AUDIT REPORT ON THE ANNUAL FINANCIAL STATEMENTS OF PRIVATE SECTOR COMPETITIVENSS AND ECONOMIC DIVERSTIFICATION PROJECT - PHASE II IDA PROJECT NO: P144933 CREDIT NO. IDA 53090 MINISTRY OF TRADE AND INDUSTRY FOR THE YEAR ENDED 31 MARCH 2020 AUDITOR GENERAL P.O. BOX 502 MASERU 100 LESOTHO MINISTRY OF TRADE AND INDUSTRY PRIVATE SECTOR COMPETITIVENESS AND ECONOMIC DIVERSIFICATION PROJECT - PHASE II I FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31ST MARCH 2020. INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT: P144933 CREDITNO. IDA 53090-LSO AND GOVERNMENT OF LESOTHO INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) CREDIT NO. 53090-LSO AND GOVERNMENT OF LESOTHO FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED MARCH 31s" 2020 TABLE OF CONTENTS A uditor's R eport .................................................................................... 1-4 Consolidated Source and Uses of Funds Components ($) ................................... 5 Consolidated Source and Uses of Funds Components (M) .................................. 6 Consolidated Source and Uses of Funds Categories ($) .................................... 7 Consolidated Source and Uses of Funds Categories (M) .................................. 8 IDA Only Components ($ and M ) ............................................................... 9 IDA Only Categories ($ and M ) ................................................................. 10 GOL Only Components (S and M ) .............................................................. GO L O nly Categories ($ and M ) ................................................................. 12 Schedule of W ithdrawal Applications ............................................................ 13 Notes to the Financial Statements .................................................................14-15 APPROVAL OF THE FINANCIAL STATEMENTS The attached financial statements set out on page 5 to 15 were approved by the management of the Project on and signed on its behalf by: PRINCIPAL SECRETARY I JECT MANAGER MINISTRY OF TRAIHLA&D.D IATRY PRIVATE SECTOR COMPETITIVENESS PROJECT REPORT OF THE AUDITOR-GENERAL ON THE FINANCIAL STATEMENTS OF PRIVATE SECTOR COMPETITIVENSS AND ECONOMIC DIVERSTIFICATION PROJECT - PHASE II INTERNATIONAL DEVELOPMENT ASSOCIATION PROJECT NO: P144933 CREDIT NO. IDA 53090-LSO MINISTRY OF TRADE AND INDUSTRY FOR THE YEAR ENDED 31 MARCH 2020 Opinion I have audited the financial statements of Private Sector Competitiveness and Diversification Project (the Project) set out on pages 5 to 15, which comprise statement of sources and uses of funds as at 31 March 2020, comparison of budget and actual performance for the year then ended including a summary of significant accounting policies and other explanatory notes. In my opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Project as at 31 March 2020, and its financial performance and its cash flows for the year then ended in accordance with International Public Sector Accounting Standards (IPSAs). Basis for Opinion I conducted my audit in accordance with International Standards on Auditing (ISAs). My responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Project in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to my audit of the financial statements in Lesotho, and I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. 1 Key Audit Matters Key audit matters are those matters that, in my professional judgement, were of most significance in my audit of the financial statements of the current period. There were no key audit matters. Responsibilities of the Management and Those Charged with Governance for the Financial Statements The directors are responsible for the preparation and fair presentation of the financial statements in accordance with IPSAs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the management is responsible for assessing the Project's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Project or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditor's Responsibilities for the Audit of the Financial Statements My 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 audit report that includes my 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, I exercise professional judgment and maintain professional skepticism throughout the audit. I 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 2 basis for my 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 control 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. * 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 I conclude that a material uncertainty exists, I am required to draw attention in my audit report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my audit 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. I 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 I identify during my audit. I also provide those charged with governance with a statement that I 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 my independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, I determine those matters that were of most significance 3 in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my audit report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. MONICA BESETSA (MS) ACTING AU4 Private Sector Competitiveness and Economic Diversification Project - Lesotho CONSOLIDATED SOURCES AND USES OF FUNDS BY COMPONENTS AND SUB-COMPONENTS IN US DOLLARS FOR THE YEAR ENDED 31st MARCH 2020 Designation 201812019 201912020 Cumulative Opening Cash Balances PPA IDA Special Account Phase I IDA Malot Account Phase I Petty Cash GOL Current a/c Sub total PPA IDA Special Account Phase I IDA Maloi Account Phase I GOL Counterpart Funds refunded to Consolidated Fund Sub total IDA Designated Account Phase II 19,05052 16.8 84 15.84464 IDA Maloti Account Phase II 25,31468 5484527 584527 Petty Cash 18.17 1174a8 11748 GOL Current alc 1.1402 2n.0812 208102 GOL Counterpart Funds refunded to Consolidated Fund Sub - total 4,197,37 100.6s.41 100."s.41 Add Sources of Funds IDA Credit 1,016e225 57 605.662 69 10.066,956.39 Direct Payments from IDA 418,97189 1.609.800 05 GOL Funds 124.201m 630.48823 Sale of fruits /other revenue 5.324 8 -4,126e7 4,37546 GOL Refund from EDSP . 12,71822 GOL Refund lo IDA 2,58314 Refund Imm Adutinal Financing 46,562 49 46,56249 IDA Refund rom EDSP 29,468.27 29,48827 PPA - IDA Credit 900.OD O PPA Refund .271 67421 1,148,752.26 1,096,558.67 13,030,86.06 Total Financing 1.194,949.65 1,197,447.08 13,131,786.47 Less Uses of Funds by Component improving Business Environment Business Regulation Industry Licencing & 0 553310.12 2.U.q280 2 Construction Permit Reform Improving Access to Finance 83,22600 5493987 I )5`.00366 Unallocated activities 9,491 77 Sub total 188,694.91 608,249.66 3,386,778 75 Support Economic Diversification Skills Development Garment Industry 134 68 Support Investment Promotion 39.648 32 5,e6084 1 0402598 Support Tourism Sector 138.5G 24 8191741 1,384,65 es Expand Commercial Horticulture 476.008 39 34174888 3.628 327 Lesotho Enterprise Assistance Programme 94 16264 28,243 29 740.52233 Sub total 748.323,89 437,77040 6.636.221 90 Project Implementation Support Project Implementation Support 126 891 47 27ss9959 2 W 260 42 Sub total 12s,691.47 27,699.5% 2,886,260.42 Total Expenditures 1,063,709.97 1,073.919.98 13.110,258.07 Foreign Exchage Difference 30,35127 113 351 4> 11 25 Closing Cash Balances PPA Account IDA Designated Account Phase II 18,544 64 3.07658 76 5So IDA Malot Account Phase II 54,14527 6,51788i 517 Petty Cash 11748 183 183 GOL Current A/C 29.08102 57956 579s5 Total Closing Cash Balances oo,s..41 10,17s.61 10,17561 GRAND TOTAL 1,194,949.66 1,197,447.08 13,131,786.47 Page 5 Private Sector Competitiveness and Economic DiversIfIcation Project it - Lesotho CONSOLIDATED SOURCES AND USES OF FUNDS BY COMPONENTS AND SUB-COMPONENTS IN MALOTI FOR THE YEAR ENDED 31st MARCH 2020 Designation 201812019 201912020 Cumulative M M M M M M Opening Cash Balances PPA IDA Special Account Phase I IDA Malotl Account Phase I Petty Cash GOL Current a1c Sub - total PPA IDA Special Account Phase I IDA Malath Account Phase I GOL Counterpart Funds refunded to Consolidated Fund Sub - total IDA Designated Account Phase II 225009 50 245.655 49 245.65549 IDA Maloli Account Phase II 298 99 48 799.841.48 799.a4i 48 Petty Cash 214.01 171329 171329 GOL Current a/c 21,425 74 42410591 424.10591 GOL Counterpart Funds refunded to Consolidated Fund Sub - total ss,e4.31 1,471 31617 1,471,a16.17 Add Sources of Funds IDA Credit Phase l1 :3.884 14785 M.773 214 85 133 318 958.19 Direct Payments from IDA 6,01449468 22 511.585 44 GOL Funds 760 74338 7.807.523 72 Sale of fruits/other income 75.26690 .0551 sa o5.450s0 GOL Refund fom EDSP 185,714 5 GOL Refund to IDA 33.406.50 Refund from Additional Financing 602.39376 602.393.76 IDA Refund from EDSP 417.48792 417.487 92 PPA - IDA Credit 0.288.900 00 PPA Refund -2.751,33 se Sub - total 15,74o,15.13 15,747.039.11 171.448,9a5.82 Total Financing 16,285,604.44 17.218,355.28 172,919,372.99 Less Uses of Funds by Component Improving Business Environment Business Regulation Industry Licencing & 1,452.936 80 7,954.831 08 27.633 $W-.37 Constr Permit Reform improving Access to Finance i i4o.88ea 8o 1404 84 18 004. 7 73 Unatlocated activities 92 "? 28 Sub - total 2.593.824.36 8,774,235.92 45.730,80438 Support Economic Diversification Skills Development Garment Industry 2s900 Support Investment Promotion 512,13218 BS 192 48 14 133.636 59 Support Tourism Sector 1,964.$3343 923630 91 17,342.449.58 Expand Commercial Horticulture 6L46e,79688 4 976 est43 49,58.78131 Lesotho Enterprise Assistance Programme 1,310 528.1s 410.62850 9,926.990 62 Sub-total 1o,253sso44 ,397,139.32 90.75,554.10 Project implementation Support Project Implementation Support 1.69247145 48517018 34.987 if,92 Sub - total 1.62,471.45 485,170.8 34,887.179.92 Total Expenditures 14.540,286.25 15,656,545.82 171,693,638.40 Foreign Exchage Difference 27420202 1.378.489 77 042414 T Closing Cash Balances PPA Account IDA Designated Account Phase II 245.65549 5542807 55 4S 07 IDA Maloti Account Phase II 789.9414 4 117,41951 1174055s Petty Cash 1 71329 3300 J00 GOL Current at 42410191 1044 07 104L1 07 Total Closing Cash Balances 1.471.316.17 la3,319.6 163,319.6 GRAND TOTAL 16,285,604.44 17,218,355.28 172,919,372.99 Page 6 Private Sector Competitiveness and Economic Diversification Project II CONSOLIDATED SOURCES AND USES OF FUNDS BY CATEGORIES IN US DOLLARS FOR THE YEAR ENDED 31ST MARCH 2020 Designation 201812019 201912020 Cumulative Opening Cash Balances -PA I A Special Account Phase I IDA Maloti Account Phase I Petty Casm $OL Current Account IDA Special Account Phase I IDA Maloti Account Phase I PPA GOL Funds Refunded to Consolidated Fund Sub total :,A :esignated Account Phase II 19,050 52 16.44 64 16844 64 'CA Maloi Account Phase II 2531468 54rB45.27 54,84527 Petty Cash 18.17 11748 11748 GOL Current Account 1 81402 29.081 02 29.061 02 GOL Funds Refunded to Consolidated rund Sub total 46,197.37 100,368.41 100,58.41 Add Sources of Funds IDA Credit 1 ,19,225 57 605.66269 10,056,956 39 Direct Payments from IDA 418.971 69 1,609.600 05 GOL Funds 124201 85 630,48823 Sale of fruits/other income 5324 8 -4,12667 437548 GOL Refund from EDSP 12.71022 CL Refund to IDA 2.583 14 Refund from Al' 46,56249 46.56249 Refund from EDSP 29.408 27 29.48827 PPA 900.000 00 PPA Refund *271 674 21 Sub total 1,148,752.28 1,096,158.67 13,030,898.06 Total Financing 1,194,949,65 1,197,447.08 13,131,786.47 Less Uses of Funds by Category Goods 11,01750 45779190 170275713 Works 20.667.09 29.909 17 70.49253 Non Consulbng SerAces - 356 69 Consultng Services 414,14975 219.34823 6.56705824 Training & Workshops 188.BB4 72 63.23801 1 780 965 27 Operating Costs 337,04997 256.246.12 2.629.026 43 Matching Grants 91,94094 27 38655 359.591 sB Sub total 1,063,709.97 1,073,919.98 13,110,268.07 Total Expenditures 1,063,709.97 1,073,919.98 13,110,258.07 Foreign Exchange Diterence 30,351 27 113351 4t i1 52 Closing Cash Balances PPA Account IDA Special Account Phase II 16,844 64 307656 3 076 56 IDA Maloh Account Phase II 54,84527 6 517 68 6517.66 GOL Current a 29.081 02 57956 579.56 Pelly Cash 11748 183 1.83 Total Closing Cash Balances 100,08841 10,176.61 10,176.81 GRAND TOTAL 1,194,949.65 1,197,447.08 13,131,786.47 Page 7 Private Sector Competitiveness and Economic Diversification Project II CONSOLIDATED SOURCES AND USES OF FUNDS BY CATEGORIES IN MALOTI FOR THE YEAR ENDED 31ST MARCH 2020 Designation 201812019 201912020 Cumulative M M M M M M Opening Cash Balances PPA DA Special Account Phase I IDA Makito Account Phase I Patty Cash GOL Current Account Sub total PPA IDA Special Account Phase I IDA Maloti Account Phase I GOL Funds Refunded to Consolidated Fund Sub total IDA Designated Account Phase i 225 009 50 245 655 49 245.65549 IDA Malati Account Phase II 298,99646 799.841 48 799.841 48 Petty Cash 21461 171329 171329 GOL Current Account 21.425 74 424 10591 424,10591 GOL Funds Refunded to Consolidated Fund Sub total 545,64631 1,471,316.17 1,471,316.17 Add Sources of Funds IDA Credit 13,884.147 85 8 773.214.65 133.316,958 19 Direct Payments from IDA 6.014 49468 22,511,565.44 GOL Funds 1,700.743 38 7,807,523 72 Sale of fruitstother income 75,266 90 -60.551 90 $5.450.60 GOL. Refund from EDSP 165,714.55 Gol. Refund to IDA 33405 50 IDA Reimbursement from Addilioarl Financi 6 802 393 76 802.393 76 IDA Reimbursement from EDSP 417 407 92 417.487 92 PPA 9.268,90 00 PPA Refund (2.751.353 85) Sub total 15,740,15013 15,747,039.11 171,448,056.82 Total Financing 16,285,804.44 17,218,356.28 172,919,372.99 Less Uses of Funds by Category Goods 154,43430 658365438 24.081,927 58 Works 291 58244 439 842 54 990,931 98 Non Consulting Services 3.921 60 Consulting Services 5 572.09834 3.266t612 80 84,689,531 80 Training & Workshops 2634 15374 1.220,835 42 23.020.173 46 Operating Costs 4L609.857 20 3 74840323 34 222.281 95 Matching Grants 1,278 16223 398,137.45 4,684,890 03 14,S40,286.25 15.656,545.82 171,693,638.40 Total Expenditures 14,540,286.25 15,656,545.82 171,693,638.40 Foreign Exchange Difference 274.20202 1 378 48977 1 042 414 90 Closing Cash Balances PPA Account IDA Designated Account Phase 245,65549 55,42607 55.42607 IDA Maloti Account Phase II 799,64148 11741955 117,419 55 Pety Cash 171329 3300 3300 GOL Current Account 424 10591 10 41.07 10,44107 Total Closing Cash Balances 1,471,316.17 183,319.69 163,319.69 GRAND TOTAL 16,285,804.44 17t218,355.28 172,919,372.99 Page 8 Private Sector Competitiveness and Economic Diversification Project II - Lesotho SOURCES AND USES OF FUNDS BY COMPONENTS FOR IDA ONLY IN US DOLLARS AND MALOTI FOR THE YEAR ENDED 31ST MARCH, 2020 201812019 201912020 Designation M M M M Opening Cash Balances PPA Accpad IDA Special Account Phase I IDA Malab Acout Phase I Petry Cash sub total PPA Accoun IDA Special Accot Phase I IDA MalobAcount Phase I sub tetal IDA Designated AccuntPh"ae I 19050 S2 225009.50 18.8444 248655 4 IDA MalokAccount Phase II 2531468 298 996 4 S4.84527 799.841.48 Perly Cash 18 17 214.61 11745 1 713.29 4438338 S24201.57 71.807.39 1A47.21021 Add Sces of Frents IDA Credrt Phase II 1.019225.57 13.884,147.85 60s5.628G 8.773.214.5 Drect Payments from IDA 410.97189 6 014.4s S Sale of haustte kcome 5324 B8 75216 9D .4.126M7 .8055190 Refuad Irom Adtroinal FitancinD 46.56249 602.39376 Refrd Irom Economic Ovrweicatmi Suport 29.408027 417.47 92 GOL Refund to IDA Sublotal 1.024.50,43 13.99,414.76 1,A,-07 tg,747,032.11 Total Financing 1,068,933.78 14,443A8332 1,188.388 0s 189.74.24937 Lew Useso Funds tby Component Imnproing BuaIness Emirenet Srmess Reg. Industry Licercinfg & Costr Perrmi Reorm 105.468 St 1.452.93980 55331012 7.954.831 08 Improving Accese to Fnance 03.22000 1 140.08756 54.93907 819.40484 Sub lotal 188.684.91 2.693,824.38 608"0J891 8,774,235.12 Support Economic Diversffcalian Support Investment Promonit & Inc LUnkages 39.64832 51213218 588084 86.19240 SWiportTournm Secto 133 107 78 1,887351.24 i1,917.41 923.630 91 Eapard Commercial Horaletwe 475.00039 6 464.79668 341 7485 4,976.687 43 Lesoft Enterpnse Assistance Pograrmae 2.2860 32.74722 Sub total £51423.88 8,95,027.32 489.12711 5,as,10.l2 Prod ImtplementailSupport Project Implementation Support 124.46430 1 U59.379 36 27.08965 412.134 24 Sub total 124,444.30 1.89793 274.8Al 4a2,134.24 Tetal Expenditurn 5,118230 13,182.21.04 1,45.473.79 15,242,880.1 Faeign E chage DMffetece 30944.09 254,19402 113.268 1,378,77 Closing Cash B4lances% IDA Designaled Accot Phase II 16.84464 245.5549 3.074.5 55 426 07 IDAMaloUAcAout Phase 1 54.84527 799841 48 6.51760 117.419 55 PeM Cash 11748 171329 IB3 3300 Tetal Closng Cash Bal4e1139079 13047110.235 9 0 172862 GRAND TOTAL 1.8,933.78 14,4.82,5.2 t,168,386M 16,714,24937 Page 9 Private Sector Competitiveness and Economic Diversification Project II - Lesotho SOURCES AND USES OF FUNDS BY CATEGORIES FOR IDA ONLY IN US DOLLARS AND MALOTI FOR THE YEAR ENDED 31ST MARCH 2020 Designation 201812019 201812019 201912020 201912020 M M _ _ _ M M Opening Cash Balances PPA DA Special Account Phase I IDA Maloit Acffunt Phase I Petty Cash Subtotal PPA IDA Special Account Phase I IDA Malo Account Phase I Sub total IDA Designated Account Phase II 19.05052 225.00950 6644 64 245,65549 IDA Malot Account Phase 1 25,31466 2. .996 46 54 54527 799.84148 Petty Cash 18.17 214.61 11748 171329 Subtotal 44,383.35 624,220.67 71,807.39 1,047,210.26 Add Sources of Funds IDA Credit Phase II 1 019.225 57 13.604.147 OS 60 662 69 8 773.214 65 Direct Payments from IDA - 418.971 89 6,014,494 68 Other revenue 5,32466 -5,266.90 .4 '2667 -60.551 90 Reimbursement from AF 46 562 49 602.393 76 Reimbursement from EDSP 29,4827 417,49792 Got Rotund to IDA Sub total 1.024.66043 13,959,414.76 1,000,658.67 1,747.039.1 Total Financing 1,068,933.78 14,483,635.32 1,168,366.06 16,754,249.37 Less Uses of Funds by Category Goods 11,017,50 154.434 30 45779190 6583.65438 Works 20.66709 291,58244 29190917 43B.B4254 Non Consultig Services Consulting Services 414,14975 5.572.096 34 21934823 3,266.612 00 Training & Workshops 18348826 2 556 971 55 8323801 1.220.83542 Operating Costs 336,48881 4,601 954.41 2551644 3.732,935 84 Malcting Grant 37089 5 192 00 966,182.30 13,182.231.04 1,046,473.76 15,242,880.98 Total Expenditures O66,102.30 13.182,231.04 1,046,473.76 16,242,880.98 Foreign Exchange Difference 30,944 09 254 194 02 11329626 1 378 4ai Closing Cash Balances IDA Designated Account Phase iI 16.84484 245 655 49 3,076.56 55,42607 IDA Malab Account Phase It 54.84527 799841 48 651766 117,41955 Petty Cash 11748 171329 163 3300 Total Closing Casth Balances 71,807.39 1,047,210.26 9,596.05 172,875.62 GRAND TOTAL 1,068,133.75 14,483,635.32 1,168,366.06 16,784,249.37 Page 10 Private Sector Competitiveness and Economic Diversification Project II- Lesotho SOURCES AND USES OF FUNDS BY COMPONENTS FOR GOL ONLY IN US DOLLARS AND MALOTI FOR THE YEAR ENDED 31ST MARCH 2020 201812019 201912020 Designation M M j M Opening Cash Balances GOL Cunent AtC 1 61402 '".425 74 2 ,61 02 424,105.91 Petty Cash GOL Counterpart Funds refunded to Consol dated Fund Sub total 1,814.02 21,425.74 29.081.02 424,105.91 Add Sources of Funds GOL Funds I 4 01 85 1 'E0 743 38 Sale of fruits/other income GOL Refund from EDSP sub total 1242:185 1 7E,) 743 ?8 Total Financing 126,015.87 1,802,169.12 29,081.02 424,101.91 L1Je5 Uses of Funds by Component improving Business Environment Business Reg Industry Liceang & Construction Permit Reform mproving Access to Finance Sub total Support Economic Diversification Support Investment Promotion & Increasing Unkages Support Tourism Sector 5,39646 182 19 Expand Commerial Horticulture Lesotho Enterpnse ASSislance 51 780 93 2824329 410.628 50 Programme Sub total 97,300.60 1,354,963.12 28,243.29 410,621,150 Project Implementation Support Project Implementation Support N7 17 3092 09 ^k02 94 3,036.34 Sub lotal 227.17 3,092.09 202.94 3,036.34 Total Expenditures 97.527.67 1,358,065.21 28,446.23 413,664.84 Foreign Exchage Difference -59282 20,008.00 55 23 0 Closing Cash Balances GOL Cuirent A/C 29,081 02 424 105 91 579 i4 10 441 d1 Patly Cash Total Closing Cash Balances 29,051.02 424,105.91 579.66 10,441.07 GRAND TOTAL 126,015.87 1,802,169.12 29,081.02 424,105.91 Page 11 Private Sector Competitiveness and Economic Diversification Project II - Lesotho SOURCES AND USES OF FUNDS BY CATEGORIES FOR GOL ONLY IN US DOLLARS AND MALOTI FOR THE YEAR ENDED 31ST MARCH 2020 Designation 201812019 2018/2019 2019/2020 2019/2020 a a M M MM Opening Cash Balances GOL Current Account 1,614 02 21.42574 29 531 02 424,105.91 Petty Cash GOL Funds Refunded to Consolidated Fund 1,81402 21.4 25 74 29,051.02 424,105.91 Add Sources of Funds GOL Funds 124.201 85 1 76074330 Sale of fruils/olher income GOL Refund from EDSP 124,201.85 1,780.743 38 - Total Financing 126,015.67 1,902,169.12 29,081.02 424,10f.91 Less Uses of Funds by Category Goods Works Non Consulting Services Consulting Services Training 8 Workshops 5,39646 77182 19 Operating Costs 561 16 790279 1 39968 15,527 39 Matching Grant 91.570.05 1.272.97023 27 386.55 398.13745 Total Expenditures 97,527.67 1,358,055.21 28,446.23 413,664.84 Foreign Exchange Difference (592 82) 20.008.00 5523 (0 00) Closing Cash Balances GOL Cunent A/C 29.08102 424 '05 91 57956 10,441,07 Petty Cash Total Closing Cash Balances 29,081.02 424,105.91 579.66 10,441.07 GRAND TOTAL 126,015.87 1,802,159.12 29,081.02 424,105.91 Page 12 WITHDRAWAL APPLICATION SCHEDULE FOR THE FY ENDED 31ST MARCH 2020 WITHDRAWAL DATE OF APPLICATION AMOUNT EXCHAN PAYMENT NO. REQUESTED USD GE RATE AMOUNT PAID LSL Equivalent 2019-04-16 PSCII 64 92 115.18 14.0330 92 115.18 1292652.32 2019-05-27 PSC I165 65 258.71 14.4061 + 65 258.71 940 123.50. 2019-07-16 PSC II 66 95 582.90 13.88104 95 582.90 4 1326 786.23 2019-08-02 PSC II 67 126 994.95 14.5888 126 994.95 1 852 703.93 2019-09-30 PSC II 68 81 189.26 15.1803 81 189.26 1 232 477.32 2019-10-24 PSC 11 69 54019.67 14.6404 54019.67 790 869.58 2019-12-12 PSC II 70 72 302.081 14.6920 72 302.08 1 062 262.16 + .|4 2020-02-21 PSC 71 18 199.94 15.1286 18 199.94 275 339.61 TOTAL 605 662.69 605 662.69 8 773 214.65 4-- AMOUNT PAID USD IN LSL EQUIVALENT 2017-04-25 DP 009 3 174 268.01 14.0045 226 660.57 ---------- 2018-03-06 DP 010 2 840 226.67 14.7689 192 311.32 TOTAL 6014494.68 418971.89 13 MINISTRY OF TRADE AND INDUSTRY PRIVATE SECTOR COMPETITIVENESS AND ECONOMIC DIVERSIFICATION PROJECT CREDIT No. 53090 - LSO NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH 2020 1. BACKGROUND The Private Sector Competitiveness and Economic Diversification Project (PSCEDP) Phase II, aims to build on reforms initiated under the first phase of the Project, as well as reforms in new areas to support Government priorities that would lead to greater private sector development. This will be achieved through improved business environment, greater access to finance; supporting investment promotion activities in new sectors and enhancing linkages to domestic SMEs and improved economic diversification in the economy through targeted support to new growth sectors such as horticulture and tourism that have tremendous potential to create sustainable jobs and improve livelihoods. The Project design has been informed by the recent World Bank (2012) technical assistance note that analyzed policies to increase economic diversification through FDI and improved backward linkages to the local domestic economy. In addition, the project design is also closely coordinated with the ongoing Financial Sector Development Strategy (FSDS). PROJECT DEVELOPMENT OBJECTIVE The objective of the Project is to contribute to the development of non-textiles sectors resulting in increased private sector investment, firm growth and job creation. 1.1 SCOPE AND REPORTING PERIOD The period covered by the financial statements is from l' April 2019 to 31 March 2020. The Project Management Unit (PMU) is mandated to oversee the day-to-day operations and therefore maintains accounts in respect of funding provided for the Project. The accompanying financial statements cover funding provided by International Development Association(1DA) under the Credit number 53090-LSO and Government of Lesotho. 2. BASIS OF PREPARATION AND ACCOUNTING POLICIES These financial statements have been prepared on the cash receipts and disbursement basis;in accordance with the International Public Sector Accounting Standards (IPSAS-Cash Basis) and the Financial Accounting Reporting and Auditing Handbook of the World Bank, and these incorporate the following accounting policies. 2.1 Presentation Currency These financial statements are presented in both Maloti (which is the functional currency for the Government of Lesotho) and US Dollars (which is the reporting currency for the Donor). 2.2 Foreign Currency Transactions * All transfers from the Designated Account to Local Currency Account are translated into Maloti at the rate ruling on the date of the transaction. * All revenue and expenditures earned and incurred in local currency are translated into US Dollars at the daily closing rate on the date of the transaction. 14 * The closing cash balances at the end of the financial year (31 ' March 2020) are reported using the closing rate: I USD M 18.0156 as provided by the Central Bank of Lesotho. 3. PROJECT FINANCING The total financing for the Project is US$ 15 Million, with IDA providing tIS$ 13.1 Million and the Government of Lesotho contributing US$ 1.9 Million. During the Financial year under review, IDA disbursed US$1 024 634.58; which was made up of Designated Account replenishment of US$ 605 662.69 and Direct Payments amounting to US$ 418 971.89. The Total translates to M 14 787 709.33. There was no disbursement from the GOL. 4. Equipment and other fixed assets Equipment and other fixed assets procured with Project resources are recorded at their acquisition cost at the date of purchase. 5. The withholding tax amounting to M 27 835.36 had not been remitted as at 31' March 2020. 6 .Budgetary Performance the annual work plans are prepared for the financial year. Performance per Components and Sub-Components is analyzed as per table below: Components Annual budget Current year Difference % Spent % Actual Expenditure between budget vs Differe and actual Budget nce over bud et M M M % IA: Improving Business 10 363 200.00 B774235.92 1588964.08 85% i5* Environment lA: Business Regulation. Industrial Licensing AND 7815200.00 7954831.08 -139 631.08 1.02% 2 Construction Permit Reform FB: Improving Access to 2548 000.00 819 404.84 1 728 595.16 32% 68 Finance 2: Support Economic 7767000.00 6397139.32 1369860.68 82% 15' Diversification 2: Supporting investment promotion & increase linkages 103 600.00 86 192.48 17 407.52 83 17 to loc economy 2B: Supporting the Tounsm 1635000.00 923630.91 711369.09 56 44 Sector 2C: Expanding Commercial Horticulture 4 778400.00 4 976 687.43 198 287.43 104 4' 2D: Lesotho Enterpnse 1250000.00 41 628.5 839371.50 33 67 Assistance Pro rant 3: Project Implementation 600000.00 485170.58 114829.42 B1 19' Support Pro*ect [in lementation Su ort 600000.00 485 17058 114829.42 81 190 GRAND TOTAL 18 230 200.00 15 656 545.82 3073 654.18 84% 16% 15