GOVERNMENT OF SIERRA LEONE MINISTRY OF AGRICULTURE AND FOOD SECURITY SMALLHOLDER COMMERCIALIZATION AND AGRIBUSINESS DEVELOPMENT PROJECT (SCADeP) IDA CREDIT 57670 IDA GRANT A6880 DfID TRUST FUND TF A07690 FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 - 'BDO Ministry of Agriculture and Forestry Smallholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TFA07690 Financial Statements For the year ended 31 December 2022 CONTENTS PAGE(S) General Information 1 Background Information of the Project 2-3 Report of the Project Management 4 Report of the Independent Auditors to the Readers 5-8 Consolidated Statement of Cash Receipts and Payments (IDA, DfID Trust Fund and GoSL Funding) 9 Statement of Comparison of Budget and Actual Amounts 10 Statement of Cash Receipts and Payments (IDA Funding) 11 Statement of Cash Receipts and Payments (GoSL Funding) 12 Notes to the Financial Statements 13 - 18 Ministry of Agriculture and Forestry Smallholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TF A07690 Financial Statements For the year ended 31 December 2022 GENERAL INFORMATION ADDRESS 1F Scan Drive Off Spur Road Freetown PROJECT COORDINATOR Mr Sutaiman Sorie Sesay BANKERS Standard Chartered Bank (SL) Limited Lightfoot Boston Street Freetown Sierra Leone Commercial Bank Limited Siaka Stevens Street Freetown AUDITORS BDO Regent House 12 Wilberforce Street Freetown DONOR The World Bank-International Development Bank (IDA) Ministry of Agriculture and Forestry Smallholder Commercialization and Agribusiness Development Project IDA 57670, 06860 and TF A07690 Financial Statements For the year ended 31 December 2022 BACKGROUND INFORMATION OF THE PROJECT The Government of Sierra Leone, through the Ministry of Agriculture and Food Security (MAFs) is implementing the SmaLkholder Commercialization and Agribusiness Development Project (SCADeP) with an estimated US$70 Million financing from the International Development Association (IDA) of the World Bank Group, and US$1.845 Million from DFID, UK. The overall day to day running of project coordination and management is anchored within the Project Coordination Unit. The project will be implemented over seven years period and comprising of five components. Project Development Objectives: The objective of the Project is to Promote Smaltholder Commercialization by fostering productive business linkages between smallholder farmers and selected agribusiness firms and other commodity off-takers. The project is supporting, production, processing and marketing of agricultural commodities along the value chains of rice, cocoa, oil palm, poultry, maize and onion. The Project has five components namely: Component A: Support for Agribusinesses to foster linkages with Farmers/SMEs Component B: Market Access Improvement Component C: Capacity Building Support to State and Non-State Institutions Component D: Project management and coordination Component E: Contingency Emergency Support Response Implementation Arrangements: The Project Implementation Manual (PIM) guides and standardizes the implementation arrangements for the Smal[holder Commercialization and Agribusiness Development Project. The Project Implementation manual serves four main overall objectives: 1. It describes the common principles, procedures, and organizational responsibilities that apply to the administration and management of the Project including coordination for implementing agencies and stakeholders. 2. It documents in detail the processes and procedures to be followed in the following key areas of project implementation: basic project, management, institutional responsibilities, financial procedures and management, procurement management procedures, fiduciary responsibilities, results monitoring and evaluation, risk assessment and monitoring, environmental and social safeguards, communications and reporting and any other specific requirements imposed by Government of Sierra Leone and the World Bank Policies. 3. It outlines performance criteria for project implementation and management. 4. It increases transparency, compliance and accountability. This document contains those arrangements and procedures, in form and substance satisfactory to the Association that shall be required for effective project implementation. 2 Ministry of Agriculture and Forestry Smallholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TF A07690 Financial Statements For the year ended 31 December 2022 BACKGROUND INFORMATION ON THE PROJECT (Contd) Project Cost: (Estimate the total cost of implementing the project, taking into account cost of material, compensation payment, etc. List all major items and their costs). Item No. Description In US$ million 1 A.1 Value chain financing under SLADF, including TA and capacity building of agribusinesses 10.8 2 A.2.1 Promotion of an e-Extension System 0.5 A.2.2 Support to increasing smallholder farmers' productivity 2.2 A.2.3 Capacity building of SMEs, Producer Organizations, agro-dealers and farmers 0.4 3 A.2.4 Agribusiness services matching grant 2.27 4 A.2.5 Goods, Works, consulting, Non-consulting Services, Operating Cost, 2 Technical Assistance and value chain development services Sub Total Component A 18.17 Goods, Works, consulting, Non-consulting Services, Training, Operating Cost for 5 Part B.2 ICT under Part B except B1(SLRA, Feeder Roads Policy review, Capacity 0.6 Building of Contractors etc.) Goods, Works, consulting, Non-consulting Services, Training, Operating Cost 6 under Part B 1(Rehabilitation and improving selected feeder roads and associated 40.04 c. infrastructures in selected districts) Sub Total Component 2 40.64 7 Goods, Works, consulting, Non-consulting Services, Training, Operating Cost under Parts C1, C2, C3 and C4 (MAF, MoTI, MWH, SLRA, MLGRD) 3.18 Goods, Works, consulting, Non-consulting Services, Training, Operating Cost under Parts, C5, C6, C7 (SLARI, SLeCAD, NAFFSL) 1.82 Sub Total Component 3 5 9 Goods, Works, consulting, Non-consulting Services, Training, Operating Cost, 5.82 d. Environmental and Social safeguards under Part D Sub Total Component 4 5.82 10 Goods, Works, consulting, Non-consulting Services, Training, Operating Cost under Part E Sub Total Component 5 1.5 Unallocated 0 Allocated PPF 0.71 Total Project Cost 71.84 3 Ministry of Agriculture and Forestry Smallholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TF A07690 Financial Statements For the year ended 31 December 2022 REPORT OF THE PROJECT MANAGEMENT The Project Management has the pleasure to report as follows: Statement of Responsibilities of the Project Management The Projects' Financing Agreement dated 4th August 2016 requires the Project Management to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the Project and of the resources and expenditure for the period. In preparing these financial statements, the Project Management is required to: * Select suitable accounting policies and then apply them consistently; * Make judgements and estimates that are reasonable and prudent; * State whether applicable accounting standard have been followed subject to any material departures disclosed and explained in the financial statements; and * Prepare and present financial statements, comprising the statement of cash receipts and payments, the statement of comprehensive income and the statement of budget versus actual for the year ended 31 December 2021 and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes in accordance with the International Public Sector Accounting Standards (IPSAS) under the cash basis of accounting. * Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the project will continue its activities. The Project Management is also responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Project, The Project Management is also responsible for safeguarding the assets of the Project and for taking reasonable steps for the prevention and detection of fraud and irregularities. Financial Statements The annexed financial statements disclose the financial activi 1 s of the project for the year ended 31st December 2022 and were approved by management on 2023 and signed on its behalf by: Name Signature Chairman - National Steering Committee Name ignature Permanent Secretary - MAF Name ignature Project Coordinator - SCADeP 4 Ministry of Agriculture and Forestry Smallholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TF AO7690 Financial Statements For the year ended 31 December 2022 REPORT OF THE INDEPENDENT AUDITORS TO THE READERS OF SMALLHOLDER COMMERCIALIZATION AND AGRIBUSINESS DEVELOPMENT PROJECT'S FINANCIAL STATEMENTS Opinion We have audited the financial statements of the Smallholder Commercialization and Agribusiness Development Project which comprise the consolidated statement of cash receipts and payments and statement of comparison of budget and actual amounts and notes to the financial statements including a summary of significant accounting policies and other explanatory notes. In our opinion, the accompanying financial statements present fairly, in all material respects, and are in accordance with the International Public Sector Accounting Standards (IPSAS) Under the Cash Basis of Accounting and in compliance with the financing agreement, the project's implementation manual and procurement requirements. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' Respons bilUties for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (ESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. We have determined that there are no such matters to report. Other Information Management is responsible for the other information. The other information compri ses Lh e information included i n the Annual Report, but does not include the financial statements and our auditors' report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form o f assurance conclusion thereon. I n connection with our audit o f the financial statements, our responsibility is5 t o read the other information and, i n doing so, consider whether the other information i s materially inconsistent with the financial statements or our knowledge obtained in the audit Or otherwise appears to be materially misstated. If, based on the work we have performed we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 5 BD0, aSierra Leor,e partsnership, isa member of U00 international Limited, a U1K company limited by guarantee, and fo,rms part of the international BDO network of independent member firm,es RD0 is the brand name for the BDO network and for each of the B00 tAemnber Firms IB D O Ministry of Agriculture and Forestry Smaltholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TFA07690 Financial Statements For the year ended 31 December 2022 REPORT OF THE INDEPENDENT AUDITORS TO THE READERS OF SMALLHOLDER COMMERCIALIZATION AND AGRIBUSINESS DEVELOPMENT PROJECT'S FINANCIAL STATEMENTS (Contd) Responsibilities of Management and those charged with Governance for the Financial Statements The project's management is responsible for the preparation and presentation of these financial statements on the basis of accounting policies for the purpose of determining the eligible expenditure and results for the year for use by the World Bank and the Government of Sierra Leone. This includes determining whether the accounting policies described in note 1 form an acceptable basis for preparing and maintaining internal controls relevant to the preparation and presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditors' Responsibilities for the Audit of the Financial Statements Our Objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. 6 BDO, a Sierra Leone partnership, is a member of BOO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms Ministry of Agriculture and Forestry Smallholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TF A07690 Financial Statements For the year ended 31 December 2022 REPORT OF THE INDEPENDENT AUDITORS TO THE READERS OF SMALLHOLDER COMMERCIALIZATION AND AGRIBUSINESS DEVELOPMENT PROJECT'S FINANCIAL STATEMENTS (Contd) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Project to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Project to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the Project audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 7 BDO, a Sierra Leone partnership, is a member of BDO international Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firns. BDO is the brand name for the BDO network and for each of the BDO Member Firms WW MMinistry of Agriculture and Forestry Smallholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TF AO7690 Financial Statements For the year ended 31 December 2022 REPORT OF THE INDEPENDENT AUDITORS TO THE READERS OF SMALLHOLDER COMMERCIALIZATION AND AGRIBUSINESS DEVELOPMENT PROJECT'S FINANCIAL STATEMENTS (Contd) Report on Other Legal and Regulatory Requirements There are no other Legal and regulatory requirements. The engagement partner on the audit resulting in this independent auditors' report is Brinsley Johnson. Freetown, Sierra Leone 2023 8 BDO, a Sierra Leone partnership, is a member of SDO International Limited, a UK company limited by guarantee, and forms part of the international RDO network of independent member firms. BDO is the brand name for the BDO network and for each of the SDO Member Firms Ministry of Agriculture and Forestry smaltholder Commercialization and Agribusiness De-lopment Project IDA 57670, D6880 and TFAO769o Financial Statements For the year ended 31 December 2022 CONSOLIDATED STATEMENT OF CASH RECEIPTS AND PAYMENTS (IDA, DflD Trust Fund and GoSL Funding) As at 31 December As at 31 December Cumulative from Notes 2022 2021 start of Project RECEIPTS:usu$US Contributions - Withdrawal Applications 2 8,298,674 6,765,417 43,752,469 DflD Trust fund Disbursements 1,2986745 GoSL counterpart contribution 1774,5 - 33,557 Other Receipts: :8-28674 7541 Sale of Bids - GoSL 152 8,240 29,242 Other Income 152 8240 921 TOTAL RECEIPTS: PAYMENTS: 8,298,826 6,773,657 45,655,842 1.1 Value Chain Financing Under SLADF 5 (1,138,551) (1,660,444) 8,394,888 1.2 Improved Support to farmers, e-extension 6 (291,707) (307,120) 2,380,920 1.3 Agribusiness Services Matching Grant 6 (291,707) (307,120) 2,380,0 1.4 Value Chain Services, TA to farmers, Agro Input Scheme a (280,660) (297,883) 1,249,164 2.5 Rehabilitation and improvement of Feeder Road (goods and consuttancies) 9 (7,499) (80,206) 707,421 2.6 Rehabilitation and improvement of Feeder Road (civil works) (4,735,180) (2,928,982) 13,157,396 3.7 Capacity Building to MAFFS, SLARI, SLRA, MWI, MOTI (190,763) (303,680) 1,657,396 3.8 Capacity Building to NaFFSL, SLECAD,MLGRD, Value Chain Services 12 (213,797) (182,403) 1,754,540 4.9 Project Management and Coordination, monitoring and evaluation and communication 1 10294 5334 ,8,2 5.11 Contingency Emergency Response Component (1,072,954) (523,324) 6,287,925 4.10 Project Preparatory Fund (PPF) 4 707,060 OTERPYMNT:(8,423 ,0002)A1 (6,37,97 4 0 , 9 3 8 , 2 1 4 OTHER PAYMENTS: ADVANCES: 4 (352,176) 89,703) 358,468 TOTAL PAYMENTS: (352 18) 6,547,794 4 1 ,2 9 6 ,868 Increase (Decrease) in cash during the year Exchange (Gain)/Loss (89) 2,322 Cash at the beginning of the year 2,322 4833,189 4,60743 3 Cash at the end of the year 3 4,356,838 4,833,189 4 ,3 5 6 ,8 3 8 These financial statements were approved on J" 2023 Chairman National Steering Committee - SCADeP Permanent Secretary - MAF Project Coordinator -SCADeP 9 Ministry of Agriculture and Forestry Smallholder Commercialization and Agribusiness Development Project IDA 57670, 06880 and TF A07690 Financial Statements For the year ended 31 December 2022 STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS Budget Actual Variance % Actual FINANCING US$ US$ US$ to budget Grant from IDA 5,843,073.39 8,298.674.00 (2,455,600.61) (42) GoSL contribution Total receipts 5,843,073.39 8,298,674.00 (2,455,600.61) (42) Payments: 1.1 Value chain financing under SLADF 1,567,730 1,138,551 429,179 73 1.2 Improved support to farmers e-extension 195,000 291,707 (96,707) 150 1.3 Agribusiness Services Matching Grant 583,000 491,891 91,109 84 1.4 Value Chain Services, TA to farmers, Agro Input Scheme 462,340 280,660 181,680 61 2.5 Rehabilitation and improvement of Feeder Road (goods and consultancies) 145,000 7,499 137,501 5 2.6 Rehabilitation and improvement of Feeder Road (civil works) 6,348,093 4,735,180 1,612,913 75 3.7 Capacity Building to MAFFS, SLARI, SLRA, MWI, MOTI 431,900 190,763 241,137 44 3.8 Capacity Building to NaFFSL, SLECAD, MLGRD, Value Chain Services 420,500 213,797 206,703 51 4.9 Project Management and coordination, monitoring and evaluation and communication 1,500,000 1,072,954 427,046 72 5.11 Contingency Emergency Response Component 1 1 4.10 Project Preparatory Fund (PPF) Total payments 11,653,563 8,423,002 3,230,561 72 Explanation of Variances IDA Income: IDA disbursement is reportad at 142% above budget, In 2022, the project used direct payment method for the payment of mobilization advances to contractor for the design and construction of rural bridges to replace manual cable ferry crossing points at Manowa in kailahun District and Gendema in the Kenema District. Expenditure; 1.1. Value Chain Financing Under the SLADF. Budget implementation rate was 73% budget for thin sub component. Low capacity of grantees to utiLize allocated grants can be a major reason. Grantees have issues with raising the needed resources to match the grants. 1.2 Actual expenditure on improved support to farmers and e-extension reported was 150% above budget. Activities that had been stalled were fast tracked so that the Interactive Voice Response System to provide a-extension to farmers can be launched and used in 2022 farming season. 2.5 Support to the Abricultural Market Information Systems/ICT: Upgrades to software and digital platforms established at MAFS were not implemented in 2022. The ICT unit had focused its time to ensuring planned extension advisory services through the use of Interractive Voice Response Systems which were launched and roLLed out to farmers. This activity was postponed to 2023, hence the low implementation rate of 5%. 2.6 Rehabilitation and improvement of Feeder Road (civil works), 75% of the budget for 2022 was satisfactorily accomplished. Variance reported can be attributed to delays in the implementation of Kambia and Port Loko Spot Improvement contract works, dure to emergent road works and no cost contract extensions on Kailahun, Bombati and Kono Spot Improvement contracts. 3.7 Under sub components 3.7 SCADeP Support to State and lon state Institutions implementation of the budget was at 44%. Major reasons for low budget implementation are delays is liquidation of advances, popularisation and roll out of the agribusiness strategy developed by the Ministry of Trade. Ministry of Trade put this activity on hold pending upgrade of other policies that may affect its implementation. 3.8 In the 2022 budget, a fuLL provision for the construction cost for completion of office building for SLECAD inctuding procurement of furniture and generator. Due to delays in completion of construction, procurement of furniture and generator were placed on hold. Support to Sierra Leone Agricultural Research Institute centres at Tekko and Kenema were slow, research on poultry not accomplished in 2022. 10 Ministry of Agriculture and Forestry Smaltholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TF A07690 Financial Statements For the year ended 31 December 2022 STATEMENT OF CASH RECEIPTS AND PAYMENTS (IDA FUNDING) IDA Credit 57670 IDA Grant D6880 Grand Total RECEIPTS: NotesUSU$U$ Contributions - Withdrawal Applications 2 4,884,942 3,413,732 8,298,674 Other Receipts: Sale of Bids Other Income (400) TOTAL RECEIPTS: 4 4,884,542 3,413,732 8,298,274 PAYMENTS: - 1.1 Value Chain Financing Under SLADF (1,137,316) (1,137,316) 1.2 Improved Support to farmers, e-extension (291,707) - (291,707) 1.3 Agribusiness Services Matching Grant (291,707) (291,707) 1.4 Value Chain Services, TA to farmers, Agro Input (491,891) - (491,891) Scheme 2.5 Rehabilitation and improvement of Feeder Road (280,660) - (280,660) (goods and consultancies) 2.6 Rehabilitation and improvement of Feeder Road (civil (7,499) (7,499) works) (1,680,527) (3,054,231) (4,734,758) 3.7 Capacity Building to MAFFS, SLARI, SLRA, MWPA, MOTI (190,763) (190,763) 3.8 Capacity Building to NaFFSL, SLECAD,MLGRD, Value Chain Services(237)(1,9) 4.9 Project Management and coordination, monitoring and (213,797) - (213,797) evaluation and communication 5.11 Contingency Emergency Response Component (25,45s) (1,046,436) (1,071,891) OTHR PYMNTS AVANES(4,319,615) (4,100,667) (8,420,282) OTHER PAYMENTS: ADVANCES (352,176) Total Payments(3216 (4,671,791) (4,100,667) (8,772,458) (Decrease)/increase in cash during the year 212,751 (686,935) (474,184) Exchange (gain)/loss Cash at the beginning of the year 3 1,472,250 3,358,246 4,830,496 Cash at the end of the year 1,685,001 2,671,311 4,356,312 Ministry of Agriculture and Forestry Smallholder Commercialization and Agribusiness Development Project IDA 57670, D6860 and TF A07690 Financial Statements For the year ended 31 December 2022 STATEMENT OF CASH RECEIPTS AND PAYMENTS (GoSL FUNDING) Cumulative from Notes 2022 2021 start of Project US$ US$ us$ RECEIPTS: GoSL counterpart contribution -33,557 - - 33,557 Other Receipts: Sale of Bids 552 4,840 10,198 552 4,840 10,198 TOTAL RECEIPTS: 552 4,840 43,755 PAYMENTS: 1.1 Value Chain Financing Under SLADF 1,234 - 2,647 1.3 Agribusiness Services Matching Grant - 142 643 2.5 Rehabilitation and improvement of Feeder Road (goods and consultancies) - 2,738 2,738 2.6 Rehabilitation and improvement of Feeder Road (civil works) 422 - 422 3.7 Capacity Building to MAFFS, SLARI, SLRA, MWI, MOTI - 7,661 3.8 Capacity Building to NaFFSL, SLECAD,MLGRD, Value Chain Services - - 375 4.9 Project Management and coordination, monitoring and evaluation and communication 1,063 318 26,421 Total payments 2,719 3,197 40,907 Increase/(decrease) in cash during the year (2,167) 1,643 2,848 Exchange loss - 89 2,322 Cash at the beginning of the year 3d 2,602 1,1:)9 Cash at the end of the year 3d 526 2,693 526 12 Ministry of Agriculture and Forestry Smaltholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TF A07690 Financial Statements For the year ended 31 December 2022 NOTES TO THE FINANCIAL STATEMENTS PRINCIPAL ACCOUNTING POLICIES The following accounting policies have been applied consistently in dealing with items which are considered material in relation to the Project's financial statements. 1.1 Basis of accounting The financial statements have been prepared in accordance with International Public Sector Accounting Standard ("IPSAS"): Financial Reporting under the Cash Basis of Accounting. The financial statements fully comply with Part 1 of the standard, which is mandatory, and includes certain Cash optional disclosures considered helpful to the readers of the financial statements. 1.2 Foreign Currency Transaction Functional and presentation currency The functional currency is the local currency in Sierra Leone in which the entity is domiciled, which is the Leone. The Project has, however adopted the United States Dollars (US$) as its presentation currency. Transactions in currencies other than the United States Dollars (US$) are therefore considered as foreign currency transactions. Transactions and balances Foreign currency transactions are translated into the presentation currency using the mid exchange rates prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions denominated in foreign currencies are reflected as adjustment in the summary of opening and closing bank balances. 1.3 Expenses Expenses are only recognized in the statement of cash receipts and payments when paid. 1,4 Advances Advances are payments made from the Project's bank accounts operated by the Project Implementation Unit (PIU) to implementing partners for use in making payments for the Project's expenditures, Once the implementing partner has provided the PIU with the necessary supporting documents to evidence the use of the advance, the related amount is reflected as project expenditure. 1.5 Accumulated Project Expenditure Accumulated Project Expenditure represents all expenditures supported by the appropriate supporting documents that relate to the achievemnnt of the Project's development objective and paid for using funds advanced to the Project's Designated Accounts or through Third Party Payments on behalf of the Project cummulative to the end of the reporting period. 1.6 Commitments Project commitments are payments to be made after the reporting period where the Project has entered into a contract for the provision of goods, works and services. Commitments; 2022 2021 Amount US $ Amount US $ SLADF grants to agribusiness, Fund Manager and SOLIDARIDARD TA 678,964 3,197,655 Consultancies for Extension Advisory Services to farmers 6,046 111,966 Agribusiness Services Matching Grants 503,538 113,680 Consultancies, works for AMIS/ICT Support to MAFS 564 1,716 Feeder Roads Rehabilitation work and related consultancies 760,646 2,409,660 Design and construction of rural bridges and related consultancies 12,829,530 945,637 Civil works and consultancies contracts to support state and non-state institutions under component C 29,183 75,597 Works, Consultancies under project coordination and management 2,83 455,597 Total Outstanding Commitments as at 31 December 14,856,315 6,915,054 13 Ministry of Agriculture and Forestry Smaltholder Commercialization and Agribusiness Development Project IDA 57670, 06880 and TFA07690 Financial Statements For the year ended 31 December 2022 NOTES TO THE FINANCIAL STATEMENTS (Contd) 2 DONOR FINANCING Donor finance received as deposits into the Project's designated account for the period were from the following sources 2022 2021 usS$ US$ IDA Credit 57670 4,884,942.00 2,247,650.00 IDA Grant D6880 431,947.00 4,517,767.00 DfID Trust Fund TF A07690 Total Donor Finance advanced to the Designated Account 5,316,889.00 6,765,417.00 Donor Finance received as payments from third parties on behalf of the Project for the period were from the following sources IDA Grant 57670 Direct payment IDA Grant D6880 Direct payments (Loss 1 Et 4 bridges) 2,981,785.00 Total Donor Finance received as payments to third parties 2,981,785.00 Total Donor Finance received: IDA Grant 57670 4,884,942.00 2,247,650.00 IDA Grant D6880 3,413,732.00 4,517,767.00 The balance of undrawn Donor Finance at the end of the period is as follows: IDA Grant 57670 4,179,030.00 9,063,972.00 IDA Grant D6880 22,068,501.00 25,482,233.00 26,247,531.00 34,546,205.00 14 Ministry of Agriculture and Food Security Smallholder Commercialization and Agribusiness Development Project IDA 57670, 06880 and TFA07690 Financial Statements For the year ended 31 December 2022 NOTES TO THE FINANCIAL STATEMENTS (Contd) 3 CASH AND BANK BALANCES 2022 2021 US$ US$ a Designated account held at Sierra Leone Commercial Bank Opening Balance 4,797,381.96 1,938,564.00 Cash received through donor financing 2,347,144.49 6,506,737.44 Other Income - 3,400.00 Interbank transfer - 318,741.34 Amount spent (3,272,187.48) (3,970,060.82) 3,872,338.97 4,797,381.96 b Designated account held at Standard Charted Bank Opening Bank balance 33,022.11 2,667,557.33 Transfer to cash in hand (20.78) - Cash received through donor financing 3,059,653.02 258,679.55 Amount spent (2,608,811.10) (2,893,214.77) 483,843.25 33,022.11 c Petty cash Balances as at 31 December 129.58 92.00 Sub total cash and bank (IDA Funding) 4,356,311.80 4,830,496.07 d GoSL account Opening baLance 2,693.11 1,139.33 Cash receuved from sale of bids 551.79 4,840.19 Amount spent (2,719.04) (3,197.41) Exchange adjustment - (89.00) 525.86 2,693.11 4,356,837.66 4,833,189.18 1s Alfinistr,fAgricr,r nd Fores,,l Snu.hode Co.nrcal.aio and Agr-ibusines D-delpet Ah jec IDA 57670, D6880 and TF A07690 NOTES TO THE FINANCIAL STATEMENTS (Contd) 4 ADVANCES 5LADF ASMG Total US$ USS USS a Advances to Sub Project Grantees Opening grants disbursed but not expensed - - Add: New grants disbursed 274,524.97 377,352.36 651,877.33 Less: Grants expensed/liquidated in 2022 (63,849.52) (239,612.60) (303,462.12) Closing grant advances disbursed but not expensed 210,675.45 137,739.76 348,415.21 b Advances to implementing Partners Amount US$ Opening balance as at 1' January 2022 6,292.00 Add: New advances during Z022 74,578.60 Less: Advances liquidated (70,817.25) Advances not yet liquidated by Implementing Partners Grand total advances to sub grantees and Implementing Partners 358,468.56 Advances on sub grants, in note 4a above, includes only grants paid using advance method; grants paid by reimbursement method are expensed on the date of payment. 5 VALUE CHAIN FINANCING UNDER SLADF As at As at 31 December 2022 31 December 2021 US$ us$ Matching Grants to SLADF Grantees 425,312 970,025 Consultancy fees to Fund Manager - KPMG Ghana 136,432 494,417 Outgrower Partnership - SOLIDARIDAD West Africa 549,525 141,129 Admin fees (meetings, bank charge Et withholding tax) 27,282 54,873 1,138,551 1,660,443 6 IMPROVED SUPPORT TO SMALLHOLDER FARMERS A2.1 Project Piloting A2.2 Farmer Productivity - 5,578 A2.3 E-Extension Support 149,949 202,934 A2.4 SME Capacity Building 141,758 98,658 291,707 307,170 16 Ministry of Agriculture and Forestry Smaltholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TF A07690 Financial Statements For the year ended 31 December 2022 NOTES TO THE FINANCIAL STATEMENTS (Contd) 7 AGRIBUSINESS SERVICES MATCHING GRANTS As at As at 31 December 2022 31 December 2021 USS US$ Matching grants to FBOs/SME/Pos 420,138 231,984 Training, monitoring and other cost 71,753 77,185 491,891 309,169 8 IMPROVED ACCESS TO FINANCE 280,660 297,445 A4.1 Value Chain Services 438 A4.2 Agro Input Marketing Systems A4.3 Technical Assistance 280,660 297,883 9 MARKET ACCESS IMPROVEMENT ICT/AMIS Support to MAFS 7,499 80,206 7,499 80,206 10 REHABILITATION OF FEEDER ROADS AND ASSOCIATED STRUCTURES Works - Road rehabitiation 1,147,700 1,298,341 Works - Construction of rural bridges to replace cable ferries 3,053,766 - Consultancies 253,869 1,149,080 Training 140,691 - Goods and operating cost 139,154 481,561 4,735,180 2,928,982 11 CAPACITY BUILDING SUPPORT TO STATE AND NON-STATE INSTITUTIONS CATEGORY 7 C1. 1 Ministry of Agriculture 104,628 123,927 C1.2 Ministry of Trade 8t Ind 63,722 130,886 C1.3 Min of Works, Housing 4,338 14,601 C1.4 Ministry of Local Govt 18,075 34,265 190,763 303,679 12 CAPACITY BUILDING SUPPORT TO STATE AND NON-STATE INSTITUTIONS UNDER COMPONENT C C2.1 National Federation of Farmers in Sierra Leone (NAFFSL) 51,425 49,475 C. 3 Sierra Lone Agricultural Reaserch Institute (SLARI) Teko and Kenema Centres 91,168 66,617 C4.1 Sierra Leone Chamber of Agribusiness Development (SLeCAD) 71,204 66,311 213,797 182,403 17 Ministry of Agriculture and Forestry Smallholder Commercialization and Agribusiness Development Project IDA 57670, D6880 and TFA07690 Financial Statements For the year ended 31 December 2022 NOTES TO THE FINANCIAL STATEMENTS (Contd) 13 PROJECT MANAGEMENT AND COORDINATION As at As at 31 December 2022 31 December 2021 us$ US$ Operating Cost, equipments, monitoring and evaluation, communication and environmental and social safeguards 1,072,813 523,324 14 CONTINGENCY EMERGENCY RESPONSE COMPONENT Land Preparation Services 421 Fertilizer/herbicides Rehabilitation of irrigation canals- Kobia and mange 15,464 Post Harvest Equipment - rice reapers/mini harvester 9,222 Others (Extension Services/Monitoring) 19179 44,286 15 FUND BALANCE IN CASH BOOKS AS AT END OF YEAR Standard Chartered Bank US Dollar Designated Account #8700102005701 (DA- A) 483,843 33,022 Sierra Leone Commercial Bank US Dollar Designated Account (DA - B) # 003001014429030145 3,872,339 4,797,382 Gosl Counterpart Funding Account 526 2,693 Cash in hand 130 92 Grand total 4,356,838 4,833,189 18