Folkert Castelein & RCF team. F.castelein@planet.nl +31629075200

Why investing in Rwanda?

Findings of our research and SWOT analysis shows that: Rwanda can meet EII requirements for a major investment. Rwanda can absorb > US$ 2 Billion foreign investment in targeted activities. EII can and will select relevant investment projects building on the priorities of EDPRS II (Rwanda planning 2013 – 2018)

a. Erasmus Investment International (EII) is instrumental getting access to a special financial platform, making funds available for building new companies and activities, all related to local needs , market demands and in line with Government strategies. b. The investment program is aimed at creating fixed assets in order to build solid businesses up and around the realized assets. c. Educational programs at all levels will leverage the local workforce to be educated and trained to take responsibilities to manage and lead these new companies. d. EII will be a majority shareholder in the local Holding Company in order to safeguard the investment. e. EII wil also ensure, related to this position, that the strategy of sustainable growth, long term employment and expansion will be followed and executed.

Thematic Area Priorities for EDPRS 2 (2013 – 2018)

Horticulture Construction industry Tourism Food processing

Logistic center Private sector investments ICT

Green neighborhood Sustainable energy Agriculture Livestock

EII will contribute to:

Goals of Erasmus Investment International

• Assist business expansion: private sector

• Development of commercial, humanitarian and non-profit projects

• Viable and sustainable projects

• Aimed at creating fixed assets in order to build solid businesses with and around the realized assets

• Initial investments realized in 3 years

• No exit for 25 years

• In Rwanda EII will create a new local legal entity:

Green Business Hub Rwanda Holding Ltd.(GBHR)

11 June, 2014 4

Goal of the program (2)

• Long term employment, good incomes and many new skills

• Low cost & Affordable housing, other buildings, Infra

By investing in the construction industry using innovative and industrial construction methods

• Food security

Improve food security and make Rwanda less dependent of imports

• Sustainable energy

Meet (future) energy demand with sustainable energy resources and methods (and by improving the electricity grid in Rwanda if required)

5 11 June, 2014

11 June, 2014 6

Mission The mission of Green Business Hub Rwanda is to help raise Rwanda to a middle income country status and to achieve the Millennium Development goals. More concrete, our mission is to realize: • Sustainable, large scale high quality food production; • Affordable and good quality housing; • Sustainable domestic energy production; • Job creation and professionalization of companies and employees. This mission is based on - and compatible with - the economic development and poverty reduction strategy (EDPRS2) of the Rwandan government. Strategy and investment targets. The strategy of Green Business Hub Rwanda is to invest in private sector development, specifically in integrated and value added supply chains in the agro-food sector and also the construction and housing industry. Market demand in these sectors exceeds current and future supply and offers investors high returns. To support this strategy, Green Business Hub Rwanda will invest in sustainable energy production, education, transport infrastructure and logistics. These investments are necessary for the success of the primary investment targets. The investment program will be realized in three years (2015 - 2018).

Investment program outline, current proposition

(1) Area Development & Construction ($ 900 M)

(2) Agriculture & Livestock ($ 700 M)

(3) Sustainable energy ($ 800 M)

(4) Logistics & equipment ($ 50 M)

(5) Education and training ($ 50 M)

11 June, 2014 7

Programs and projects

11 June, 2014 8

Dwelling Units (Housing +) & infra: Sustainable neighborhoods and a Housing & Maintenance Organization. 13,500 houses, 270,000 m2 other buildings, 3,000 dormitories, re-allocation of 2,000 low cost houses, 40 factory buildings and Power Installations, waste water treatment, a Sports Campus, 60 farmhouses, cool-stores, warehouses & silos, shelters, a Wholesale Center, and a High School - factories for the construction industry: pre-fab concrete, cell concrete, eco-Boards, steelframe profiles, Compressed Earth Blocks, gypsum panels, RapidWall panels, PVC pipes, cables, workshop, and furniture - innovative industrial approach and cement replacement a Living Lab demonstration area - development of 530 ha. new Economic Zones Logistic & equipment center, workshops Education & (vocational) training

Programs & Projects (2)

11 June, 2014 9

Food Security Agricuture: irrigation of 14,000 ha, 3,000 ha Mulberry trees, 1,000 ha Horticulture, seeds, fertilizers, mechanization, - Post Harvest Treatment & Storage (PHHS) - greenhouses 40 ha. and the production of Silk - 2 factories for fertilizers - agro-food processing industry: pepper, patchouli, bananas, tomatoes, pineapple, maize milling, soybean processing, bamboo - Factories for packaging and for bio-plastics Slaughtering & meat processing of poultry, cows, sheep, goat Livestock: poultry meat & eggs production, fish farming, animal feed Energy: methane (55 Mwe), biomass (60 Mwe), solar (20 Mwe), Hydro (110 Mwe), biogas, and 350 km GRID (power transition lines)

11 June, 2014 10

Top-level structure

EPC-M = Engineering, Procurement & Contracting -Management

Existing LOI’s

• Rwanda Development Board (RDB) • CITY of KIGALI: Development of 12.200 Dwelling Units in Kinyinya based on

existing sub-area plan • MINICOM: Development of 3 new Economic Zones, 530 ha and

optional is the new Kigali Logistic Platform (KLP) • MINAGRI: Agricultural development by irrigation, cultivation, greenhouses,

PHHS, wholesale, food processing, packaging AND Livestock production with poultry and fish farming incl. animal feed,

Maize milling & Soya processing Under construction • LOI with MINIRENA: concessions Natural Resources • LOI with MININFRA: Energy, Grid, Water supply, Infra • LOI with the Governor of the Eastern Province: over 20 projects • LOI NGALI Energy: Hydro energy & water management • LOI Minister of Finance, MINICOFIN 11 June, 2014 11

11 June, 2014 12

Project locations (blue=energy, red=housing, green=agriculture

TIMELINE initial investment = 3 years DESIGN + BUILD

Client organization

Contractor organization

CONCEPT HOUSES

Business case & planning Business

Planning & funding

Housing

Infra Road Water Waste Energy

Agro & Industry

Funding approval

Funding available

Q2 2014

Q1 2014

Q4 2013

Q4 2018 …………. Q3

2014 Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Delivery and buildup Industry

Procurement & Contracting

Production - Start Maintenance & Service

Engineering Housing

Construction and project Delivery Housing

Engineering Infra

Procurement & Contracting

Procurement & Contracting Construction and Project Delivery Infra

Start Maintenance & Service

Production - Maintenance & Service till transfer to city

Education & Training Q+Q

Content development E&T

Set up program facilities & sourcing Start education & train the trainer

Selection of involved parties

Establish Housing Maintenance Corp.

LIVING LAB

11 June, 2014 13

Timeline – start depends on funding 1. Business plan development completed (July 2014). Q&A in Q3 2014

2. Trading / Financing Q 3 or Q 4, 2014, depending A-level co-financer

3. Engineering phase - first half 2015

4. Ordering factories for construction industry - Q1 2015

5. Site preparation - 2nd half 2015

6. Start production factories construction industry - Q4 2015

7. Housing construction 2016 - 2018 in all neighborhoods at the same time, starting with affordable new housing

8. Completion 2018 9. Continuation of the investment of revenues in the program over 25 (+) years

11 June, 2014 14

How do we finance?

Erasmus Investment International (EII) works for a platform of international (country) Banks. An example of a program financed through this channel is Macedonia, € 1.5 B . http://www.foodhubmacedonia.com/erasmus-investment-macedonia-new-company-responsable-for-development-of-food-hub/) . For execution 52 companies are contracted. Starting now. Financial engineering: The final decission financing a program starts with a SWOT analysis Rwanda, feasible projects within the requirements, contracted EPC-m and suppliers, and a 15%-20% co-investor(s) for the total program. Find more information on the website www.erasmus-group.com EII need to keep assets on the balance sheet as value for the funding. There is no exit strategy (It is not a loan) and the total investment must be done within 3 years after funding. The Capex and the EII dividend stays in the country. Documentation: Co-investors Rwanda brochure. Erasmus I.I. Prospectus Macedonia.

“Rules of engagement” If GoR and the local private sector deliver feasible and do-able projects within the requirements of EII, sustainable and really strengthening the private sector, making a difference for the country, then EII will mediate with the financing platform in this long term investment. EII does not subscribe on tenders. -EII will be and stay a majority shareholder in all entities created under the investment program. Minimum shareholding position will 2/3 of total issued shares. Max. 1 / 3 is open for co-investors and local management. - EII will not pre-finance research, formulating business cases and investigations. That is up to the potential foreign co-investors, Rwandan private parties, and international suppliers.

- After a positive decision of the financing platform, based on a feasible program within the requirement plus an A-level co-investor¹) plus a contracted EPC, parties will get their pre- investment back as agreed in a MoU, or they will get shares for it with a good leverage

- EII invested money from the financing platform, the total CAPEX, stays in the country (no exit strategy before 25 years) and most of the EII dividend and all sold shares and assets will be re-invested in Rwanda. After 25 years GBHR sells all shares to existing shareholders or GoR.

¹) A-level will start the Trade with EII. B-level gets shares on GBHR Holding level. C-level get shares on business unit level under one of the Divisions of GBHR.

-The business case must be positive because without profit no company will grow,. Dividend is needed for co-investors at B- and C-level. EII dividend will cover costs and will finance the non-profit side program (infrastructure, housing, schools, education, healthcare) Positive means: Revenue – Opex – Depreciation – Tax = > +10% (no interest or pay-back)

“Rules of engagement” (2)

In Rwanda EII will work with a new legal entity: Green Business Hub Rwanda Holding (GBHR). Under this Holding we create 3 Divisions for the 3 clusters of activities. Per Division we will have many operational companies / Ltd’s

Options for the operational companies: Option 1: -GBHR might create a new legal local entity (Ltd.) per project or group of related activities

-local private parties and foreign investors can get or may buy max. 33% of the shares. They might receive a leverage of the value of their investment in the number of shares, up to a factor of 10, depending the moment they step in

(example: we invest $ 10 M in equity. Mgnt team/local company brings in $ 0.5 M. They might get 15% of the shares and grow to 25%)

-They can increase the number of shares by getting dividend (partly) in shares -(example: we give shares from the GBHR shares, up to max. 33%. Not new shares because the total number of shares does not change) -GBHR / Erasmus will take a position in the Board at Holding and Division level, not at all company levels, subsidiaries under the Division -GBHR will keep the majority of the shares to control the assets, monitor strategic decissions, secure that part of the profit will be re-invested again in the company.

-Co-investors may des-invest on agreed terms and EII will buy their shares

Principles of structure

Option 2: -GBHR Holding might acquire 67% - 100% shares of a local company. -The owner(s) / management team will cash and shall take the responsibility for the company at a salary and a bonus construction. -After aquiring the majority of the shares GBHR will invest heavily in that company -Depending the value of the company and may be additional co-investment GBHR will give more shares than the value which has been brought to the table.

Dividend Net profit is available for dividend (part of the EBT, shall go to the reserves of the company for growth) -The minority shareholders get their dividend at their choice in shares (if there are still shares available from GBHR, up to 33%) or in cash. The total number of shares will not change. They always keep the nominal value. -The remaining 67%, goes to GBHR, and GBHR will:

-pay dividend to the co-investors at that level -cover administration / overhead costs -finance the non-profit side program in Rwanda -Re-invest in other projects in Rwanda

Principles of structure (2)