African Business Outlook Part of the Global Business Outlook

1. African Business OutlookPart of the Global Business Outlook A joint survey effort between Duke University, The South African Institute of Chartered Accountants, Africa Investment Advisors and CFO magazine African Business Outlook Duke University / SAICA / CFO Magazine June 2016

2. CFO Global and African Business Outlook – Overview Global Business Outlook Duke University has surveyed CFOs around the world every quarter since 1996, most of those years jointly with CFO magazine. The survey takes the pulse of the business community and has a strong record of predicting future economic activity. The results are relied upon by Central Bankers, Analysts, Investors, and are widely reported in the press. SAICA, AIA, and the African Business Outlook SAICA joined the survey in 2013, helping to found the African Business Outlook, with an initial focus on the South African economy. Nigeria was added to the survey sample in late 2015. African Investment Advisors joined the survey team in Spring 2016, with an objective of solidifying participation by Nigerian CFOs and also expanding into Kenya. The analysis in this report will enable participating firms to make important business decisions as they can benchmark themselves against their global peersand also aid investors interested in Africa. • Key Survey Facts • Survey Respondents: 113 • Of which, 47 from Nigeria, 47 from South Africa, and 19 from other parts of Africa. • Unless otherwise stated, the analysis represents responses from across Africa. • Due to the increase in respondents from Nigeria in the last two quarters, care should be taken when comparing to previous results, which were comprised primarily of responses from South Africa. • Sample includes CFOs from both public and private companies representing a broad range of industries, including: • Retail/Wholesale, Mining/Construction, Manufacturing, Transportation/Energy, Communications/Media, Technology, and Banking/Finance/Insurance. • Certain questions are constant each quarter, to capture trends in corporate optimism, expected hiring and capital investment plans, inflation, wages, and many other categories. • Other questions change each quarter to examine topical economic issues and newsworthy business or political events that may affect the corporate finance landscape. African Business Outlook Duke University / SAICA / CFO Magazine June 2016

3. African Business Optimism Compared to the Rest of the World • African CFOs are the least optimistic in the world about their countries economic outlook over the next year. However, they are more optimistic about their own companies than Europe and Latin America. Global Trends Jun2016 Response • Country Business Optimism Index Country / Region • Own-Firm Business Optimism Index Own Company Notes: Presented data are the mean value for each region or country, Scale from 0-100 African Business Outlook Duke University / SAICA / CFO Magazine June 2016

4. Optimism Regarding Economy, African Details Optimism about the domestic economy in South Africa remains low, and is still significantly lower than the rest of Africa. Nigerian CFOs are more optimistic about the domestic Nigerian economy. Nigerian Optimism CFOs are optimistic about the domestic economy • A large percentage of CFOs from Nigeria (59%) have become more optimistic, more than CFOs from South Africa (11%) and from West Africa (40%) • More CFOs from Nigeria became more optimistic in Q2 2016 (59%) compared to Q1 2016 (42%). Trends in South Africa Optimism CFOs are less optimistic about the domestic economy • CFOs from South Africa (83%) grow less optimistic, more so than CFOs from the Rest of Africa (41%) • Last quarter, about the same number (85%) of South African CFOs reported becoming less optimistic about the domestic economy When ranked on a 100 point scale, the South African Optimism Index (for the economic prospects of the domestic economy over the next year) decreased from 38.3 in Q1 2016 to 37.6 in Q2 2016, and is significantly lower than Africa as a whole at 47.5. African Business Outlook Duke University / SAICA / CFO Magazine June 2016

5. Own Company Optimism, African Details CFOs are becoming more optimistic about their own companies in South Africa. CFOs in Nigeria and Africa in general also follow this trend and are more optimistic about their own companies than about the domestic economy. Trends in African Optimism CFOs are more optimistic about their own companies • A majority of CFOs from Nigeria are increasingly optimistic about their own companies (64), about the same as last quarter. • There was a decrease in the number of less optimistic Nigerian CFOs (14%) compared to Q1 2016 (34%) • CFOs from West Africa became more optimistic about their companies in Q2 2016 (70%) compared to Q1 2016 (40%). Trends in African Optimism CFOs are more optimistic about their own companies • Across Africa, a majority of CFOs higher own-firm optimism (62) compared to last quarter (59) • Significantly fewer CFOs from South Africa (36%) are more optimistic about their own firms than are CFOs from the Rest of Africa (61%) • Compared to Q1 ’16 (54%), fewer South African CFOs (34%) report being less optimistic about their own companies this quarter. When ranked on a 100 point scale, the South African Own-Company Optimism Index (for the financialprospects over the next year of each CFO’s own company) fell slightly from 58.6 in Q1 2016 to 58.3 in Q2 2016. This is lower than Africa as a whole, which increased from 59 to 62. African Business Outlook Duke University / SAICA / CFO Magazine June 2016

6. Top 10 Most Pressing Concerns CFOs in South Africa and Nigeria feel that economic uncertainty, currency risk, and government policies are the most pressing concerns. African Business Outlook Duke University / SAICA / CFO Magazine June 2016

7. Most Pressing Concerns, Details and Comparisons Most CFOs in South Africa and Nigeria agree that economic uncertainty is their most pressing concern. Most CFOs in South Africa believe that the depreciation of the currency is the next major cause for concern. However, their Nigerian counterparts are more worried about the impact of the new government’s polices on their operations. Other CFOs in West Africa are concerned about difficulty accessing cheap sources of capital. African Business Outlook Duke University / SAICA / CFO Magazine June 2016

8. Business Plans Capital expenditures will increase by 10% in Nigeria and other parts of West Africa buy only by 2% in South Africa. Of the surveyed areas, only Nigeria expects to increase fulltime employment. Wages and salaries will increase by about 7% across Africa. African Business Outlook Duke University / SAICA / CFO Magazine June 2016

9. Political Risk and Uncertainty How would you rate the degree of political uncertainty or political risk in your country? Africa has the highest degree of political risk, followed by Latin America • 93% of African CFOs think their country’s political risk is moderate-to-high, compared to 90% for Latin America • Within Africa, South Africa has the highest political uncertainty, with more than 80% saying it is severe • Due to the upcoming election and Washington gridlock, the US also faces high political risk Latin American Business Outlook Duke University / FGV / CFO Magazine June 2016

10. Primary Sources of Political Risk CFOs from South Africa and Nigeria rank the following sources of political risk and uncertainty that is causing their firms to be more cautious in their business plans African Business Outlook Duke University / SAICA / CFO Magazine June 2016

11. Primary Sources of Political Risk, Details African CFOs identify Government gridlock or dysfunction (68%) as the primary source causing business caution, followed by proposed regulations (50%) and Protests against the current administration (38%). African Business Outlook Duke University / SAICA / CFO Magazine June 2016

12. Effects on Business of Political Risk and Uncertainty About three-fourths of South African and Nigerian CFOs say that political risk is causing their firms to be more cautious in spending or making acquisitions. African Business Outlook Duke University / SAICA / CFO Magazine June 2016

13. Are African Firms Hesitant to Do Business in the US Due to US Political Risk? Political Uncertainty in the United States has very little effect on the willingness of African companies to do business in the United States or with United States companies. African Business Outlook Duke University / SAICA / CFO Magazine June 2016

14. Do Trade Alliances Help African Companies and Their Countries? African CFOs say that trade alliances have a predominantly positive effect on their county’s economy (71%). The positive effect is more moderate on their own companies (58%) African Business Outlook Duke University / SAICA / CFO Magazine June 2016

15. Do Trade Alliances’ Affect African Employment? African CFOs say that trade alliances have a moderate positive effect on the number of employees they hire, though many firms say there is no effect. African Business Outlook Duke University / SAICA / CFO Magazine June 2016

16. Cash on the Balance Sheet CFOs from Nigeria and South Africa have their holdings of cash and marketable securities compared to previous years. CFOs indicate that their companies have loose cash targets and attempt to increase cash holdings if it they fall too low African Business Outlook Duke University / SAICA / CFO Magazine June 2016

17. Will African Companies Deploy Their Cash Reserves? Most African CFOs are willing to deploy their cash reserves (60%), which they plan to use for capital expenditures and investment. The other 40% of CFOs are holding back because they lack excess cash and need a liquidity buffer. African Business Outlook Duke University / SAICA / CFO Magazine June 2016

18. Return on Assets and Capacity Utilization Despite the risks and uncertainties, South African and Nigerian companies expect an increase in ROA over last year. However, South African companies expect a decrease in capacity utilization in the first half of 2016. African Business Outlook Duke University / SAICA / CFO Magazine June 2016