1. 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 March 2017

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 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: 53
Of which, 23 from Nigeria, 24 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 March 2017

3. African Business Optimism Compared to the Rest of the World
African CFOs have been and continue to be the least optimistic in the world about their countries’ economic outlook
but have increased in optimism about their companies’ outlook in the last quarter.
Global Trends
March 2017 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 March 2017

4. 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 Nigerian CFOs are more optimistic about their domestic economy relative to the rest of Africa.
South Africa Optimism Trend
CFOs remain less optimistic about the domestic economy
39% of South African CFOs have become more optimistic this quarter, versus 65% of Nigerian CFOs.
Compared to Q4’16, slightly more South African CFOs are optimistic about the overall economy.
Nigerian Optimism Grows
More than half of CFOs from Nigeria have become “more optimistic”, compared to 17% who have become “less optimistic”.
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

5. Changes in Own Company Sentiment
South African CFOs optimism about their own companies declined this quarter
South African Own-Company Optimism
CFOs are more optimistic about their own companies than the general economy
South African CFOs optimism about their own companies has declined compared to last quarter, from 47% to 39%.
South African CFOs are more optimistic about their own companies (39.1%) than about the general South African economy (25%).
More South African CFOs are growing pessimistic (30.4%) about their companies than are CFOs from Nigeria (17.4%).
Nigerian Own-Company Optimism
Compared to last quarter, more Nigerian CFOs are optimistic
65% of Nigerian CFOs have grown more optimistic about their own companies’ prospects this quarter, compared to 17.4% that have grown less optimistic.
Last quarter, 44% of CFOs had grown more optimistic about their own companies’ prospects.
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

6. What Keeps CFOs Awake at Night? (Most Pressing Concerns of CFOs)
CFOs in South Africa and Nigeria feel that economic uncertainty, government policies and currency risk are pressing concerns. Nigerian CFOs are becoming increasingly concerned with inflation.
South Africa
Nigeria
Economic uncertainty
Government policies
Volatility of political situation
Inflation
Difficulty attracting /retaining qualified employees
Currency risk
Access to capital
Regulatory requirements
Unrest in the general population
Commodity prices
Weak demand for your products/services
Employee morale
Corruption and white collar crime
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

7. 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 March 2017

8. Expected Product Price Inflation
Africa inflationary expectations continue to trend above the rest of the world.
Global Trends
March 2017Outlook
Product Prices
Inflationary expectations high in Africa, low-to-moderate elsewhere
Africa has the highest expectation of inflation in the last 4 quarters and the trend continues to persist.
Latin American CFOs expect moderate price increases.
CFOs in Europe expect low inflation
Inflation expectations highest in Nigeria
Of responding countries, Nigeria has the highest inflationary expectations (over 6%) 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 March 2017

9. Expected Growth in Sales Revenue
Overall, CFOs Africa expect strong revenue growth, beyond the expectations of other region.
Global Trends
March 2017 Outlook
Revenue
African sales revenue to rebound
Revenue expectations increase from last quarter across regions, except Asia
Revenue growth will vary in Africa
Overall African revenue growth bolstered by Nigeria’s outlook.
South African CFOs expect a significant increases in revenue.
Notes: Presented data are the mean or median values for each region or country.
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

10. Capital Spending Plans
Modest African capital spending growth is expected in 2017.
Global Trends
March 2017 Outlook
Capital Spending
Modest capital spending plans
Latin American CFOs expect modest business spending growth
Business spending is ramping up in the US and Europe, softening in Asia
Business spending varies within Africa
Nigeria anticipates a 21.5% growth in capital expenditures.
Spending in South Africa is expected to increase by over 20%
Notes: Presented data are the mean or median values for each region or country.
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

11. Expected Change in Earnings
Earnings are expected to increase in Africa, rebounding from last quarter.
Global Trends
March 2017 Outlook
Earnings
Positive earnings trends expected across regions
Latin American earnings are expected to increase in 2017.
US expects the highest earnings growth
Earnings growth expected in Africa
South Africa expects a modest 6% increase in earnings this quarter.
Outlook of Nigeria CFOs is more optimistic, with earnings expected to grow by over 20% in 2017.
Notes: Presented data are the mean public company value for each region or country.
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

12. Fulltime Employment Outlook
African CFOs expect to significantly reduce fulltime domestic employment over the next year.
March 2017 Outlook
Global Trends
# FT Employees
Negative employment outlook in Africa
LatAm CFOs expect employment growth of 0.9% in 2017.
Significant layoffs expected in Africa, continuing the trend expected from last quarter
Employment growth varies across Africa
Expected employment reductions in South Africa pulls down the average for all of Africa.
Expected decline in fulltime employment in Nigeria over the next year
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 March 2017

13. Expected Wage and Salary Increases
Africa wages and salaries are projected to increase by 7% over the next year.
March 2017 Outlook
Global Trends
Wages & Salaries
Rapid wage growth in Africa
Africa expects wages to grow nearly 7% in 2017
Europe expects the lowest wage growth
US wages to grow 3.9%, the strongest in a decade
Wage growth in Africa is positive
All participating African countries expect substantial wage growth, with Nigeria leading the trend
Notes: Presented data are the mean value for each region or country
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

14. Improving the business climate
 What issues / policies most need to be addressed to improve the business climate in your country?
Europe
Reduce business regulations
43.2%
Reduce political instability
40.0%
Improve public education and training
38.9%
Improve the judiciary / legal system
31.9%
Asia
Corporate tax reform
38.6%
Reduce business regulations
34.2%
Reduce corruption
32.7%
Improve the price inflation/deflation situation
29.1%
Latin America
Reduce corruption
57.8%
Improve the judiciary / legal system
40.9%
Corporate tax reform
Improve infrastructure
34.4%
Africa
Reduce corruption
66.0%
Improve infrastructure
52.8%
Reduce political instability
49.1%
Reduce business regulations
30.2%
Latin American Business Outlook Duke University / FGV / CFO Magazine March 2017

15. Improving the Business Climate
Reduction of corruption and Improving Infrastructure are seen as the 2 most important issues and policies to be addressed to improve business climate across the region.
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

16. Could Your Company Handle a Surge in Demand?
If orders for your product/service sharply increased over the next few months, would you have enough _____ to meet sharply higher demand? (% Yes shown below)
Percentage answering YES
Nigeria and South Africa are optimistic about having enough access to Raw materials/ Suppliers to meet sharply higher demand
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

17. Reaction to US trade proposals
In response to recent trade proposals put forth by the US government, should your government…
CFOs in Europe are most likely to support a retaliation by the government - over 30% compared to less than 10% across other regions
South African CFOs are more likely to support a retaliation by the government while Nigerian CFOs are more likely to support a neutral reaction by the government
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

18. Reaction to US trade proposals
In response to recent trade proposals put forth by the US government, should your company …
African CFOs also support resisting or retaliating as a company
Latin American Business Outlook Duke University / FGV / CFO Magazine March 2017

19. Effect of Public Trust on Companies
Recent data from the Edelman Trust Barometer shows public trust continues to decline in business and government leadership. To what degree, if any, has a lack of public trust in business and government affected…
Nigeria expects the lack of Public Trust to have a relatively higher effect on companies
Across Africa, there is a relatively lower effect of lack of Public Trust on companies in the Pharmaceutical Industry
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

20. Effect of Public Trust on Business Environment
Recent data from the Edelman Trust Barometer shows public trust continues to decline in business and government leadership. To what degree, if any, has a lack of public trust in business and government affected…
83.2% of respondents anticipate a moderate to high effect of the lack of Public Trust on the business environment
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

21. Response of African Firms to lack of Public Trust
How much do you agree or disagree with the following statements in relation to public concerns about business trust?
African companies are responding to lack of Public Trust by:
Emphasizing increased transparency in their business dealings and reporting
Strengthening their governance policies and procedures
The Mining and Technology Industries have taken the lead on this
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

22. UN Sustainable Development Goals
On a scale of 1 to 10, where do you think African companies are in implementing the UN Sustainable Development Goals?
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

23. UN Sustainable Development Goals
Does your organization have effective monitoring and measuring systems to track progress in achieving the UN Sustainable Development Goals?
About 20% of respondents are effectively monitoring and measuring progress towards achieving the UN Sustainable Development Goals
The higher the annual revenue of the company, the more likely it is to be monitoring and measuring progress
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

24. Return on Assets Profit margins are expected to increase in 2017
Companies in Financial Services and Technology expect the highest ROA, with Financial Services having a 20% increase over 2016
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

25. Information on Respondents
African Business Outlook Duke University / SAICA / AIA / CFO Magazine March 2017

26. Africa 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
Latin American Business Outlook Duke University / FGV / CFO Magazine March 2017