1. African Business Outlook
Part of the Global Business Outlook
A joint survey effort between Duke University The South African Institute of Chartered Accountants 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, 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 2015.
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: 32
Of which, 12 from Nigeria, 15 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.

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. Optimism about their own companies’ outlook has however increased in the last quarter.
Global Trends
June 2018 Outlook
Sep 2017 Outlook
Country Business Optimism Index
Country / Region
Country / Region
Own-Firm Business Optimism Index
Own Company
Own Company
Notes: Presented data are the mean value for each region or country, Scale from 0-100

4. Changes in African Business Optimism Index
Optimism about the domestic economy in South Africa is growing but at a slower rate this quarter. The trend in Nigerian CFOs is less optimistic about the domestic economy relative to the rest of Africa.
South Africa Optimism Trend
Trend in South African optimism has declined
67% of South African CFOs are “more optimistic” this quarter, compared with 89% from last quarter
Nigerian Optimism
Nigerian optimism increases
Optimism about the economy has declined in Nigeria, with 50% of surveyed CFOs from Nigeria being “more optimistic”, lower than last quarter
Notes: Presented data are the mean or median values for each region or country.

5. Changes in Own Company Sentiment
The proportion of South African CFOs becoming more optimistic about their own companies declined this quarter, while Nigerian CFO Optimism increased marginally
South African Own-Company Optimism
CFOs are less optimistic about their own companies than the general economy
S. A. growth in optimism about their own companies fell this quarter to 40%, from 59% last quarter
More South African CFOs became more pessimistic (20%) about their companies compared to last quarter (15%)
Nigerian Own-Company Optimism
Compared to last quarter, Nigerian CFOs have become slightly more optimistic
83% of surveyed Nigerian CFOs are more optimistic about their own companies’ prospects this quarter, compared to 81% last quarter
Nigerian CFOs are still more optimistic about their companies than about the economy

6. What Keeps CFOs Awake at Night? (Most Pressing Concerns of CFOs)
CFOs in South Africa and Nigeria feel that Government Policies, Economic Uncertainty, and Employee Morale are pressing concerns.
South Africa
Nigeria
Economic uncertainty
Government policies
Corruption and white collar crime
Employee morale
Property rights
Access to capital
Difficulty attracting /retaining qualified employees
Volatility of political situation
Weak demand for your products and services
Unrest in the general population
Currency risk
Employee productivity
Ranking – from most pressing to least pressing

7. Most pressing concerns for African countries
Government policies, Economic certainty and Employee Morale rank highly. Property Rights is a significant concern for South African CFOs.

8. Expected Product Price Inflation
Africa inflationary expectations remain around 4%, slightly below Asia’s expectations
Sep 2017 Outlook
Global Trends
June 2018 Outlook
Product Prices
Product Prices
Inflationary expectations highest in Asia
Asian CFOs expect the highest price increases among all the regions
CFOs in Europe expect the lowest inflation
Inflation expectations highest in Nigeria
Nigeria has significantly high inflationary expectations (7%) compared to South Africa (4%)
Notes: Presented data are the mean or median values for each region or country.

9. Expected Growth in Sales Revenue
Overall, CFOs in Africa expect a higher increase in revenue over the next year.
Sep 2017 Outlook
Global Trends
June 2018 Outlook
Revenue
Revenue
African outlook improves slightly as CFOs expect higher sales revenue this quarter
Revenue expectations decrease from last quarter in Latam and Asia
Europe expected revenue growth to raise
Revenue growth expected in Africa
South Africa revenue expectations stayed flat compared to last quarter
Nigerian CFOs expect much better revenue performance than South African CFOs
Notes: Presented data are the mean or median values for each region or country.

10. Expected Change in Earnings
Earnings are expected to stay flat in Africa
Sep 2017 Outlook
Global Trends
June 2018 Outlook
Earnings
Earnings
Earnings stay relatively flat
Europe has the lowest earnings expectations for 2018
Latam expects moderately strong earnings growth
Earnings growth expected in Africa
South Africa expectations rise to an increase of 9% in earnings this quarter compared to 5% last quarter
Outlook of Nigerian CFOs increases from last quarter, at 21% growth in expected earnings
Notes: Presented data are the mean or median values for each region or country.

11. Fulltime Employment Outlook
African CFOs expect strong employment growth, though down from last quarter.
Sep 2017 Outlook
Global Trends
June 2018 Outlook
# FT Employees
# FT Employees
Weak employment outlook in Latin America
Asia and Latam CFOs expect rising employment growth in 2018.
Employment growth stays strong in the US
Employment growth is expected to continue in Africa
South Africa CFOs expect a 4% increase in the number of fulltime employees
Expected increase in fulltime employees in Nigeria is 4%
Notes: Presented data are the mean value for each region or country | #FT=Number of Fulltime Employees

12. Expected Wage and Salary Increases
African wages and salaries are projected to increase 6% over the next year
Sep 2017 Outlook
Global Trends
June 2018 Outlook
Wages & Salaries
Wages & Salaries
Wage growth expectations vary across regions
Africa expects wages to grow 5.9% in 2018, which is the highest among all regions
Europe expects the lowest wage growth
Wage growth in Africa is positive
South Africa expecting a significant wage increase
Nigerian CFOs expect a decline in wages and salaries over the next year.
Notes: Presented data are the mean or median values for each region or country.

13. Borrowing Cost and Leverage Ratio
What is your current long-term borrowing interest rate and debt-to-assets ratio?

14. Projected Borrowing Cost and Leverage Ratio Low Interest Rate Case
There is a 1-in-10 chance that your long-term borrowing rate will be as low as X in June 2019:
At this borrowing rate, what do you expected expect your debt-to-assets ratio and your planned growth in capital spending will be in June 2019?
Mexico is removed because it looks very weird for the high interest rate case

15. Projected Borrowing Cost and Leverage Ratio Best Guess Case
You expect that in one year your long-term borrowing interest rate will be X in June 2019:
At this borrowing rate, what do you expected expect your debt-to-assets ratio and your planned growth in capital spending will be in June 2019?
Mexico is removed because it looks very weird for the high interest rate case

16. Projected Borrowing Cost and Leverage Ratio High Interest Rate Case
There is a 1-in-10 chance that your long-term borrowing rate will be at least this high in June 2019:
At this borrowing rate, what do you expected expect your debt-to-assets ratio and your planned growth in capital spending will be in June 2019?
Mexico is removed because it looks very weird for the high interest rate case

17. Data security
To your knowledge, have hackers ever successfully penetrated your systems in an attempt to steal, change, or make public important data?

18. Data security
During the past year, indicate which of the following (if any) steps your firm has taken as a result of concerns about hacking and data security.

19. Role of CFO
Over the next five years, which of the following issues will have the most impact on the role played by the Finance Function in your company, as well as on the role of the CFO?
Top 10 shown for role of CFO

20. Funding Environment
In general, how would you describe the current funding environment for your company?
South Africa
Nigeria

21. M&A Activities – Country Level
During the next 12 months how do you expect M&A activity to change in your country?

22. M&A Activities – Industry Level
During the next 12 months how do you expect M&A activity to change in your industry?

23. Return on Assets (ROA)
Profit growth in Africa is strong with significant increase compared to 2017
March 2017:
Argentina too high: 21.1 & 23.3
Profit margins are expected to increase in all regions
CFOs in Africa expect profits to grow as measured by ROA