Benefits of Making Business in Mozambique | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN MOZAMBIQUE WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN MOZAMBIQUE WWW.MERGERSCORP.COM

4. Country Overview Mozambique, a country in Southeast Africa with a coast on the Indian Ocean, is bordered by Tanzania to the north, Malawi and Zambia to the northwest, Zimbabwe to the west, and Swaziland and South Africa to the southwest. Mozambique existed for almost five centuries as a Portuguese colony until independence in 1975. It is divided into ten provinces and one city with provincial status, Maputo, which is the capital. Portuguese is the official language of Mozambique. The currency of Mozambique is the metical (MZN).

5. Executive Summary The government system is a presidential republic; the chief of state is the president, and the head of government is the Prime Minister. Mozambique has a mixed economy combining both traditional and market economic systems. Many citizens engage in subsistence agriculture. There is a variety of private freedom combined with centralized economic planning and government regulation. Mozambique is a member of the Southern African Development Community. The various religions followed are - Roman Catholic 27.2%, Muslim 18.9%, Zionist Christian 15.6%, Evangelical/Pentecostal 15.3%, Anglican 1.7%, other 4.8%, none 13.9%, unspecified 2.5% (2017 est.)

6. Introduction – Doing business in Mozambique Mozambique is ranked 135th out of 190 countries in the World Bank’s Ease of Doing Business Survey for 2019. The country’s highest rankings are for dealing with construction permits (64th) and resolving insolvency (84th). As Sub-Saharan Africa’s 10th largest economy, which translates to just under 25 million people, Mozambique’s domestic consumer market is relatively small. But as a member of the Southern African Development Community (SADC), investors in the country gain access to the larger southern African region.

7. Conducting business in Mozambique There are several ways of doing business in Mozambique : •The Mozambique limited liability company •The Mozambique public limited company •The Mozambique branch •The Mozambique representative office Obtain license to operate in Mozambique from the Permit issued by one stop solution (BAU) launched by the Ministry of Industry and Trade. IMC will assist you to obtain business license.

8. Taxation in Mozambique are the taxa de facilidade permanente de depósito set at 1.75% and the taxa de facilidade permanente de cedência set at 9.0%1. In Mozambique, employment income is taxed under the PAYE system at rates up to 32%. The maximum rate applies to monthly income approximating USD 27,000. A 25% rate applies above approximately USD 7,000 per month. Interest rates – The interest rates of reference in Mozambique

9. Trade Mozambique is the 98th largest export economy in the world and the 114th most complex economy according to the Economic Complexity Index (ECI). In 2017, Mozambique exported $6.58B and imported $5.99B, resulting in a positive trade balance of $584M. In 2017 the GDP of Mozambique was $12.6B and its GDP per capita was $1.25k. The top exports of Mozambique are Coke ($1.51B), Coal Briquettes ($1.44B), Raw Aluminium($907M), Petroleum Gas ($411M) and Raw Tobacco ($306M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($457M), Raw Aluminium ($392M), Aluminium Oxide ($376M), Chromium Ore($222M) and Copper Ore ($175M).

10. Banking in Mozambique The Banco de Moçambique (Bank of Mozambique) is a Central Bank located in Maputo Mozambique, Africa, and was founded in 1975. The banking system is largely dominated by foreign-owned financial institutions. There are 19 commercial banks out of a total 40 financial institutions. The largest banks are Millennium BIM (Portuguese and Mozambican shareholders), BCI (Portuguese and Mozambican shareholders), and Standard Bank (South African shareholders). These three banks hold over 70% of all financial assets including deposits and loans. They also cover all major cities and areas of economic growth. Local commercial banks provide most services expected from commercial banks.

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com