SARB's Jibar Cessation Announcement: Overview and Implications
The South African Reserve Bank's (SARB) press release yesterday (3 December 2025), formally announced the permanent discontinuation of the Johannesburg Interbank Average Rate (Jibar), South Africa's key short-term benchmark interest rate. This will come into effect immediately after its final publication on December 31, 2026. The change marks the end of a multi-year reform process
SARB's Jibar Cessation Announcement: Overview and Implications
The South African Reserve Bank’s (SARB) press release yesterday (3 December 2025), formally announced the permanent discontinuation of the Johannesburg Interbank Average Rate (Jibar), South Africa’s key short-term benchmark interest rate. This will come into effect immediately after its final publication on December 31, 2026.
The change marks the end of a multi-year reform process to transition to a more robust, transaction-based alternative, aligning with global efforts to phase out vulnerable interbank offered rates (IBORs) like LIBOR. All Jibar tenors (overnight to 12-month) will cease, and be deemed non-representative post-cessation, with the SARB urging market participants to expedite updates to contracts and systems beforehand.
Why Was Jibar Established?
Jibar was introduced in 1999 by the SARB as a domestic money market reference rate, evolving from the 1990s South African Futures Exchange (Safex) Bank Bill rate. Initially known as the Johannesburg Interbank Agreed Rate (until a 2012 rebrand to Average Rate), it was created to provide a transparent, locally administered benchmark for pricing and valuing financial instruments, such as loans, bonds, derivatives, and swaps. Constructed from daily submissions of quoted rates for Negotiable Certificates of Deposit (NCDs) by a panel of major banks, Jibar averaged 8.19% over its three-month tenor from 1999-2020, with highs of 16.96% in 1999 (amid emerging market volatility) and lows of 5.06% in 2012. It underpinned trillions in rand-denominated contracts, fostering liquidity in South Africa’s interbank market and reducing reliance on foreign benchmarks.
Why Has Jibar Now Failed/Ceased?
Jibar’s cessation stems from “structural weaknesses” and a “sustained decline in the market underpinning it,” rendering it unsustainable. Key issues include shrinking interbank unsecured lending volumes, driven by post-2008 regulations favouring secured lending and collateralised transactions, leading to thinner submissions, reduced liquidity, and vulnerability to manipulation or errors.
Globally, IBOR scandals (e.g., LIBOR rigging fines exceeding $9 billion) exposed similar flaws in quote-based rates lacking robust transaction data. In South Africa, these risks amplified amid low underlying activity, creating “unresolvable vulnerabilities.” The SARB, via its Market Practitioners Group (MPG), initiated reforms in 2018, designating ZARONIA (South African Rand Overnight Index Average) as successor in 2022. ZARONIA, a risk-free rate calculated as a trimmed, volume-weighted mean of actual unsecured overnight deposit transactions, addresses these by being nearly 100% transaction-based, enhancing credibility and compliance with IOSCO principles.
What Does This Mean for the Currency and Economy?
The transition is designed for minimal disruption, with positive long-term effects on the rand (ZAR) and economy likely, though short-term operational costs could catch unprepared firms.
- For the ZAR: Neutral to mildly positive. A credible benchmark like ZARONIA boosts investor confidence in South Africa’s financial infrastructure, potentially stabilizing ZAR volatility by reducing “basis risk” in hedging (e.g., mismatches between Jibar-linked contracts and global rates). It aligns rand markets with international standards, easing cross-border flows, which is critical as ZAR trades around 1% of global FX volume. No immediate depreciation risks; the phased rollout (derivatives transitioned via “ZARONIA First” in 2025) avoids LIBOR-style shocks. However, if transition lags, temporary spikes in borrowing costs could pressure ZAR-sensitive imports/exporters.
- For the Economy: The transition enhances resilience and transparency, supporting approximately R10-15 trillion in Jibar-linked contracts (loans, bonds, derivatives). Benefits include lower systemic risks (e.g., from rate manipulation), cheaper funding via risk-free rates (ZARONIA is about 20-50bps below Jibar historically), and better monetary policy transmission, SARB’s repo rate influences via clearer channels. Sectors like banking, real estate, and corporates face around R500 million in one-off adaptation costs (IT, legal), but this paves for innovation in green bonds and ESG financing. Broader growth (1.3% GDP forecast for 2026) gains from a modernised market attracting FDI; delays could add 0.1-0.2% to inflation via higher credit spreads. The SARB emphasizes “economic equivalence” through credit adjustment spreads (CAS) to preserve contract values.
Overall, this is a proactive reform introduced by the Reserve Bank, not a crisis. SARB’s December 2026 timeline gives 12+ months for readiness, with MPG guidance on fallbacks and conventions.
Queries can go to SARB-Benchmarks@resbank.co.za. If you need contract-specific advice, companies are advised to consult a financial advisor.
