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 and CFO magazine

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 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, 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: 145 • Of which, 78 from Nigeria, 55 from South Africa, and 13 from other parts of Africa. • Unless otherwise stated, the analysis represents responses from across Africa. • Due to the increase in respondents from Nigeria, care should be taken when comparing previous quarterly results, which comprises 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 Mar 2016

3. Sentiment Regarding Domestic Economy Optimism in the domestic economy in South Africa deteriorated further, and is significantly lower than the rest of Africa. Trends in African Optimism CFOs are less optimistic about the domestic economy • More CFOs from South Africa (85%) have become less optimistic versus CFOs from the Rest of Africa (49%). • Compared to Q4 ’15 (77%), this quarter more South African CFOs (85%) report being 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 49.3 in Q4 2015 to 38.3 in Q1 2016, and is significantly lower than the Rest of Africa at 50. African Business Outlook Duke University / SAICA / CFO Magazine Mar 2016

4. Sentiment Regarding Domestic Economy Nigerian CFOs are more optimistic about the domestic economy relative to the rest of Africa, though Nigerian optimism is only modest. Nigerian Optimism CFOs are optimistic about the domestic economy • A larger percentage of CFOs from Nigeria (42%) have become more optimistic, relative to CFOs from South Africa (6%) and from West Africa (40%) • About the same number of CFOs from Nigeria (51%) have become more pessimistic as CFOs from West Africa (50%). African Business Outlook Duke University / SAICA / CFO Magazine Mar 2016

5. Own Company Sentiment There has been a noteworthy increase in CFOs being less optimistic about their own companies. Trends in African Optimism CFOs are less optimistic about their own companies • CFOs from South Africa (54%) have become significantly less optimistic about their own firms than CFOs from the Rest of Africa (34%). • Compared to Q4 ’15 (18%), more South African CFOs (54%) report becoming less optimistic about their own companies this quarter. • In the Rest of Africa, the majority of CFOs have increasing own-firm optimism (59%) versus only 34% that have decreasing optimism (34%) about their own companies. 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) fell from 63.5 in Q4 2015 to 58.6 in Q1 2016. This is comparable to the Rest of Africa at 58.7. African Business Outlook Duke University / SAICA / CFO Magazine Mar 2016

6. Own Company Sentiment Nigerian CFOs are more optimistic about their own companies than the domestic economy. Trends in African Optimism CFOs are less optimistic about their own companies • More than 50% of CFOs from Nigeria have increased their own-firm optimism, significantly more so than for CFOs from West Africa (40%). • In Nigeria, the majority of CFOs are more growing more optimistic (61%), versus only 34% that have become less optimistic about their own firms. African Business Outlook Duke University / SAICA / CFO Magazine Mar 2016

7. 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 Mar 2016

8. Most Pressing Concerns 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 Mar 2016

9. Most Pressing Concerns (continued) This chart summarizes additional causes for concern in Africa. African Business Outlook Duke University / SAICA / CFO Magazine Mar 2016

10. Top 10 Company Changes (One-year Forecast) CFOs in South Africa and Nigeria estimate the following changes (in %) will occur in their companies during the next 12 months. African Business Outlook Duke University / SAICA / CFO Magazine Mar 2016

11. Probability of recession – Worldwide What do you think is the probability that your country's economy will be in recession at the end of 2016? Estimated probability of recession Averaged across all countries, 44% of African CFOs believe that their own country will be in recession at the year-end 2016, the highest recession probability in the world. African Business Outlook Duke University / SAICA / CFO Magazine Dec 2014

12. Probability That Country Will be in Recession by year-end 2016 CFOs from the African continent are worried that their countries will be in recession by 2016, with the risk substantial in South Africa. Respondents believe that the likelihood of recession is substantial, with 40% indicating that recession is more likely than not. South Africa is the most likely to go into recession based on responses, with a 59% probability. African Business Outlook Duke University / SAICA / CFO Magazine Mar 2016

13. Key Risks That May Lead To Recession CFOs from South Africa and Nigeria rank the following risks, from highest to lowest, that may lead to recession in their respective countries. African Business Outlook Duke University / SAICA / CFO Magazine Mar 2016

14. Key Risks That May Lead To Recession Majority of CFOs from Nigeria and West Africa believe the decrease in price of oil will play a major role in taking their countries into a recession. This isn’t a major concern outside West Africa as CFOs from South Africa feel that an “unstable political environment” would have a greater negative effect on the economy. CFOs from other African countries are more interested in the fortunes of emerging economies in Africa and Latin America. African Business Outlook Duke University / SAICA / CFO Magazine Mar 2016

15. Impact of increase in borrowing costs African CFOs say that their firms are fairly interest-rate insensitive. Interest rates would have to increase by 3 percentage points before the CFOs say that higher interest rates would cause their firms to reduce hiring, spending, or borrowing. African Business Outlook Duke University / SAICA / CFO Magazine Mar 2016

16. Return on Assets and Capacity Utilization South African companies expect an increase in ROA over the previous period and an increase in capacity utilization in the first half of 2016. African Business Outlook Duke University / SAICA / CFO Magazine Mar 2016