The Zaronia bill is likely to pass parliament before it rises in December, the head of the Standing Committee on Finance said on Wednesday, a day after the same committee had paused the bill over a legal snag. “I am confident that parliament will pass the General Finance Laws Amendment Bill before it rises in December,” Joe Maswanganyi told Moneyweb. “We will not put the country at risk, and we will make sure it passes constitutional muster.”
Why the bill stalled
The bill gives the Reserve Bank a framework to designate Zaronia, short for the South African Rand Overnight Index Average, as the successor to the Johannesburg Interbank Average Rate (JIBAR), which is due to stop being published at the end of this year. Half of the bill also amended the Public Procurement Act, which the Constitutional Court struck down on 17 September for failing to meet the constitutional requirement for public participation. National Treasury has argued that the finance bill was introduced to parliament on 18 August, before that ruling, but Maswanganyi’s committee decided a day earlier not to advance the bill until it had resolved whether the procurement sections needed to be reworked or dropped.
Maswanganyi said the committee will now hold meetings “as soon as possible” to settle the point. “Parliament will hear all stakeholders, especially National Treasury and the South African Reserve Bank,” he said.
What is riding on the deadline
JIBAR underpins pricing on a wide range of business loans and interest rate swaps, so a gap between JIBAR’s last publication and a legally recognised replacement would leave those contracts without a reference rate. Zaronia is calculated from actual overnight interbank lending rather than bank submissions, which the Reserve Bank has said makes it harder to manipulate. Passage of the bill is also a precondition for a second, larger change: in a consultation paper on scrapping the prime rate, the Reserve Bank said it wants to retire the prime lending rate, the benchmark commercial lenders use to price consumer and small business credit, in 2027 at the earliest, replacing it with a rate pegged directly to the repo rate. More than 12 million contracts, worth over R3.2 trillion, currently reference prime.
The 17 September Constitutional Court judgment that triggered the procurement dispute was unanimous and found that the Public Procurement Act of 2024 had never come into force, because it too was passed without adequate public participation. The applicants included the Western Cape Premier, the City of Cape Town and civil society groups, Business Day reported at the time. Treasury has asked the finance committee to strip the procurement amendments out of the general finance bill entirely and change its short title, rather than risk the whole bill being challenged on the same grounds.
Businesses have been adjusting to the JIBAR changeover since it was first flagged. We reported in August how the Zaronia transition forces South African corporates to overhaul debt administration, and in September on how treasury teams are working through the practical challenges of repricing existing facilities. Those pressures do not go away while parliament works out the procurement question; if anything, a bill that changes shape at a late stage adds another variable for legal and treasury teams to track before year end.
What to watch
The committee has not set a date for its meetings with National Treasury, the Reserve Bank and other interested parties, and Maswanganyi’s comments give no detail on whether the procurement provisions will be amended, replaced with a fresh public participation process, or simply removed from this bill and dealt with separately. Any of those routes can still meet a December deadline if the committee moves quickly, but a business with loan contracts referencing JIBAR should treat “before parliament rises” as a target, not a guarantee, and confirm with its bank or legal adviser what happens if the legislation slips past year end.
The Reserve Bank has previously said the bill would also carry legislative safe-harbour provisions, so that existing contracts written to reference JIBAR or prime continue to have a clear legal basis once those benchmarks are retired. Until the bill passes, that protection is not yet in law, which is the practical reason Maswanganyi’s committee is under pressure to move quickly rather than let the procurement dispute run into next year.
