South Africa’s financial markets are entering a new era. The Johannesburg Interbank Average Rate (JIBAR), long the anchor of domestic funding and lending, will soon be replaced by the South African Rand Overnight Index Average (ZARONIA). This transition is reshaping how interest rates are priced, aiming for greater transparency, reliability, and alignment with global best practice.
Historically, JIBAR has been central to loan agreements, preference shares, bonds, and structured products. However, given that it is based on indicative quotes from banks rather than actual trades, it no longer meets international standards for robust benchmarks. By contrast, ZARONIA is calculated from actual overnight unsecured interbank lending transactions, providing a more transparent, transaction-based measure.
The South African Reserve Bank (SARB) first published ZARONIA on 2 November 2022, and since then, the Market Practitioners Group (MPG) has mapped out a detailed transition plan. Milestones include the launch of the “ZARONIA First” initiative for derivatives in April 2025, the introduction of fallback methodologies for JIBAR-linked contracts in both cash and derivatives markets, and legal amendments to address so-called “tough legacy” contracts.
The transition will unfold in phases. A formal announcement of JIBAR’s cessation is expected in December 2025, followed by an active transition period in 2026. After a directive of “no new JIBAR transactions” comes into force, JIBAR will be discontinued, with the cessation expected by December 2026. This will ensure that institutions have time to renegotiate contracts, update treasury and risk systems, and adapt hedging strategies.
A critical issue is contract fallback. In March 2025, the MPG confirmed that JIBAR fallback rates will be based on compounded ZARONIA plus a credit adjustment spread (CAS), mirroring global ISDA conventions. Without such provisions, contracts could face pricing uncertainty once JIBAR disappears. Legislative amendments are also being prepared to safeguard contracts lacking adequate fallback language.
The shift is more than regulatory housekeeping: It affects corporate funding costs, covenant calculations, refinancing terms, and capital strategies. Institutions that move early by adopting ZARONIA-linked instruments and restructuring exposures will reduce uncertainty and gain an advantage as liquidity deepens in the new benchmark.
The fall of JIBAR and rise of ZARONIA is a defining shift in South Africa’s financial architecture – it’s not only the end of an era, but also the beginning of a more transparent, resilient, and internationally consistent future.
