Benefits of Making Business in Tanzania | Buy & Sell Business

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

4. Country Overview Tanzania, East African country situated just south of the Equator. Tanzania was formed as a sovereign state in 1964 through the union of the theretofore separate states of Tanganyika and Zanzibar. The United Republic of Tanzania is located in Eastern Africa. It is bordered by Kenya and Uganda to the North, Rwanda, Burundi and the Democratic Republic of Congo to the West and Zambia, Malawi and Mozambique to the South. The country's eastern border lies in the Indian Ocean which has a coastline of 1,424 km. The capital City of Tanzania is Dodoma where the National Parliament has its main offices and there it holds its regular sessions. Other big urban centres include Arusha, Moshi, Tanga, Mwanza, Morogoro, Mbeya, Iringa, Tabora, Kigoma, Shinyanga and Zanzibar. The Government of the United Republic of Tanzania is composed of 26 administrative regions; 21 regions on the mainland and 5 in Zanzibar. Tanzania's regions are Arusha, Dar es Salaam, Dodoma, Iringa, Kagera, Kigoma, Kilimanjaro, Lindi, Manyara, Mara, Mbeya, Morogoro, Mtwara, Mwanza, Pemba North, Pemba South etc. Tanzania also has 98 districts each with at least one council created to increase local authority.

5. Executive Summary Tanzania is an East African country and Swahili is the nation's official language. English is widely spoken, and other languages spoken in the country are the native tongues of various ethnic groups. Most of Tanzania's population is fluent in their mother tongue and one other language, mainly Kiswahili. Dodoma was declared as the capital of Tanzania in 1974. Despite the declaration, Dar es Salaam remains the central administrative and most prominent city in Tanzania. Zanzibar is a part of the United Republic of Tanzania and consists of two main islands of Unguja and Pemba and a number of small islands. The Islands are located 40 km off the mainland coast of East Africa in the Indian Ocean. The two main islands are 40 kilometers apart, separated by 700 meters deep Pemba Channel. Tanzania has a total area of 945,087 sq.km including 61,000 sq. km of inland water. The total surface area of Zanzibar is 2,654 sq.km. Unguja, the larger of the two islands has an area of 1,666 sq.km, while Pemba has an area of 988 sq.km. Tanzania population is now estimated at 44.8 Million with an annual population growth rate of 3%. This country located in East Africa is famous for tourism, agricultural activities, mining and fishing as major economic drivers.

6. Introduction – Doing business in Tanzania Ease of Doing Business in Tanzania averaged 135.67 from 2008 until 2019, reaching an all time high of 145 in 2013 and a record low of 125 in 2010. source: World Bank As one of the fastest growing economies in Africa, there are many opportunities for doing business in Tanzania. Expats will likely find themselves working or doing business within one of the three most important sectors of agriculture, mining or tourism and based in one of the major centres of Dar es Salaam, Arusha or the capital, Dodoma. Tanzania has a very diverse population, both ethnically and religiously, which was successfully unified by the country’s first president Mwalimu Julius Nyerere in the 1960s. Tanzania is a developing country that needs improved infrastructure, healthcare and education and investment in agricultural development. A growing consumer base and rising trade flows mean that growth is expected to continue to average 6% to 7%. Growth markets are banking, which is growing in rural areas, and oil and gas, which has been discovered in Tanzania, with small-scale developments now starting to take place. In addition, general infrastructure and agricultural value-chain improvements are also ripe for investment.

7. Conducting business in Tanzania business to do in cities like Dar es Salaam are very lucrative and can easily make you a billionaire. Tanzania's main sectors include agriculture, fishing, mining, manufacturing, energy, telecommunications and IT. Many people also have jobs in tourism, since Tanzania is home to some of Africa's biggest tourist destinations such as Serengeti National Park, Mount Kilimanjaro, Lake Victoria, and Olduvai Gorge. Some states only require a one-time application for a business license. The license remains active until the owner closes the business. The license does not need to be renewed, so it cannot lapse. A license may require the business owner to file sales tax reports or other documents on a regular basis. Many small business owners are completely unaware of the fact that their Master Business Licence expires every 5 years. If the Master Business Licence is not renewed, the registration will automatically expire. The Master Businesses include Sole Proprietorship, General Partnership and Tradename registrations. Tanzania's economy is strong and stable! You can make profits by building profitable businesses in Tanzania in many sectors and with any amount of money you have! Some of the best

8. Taxation in Tanzania duty, excise duty, and stamp duty. There are also taxes levied at the local government level. All central government taxes are administered by the Tanzania Revenue Authority (TRA). The authority has three tax departments (Domestic Revenue, Customs and Excise, and Large Taxpayers (in respect of all taxes). TRA is headed by a Commissioner General in charge of tax collection and day to day administration. The Ministry of Finance oversees the tax policy. The tax system in Tanzania is structured in a view to establishing a fair, simple, efficient and taxpayer friendly regime. The tax structure of Tanzania consists of 30% direct taxes, that include Corporate and Income tax, and 70% indirect taxes that include VAT (Value Added Tax), Excise Tax, import duties and various other taxes. All of these taxes can be paid online or can be paid at either the TZA or the ZRB. TYPES OF TAXES IN TANZANIA There are five types of taxes that people pay in Tanzania. They are: Corporate Tax Income, Tax Value Added Tax (VAT), Import Duty, Excise Tax. The tax regime in Tanzania consists of a number of direct and indirect taxes including income tax, Value Added Tax, import

9. Trade tea, sisal, tobacco, pyrethrum and cloves. The main imports are machinery and transport equipments, textiles and clothing, petroleum products. Certain duty exemptions are made based on bilateral and multilateral trade agreements or investment incentive packages. The tariffs range from 0 percent for raw materials to 10 percent for industrial used goods and 25 percent for consumer goods. The top exports of Tanzania are Gold ($1.55B), Coconuts, Brazil Nuts, and Cashews ($612M), Raw Tobacco ($344M), Coffee ($160M) and Fish Fillets ($157M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($1.36B), Packaged Medicaments ($335M), Palm Oil ($261M), Wheat ($176M) and Cars ($154M). The principal export commodities include Minerals (gold, gemstones, diamonds, coal e.t.c.), coffee, cotton, cashew nuts,

10. Banking in Tanzania been privatized, though the government maintains minority shares in CRDB Bank, National Bank of Commerce (NBC) and National Microfinance Bank (NMB), among others. Currently, about 40 local and foreign private commercial banks are registered with the central bank (Bank of Tanzania) and are operating. International banks include CitiBank/Citigroup, Standard Chartered Bank, Barclays Bank and Stanbic Bank. The influx of foreign banks has helped to improve the availability of financial services and the quality and pricing of existing services, either directly as providers of such services or indirectly through competitive pressures on domestic banks. The banking sector remained sound and stable, liquid and adequately capitalized. The ratio of core capital and total capital to total risk-weighted assets and off-balance sheet items were 18.2 percent and 20.2 percent, well above the minimum regulatory requirements of 10 percent and 12 percent, respectively. The ratio of non- performing loans to gross loans, which measures the quality of assets increased to 10.6 percent from 8.7 percent. The Tanzanian banking sector was liberalized in June 1999 and is now increasingly competitive. Local state-owned banks have

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