The incident had occurred during the second ODI between the two teams in Durban, earlier this week.
Sarfraz's racist comments were picked up by a stump microphone. The ICC could enforce a disciplinary action on the player.
Here's what Sarfraz said during the second ODI
The senior cricketer was heard making comments in Urdu about Phehlukwayo.
The all-rounder played an important role after stitching a match-winning partnership with Rassie van der Dussen to help SA level the series.
According to ESPN, the comment, translated in English, read: "Hey black guy, where's your mother sitting today? What [prayer] have you got her to say for you today?"
Phehlukwayo had a role in Durban's win
Pakistan scored just 203 as Phehlukwayo picked up four crucial wickets. Hasan Ali top scored with 59. In reply, South Africa were in a spot of bother after losing wickets at regular intervals. Phehlukwayo (69*) joined hands with Dussen (80*) to guide SA home.
My words were not directed towards anyone, says Sarfraz
The Pakistani skipper apologized for his comments.
In a tweet, he wrote, "I wish to extend my sincere apologies to any person who may have taken offence from my expression of frustration which was unfortunately caught by the stump mic during yesterday's game against SA. My words were not directed towards anyone in particular. I certainly had no intention of upsetting anyone."
Matter is presently in the hands of the ICC
According to report in South African media, team manager Mohammed Moosajee said that the ICC and the match officials had "noted the alleged incident." The matter is presently in the hands of the ICC. Meanwhile, there was no immediate comment from the governing body.
Racism in cricket
Some of the ghastly racist incidents in cricket
In 2006 when South Africa toured Sri Lanka, cricketer turned commentator Dean Jones had called Hashim Amla a terrorist.
Jones lost his commentary stint with Ten Sports.
Former Zimbabwe cricketer Prosper Utseya had accused Alistair Campbell of preferring white people.
Mark Vermeulen had responded to the allegations by referring to black people as "apes".
The ICC's official stance regarding such activities states, "on-field racism is considered one of the most serious acts that can be committed, with the possibility of a life ban for anyone found guilty of such an offence."