1. © 2009 Crowe Horwath International Audit | Tax | Advisory THE EAST AFRICA BUDGETS: COMPARATIVE ANALYSIS OF 2015/2016 POST BUDGET REVIEW BREAKFAST MEETING SERENA HOTEL, 15 JUNE 2015 COUTTS OTOLO, CHIEF EXECUTIVE OFFICER Exceeding Expectations

2. © 2009 Crowe Horwath International  Overview of Parker Randall Eastern Africa  Introduction to EAC 2015/16 Budget  An Overview of the EAC Economic Environment  Priority Sectors Across the EAC Region  Measures in the Budgets to Facilitate and Sustain Regional Growth  Potential Business Opportunities  Contradictions / Issues Arising from the Budgets  Q&A Presentation layout

3. © 2009 Crowe Horwath International  A connected international firm that provides proactive solutions to business at local, regional and global level.  Global Provider of Assurance, Tax and Advisory Services.  Presence in over 43 countries,100 offices and 2000 Partners and professional staff.  Structured into 5 regions; Americas, Europe, Middle East, Africa, and Asia Pacific.  Parker Randall Eastern Africa is the Africa Leader.  Anchor Africa offices in Mauritius, Kenya, Rwanda, Egypt, Botswana, Sudan and Nigeria.  Parker Randall Eastern Africa serves the client needs across over 14 countries in the EA region:-  Established 2014  5 Partners across all the service lines  Partners, Directors and Managers with big 4 experience  32 employees and growing Parker Randall

4. © 2009 Crowe Horwath International  Examines four EAC Economies – Kenya, Tanzania, Uganda and Rwanda  Budget speech and financial period coordinated across the region  Average EAC projected economic growth is above the global estimate (6.5% against 3.5%)  The EAC budgets have allocations to enhance regional integration and promote intra trade  Opportunities and challenges for investments in the region  The table below indicates the overview of EAC economic performance. Introduction to EAC 2015/16 Budgets

5. © 2009 Crowe Horwath International IndicatorKenyaTanzaniaUgandaRwanda Population (Million)42.849.635.811.3 GDP (US $ bn)59.236.424.99.0 Projected econ growth (%)7.07.35.86.5 Inflation (%)6.94.55.52.6 Budget amount(US$ bn)21.010.57.72.6 Domestic revenue (US$ bn)13.26.53.61.5 Domestic financing (US$ bn)2.42.92.30.2 External financing (US$ bn)3.51.1*1.50.4 Appropriations in aid & grants (US$ bn) 1.9-0.30.5 An Overview of the EAC Economic Environment * This represents grants and loans from external sources.

6. © 2009 Crowe Horwath International KenyaTanzaniaUgandaRwanda Security – 13%Election and referendum Infrastructure – 18%Infrastructure & Energy – 16% Infrastructure (energy & ICT & transport) – 15% Rural development – 6.2% Energy – 15%Agricultural transformation – 7% Agricultural transformation – 4% Infrastructure & transportation – 15.1 Health – 11%Education and health – 38%* Tap latent talent – 2% Energy and minerals – 5.7% Security – 9% Priority Sectors Across the EAC Region * Include the other component of EDRS I – Macro Economic stability and Public Finance Support organs.

7. © 2009 Crowe Horwath International  Harmonization of import and export duties and VAT:  Reduction of IDF in Kenya from 2.25% to 2.0 %  Export duty rate on hides and skins to 80%  Zero rating of services in respect to goods in transit. Previously exempted  Increase of import duty across various products to encourage to local production(Semolina, toothpaste tubes, fishing nylons, sugar)  Investment in infrastructure to improve connectivity  Addressing insecurity concerns (tourism, businesses)  Provisions to enhance the capacity of Institutions mandated to fight corruption  Intention of developing a framework to facilitate leasing as an alternative financing mechanism for capital expenditure Measures in the Budgets to Facilitate and Sustain Regional Growth

8. © 2009 Crowe Horwath International  Implementation of Trade Net System (single window system) i.e. Kentrade in Kenya.  Establishing fully integrated one stop centre for investors across the region e.g. RDB in Rwanda  Improving public service delivery examples i.e. Huduma Centres.  Rehabilitation and improvements of airports – e.g. Entebbe, JKIA, Malindi and Kisumu.  Establishments of industrial parks  Tax incentives - on-job training for 10 graduates  Structural reforms in the financial sector  Core capital of Kenyan banks and Uganda Development Bank.  Core capital and risk based capital of insurance companies. Measures in the Budgets to Facilitate and Regional Sustain Growth (Cont’d)

9. © 2009 Crowe Horwath International  Pasta manufacturing  Agricultural sector – value addition, farm inputs, farming  Construction sector  293 schools in Uganda  Industrial parks  SGR  Industrial supply chain - 40% local content  Film industry – exempt WHT for crews and actors, VAT exempt on goods and services; proposed fund for rebating expenses by producers  ICT sector  Textile and leather industries  New investments in water facilities and small holder irrigation equipment – reap on tax incentives. Potential Business Opportunities Within EAC

10. © 2009 Crowe Horwath International  Requirement of gazettement manufacturers of specific products e.g. pasta manufacturers  Duty remissions of duties across some sectors/products  Establishing of a National Construction Company – unfair competition  Sin tax vis-à-vis illicit brews  Strengthening of Anti Laundering Act vis-à-vis planned measures to encourage repatriation of wealth held abroad  Cost burden of infrastructure spending i.e. Kenyan fuel levy  M-Akiba bond- enhance savings at the expense of discretionally spending Contradictions / Issues Arising from Budget

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