A turning tide: Navigating the transition from JIBAR to ZARONIA

The South African financial landscape is currently undergoing one of its most significant structural shifts in decades. As we move toward the permanent discontinuation of the Johannesburg Interbank Average Rate (JIBAR) on 31 December 2026, with the "no new JIBAR" milestone approaching in March 2026, the transition to the South African Overnight Index Average (ZARONIA) is no longer a distant line item on a risk register, but a strategic imperative.

From estimates to reality

Much like the transition from LIBOR in international markets, South Africa’s shift to ZARONIA follows a global movement to strengthen the reliability of the benchmarks that underpin our financial systems. At its core, this reform represents a fundamental shift in how we measure the cost of money. For years, JIBAR operated as a forward-looking term rate, often derived from indicative quotes rather than hard data. In contrast, ZARONIA is a backward-looking benchmark grounded in observable market activity.

ZARONIA reflects actual, unsecured overnight wholesale funding transactions—drawing from a deep daily pool reported to be in excess of ZAR460 billion. By utilising a volume-weighted methodology on completed transactions above ZARR20 million, ZARONIA offers a level of transparency and auditable integrity that JIBAR serves as a step up from. This isn’t just a technical change, it is an upgrade to the robustness of our entire financial ecosystem.

The legacy hurdle

Crucially, ZARONIA is not a direct plug-and-play substitute for JIBAR, as it is an overnight rate rather than a term rate, the transition requires a deliberate re-engineering of how interest is calculated and documented. Despite the clear benefits, a significant legacy problem remains. As we entered 2025, the South African Reserve Bank (SARB) highlighted that JIBAR-linked exposures still sat at approximately R45 trillion. The experience of the global LIBOR transition showed that late engagement leads to congested amendment processes, spiked advisory costs and strained contractual relationships.

The role of market participants

Many South African corporates may still view themselves as bystanders in this process. However, as ZARONIA is underpinned by wholesale funding transactions involving large corporates, SOEs, and asset managers, these entities are not just users of the benchmark but contributors to the data pool that determines it.

The focus must now shift from understanding ZARONIA to operationalising it. To avoid finding themselves in an 'operational cliff-edge' at the tail end of this year, businesses should prioritise the following strategic pillars:

• Halt new JIBAR exposure: From March 2026, any new instrument referencing JIBAR becomes a self-inflicted contribution to the legacy problem. Proactive firms are already moving toward ZARONIA-linked alternatives.

• Audit and scope: Identify every contract, loans, bonds, and derivatives that matures after 2026. Understanding your exposure by value and tenor is the first step toward mitigation.

• Review "fallback" provisions: Many legacy contracts lack effective mechanisms to transition to a new rate automatically. 

• Systemic readiness: Update internal treasury and accounting systems to support compounded overnight rate calculations. This is a multi-disciplinary effort involving legal, tax and risk functions.

• Strategic education: Ensure that senior management and stakeholders understand that JIBAR cessation is not the start of the process, but the finish line.

The way forward

The balancing act for South African businesses lies in managing the transition without disrupting commercial momentum. The success of this shift will depend less on the availability of technical tools and more on the quality of early engagement.

The market’s remaining choice is not whether to move, but whether to do so deliberately or reactively. As with all major financial reforms, the market will adjust but it will do so on terms set by those institutions that meet the change halfway.

Riza Moosa is the Head of Banking and Finance and a co-founder of CMS South Africa, with 22 years of experience, specialising in banking and finance, business rescue, insolvency and restructuring transactions. 

Mbali Nene is an Associate in the Banking and Finance team at CMS South Africa, with experience on cross border bilateral and syndicated matters spanning corporate, leveraged, asset and acquisition finance, and project financing transactions,