A Step Forward in Exchange Control — But What Comes Next?

By Gilbert Punt, CEO of Kuda FX

The recent increase in South Africa’s Single Discretionary Allowance (SDA) from R1 million to R2 million is a welcome and practical development. It simplifies the ability for individuals to move funds offshore for legitimate purposes and reduces administrative friction in a system that has historically been highly regulated.

Importantly, this is the first adjustment since the allowance was increased to R1 million in 2011. Over that period, inflation has broadly doubled the price level, meaning the new R2 million threshold largely restores the real value of the original allowance rather than representing a material expansion in purchasing power.

That said, the change is still meaningful. It signals a continued, albeit gradual, willingness by the South African Reserve Bank (SARB) and National Treasury to modernise aspects of the exchange control framework.

Beyond the headline increase in the Single Discretionary Allowance, a number of quieter developments over the past few years point to a more meaningful shift in how exchange control is being applied in practice.

The introduction of inward loop structures in 2021 allows South African residents to reinvest legitimately externalised capital back into the country. While subject to reporting and valuation requirements, it represents a departure from the historical resistance to so-called “round-tripping” of capital.

More notably, there has been a growing acceptance of trust-to-trust distributions — an area that remains relatively unknown outside of specialist circles. In practice, South African inter vivos trusts are now, in certain circumstances, able to distribute to offshore beneficiary trusts, despite the absence of a formal SARB circular.

These transactions are currently dealt with on a case-by-case basis and require careful structuring, including SARS compliance and appropriate trust deed provisions. However, their increasing acceptance reflects a meaningful evolution in how cross-border wealth structuring is being approached.

From our experience at Kuda FX, we have already assisted clients in facilitating significant transfers of this nature. While each case is highly specific and requires careful navigation, the practical reality is that the system is accommodating structures that would historically have been extremely difficult, if not impossible, to execute.

Taken together, these developments point to a more pragmatic approach by the authorities. Rather than strictly preventing the movement of capital, the focus appears to be shifting toward managing and monitoring it more effectively.

This shift becomes particularly relevant in the context of digital assets. National Treasury has indicated that crypto assets will be brought into South Africa’s capital flow management framework, with further guidance expected in due course.

From a regulatory perspective, this is understandable. As new channels for cross-border value transfer emerge, oversight becomes increasingly important. At the same time, it introduces a delicate balance: ensuring sufficient transparency without introducing unnecessary friction in an already competitive global environment.

From a client perspective, the direction of travel is becoming clearer:

• Gradual easing of traditional exchange control mechanisms 

• Increased emphasis on reporting and transparency 

• Growing integration of digital assets into the regulatory framework 

The increase in the SDA should therefore be viewed as one part of a broader evolution. While incremental, these changes collectively indicate a system that is adapting — even if more slowly than many would prefer.