Republic of South Africa Investor Presentation

1. Republic of South AfricaInvestor Presentation March 2011

2. Key Highlights • Economic recovery bolstered by: • Structural tailwinds from strong regional growth and low domestic debt levels • Sustained improvements in external and internal demand supports investment and employment prospects • Accommodative policies afforded by low inflation levels • Public finances on a solid footing: • Recovery in revenue and moderate growth in public spending lowers the fiscal deficit • Debt ratios remain low • Emphasis on fiscal sustainability by setting a target for the structural budget balance • External vulnerability reduced: • Sustainable long-term policy solutions to strengthen and diversify current account funding sources • External vulnerability reduced by low external debt • Banking sector systemically sound

3. 1. South Africa Macro Backdrop

4. Rebalancing of world demand favours South-South Flows Emerging market households’ final consumption expenditure (FCE) • Structural shift in world demand underway as economic power shifts to emerging market economies • Rising EM intensity in South Africa’s export basket: • Share of exports to advanced economies declined to 58% in 3Q10 (73% in 3Q06) • Exports to developing Asia increased to 19% in 3Q10 (6% in 3Q06) Source: World Bank Emerging markets claim a greater share of SA exports *Greece, Ireland, Italy, Portugal and Spain Source: IMF

5. South Africa is part of a positive regional growth story World vs. Sub-Saharan Africa real GDP growth • What explains the SSA surge? • Favourable demographic developments • Improvements in the political environment • Pay-offs from better macroeconomic policies • Lower inflation and interest rates • Smaller budget deficits • Lower levels of sovereign debt • Benefits directly related to strong growth in developing economies Source: IMF FDI flow into sub-Saharan Africa Source: UNCTAD

6. The domestic economic outlook is positive Strong demand from global trading partners for SA exports • GDP recovery toward potential expected over medium term, underpinned by: • Accommodative fiscal and monetary policies • Public sector capital formation supportive of the broader recovery in private fixed investment • Inflation anchored within target band • Trade partner growth leading exports higher Source: SARB Macroeconomic growth forecasts, 2009 - 2013 Source: SA National Treasury

7. Low debt ratios support household and public demand Private sector credit-to-GDP ratio – EM comparisons (2009/10*) • Household debt service cost is low in comparison to historical levels • The government debt-to-GDP ratio remains low relative to that of the developed world and compares favourably with other EMs • The relatively low debt ratios create room for household and government expenditure to meaningfully contribute to domestic demand growth *Average from 4Q09 – 3Q10 Source: IMF Government debt and funding requirement ratios (2011) Source: IMF

8. Healthy corporate profits potentially supportive of investment and employment Corporate profits and employment in trade- and non-trade sectors • Corporate profitability improved in 2010 and employment prospects are firming • Unemployment has fallen from 25.3% in 3Q10 to 24% in 4Q10 • 120,000 formal non-agriculture jobs have been created between October and December 2010 • Growth in capital imports is picking up • Real investment in productive capacity will foster higher economic activity. * Proxied by gross operating surplus. Source: SARB Progress in fixed capital formation underway *Nominal imports deflated by trade-weighted exchange rate. Source: Department of trade and Industry (DTI), SARB

9. 2. Monetary Policy and Prices

10. Monetary policy by no means excessively loose Nominal policy rates • South Africa’s policy rate is at a 30-year low. Low rates are stimulating consumer spending growth • Real rates are positive, though still accommodative Source: Reuters Ecowin Real policy rates Source: Reuters Ecowin Source: Reuters Ecowin, RMB FICC Research

11. Muted inflation affords accommodative policy response Inflation well-below target • Currency appreciation and a deceleration in global price pressures dragged targeted inflation below the mid-point of the 3-6% target band • Services inflation (45.8% of CPI) lags disinflation in goods prices, supportive of accommodative policy • Administered price (14.8% of CPI) inflation has trended lower too • Policy tightening occurs withsecond-round inflation pressures, which remain absent in non-food and energy inflation Source: Stats SA Low core inflation justifies low policy rate Source: SARB, StatsSA

12. Room to absorb upside risk from food and fuel prices The Economist Food Index vs. brent crude oil • Rising international food and energy prices pose upside risk to global inflation • South Africa is in a better position relative to EM peers to weather the inflation storm • Weight of food in CPI in SA is currently 14.3% vs EM peer group of between 15% and 35% • Core inflation is very low at 3.5% and historically shown much lower volatility than headline inflation Source: Bloomberg Core vs food and fuel inflation Source: Stats SA 12

13. 3. Public Finance

14. New growth cycle encourages fiscal consolidation Consolidated government fiscal framework, 2009/10 – 2013/14 • Fiscal discipline is critical to create scope for future countercyclical policy when the need arises • Public infrastructure programmes of more than R800bn will maintain a fair degree of stimulus • A stabilisation of non-interest spending and higher revenue reduces the primary budget deficit from of -4.3% in 2009/10 to -0.9% of GDP in 2013/14 Source: SA National Treasury Primary budget deficit projected to narrow significantly over the medium term Source: SA National Treasury 14

15. Borrowing requirement reined in over medium term Public sector borrowing requirement • The public sector borrowing requirement is projected to fall from 10.5% of GDP in 2010/11 to 6.3% by 2013/14 • Lower consolidated government deficit • Lower borrowing by non-financial public enterprises as own revenue streams come on line once capital projects are completed and become operational Source: SA National Treasury

16. Fiscal debt sustainable over medium term Net loan debt expected to stabilise at 40% of GDP • The countercyclical fiscal stance led to increased borrowing to meet expenditure commitments • Fiscal sustainability will be guided by: • The adoption of an annual target for the structural budget balance consistent with long-term growth, the desired level of public debt and inter-generational considerations • Communicating the costs of existing and new programmes that require a long-term expenditure commitment • Setting a time-line to bring the budget back on target following large fiscal shocks Source: SA National Treasury

17. 4. External Vulnerability

18. External vulnerability reduced by a positive balance of payments position Net capital and FDI inflows reduces balance of payments risks • Portfolio inflows continue to fund the current account deficit. Recent FDI deals to improve balance of payments funding mix • Structural deficit remains the key contributor to the current account deficit – net services and income payments to the world account for 90% of the current account deficit • Relaxation of exchange control a sustainable long-term solution to balancing financial market flows Source: SARB, Bloomberg Structure of current account deficit * Southern African Customs Union, comprising Botswana, Lesotho, Namibia and Swaziland Source: SARB

19. South Africa benefiting handsomely from rising interest in EM assets Cumulative inflows into bond and equity markets support rand • Net capital inflows increased strongly over the past two years, reaching 3.7% of GDP in the first three quarters of 2010, versus 3.4% of GDP over the corresponding period in 2009 • The recent shift in portfolio inflows from bonds to equities reflect confidence in South Africa’s growth prospects and business-friendly policy choices • The recent revisions in South Africa’s credit rating outlook to stable confirm that external balance sheet dynamics remain manageable Source: Bloomberg South African equity market outperforms the EM asset class Source: Bloomberg

20. Reserves accumulation assist in reducing rand volatility Reserves accumulation assist in limiting rand volatility • Coordinated fiscal and monetary policy response to building reserves have contributed to lowering rand volatility • Rising import cover assist in reducing external vulnerability Source: Bloomberg, SARB External Vulnerability Index * (Short-term external debt + currently maturing long-term external debt+ total non-resident deposits over one year)/ Official foreign exchange reserves Source: Moody’s Ratings Agency

21. 5. Banking System Stability

22. Ample banking liquidity Capital adequacy • The South African banking system is highly concentrated with the top four banks holding a 85% market share • Banks are comfortably exceeding the minimum capital adequacy requirements of 9.75% • The current banking sector Tier 1 capital to risk-weighted assets ratio is over 11%, exceeding the target Basel III requirements for 2018 • Global perceptions of South African Banks consistently among best in the world. South Africa ranked 6th out of 139 countries in terms of soundness of banks (World Economic Forum Executive Opinion Survey) Source: Company data Funding structure of SA banks Source: SARB, June 2010 22

23. Banking system remains systemically sound Robust primary issuance volumes in the local capital markets • Banks account for 33% of the total primary market issuance over the last five years • Cost of bank funding in the local market increased during the crisis, but spreads have contracted significantly Source: JSE Credit spread of bank vs. public sector entities Source: JSE 23

24. 6. Conclusion

25. Concluding thoughts • The macroeconomic landscape reflects sustained improvements in both internal and global demand • The positive regional backdrop and low domestic debt levels are structural tailwinds • Stimulatory fiscal and monetary policy have lessened the impact on South Africa from the global slowdown. • Prudent fiscal management and automatic stabilisers have ensured that the fiscal position should return to pre-crisis levels without requiring extraordinary fiscal austerity • External debt remains low and manageable • The banking system remains on a solid footing

26. 7. Appendix

27. Public-sector infrastructure spending Major state-owned entities’ capital expenditure programmes, 2009/10 – 2014/15 • R392.6bn (49%) of spending by non-financial public enterprises • Guarantees for SOEs increase from R63bn in 2008/09 to R194bn in 2013/14 to reduce their cost of borrowing • Provinces and municipalities remain significant drivers of infrastructure spending, despite the completion of many large projects related to the 2010 FIFA World Cup Source: SA National Treasury

28. Disclaimer The Republic has filed a registration statement (including a prospectus) with the SEC for the offering to which this presentation relates. This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Republic in any jurisdiction or an inducement to enter into investment activity in any jurisdiction. Neither this presentation nor any part thereof, nor the fact of its distribution, shall form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. Any decision to purchase any securities in any offering should be made solely on the basis of the information to be contained in the prospectus. Before you invest, you should read the prospectus supplement and related prospectus in that registration statement and other documents the Republic has filed with the SEC for more complete information about the Republic and the offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the Republic or any underwriter participating in the offering will arrange to send you the prospectus if you request it by calling: Deutsche Bank Securities Inc.: +1-800-503-4611 This presentation contains certain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933. Statements that are not historical facts, including statements with respect to certain of the expectations, plans and objectives of South Africa and the economic, monetary and financial conditions of the Republic, are forward-looking in nature. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Forward-looking statements speak only as of the date that they are made, and South Africa undertakes no obligation to publicly update any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. South Africa cautions you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Such factors include, but are not limited to (i) external factors, such as interest rates in financial markets outside South Africa and social and economic conditions in South Africa’s neighbors and major export markets; and (ii) internal factors, such as general economic and business conditions in South Africa, present and future exchange rates of the rand, foreign currency reserves, the ability of the South African government to enact key reforms, the level of domestic debt, domestic inflation, the level of foreign direct and portfolio investment and the level of South African domestic interest rates.