1. 03 October 2013 Investment Attractiveness Southern Africa – An Economic Overview

2.  African Megatrends SA Laggard and Leader African Growth Paradox Global Externalities Mining Industry

3. Investment climate dominated by monetary policy …authorities may be trapped Source: INet

4. US M2 money supply: 1970 to present …growth exponential; Policy irresponsibility Source: INet

5. Global debt levels are accelerating May well have developed into a systemic PONZI scheme Systemic collapse Time Debt needed to sustain the system BCA: the debt super cycle Systemic instability Credit worthy capacity Debt Over-indebtedness – debt & commitments un-payable

6. Financial repression consequently on the rise…. Tools of Repression Inflation/Deflation Fiscal & Monetary Policy Red Tape Corruption Market Dominance Tax (Especially Wealth)

7. Investment Divide Dependent on Confidence Inherent Intrinsic Value Nature of Assets Policy Impact QE; LTRO; ZIRP Bonds Cash Property Precious Metals Industrial Equipment Yield Growth Solvency Indebted politically more powerful than the saver

8.  African Megatrends SA Laggard and Leader African Growth Paradox Global Externalities Mining Industry

9. Reality: Africa a challenging business environment …but the 2008 global financial crisis exposed a shift Infrastructure Governance Institutions Regulation

10. Critical African Growth Unlocks …Growth surge following the 1997/8 EM crisis Growth Drivers Growth Drivers Cellular Telephony Cellular Telephony Governance

11.  African Megatrends SA Laggard and Leader African Growth Paradox Global Externalities Mining Industry

12. Electricity production: Reflecting a longer term malaise Source: INet

13. SA Business Confidence vs JSE All Share Source: Bloomberg

14. SA Growth: 0.9% ….growth drivers weak SA Growth Drivers SA Growth Drivers Credit Expansion Credit Expansion Disposable Income & Costs Disposable Income & Costs Global Economy Global Economy Savings & Investment Savings & Investment Twin deficits and credit rating downgrade a risk ….but there are investment competitive advantages

15. SA: Current Account Deficit: major risk to the rand Widening despite slower growth Source: INet

16. The rand: weakening during a risk-on period

17. African growth: become a multi-sectoral phenomenon …South African skills, expertise, capital a catalyst Agriculture Financial Services Financial Services Technology Mining Telecoms Tourism Manufacturing Retailing Property Development Property Development

18.  African Megatrends SA Laggard and Leader African Growth Paradox Global Externalities Mining Industry

19. Macro-economic outcomes Improving macroeconomic management Proof of the pudding Inflation Growth 3.5% 1995 40.1% 2011 5.1% 8.2% 2000 15.0% 3.6%

20. Budget Deficits: less problematic in Africa Source: CIA Factbook Angola +7.1% Gabon +4.6% Libya +4.4% Brazil +2.9% DRC +2.4% Switzerland +1.0% Sweden -0.2% Rwanda -0.4% CAR -0.5% Ethiopia -1.4% China -1.6% Equatorial Guinea -1.7 Ivory Coast -2.0% Madagascar -2.0% Cameroon -2.5% Germany -3.3% Zambia -3.3% Nigeria -3.4% Uganda -3.5% Russia -4.1% South Africa -4.1 Italy -4.6% Mauritius -4.6% World -5.3% Netherlands -5.3% India -5.6% Mozambique -5.8% Tanzania -6.1% Kenya -6.3% Namibia -6.5% Botswana -7.0% France -7.0% Ghana -7.6% Slovakia -7.9% Egypt -8.0% Japan -8.1% USA -8.8% Niger -8.9% Portugal -9.2% Spain -9.3% UK -10.3% Greece -10.4% Ireland -32.4% Data for 2010

21. Debt: aftermath of 2008 …rising and excessive Country Debt: GDP 2010 Japan197.5% Greece142.8% Iceland126.1% Italy119.1% Singapore105.8% Belgium100.9% Ireland96.7% Portugal93.0% Country Debt: GDP 2010 Canada84.0% Germany83.2% France82.4% UK76.1% Austria71.0% Netherlands62.6% US62.3% Spain60.1% Country BRICS Debt: GDP 2010 Brazil59.0% India51.9% SA32.3% China18.9% Russia9.0% Source: CIA Factbook

22. Africa: HIPC status now a receding legacy Country Debt: GDP 2010 Ivory Coast63.1 Mauritius57.7 Ethiopia48.3 Kenya47.7 Mozambique46.3 Tanzania34.4 Ghana34.0 South Africa33.4 Country Debt: GDP 2010 Zambia26.7 Uganda21.8 Angola21.4 Namibia20.1 Botswana19.9 Nigeria17.8 Cameroon16.1 Libya3.5 Source: CIA Factbook

23. Improving African Investment Case …in contrast to the developed world deterioration Africa’s Time Has Come Africa’s Time Has Come Economic Base Demographics Regeneration Sovereign Solvency Sovereign Solvency Improvement both relative and absolute The Public Teat The Public Teat

24. Africa: no longer off a low base Country GDP 2000 GDP 2012 South Africa133.0443.3 Nigeria46.4263.2 Angola8.4109.0 Ghana7.445.1 Kenya12.340.6 Ethiopia8.236.9 Cameroon10.027.6 Ivory Coast10.426.7 Source: CIA Factbook Country GDP 2000 GDP 2012 Tanzania9.624.1 Zambia3.320.1 Botswana5.617.5 Gabon5.117.0 Uganda6.217.0 DRC4.316.5 Namibia3.913.4 Mozambique4.213.1

25. Political Risk Rating agencies and investors Jurisdiction risk is changing....but Neither Africa nor Europe completely homogeneous Solvency Europe Africa Taxes Solvency Tax Burden

26. The 3 rd scramble for Africa China Factor China Factor Resource Security Resource Security Infrastructure Strategic Relationships Strategic Relationships Greater confidence; greater assertiveness Coordinated investment Investment competition Food Energy Commodities

27. Investment Timelines Getting longer YieldGrowthSolvency

28.  African Megatrends SA Laggard and Leader African Growth Paradox Global Externalities Mining Industry

29. Gold mining: in a state of crisis …SA now ranked #5 globally (2012) Source: INet However still ranked #1 in terms of reserves

30. Mining Production: lowest since 1970’s …strikes, regulation, taxes Source: INet SA still ranked #1 in terms of mining potential (Citibank)

31. Mining in South Africa …the importance of a supportive, enabling environment Issues Easy to Identify Issues Easy to Identify Legacy Transformation Competitiveness Social Impact Beneficiation Social Impact Beneficiation Minerals of no value if not extracted Critical Mass Skills Finance Logistics Critical Mass Skills Finance Logistics SA: 50/93 ito Attractiveness Lost leadership

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