Benefits of Making Business in Rwanda | Buy & Sell Business

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

4. Country Overview Rwanda, a small landlocked country in east-central Africa, is trying to recover from the ethnic strife that culminated in government-sponsored genocide in the mid-1990s. In the genocide, an estimated 800,000 ethnic Tutsis and moderate Hutus were killed by dominant Hutu forces in 100 days. The country has struggled with its legacy of ethnic tension associated with the traditionally unequal relationship between the Tutsi minority and the majority Hutus. Rwanda is striving to rebuild its economy, with coffee and tea production among its main exports. The World Bank has praised Rwanda's "remarkable development successes", which have helped reduce poverty and inequality. But Paul Kagame, who became president in 2000 and has effectively run Rwanda since 1994, faces criticism at home and abroad over his political and human-rights record.

5. Executive Summary A virtual guide to "the land of a thousand hills". Rwanda is a relative small landlocked, hilly country in Central Africa, located south of the Equator and east of Lake Kivu, one of the African Great Lakes. It is bordered by Burundi, the Democratic Republic of the Congo, Tanzania, and Uganda. The country covers an area of 26,338 km², compared it is about the size of Macedonia (Rep.), or slightly smaller than the US state of Maryland. Rwanda has a population of 11.5 million People (2016; Rwanda's population density is among the highest in Sub-Saharan Africa). Capital and largest city is Kigali (est. pop. 1 million people). Spoken languages are Kinyarwanda (official language of Rwanda), English and French, Swahili as the lingua franca in the African Great Lakes region. Small and landlocked, Rwanda is hilly and fertile with a densely packed population of about 12.5 million people. It borders the far larger and richer Democratic Republic of Congo, as well as its closest East African neighbors, Tanzania, Uganda, and Burundi.

6. Introduction – Doing business in Rwanda More than 50% of imported goods are food products. Rwanda imports rice, sugar, dairy products, juice and jams, wheat flour, etc. Due to the increased number of population, especially in urban areas the demand in food products is steadily increasing. This increased demand presents many opportunities in the area of food production and processing. Business opportunities are in in soy products making, dairy processing, fruit processing, maize and sorghum milling, cassava processing, etc. Rwanda's manufacturing sector has a ready domestic and regional market, as demand for products continues to increase rapidly. Investment opportunities include: production of plastics bottles, paper mill and printing, general paper packaging, manufacture of wood and metal products, and the establishment of a pharmaceutical plant. Rwanda is currently growing its potential for real estate investment and is attracting international estate developers. Real estate investors have the opportunity to acquire expropriated land and develop residential housing for low to middle income earners.

7. Conducting business in Rwanda Rwanda has the fewest procedures and fastest processes in the whole of East Africa and possibly the world to register and start a business. Below are the steps followed to register a business in Rwanda You can register your business online at the Office of the Registrar General which is a department within the Rwanda Development Board located in the Kigali the capital city What are some of the important documents needed before I can register my business in Rwanda? - Opening a branch/ Foreign Company - Power of attorney to present the company in Rwanda. - A duly authenticated copy of the memorandum Articles of Association. - Certificate of Registration/Incorporation issued by the registration authority in the country of incorporation. - Notarized resolution from the authorized agency authorizing to open a branch. - Passport copies of the shareholders/directors. - List of directors residing in Rwanda.

8. Taxation in Rwanda In Rwanda, the Personal Income Tax Rate is a tax collected from individuals and is imposed on different sources of income like labor, pensions, interest and dividends. The benchmark we use refers to the Top Marginal Tax Rate for individuals. Revenues from the Personal Income Tax Rate are an important source of income for the government of Rwanda. Resident individuals must pay tax on all income from their employment in Rwanda, regardless of where income is paid. Non-resident individuals must pay tax on any income derived in Rwanda, including employment income, at the withholding tax rate of 15%. Company tax is paid based on computed tax profits at a rate of 30%. A registered investment entity that operates in an export processing Zone or a foreign company that has its headquarters in Rwanda and fulfils the requirements stipulated in the Rwandan Law on Investment Promotion, are entitled to pay corporate income tax at the rate of 0%. Capital gains tax is applicable at the rate of 30% on capital gains arising from the disposal (sale or cession) of immovable commercial property and sale of shares.

9. Trade Rwanda is the 172nd largest export economy in the world. In 2017, Rwanda exported $223M and imported $1.11B, resulting in a negative trade balance of $890M. In 2017 the GDP of Rwanda was $9.1B and its GDP per capita was $2.04k. The top exports of Rwanda are Coffee ($60M), Tea($48.4M) Niobium, Tantalum ,Vanadium and Zirconium Ore ($39.4M), Tin Ores ($14.3M) and Tungsten Ore ($7.69M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($72.7M), Packaged Medicaments ($68.9M), Broadcasting Equipment($53.9M), Raw Sugar ($31.9M) and Wheat ($29.6M).

10. Banking in Rwanda Commercial banks in Rwanda reported mixed results in the nine months to September, with Eco bank Rwanda joining the group of nine banks that returned a profit, together representing a 21.8 per cent growth from $36 million to $43.8 million, while new entrants struggled. Eco bank Rwanda, which reported a loss of Rwf1.9 billion ($2 million) in the nine months to September 2017, posted a Rwf1 billion ($1 million) net profit in the same period this year. Those that did not fare well Commercial Bank of Africa (CBA), three microfinance banks and the Development Bank of Rwanda reported a combined Rwf8.3 billion in net losses. Bank of Kigali, I&M Bank Rwanda, Equity Bank Rwanda, Bank Populaire du Rwanda and KCB Rwanda led the group of banks that posted profits. Bank of Kigali reported a net profit of Rwf19.7 billion ($22 million) in the first nine months, which is an 11.1 per cent increase from the Rwf17.6 billion ($19.7 million) reported during the same period last year. The bank’s credit book grew by 10.6 per cent in the nine months to September, compared with the same period last year, from Rwf471 billion to Rwf500.7 billion.

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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