The South African Overnight Index Average (ZARONIA) is a benchmark that reflects the interest rate at which rand-denominated overnight wholesale funds are obtained by commercial banks. It is based on actual transactions that are reported daily to the South African Reserve Bank (SARB). In June 2020, the SARB published the ‘Draft Statement of methodology and the policies governing the SARB-administered interest rate benchmarks’, which is a technical specification paper that details the calculation methodology, contingency arrangements and policies governing ZARONIA and four other new benchmarks. 

The Market Practitioners Group (MPG) has designated ZARONIA as the preferred successor rate that will most likely replace the Johannesburg Interbank Average Rate (Jibar), which currently underpins a significant number of financial contracts. Consequently, the conceptual design of ZARONIA was rigorously tested, using bona fide transactions data to ensure that it is reliable, robust and sufficiently stable. The back-testing results were published in a report titled ‘Feedback on the draft statement of methodology and policies governing the SARB-administered interest rate benchmarks’.

ZARONIA is currently being published to allow market participants to observe the rate, while the MPG considers its implications and plans for the Jibar transition. Market participants are strongly dissuaded from using the benchmark in financial contracts until such a time that the SARB and the MPG indicate otherwise.