Repo rate rises to 7.25%: what it means for business buyers and sellers

The South African Reserve Bank raised the repo rate by 25 basis points to 7.25%.
The decision was made on 23 September 2026.
It was unanimous and takes effect from 25 September.

Prime lending rate moves to 10.75%.

Why the Reserve Bank moved

Governor Lesetja Kganyago pointed to higher fuel prices.
These are linked to conflict in the Middle East and disruption to oil shipping routes.

Inflation is at 4.4%.
The Bank now expects it to average 4.4% in 2026, up from an earlier 4% forecast.
For 2027 it sees 4%, compared with 3.8% before.

The Bank wants to stop this price shock from spreading into lasting price increases.
So it is keeping policy restrictive.

The Governor said it is crucial that inflation returns to the 3% target as the shock fades.

On growth, the Bank projects GDP growth of 1.2% for 2026.
It expects a rebound in the second half of the year, and around 2% over the medium term.

What it means if you are buying a business

Most acquisition finance in South Africa is priced off prime.
That includes bank loans and vendor finance agreements.

A higher prime rate means higher repayments on any variable rate debt used to fund a purchase.
In practice, this does three things:

1. Less debt fits comfortably inside the business's cash flow, so lenders may advance less.
2. You need a higher return to justify the price, which puts pressure on valuation multiples.
3. Working capital facilities and overdrafts cost more after the deal closes.

Before you sign, rerun your numbers at the new prime rate.
Then test what happens if rates rise again.

Make sure the business can service its debt with a margin of safety.
Not just on paper at today's rate.

What it means if you are selling

Buyers who rely on finance will feel this hike.
Expect sharper questions on cash flow.
Opening offers may also come in lower.

You can keep deals moving:

• Have clean, up to date financials ready.
• Show stable earnings.
• Be open to vendor finance or an earn out that bridges a funding gap.

If you offer vendor finance, agree clearly whether the interest rate is fixed or linked to prime.

The bigger picture

This is one 25 basis point move, not a crisis.
The Bank still expects growth to pick up and inflation to settle.

But the direction of rates matters if you plan a sale or purchase in the next six to twelve months.

Build rate risk into your plans now.
Don't get caught out halfway through a deal.