjust on terms set by institutions that engage early and decisively in navigating the transition from JIBAR to ZARONIA.
