Invoice Financing for Medical Distributors in Kenya (SHIFT/ Trefi ) January 2019

1. Invoice Financing for Medical Distributors in Kenya (SHIFT/Trefi) January 2019

2. Contents 1. Transaction Overview 2. Transaction Structure 3. Benefits to the Medical Distributors + + + + 4. Next Steps/Materials Required 5. Further Information

3. I. Transaction Overview • Access to finance is a pressing need for small and medium enterprises (SMEs) in Kenya because availability of bank financing is severely limited. • For many SMEs, the only financing available are the payment terms given by their suppliers/distributors; those terms are vital for retail businesses, which need them to stock their shelves. • Total Impact Capital and the World Bank have developed a program that allows distributors to sell their receivables and raise cash to fund growth and, for example, extend credit to their buyers – pharmacies, clinics etc. • The SHIFT program is supported by ‘TREFI’, a tried and tested digital platform which is built for the convenience of SME’s wishing to raise working capital, and for financiers wishing to purchase receivables.

4. II. Structure • Trefi will purchase invoices/account receivables from a distributor. • Trefi purchases the distributor’s entire receivables portfolio for 100% of the value of these invoices • Trefi pays the distributor a purchase price in cash which consists of 2 parts: • One part paid immediately – the initial purchase price. • One part paid on successful collection of the invoices – the delayed purchase price. • The purchase price depends on the quality of the receivables portfolio as a whole and as determined by Trefi. • The credit worthiness of the distributor and of each of its clients is the key driver of the purchase price. • After buying the entire portfolio, Trefi continues to buy each subsequent invoice issued by the distributor, continuously generating working capital • As invoices are collected, Trefi deducts financing and operating costs, and credits the excess funds to the distributor (the delayed purchase price).

5. II. Structure - schematic Invoice Financing Scheme – cash flows (3a) Receivables Medical Suppliers TRFI Limited Financiers (2) Financing (3b) Initial Purchase Price (5c) Delayed Purchase Price (5a) Interest and Principal (1) Goods (5b) Operating Cost (4) Payment on invoices Trefi Platform Service Providers Pharmacies/ Other Buyers

6. II. Structure (cont’d) • The collection process is managed by the distributor • If the distributor is unsuccessful in collecting payment on any given invoice, at a date previously agreed with the distributor, the distributor can turn over collections to Trefi. • Each distributor has its own collection account with Trefi, which is where the payments on its invoices (purchased by Trefi) are collected. • Trefi then divides the funds collected between the financier, the platform service providers and the distributor. • Trefi purchases each newly issued invoice, generates new working capital continuously, and becomes an important partner to the growth of the distributor (and, indirectly, the distributor’s clients).

7. II. Structure (cont’d) • The cost of the program to the distributor is made up of (a) the “financing costs” of the Initial Purchase Price; and (b) a portion of the “operating costs” of the platform. • Based on our current model we are projecting an all-in cost of working capital of approximately 12.00% to 15.50% per annum, depending on the quality of the invoices purchased, of the amount of the portfolio’s Initial Purchase Price. These cost may be recharged by the distributor to its customers, for example, when the distributor grants extended credit terms to these customers. • The operating costs of Trefi are the expenses incurred in maintaining its corporate presence (rather than merely a digital presence) in Kenya, cost of audit, credit rating, third-party services such as collection services, insurance services, security agency, calculation agency, bank account and payment services, and other services, which are reviewed annually on quality and cost effectiveness.

8. III. Benefits to the Distributors • The program provides an alternative source of working capital financing and a real change in dependence on bank borrowing. This is off balance sheet and not the distributor’s liability. • Our proposal is to deliver working capital finance to the distributor: • With equal or lower all-in (finance and operating) cost than their current bank borrowing costs. • Without (hidden) fees, i.e. no up-front or facility fees, administration fees, commitment fees, amendment fees, ect., etc.; neither one-off, nor annual; • Without need for any supporting pledges of assets, debentures or personal guarantees from the distributors’ shareholders. • The program releases the distributor from existing collateral pledges of all assets and personal guarantees. These assets/guarantees can be re-deployed, for example, to support investment and fuel growth. • Availability of bank financing has been constrained due to the rate caps in the market. Availability of finance through Trefi is constrained by the size and quality of the portfolio of receivables. • With more working capital, distributors have more room to give existing customers longer payment terms, win new customers with an offer of payment terms, and more effectively expand their business.

9. IV. Next Steps/Information Required • In order for a distributor to successfully apply for working capital financing under the program, we require (i.a.) the following information from you: • Company constitutional documents (Mem&Arts, By-Laws, Powers of Attorney granted to directors and/or other authorized individuals) • Two years of financial information – audited balance sheet, profit & loss account, cash flow • A 2-year (or more) history of the accounts receivable portfolio showing the details of each invoice issued, notably the date the invoice was issued, the invoice amount, full details of the debtor, the date the invoices was paid, the account to which the invoice was paid, the amounts of tax on each invoice, • Full details on the company’s standard terms and conditions of sale, • The name of the accounting software the company uses (Trefi has interfaces to facilitate automated uploading of the invoice information, on a daily basis) • Any automated services the company currently uses for making payments, for collection of debtor payments

10. V. Further Information TIMING • We anticipate to be offering working capital to distributors in the second quarter of 2019. DOCUMENTATION, PLATFORM SERVICES AND PRICING • We will provide you with standard Trefi documents for membership of the platform and for requesting the services you wish to use: credit information, invoicing, debtor tracking, collection, credit insurance and/or working capital finance. • Pricing of each service is standard on the platform, making it a level playing field for all members, with exception of insurance and finance, which both largely depend on the credit risk present in your receivables portfolio SUPPORT • We will provide training on the use of the platform, so that you may use its various tools to their maximum effect • We will provide helpdesk functionality to assist you day-to-day • We will provide software upgrades and improvmens regularly at no charge.

11. V. Further Information (cont’d) Contact Information: CTC Consulting BV Irene Gathikia Filip Deelen, Director Daniel J. Dumanwww.trefi.com Senior Advisor Skype : filipdeelen dduman@totalimpactcapital.com

12. Appendix 1 : Key Parties in Transaction

13. Appendix 2 : Confidentiality & Disclaimer Confidential The information contained herein is confidential and provided to you under the NDA you have signed with the Capital Tool Company Consulting B.V. Under no circumstance should this material be used for any other purpose, nor shall the information be read, copied, disclosed or used by any person(s) other than for whom it was intended. After the intended use of the information, the information must be returned to Capital Tool Company. Patents protect some of the methodologies described herein. Disclaimer This confidential information contains forward-looking statements. Specifically, all statements other than statements of historical facts included in this confidential memorandum regarding the program’s business strategy, plans, objectives and/or product offerings to third parties are forward-looking statements (hereinafter “Forward-Looking Statements”). These Forward-Looking Statements are based on the beliefs of the management of the Capital Tool Company (the “Company”), as well as assumptions made by, and information currently available to, the Company’s management. When used in this memorandum, the words ‘anticipate’, ‘believe’, ‘estimate’, ‘expect’, ‘project’ and ‘intend’ and words or phrases of similar import, as they relate to the Company, or Company’s management, or its product offering on or via the Trefi Platform, are intended to identity Forward-Looking Statements. Such Forward-Looking Statements reflect the current view of the Company with respect to future events and are subject to certain risks and uncertainties. Although the Company believes that the expectations reflected in such Forward-Looking Statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Based upon changing conditions, should any one or more of these or other risks or uncertainties materialise, or should any underlying assumptions prove incorrect, actual results, product offerings and/or services provided on or via the Trefi Platform may vary materially from those described herein as anticipated, believed, estimated, expected, projected or intended. The Company does not intend to update these Forward-Looking Statements. All subsequent written or oral Forward-Looking Statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by these applicable cautionary statements.