1. @chrishartZA @InvestmentSolZA AFRICA MUST TRY HARDER NOVEMBER 2014

2. INVESTMENT DESTINATIONS1 DEVELOPED MARKETS AFRICAN GROWTH INVESTMENT EVERGREENS EMERGING MARKET LESSONS AFRICA MUST TRY HARDER

3. The Developed World: scoring own goals INVESTMENT SOLUTIONS2 Investor Objectives Macroeconomic Management Debt Trap Financial Repression Emulate? Haven?

4. Markets and Economies: Continued disconnect.. INVESTMENT SOLUTIONS3 Unsustainable… Problematic…

5. DM Economies EM Economies DM & EM GDP per Capita INVESTMENT SOLUTIONS4 DM vs EM GDP per capita Source: INET- Bridge, Investment Solutions

6. INVESTMENT DESTINATIONS5 DEVELOPED MARKETS AFRICAN GROWTH INVESTMENT EVERGREENS EMERGING MARKET LESSONS AFRICA MUST TRY HARDER

7. Global growth 2007 INVESTMENT SOLUTIONS 6 Rest of World Africa (5/25) BRICS

8. Global growth 2015: Africa & Asia INVESTMENT SOLUTIONS7 Rest of World Africa (14/25) BRICS

9. Projected economic growth rates Sub-Saharan Africa to grow at more than 4% Source: IMF World Economic Outlook April 2014 INVESTMENT SOLUTIONS

10. African growth INVESTMENT SOLUTIONS9 Investment TimelinesCellular Telephony 2008: Debt Crisis Zimbabwe!! Improving Governance Necessary, but not the whole picture Technology Critical Growth Unlock Factors Lower Debt Levels

11. Economic risk-reward INVESTMENT SOLUTIONS10 Inflation and Growth: G7 and SSA last 20 years Source:IMF, Investment Solutions, 2014 G7 GDP G7 CPI SSA GDP SSA CPI

12. SSA GDP / Capita INVESTMENT SOLUTIONS11 Middle Income Counties Low Income Countries 2000 `

13. SSA GDP / Capita INVESTMENT SOLUTIONS12 2015 ` Middle Income Counties Low Income Countries High Income Country

14. EM GDP now eclipsing DM: Africa still small INVESTMENT SOLUTIONS13 Source: IMF, Investment Solutions, 2014

15. INVESTMENT DESTINATIONS14 DEVELOPED MARKETS AFRICAN GROWTH INVESTMENT EVERGREENS EMERGING MARKET LESSONS AFRICA MUST TRY HARDER

16. Investor perceptions on Africa Foreign direct investment on the rise Source: EY’s Attractiveness Survey Africa 2014, Executing Growth 2011 2012 20132014 Markets More attractive than Africa Markets less attractive than Africa 1 2 3 4 5 6 7 8 9 10 1 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 Improvement in Africa’s relative attractiveness Africa INVESTMENT SOLUTIONS Latest Fashion Or Evergreen?

17. Investment evergreens: Jurisdiction INVESTMENT SOLUTIONS16 Investment Evergreens Freedom from Financial Repression Capital Controls Valuation Liquidity Diversification Financial Market Stability Regulatory Certainty

18. Investment evergreens: Investor requirements INVESTMENT SOLUTIONS17 Investor Requirements YieldGrowth Quality/ Solvency Developed Market own goals!!

19. INVESTMENT DESTINATIONS18 DEVELOPED MARKETS AFRICAN GROWTH INVESTMENT EVERGREENS EMERGING MARKET LESSONS AFRICA MUST TRY HARDER

20. Investment and growth INVESTMENT SOLUTIONS19 Source: IMF, Investment Solutions, 2014 Advanced CountriesEM and AfricaBRICS

21. Government spending and growth INVESTMENT SOLUTIONS20 Source:INet

22. Global shifts: Savings critical for growth INVESTMENT SOLUTIONS21 Global Savings Source:Thomas Reuters Datastream / Fathom Consulting

23. G7 and BRICS investment INVESTMENT SOLUTIONS22 G7 & BRICS Investment 1992G7 & BRICS Investment 2015 Source: INET- Bridge, Investment Solutions

24. Tale of two elections: SA and India INVESTMENT SOLUTIONS23 … currency has also outperformed Rand SA vs India Source: INET- Bridge, Investment Solutions

25. INVESTMENT DESTINATIONS24 DEVELOPED MARKETS AFRICAN GROWTH INVESTMENT EVERGREENS EMERGING MARKET LESSONS AFRICA MUST TRY HARDER

26. WEF Global Competitiveness Report Financial Market Development Mauritius 20142006 2667 Kenya 20142006 2472 South Africa 20142006 733 Morocco 20142006 6974 Botswana 20142006 5759 Algeria 20142006 13796 Namibia 20142006 4679 Zambia 20142006 5085 Egypt 20142006 12565 Zimbabwe 20142006 112113 Nigeria 20142006 6770 Angola 20142006 140120 Source: World Economic Forum Global Competitiveness Repot (2014/2015 and 2006/2007) 2014/2015 out of 144 countries 2006/2007 out of 125 countries

27. Risk of Overheating INVESTMENT SOLUTIONS

28. SA: Slow puncture… Global comparisons2008 RankLatest Rank WEF Competitiveness Index45/13156/144 Corruption Perception Index54/18072/177 Freedom of the Press28/19533/194 Economic Freedom83/14188/152 Ease of Doing Business35/18141/189 S&P Credit RatingBBB+BBB- Overvalued markets and deteriorating long term growth outlook INVESTMENT SOLUTIONS27 Stagflation Triple Deficit Growth Drivers Self Inflicted

29. National Scars National Transitions Economic Value Chains Capital Allocation Political Economy Dynamics within BRICS… INVESTMENT SOLUTIONS28 BRICS ANALYTICAL LENSES

30. SA BRICS membership Punching above its weight INVESTMENT SOLUTIONS29 SA Global Aspirations Big in Africa Small in BRICS Globally Insignificant Emulate China? Emulate Mauritius?

31. SA’s role model: or Chile? INVESTMENT SOLUTIONS30 GDP / Capita since 1980 Source: IMF, Investment Solutions, 2014 Chile South Africa

32. SA’s role model: China or Mauritius.? INVESTMENT SOLUTIONS31 GDP / Capita since 1980 Overtaken by both China SA Mauritius Source: IMF, Investment Solutions, 2014

33. SSA: Tax differentials between jurisdictions CountryIncome Tax Rate (%)Corporate Tax Rate (%)Tax Burden % of GDP Hong Kong 15.016.514.2 Nigeria 24.030.04.7 Ghana 25.0 14.6 Mauritius 15.0 18.3 Zambia 35.0 19.3 Kenya 30.0 20.1 South Africa 40.028.027.3 Namibia 37.034.0 28.0 Lower tax burdens more competitive… Source: Heritage foundation

34. Top Insights from ‘Half Way There’ INVESTMENT SOLUTIONS33 Business is the source of all wealth Corruption is an economic cancer Effective institutions essential for democratic credibility SEE HALF WAY THERE FOR MORE..!

35. Global economic freedom… INVESTMENT SOLUTIONS34

36. Thank You INVESTMENT SOLUTIONS35 CHRIS HART Chief Strategist Investment Solutions hartc@ishltd.co.za sa.investmentsolutions.co.za @chrishartZA 011 505 6041