South Africans who regularly send or receive money from Lesotho, Eswatini, and Namibia will need to find alternative methods as Electronic Funds Transfers (EFT) between these countries will be discontinued from September 9th, 2024. This change, originally planned for April, was extended due to intervention by the Bank of Namibia.
The Backstory: The Common Monetary Area (CMA) Decision
The Common Monetary Area (CMA), comprising South Africa, Lesotho, Eswatini, and Namibia, has decided to stop processing EFT payments within the region. This means:
- You can no longer make EFT payments to accounts in these countries.
- Receiving EFT payments from these countries through EFT channels will also be unavailable.
Alternatives for Sending and Receiving Money
South African banks are advising customers to utilize alternative methods for cross-border transactions after September:
- Global Payment Platforms: Banks like Nedbank offer global payment platforms for these transactions.
- SWIFT: Standard Bank highlights the SWIFT network (Society for Worldwide Interbank Financial Telecommunication) as the new standard for cross-border transfers.
- Relationship Banking Services: Absa suggests contacting their relationship banking, international banking, and foreign exchange teams for solutions like SWIFT.
Potential Impact
This change is likely to disrupt businesses and families in the region due to:
- Increased Processing Time: SWIFT transfers may take longer due to stricter checks.
- Higher Costs: Additional fees associated with SWIFT transfers could be a burden for individuals and businesses.
- Uncertainties for Online Payments: The impact on online shopping using EFT remains unclear.
- Disruption of Remittance Services: Families relying on cross-border remittances for essential services may be affected.
A Look at the Numbers
- A 2023 Finmark Trust study revealed many families in the region depend on cross-border remittances.
- Formal outbound remittances from South Africa in 2022 reached nearly $1 billion.
Engelsman Magabane Incorporated: Here to Help
Engelsman Magabane Incorporated understands the potential challenges these changes may bring. We can assist you with:
- Understanding the new regulations and their impact on your specific situation.
- Exploring alternative methods for cross-border money transfers.
- Navigating the new processes for sending and receiving funds.
Stay Informed, Stay Connected
While this change presents hurdles, new solutions are emerging. We encourage you to stay informed and explore alternative options to ensure your cross-border financial needs are met.