African Business Outlook Part 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 / AIA / CFO Magazine Dec 2016

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 peers and also aid investors interested in Africa. Key Survey Facts Survey Respondents: 99 Of which, 36 from Nigeria, 58 from South Africa, and 5 from other parts of Africa. Unless otherwise stated, the analysis represents responses from across 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 / AIA / CFO Magazine Dec 2016

African Business Optimism Compared to the Rest of the World African CFOs have been and continue to be the least optimistic in the world over the last 3 quarters, both about their companies prospects and countries’ economic outlooks. Global Trends Dec 2016 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 / AIA / CFO Magazine Dec 2016

Changes in the African Business Optimism Index Optimism about the domestic economy in South Africa remains low, lower than the rest of Africa. The South African Optimism Index improved to 43.55. Nigerian CFOs are more optimistic about their domestic economy relative to the rest of Africa, though their number fell from last quarter. Trends in South Africa Optimism CFOs remain less optimistic about the domestic economy 60% of South African CFOs have become less optimistic this quarter, versus 53% of Nigerian CFOs. Compared to Q3’16, optimism of South African CFOs is relatively the unchanged. Nigerian Optimism Nigerian pessimism grows More than half of CFOs from Nigeria have become “less optimistic”, compared to 36% become “more optimistic”. When ranked on a 100 point scale, the South African Optimism Index (for the economic prospects of the domestic economy over the next year) increased from 43.6 in Q3 ‘16 to 45.13 in Q4 ‘16; Nigeria ranks at 48.65 African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Changes in Own Company Sentiment The trend of South African CFOs becoming more optimistic about their own companies is continuing, increasing to 46.6%. South African Own-Company Optimism CFOs are more optimistic about their own companies than the general economy The trend of South African CFOs becoming more optimistic about their own companies is continuing, increasing from 42.9% in Q3 ’16 to 46.6% in Q4 ‘16. More South African CFOs are becoming more optimistic about their own companies (46.6%) than about the general South African economy (22.4%). Fewer South African CFOs are growing pessimistic (25.9%) about their companies than CFOs from Nigeria (36.1%). Nigerian Own-Company Optimism Compared to last quarter , fewer Nigerian CFOs have become more optimistic 44% of Nigerian CFOs have grown more optimistic about their own companies’ prospects this quarter, compared to 36% that have grown less optimistic. Last quarter, 52% of CFOs had grown more optimistic about their own companies’ prospects. When ranked on a 100 point scale, the South African Own-Company Optimism Index (for the economic prospects over the next year of each CFO’s own company) increased slightly from 59.1 in Q3 ‘16 to 61.9 in Q4 2016. While Nigeria’s optimism index decreased from 58.7 to 57.5. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

What Keeps CFOs Awake at Night? (Most Pressing Concerns of CFOs) CFOs in South Africa and Nigeria feel that economic uncertainty, currency risk, and government policies are pressing concerns. Nigerian CFOs are becoming increasingly concerned with inflation. South Africa Nigeria Currency risk Economic uncertainty Inflation Government policies Volatility of political situation Weak demand for your products/services Access to capital Commodity prices Difficulty attracting /retaining qualified employees Regulatory requirements Cost of borrowing Banking Sector weaknesses Corruption and white collar crime African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Most pressing concerns for top Management teams? Nigerian CFOs rank economic uncertainty, inflation and Government policies as the top 3 most pressing concerns for their team, while South African CFOs rank currency risk, government policies and economic policies as their top 3 most pressing concerns. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Expected Product Price Inflation Africa inflationary expectations decrease, continues to trend above the rest of the world. Global Trends Dec 2016 Outlook Product Prices Inflationary expectations high in Africa, low-to-moderate elsewhere Africa has the highest expectation of Inflation in the last 3 quarters and the trend continues to persist. Latin American CFOs expect moderate price increases, driven by high inflation in Brazil. CFOs in Asia and the US expect low inflation, Europe expects flat prices. Inflation expectations highest in Nigeria Of responding countries, Nigeria has the highest inflationary expectations (over 7%) compared to South Africa and the rest of Africa. Notes: Presented data are the mean or median values for each region or country. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Expected Growth in Sales Revenue Overall, CFOs Africa continue to expect slowing growth in sales revenue. Global Trends Dec 2016 Outlook Revenue Africa continues to expect a decline in sales revenue Revenue growth expectations decrease from Q3 ‘16 (9.8%) to Q4 ‘16 (5.8%). Latin America and Asia expectations are trending upward, United States is expected to stay flat at 4%, while European expectations are falling. Expectations of revenue growth varies in Africa Overall African revenue growth pulled down by Nigeria. South Africa expects higher sales growth. Notes: Presented data are the mean or median values for each region or country. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Capital Spending Plans African capital spending growth is expected to decline sharply in 2017. Global Trends Dec 2016 Outlook Capital Spending Modest capital spending plans African CFOs expect a substantial decline in capital spending. Business spending is still weak in the US, and expectations have decreased in Europe, while Latin American CFOs expect modest business spending growth. Business spending varies within Africa South Africa anticipates a 5% growth in capital expenditures. Spending in Nigeria is expected to increase by a modest 3%. Notes: Presented data are the mean or median values for each region or country. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Expected Change in Earnings Earnings are expected to decrease in Africa after increasing the last quarter. Global Trends Dec 2016 Outlook Earnings African earnings growth African earnings are expected decrease in 2017. Other regions except the United States expect earnings to decrease. Negative earnings growth in Africa Falling earnings expectations in South Africa pull down the average for all of Africa. 2017 earnings are expected to grow in Nigeria by over 6%. Notes: Presented data are the mean public company value for each region or country. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Fulltime Employment Outlook African CFOs expect to reduce fulltime domestic employment over the next year. Global Trends Dec 2016 Outlook # FT Employees Negative employment outlook in Africa African CFOs expect negative employment growth in 2017, as do Latin American CFOs. Asia and US expect moderate increases in employment. Employment growth varies across Africa Expected employment reductions in South Africa pulls down the average for all of Africa. Employment growth in Nigeria is expected to be minimal (less than 1%). Notes: Presented data are the mean value for each region or country #FT=Number of Fulltime Employees African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Expected Wage and Salary Increases Africa wages and salaries are projected to increase by 7% over the next year. Global Trends Dec 2016 Outlook Wages & Salaries Rapid wage growth in Africa, similar to last Quarter Africa and Asia expect wage growth of nearly 7% in 2017. Europe expects the lowest wage growth. US wages to grow 3.2%. Wage growth in Africa is positive All participating African countries expect substantial wage growth. Notes: Presented data are the mean value for each region or country African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Financial Snapshot (Expected % Change in Next 12 Months) Price of products will increase rapidly in Nigeria as companies try to keep pace with inflation. South African technology spending will experience significant growth (about 10%). African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Financial risk increases due to corporate borrowing African CFOs say that recent increases in corporate borrowing have increased the financial risk of the corporate sector in their industry. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Borrowing-related financial risk increases in most industries Across industries, except for Technology, financial risk is higher than normal due to increased corporate borrowing. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Corporate uses of debt financing Most of the recent borrowing by African companies has been used for “real activities” that will grow their businesses. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Does current debt level limit future investments? African CFOs believe future investment opportunities will be limited due to current debt burdens. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

African CFO actual and expected ROA Of CFOs surveyed, African CFOs have the highest ROA and are the most optimistic about 2017. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Career Paths of CFOs  What is the probability that you will be a CEO in 5 years? More than 1-in-4 African CFOs expect to be a CEO in 5 years, the highest percentage in the world African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016

Does being a CFO prepare you to be a CEO? 68% of African CFOs believe that their current job tasks adequately prepare them to be a CEO someday. African Business Outlook Duke University / SAICA / AIA / CFO Magazine Dec 2016