The decision by South Africa's most decorated Olympian Tatjana Smith to switch allegiance to the Netherlands is "sad" for the nation, says Swimming South Africa CEO Zikie Molusi.

Double Olympic champion Smith, who has dual citizenship because her father is Dutch, was in tears when she announced her decision on Wednesday.

She said that the opportunity "offers greater high-performance support" and that South African athletes "deserve a system that gives them an opportunity to thrive, not just survive".

"When I received that correspondence from Tatjana we understood because she has been really generous and kind enough to articulate the rationale that informed the decision," Molusi, the acting CEO of the governing body, told eNews Channel Africa.

"A very sad decision for the country, particularly as we were preparing to take the team to Beijing for the short course World Championships in December."

Smith, formerly Schoenmaker, previously said financial worries, which included a dispute with Swimming South Africa over prize money, contributed to her decision to step away from the sport after the Paris 2024 Olympics.

The 29-year-old, who has won four Olympic medals, came out of retirement in September and is set to represent the Netherlands for the first time at the World Championships from 1-6 December.

Smith said representing the Netherlands would give her "the potential to build a more sustainable career".

She said the "financial and practical challenges of swimming were among the reasons my previous career became difficult to sustain".

Speaking to Radio 702, Molusi accepted that Swimming South Africa should not have withheld prize money from Smith following the 2023 World Championships.

Molusi said that was caused by conflicting sponsorship agreements but it "shouldn't have happened".

Of the 21 athletes competing for South Africa at the Worlds next month, Molusi said "probably 50% will be subsidised fully", with the rest receiving partial support.

"It's an ecosystem issue within South African sport that possibly needs to be dealt with," Molusi said.

"This comes as a result of the inadequate funding that sport federations are receiving."