Transcript Analysis – in English

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
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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, 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
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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
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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.
African Business Outlook
Duke University / SAICA / CFO Magazine
Sept 2014
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Sentiment Regarding Domestic Economy
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
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 Business Outlook
Duke University / SAICA / CFO Magazine
Sept 2014
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Own Company Sentiment
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
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
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)
African Business Outlook
Duke University / SAICA / CFO Magazine
Sept 2014
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African Business Optimism Compared to Rest of World
African Business Optimism slightly recovers from last quarter.
Business Optimism Index (by Continent)
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.
African Business Outlook
Own-Firm Business Optimism Index
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
Duke University / SAICA / CFO Magazine
Sept 2014
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Top 10 Corporate Concerns for African CFOs
Concerns of African CFOs vary by country, with governmental policies being one common concern.
Top 10 Corporate Concerns
South Africa
Nigeria
Rest of Africa
1)Government policies
1)Corporate tax code (other countries)
2) Employee productivity
2) Geopolitical / Health Crises
Difficulty attracting/retaining qualified
employees
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
Difficulty attracting/retaining qualified
8)
employees
9) Employee morale
6)Economic uncertainty
7)Government policies
6)Rising wages and salaries
7)Employee productivity
9) Weak demand for products/services
9) Geopolitical / Health Crises
9)Inflation
African Business Outlook
10)Cost of borrowing & Cost of benefits
1)
10)Data security
Duke University / SAICA / CFO Magazine
Sept 2014
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Growth in Revenue, Earnings, Spending, Other Budget Items
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.
African Business Outlook
Duke University / SAICA / CFO Magazine
Sept 2014
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Minimum Wage and Reducing Labor Needs
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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%).
African Business Outlook
Duke University / SAICA / CFO Magazine
Sept 2014
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Political Contributions
Firms in emerging markets are less likely to make political contributions, even where permitted by
local laws.
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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
African Business Outlook
Duke University / SAICA / CFO Magazine
Sept 2014
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Managing Corporate Tax Exposure
Do you Agree or Disagree with the following statements about managing your company's corporate
tax exposure.
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.
African Business Outlook
Duke University / SAICA / CFO Magazine
Sept 2014
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