1. African Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University, The South African Institute of Chartered Accountants and CFO magazine 1

2. CFO Global and African Business Outlook – Overview 2 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 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 and the African Business Outlook SAICA joined the survey in 2013, helping to found the African Business Outlook. South African results are highlighted in the analysis, as are results from Nigeria and the rest of Africa, enabling SAICA and other survey partners to share key insights about the African economy with members of the Institute and others focusing on Africa. The analysis in this report will assist companies to make important business decisions as they can benchmark themselves against their global peers. The long run goal is to develop a large and steady set of responding African firms. Key Survey Facts  Survey Respondents: 74  Of which, 44 from South Africa, 9 from West Africa (excluding Nigeria), 4 from Nigeria, and 17 from MENA other parts of Africa  The small number of respondents may skew some results outside of South Africa  Sample includes CFOs from both public and private companies representing a broad range of industries  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 landscape of corporate finance.

3. Sentiment Regarding Domestic Economy 3 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 When ranked on a 100 point scale, the African Optimism Index (for the economic prospects of the continent over the next year) increased from 49.4 in Q2 2014 to 51.7 in Q3 (South Africa: 53; ROA: 51.5). African optimism about the next 12 months remains low Trends in South African Optimism CFOs are less optimistic about the domestic economy  67% of South African CFOs report being less optimistic about the domestic economy this quarter Sentiment towards domestic economy  Unlike South Africa, CFOs surveyed in the Rest of Africa are more optimistic about their domestic economies  Overall average suggests CFOs are less optimistic but this is likely due to high response rate from South Africa

4. 4 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 Most African CFOs are optimistic about their own companies, despite being less optimistic about the overall economy; own-firm optimism is especially high in Nigeria Own-company optimism has decreased over the past year in South Africa  Although South African CFOs remain optimistic for their own companies on average, a pattern of decreasing optimism has emerged Own Company Sentiment When ranked on a 100 point scale, the Own-Company African Optimism Index (for the economic prospects over the next year of each CFO’s own company) increased from 61.5 in Q2 2014 to 65.5 in Q3 (South Africa: 67.8, Nigeria: 63.8, ROA: 62.2) All surveyed Nigerian CFOs have grown more optimistic about their company this quarter compared to last  Throughout the rest of Africa, CFOs are more optimistic about their own companies then they were three months ago

5. African Business Optimism Compared to Rest of World 5 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 African Business Optimism slightly recovers from last quarter. African CFOs are more optimistic about their own firms than they are about the continent overall, and they are at the median in the world  Own-company optimism recovers in all regions except for Latin America Over the past few quarters, African CFOs have become increasingly less optimistic about their domestic economies, with a slight rebound this quarter  Economic optimism in the USA and Asia are stable and high, while optimism in Africa and Latin America remain low. Business Optimism Index (by Continent)Own-Firm Business Optimism Index

6. Top 10 Corporate Concerns for African CFOs 6 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 Concerns of African CFOs vary by country, with governmental policies being one common concern. South AfricaNigeriaRest of Africa 1) Government policies 1) Corporate tax code (other countries) 1) Difficulty attracting/retaining qualified employees 2) Employee productivity 2) Geopolitical / Health Crises 2) Rising input or commodity costs 2) Regulatory requirements 3) Government policies 3) Currency risk 4) Currency risk 3) Regulatory requirements 4) Economic uncertainty 4) Economic uncertainty 3) Rising input or commodity costs 5) Rising wages and salaries 4) Rising input or commodity costs 6) Currency risk 6) Inflation 4) Rising wages and salaries 6) Economic uncertainty 7) Government policies 8) Difficulty attracting/retaining qualified employees 6) Rising wages and salaries 7) Employee productivity 9) Employee morale 9) Weak demand for products/services 9) Geopolitical / Health Crises 9) Inflation 10) Cost of borrowing & Cost of benefits 10) Data security Top 10 Corporate Concerns

7. Growth in Revenue, Earnings, Spending, Other Budget Items 7 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 Compared to last quarter, South African CFOs expect larger growth in earnings but slower growth in spending (capital and technology). Other expectations are similar to last quarter. South African CFOs anticipate modest growth in dividends, R&D spending, and Marketing but the rate of growth is reduced relative to last quarter’s predictions  Significant growth is expected in Revenues, Tech spending (>10%);  Earnings are expected to grow more strongly, compared to last quarter’s expectation.

8. Minimum Wage and Reducing Labor Needs 8 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 African firms typically pay the workforce a higher wage than the minimum wage Only around 16% South Africa workers in the surveyed firms are paid minimum wage, much lower than Asia. The percentage of minimum-wage workers is 7.2% in the US, 7.0% in Europe and 8.3% in Latin America. African CFOs plan to slowly invest in labor-saving technology, less so than in other regions of the world. Fewer than 30% of the S.A CFOs say that they have made or plan to make capital investment to reduce labor needs, Nigerian CFOs are more active in such spending (50%).

9. Political Contributions 9 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 Fewer than 20% of South African CFOs indicate that their firms make political contributions, which is among the lowest in all the surveyed regions. European and US CFOs show higher rates of making political contributions, aimed at making sure that their corporate views are heard by policy-makers Firms in emerging markets are less likely to make political contributions, even where permitted by local laws.

10. Managing Corporate Tax Exposure 10 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 Companies overwhelmingly agree that managing corporate tax exposure is important Taxes affect business strategies and where to locate operations Responses are very similar in other regions of the world. Do you Agree or Disagree with the following statements about managing your company's corporate tax exposure.

11. Over 50% of African CFOs Anticipate Labor Unrest Over the Next Year 11 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 Very few Nigerian CFOs expect labor unrest to affect their countries’ economies over the next 12 months. In contrast, 90% of South African CFOs expect problems with labor unrest Labor unrest in Africa is mainly driven by problems in the general economy, wage pressure, and income inequality Though not shown on this page, 75% of Latin American firms expect labor unrest to hurt their economies

12. Does Lack of Public Trust Affect African Firms? 12 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 Around the world, the public has shown increasing mistrust of governments and businesses. Here we assess the effect of these findings on the company and on the business environment In Nigeria and South Africa, CFOs report a larger effect of mistrust on the business environment than on the individual company. In fact, 50% of CFOs surveyed in Nigeria state that there is no effect of mistrust on the individual company Most CFOs surveyed in other regions of Africa believe that public mistrust leads to a moderate to great effect on both their individual company and their business environment How do African companies react to public mistrust? 58.4% of CFOs surveyed say that public mistrust affects their company’s business decisions However, only 12.3% agree that this lack of public trust results in lower revenue 26.1% believe this negative perception can be countered through marketing and PR

13. Cash Holdings on the Balance Sheet 13 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 South African companies tend to hold cash and marketable securities as a greater percentage of their total assets then their counterparts in other African countries On average, African companies hold about 15% of assets in the form of cash  All companies are holding less cash as a percentage of total assets than they did one year ago  Nigerian firms hold the least amount of cash and marketable securities outside of their home country, despite reporting currency risk as their most pressing concern

14. Deployment of Cash Reserves over Next Year 14 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 More than half of the African companies anticipate deploying cash reserves over the next year. South African companies anticipate a high likelihood of deploying cash reserves compared to Nigeria over the next 12 months  More than 50% of South African CFOs surveyed believe that their firms will begin to deploy cash reserves over the next 12 months  Among Nigerian CFOs, 33% believe the same  CFOs from the rest of Africa anticipate the highest likelihood of deploying cash. Those who believe cash reserves will likely be deployed cite acquisitions and capital investments as top uses. The two most cited reasons for firms that are unlikely to deploy are: Lack excess cash to deploy Need for cash as liquidity buffer

15. Do African Firms Set a Target for Their Amount of Cash Reserves? 15 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 Survey shows that most African firms do not have a pre-defined / strict target for the amount of cash and marketable securities to hold Of all the firms surveyed, only a few, specifically in Nigeria, have a strict cash target Though not shown in the graph, companies in other emerging markets (Asia, Latin America) are much more likely to set a cash target. For African firms that set some kind of cash target, most agree that they quickly alter their cash holdings to meet the target set if they fall below – but hardly modify cash holdings when drifting above the target

16. What is the Primary Purpose of Holding Cash? 16 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 40% of African companies say that they primarily hold cash as a means to facilitate everyday transactions and manage expenses, followed by using cash as a source of funding future investments.

17. Would More Severe Russian Sanctions Hurt African Businesses? 17 African Business Outlook Duke University / SAICA / CFO Magazine Sept 2014 33% of surveyed African firms do business with Russia Of those who work with Russia, 60% of CFOs expect to see a negative impact if the US and Europe were to impose severe financial sanctions on Russia While none of the firms have yet reduced Russian-related business, they do indicate that they are evaluating a reduction.