Financial liberalisation versus the regulation of capital outflows: reflections on capital movement restrictions in South Africa on the backdrop of South African Reserve Bank and Another v Shuttleworth and Another 2015 (5) SA 146 (CC)

Abstract

One of the constraints to economic development in emerging economies has to do with unavailability of capital to fund economic activities. It is not surprising therefore that most jurisdictions have come up with mechanisms that are aimed at arresting capital leakages out of their borders. Such strategies include stringent regulation of capital mobility. Much as that approach is economically laudable, it nonetheless conflicts with the financial liberalisation agenda that most of these countries have subscribed to. In South Africa, the recent case of South African Reserve Bank and Another v Shuttleworth and Another rekindled this debate. This article is an attempt to ride on the waves that this judgment has created so as to add to the conversation about the necessity or otherwise, of regulation capital outflows within the South African context in particular and in emerging economies in general. As such, this is a discussion about a conflict. A conflict between two contrasting scholarships; one advocating for the preservation of capital controls, and the other intensely agitating for capital account liberalisation.