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• THE UNITED REPUBLIC OF TAfl2~~~~
NATIONAL AUDIT OF •
•'
REPORT OF THE CONTROLLER AND AUDITOR GENERAL
ON THE AUDIT OF FINANCIAL STATEMENTS OF SAGCOT
-SIP (CREDIT NO. 57760) FOR THE YEAR ENDED
30TH JUNE, 2017
Controller and Auditor General,
National Audit Office,
16 Samora Machel Avenue,
P.O. Box 9080,
Tel: 255 (022) 2115157 /8,
Fax: 255 (022) 2117527
E-mail: ocag@nao.go.tz
Website: www.nao.go.tz
11101 DAR ES SALAAM, TANZANIA.
January, 2018 AR/ SAGCOT-SIP/2016/2017
TABLE OF CONTENTS
1.0 GENERAL INFORMATION .................................................................. 1
1.1. Mandate ..................................................................................... 1
1.2. Vision , Mission and Core Values .......................................................... 1
1. 3. Audit objective ............................................................................. 2
1.4. Audit Scope ................................................................................. 2
1. 5. Audit Methodology ......................................................................... 2
2.0 AUDIT REPORT ON THE FINANCIAL STATEMENTS .................................... 3
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Office of the Controller and Auditor AR/ SAGCOT-SIP/2016/2017
DEFINITION OF TERMS AND ABBREVIATIONS
(i) Definition of Terms
Financial statements comprise of the following:
(a) Statement of Financial Position;
(b) Statement of Financial Performance;
(c) Cash Flow Statement;
(d) Statement of Comparison of Budget and Actual Amounts; and
(e) Notes, Comprising a Summary of Significant Accounting Policies and Other
Explanatory Notes.
• Supplementary information means: additional information to the financial
statements comprising of the following:
(ii) Abbreviations
PPA Public Procurement Act of 2011
Reg. Regulation
SAGCOT CTF SAGCOT Catalytic Trust Fund
SAGCOT-SIP Southern Agricultural Growth Corridor of Tanzania-Investment Project
Sect. Section
SIP SAGCOT Investment Project
USD United States Dollar
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Office of the Controller and Auditor AR/ SAGCOT-SIP/2016/2017
1.0 GENERAL INFORMATION
1 . 1. Mandate
The statutory duties and responsibilities of the Controller and Auditor General
are given under Article 143 of the Constitution of the URT of 1977 (revised
2005) and in Sect. 10 (1) of the Public Audit Act No.11 of 2008
1.2. Vision, Mission and Core Values
Vision
To be a highly regarded Institution that excels in Public Sector Auditing
Mission
To provide high quality audit services that improves public sector performance,
accountability and transparency in the management of public resources.
Core Values
In providing quality services, NAO is guided by the following Core Values:
./ Objectivity: We are an impartial organization, offering services to our clients in an
objective and unbiased manner;
./ Excellence: We are professionals providing the highest quality audit services based
on best practices;
./ Integrity: We observe and maintain the highest standards of ethical behaviour and
the rule of law;
./ People focus: We focus on our stakeholders' needs by building a culture of good
customer care and having competent and motivated work force;
./ Innovation: We are a creative organization that constantly promotes a culture of
developing and accepting new ideas from inside and outside the organization and
./ Best resource utilisation: We are an organisation that values and uses public
resources entrusted to it in an efficient, economic and effective manner.
We do this by:
• Contributing to better stewardship of public funds by ensuring that our clients are
accountable for the resources entrusted to them ;
• Helping to improve the quality of public services by supporting innovation on the
use of public resources;
• Providing technical advice to our clients on operational gaps in their operating
systems;
• Systematically involve our clients in the audit process and audit cycles; and
• Providing audit staff with appropriate training, adequate working tools and
facilities that promote their independence.
© This audit report is intended to be used by Government Authorities. However, upon
receipt of the report by the Speaker and once tabled in Parliament, it becomes a public
record and its distribution may not be limited.
Office of the Controller and Auditor General AR/ SAGCO-SIP/2016/2017
1.3. Audit objective
To obtain reasonable assurance about whether the Financial Statements as a
whole are free from material misstatement, whether due to fraud or error and
are prepared in accordance with an applicable financial reporting framework;
and whether laws and regulations have been complied with.
1 .4. Audit Scope
The audit was carried out in accordance with the, the International Standards
of Supreme Audit Institutions (ISSAls) and other audit procedures as were
deemed appropriate under the circumstances. This covered the evaluation of
the effectiveness of the financial accounting system and internal control over
various activities of the SAGCOT SIP.
The audit was conducted on a sample basis; therefore the findings are confined
to the extent that records, documents and information requested for the
purpose of the audit were made available to me. Audit findings and
recommendations arising from the examination of the accounting records,
appraisal of the activities as well as evaluation of the Internal Control System
which requires management's attention and actions, are set out in the
management letter issued separately to the SAGCOT SIP.
As an auditor, I am not required to specifically search for fraud and therefore,
my audit cannot be relied upon to disclose all such matters. However my audit
was planned in such a way that I would have reasonable expectations of
detecting material errors and misstatement in the financial statements
resulting from irregularities including fraud. The responsibility for detection,
prevention of irregularities and the maintenance of an effective and adequate
system of internal control rests with the management of the SAG COT SIP.
1. 5. Audit Methodology
My audit approach included tests of the accounting records and other
procedures in order to satisfy the audit objectives. My audit procedures
included the following:
• Planning the audit to identify and assess risks of material misstatement,
whether due to fraud or error, based on an understanding of the entity and
its environment, including the entity's internal controls.
• Obtain sufficient appropriate audit evidence about whether material
misstatements exist, through designing and implementing appropriate
responses to the assessed risks.
• Form an opinion on the financial statements based on conclusions drawn
from the audit evidence obtained.
• Follow up on the implementation of the previous year's audit findings and
recommendations to ensure that proper action has been taken in respect of
all matters raised.
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Office of the Controller and Auditor AR/ SAGCOT-SIP/2016/2017
2.0 INDEPENDENT REPORT OF THE CONTROLLER AND AUDITOR GENERAL
Permanent Secretary,
Policy, Coordination and Parliament,
P.O. Box 980,
40480 DODOMA.
REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL
STATEMENTS OF THE SAGCOT SIP FOR THE YEAR ENDED 30TH JUNE, 2017
Opinion
I have audited the accompanying Financial Statements of SAGCOT-SIP, which comprise
the statement of financial position as at 30th June, 2017 and the Statement of Financial
Performance, the Statement of Changes in net assets/ equity the cash flow statement
and the statement of comparison of budget and actual amounts for the year then
ended , as well as the notes to the financial statements, including a summary of
significant accounting policies .
In my opinion , the accompanying financial statements of the SAGCOT-SIP present fairly
in all material respects, the financial position of the project as at 30th June, 2017, and
its financial performance and its cash flows for the year then ended in accordance with
International Public Sector Accounting Standards (IPSASs) Accrual basis of accounting
and in the manner required by the Public Finance Act, 2001 revised 2004.
Basis for Opinion
I conducted my audit in accordance with International Standards of Supreme Audit
Institutions (ISSAls). 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 SAGCOT-SIP 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 Tanzania, 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 .
Information Other than the Financial Statements and Auditor's Report Thereon
Management is responsible for the other information . The other information comprises
of the Director's Report and the Declaration by the Head of Finance but does not
include the financial statements and our auditor's report thereon.
My opinion on the financial statements does not cover the other information and I do
not express any form of assurance conclusion thereon. In connection with my audit of
the financial statements, my responsibility is to read the other information and , in
doing so, consider whether the other information is materially inconsistent with the
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Office of the Controller and Auditor General AR/ SAGCOT-SIP/2016/2017
financial statements or my knowledge obtained in the audit, or otherwise appears to be
materially misstated.
If, based on the work I have performed on the other information that there is a
material misstatement of this other information , I am required to report that fact. I
have nothing to report in this regard.
Key Audit Matters
Key audit matters are those matters that, in my professional judgment, were of most
significance in my audit of the financial statements of the current period. These
matters were addressed in the context of my audit of the financial statements as a
whole, and in forming my opinion thereon, and I do not provide a separate opinion on
these matters. In addition to the matter described in the Basis for Opinion section I
have determined the matters described below to be the key audit matters to be
communicated in my report. I have determined that there are no key audit matters to
communicate in my report.
Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with IPSASs, 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, management is responsible for assessing the
entity's ability to conti nue as a going concern , disclosing, as applicable, matters
rela t ed to going concern and using the goi ng concern basis of accounting unless
management either intends to liquidate the entity or to cease operat ions, or has no
reali stic alternative but to do so .
Those charged with governance are responsible for overseeing the entity's financial
repo rting process.
Auditor's Responsibilities for the Audit of the Financial Statements
My objectives are to obtain reasonable assurance about whethe r the financial
state ments as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor's report that i ncludes 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.
Misst atements 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.
In addition, Sect. 10 (2 ) of the PAA No.11 of 2008 requires me to sati sfy myself that,
the accounts have been prepared in accordance with the appropriate accounting
standards.
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Office of the Controller and Auditor General AR/ SAGCOT-SIP/ 20 16/ 2017
Further, Sect. 48(3) of the Public Procurement Act No. 7 of 2011 requires me to state in
my annual audit report whether or not the audited entity has complied with the
provisions of the Law and its Regulations.
Report on Other Legal and Regulatory Requirements
Compliance with the Public Procurement Act, 2011
In view of my responsibility on the procurement legislation and taking into
consideration the procurement transactions and processes I have reviewed as part of
this audit, I state that, SAGCOT-SIP procurement transactions and processes have
generally complied with the requirements of the Public Procurement Act No. 7 of 2011
and its underlying Regulations of 2013.
Con troller a Auditor General,
26th January, 2018
National Audit Office of Tanzania,
P.O . Box 9080,
11101 Dar es Salaam, Tanzania.
Tel: 255 (022) 2115157/8,
Fax: 255 (022) 2117527,
E-mail : ocag@nao.go.tz
Copy to: The Chief Secretary,
State House,
P.O. Box 9120,
1 Barack Obama Road,
11400 DAR ES SALAAM.
Permanent Secretary and Paymaster General,
Ministry of Finance,
P.O. Box 9111,
11468 DAR ES SALAAM.
The Permanent Secretary,
Prime Minister's Office,
P.O. Box 3021 ,
DAR ES SALAAM.
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Office of the Controller and Auditor General AR/ SAGCOT-SIP/ 2016/ 2017
The Permanent Secretary,
Ministry of Agriculture, Livestock and Fisheries,
P.O. Box9192,
DAR ES SALAAM.
Resident Representative,
World Bank,
P.O. Box 2054,
DAR ES SALAAM.
6
Of fice of the Controller and Audi tor General AR/ SAGCOT-SIP/ 20 16/ 2017
,r_. ,, • .. ._.,. ' • ,t.;; ..... 't' ,, .. • ... .,,. '" /__ , ...
PRIME MINISTER'S OFFICE
1.
,
SOUTHERN AGRICULTURAL GROWTH CORRIDOR OF TANZANIA
INVESTMENT PROJECT (SIP)
(CREDIT NO. 57760)
FINANCIAL STATEMENTS FOR THE YEAR ENDED
30TH JUNE 2017
SEPTEMBER, 2017
REPORT AND FINANCIAL STATEMENTS OF SOUTHERN AGRICULTURAL
GROWTH CORRIDOR OFT ANZANIA INVESTMENT PROJECT IDA CREDIT No.
57760 FOR THE YEAR ENDED ON 30th JUNE, 2017
TABLE OF CONTENT
I GENERAL INFORMATION ........ ............ ... ... ...... ... ...... .... .............. ............ ... ........ ..... ............... ... .... ....... ... .... ..... 3
2 SUMMA RY OF ACHIEVEMENT DUR.ING THE YEA R 2016/17 ......... ........ ............. ..... ..... .......... ..... ...... .. ...... 4
3 CHALLENGES AND REMEDI AL ACTIQNS ........... .................. .................. .... .. .. ... ... ... ... .... ............................. 7
4 FUNDS TRANSFE R.RE D TO SAGCOT INVESTMENT PROJECT DU RI NG THE YEA R 20 16/17 ... ..... 8
5 STATEMENT OF MANAGEMENT R.ES PONS IBI LITIES FOR THE FINANCIAL STATEMENTS FOR THE
YEAR ENDED 30TH JUNE 20 17 ................. ... .......... .... ... .. ...... .......... ....................... ... ......... ... ................................ 9
6 STATEMENT OF DECLATION OF THE HEAD OF FINANCE O THE FI ANCJAL STATEME TS FOR
THE YEAR EN DED 30TH JUNE 2017 ..... ........... ...... ....................... ... ......... ..... .......... ..... ..... .......... .. .. ....... ..... ...... . IO
7 STATEMENT OF FINANC IAL PERFORMANCE FO R THE YEAR ENDED 30TH JUNE 20 17 .... .. ... ..... ... ... 11
8 STATEMENT OF FINANC IA L POSIT ION AS AT 30TH JUN E 2017 ............................ ..... ........... .. ................ 12
9 STATEMENT OF CHANGES IN NET ASSETS FO R THE YEAR ENDED 30 JUNE 20 17 ......... ...... .... ........ 13
IO STATEMENT OF CAS H FLOWS FOR THE YEAR EN DED 30TH JUNE20 17 ..... .... ... ...... ...................... .... 14
I I STAEMENT OF COMPA Rl SON BETWEEN BUDGET AND ACTUAL AMOUNTS FOR TH E YEAR
ENDED O 30TH JU E 20 17.. .............. .......... .......... .... ...... .... ..... ......................... ................................................. 15
12 NOTES TO THE FI ANC IAL STATEMENTS FO R THE YEAR ENDED 30TH JUNE, 2017 ..... .. .............. . 16
2
REPORT OF THE OF SOUTHERN AGRICULTURAL GROWTH CORRIDOR OF
TANZANIA INVESTMENT PROJECT IDA CREDIT No. 57760 FOR THE YEAR
ENDED ON 30 1h JUNE, 2017
1 GENERAL INFORMATION
PRINCIPAL PLACE OF BUSINESS
T ACAIDS BUILDING
1ST FLOOR ,
SOKOINE DRIVE /LUTHULI STREET
P.O.BOX 3021
DAR ES SALAAM
BANKERS
Bank of Tanzania
P.O.BOX 2939
DAR ES SALAAM
NATIONAL MICROFINANCE BANK,
Bank House Branch
P.O.BOX 9031 ,
DAR ES SAMAAM
Email :info@nmbtz.com
AUDITORS
The Controller and Auditor General
National Audit Office of Tanzania (NAOT)
Samora Avenue/Ohio Street,
P.O.BOX 9080
DAR ES SALAAM
Email :ocag@nao.go .tz
3
MANAGEMENT REPORT AND FINANCIAL STATEMENTS OF THE SOUTHERN
AGRICULTURAL GROWTH CORRIDOR OF TANZANIA INVESTMENT PROJECT
FOR THE YEAR ENDED ON 30TH JUNE 2017
1. Introduction
The Government has initiated a Southern Agricultural Growth Corridor of Tanzania
(SAGCOT) which is a public - private partnership aimed at increasing agribusiness
investment with the objectives to increase smallholder incomes and create new jobs along
agribusiness value chains in Tanzania's southern corridor. The partnership is a centerpiece of
Tanzania's Kilimo Kwanza strategy for pursuing food security, poverty, reduction, rapid
economic growth and reduced vulnerability to climate change. Implementation of this
initiative is facilitated mainly through three entities i.e Tanzania Investment Centre (TIC),
SAGCOT Centre Limited (SCL), SAGCOT Catalytic Trust Fund (CTF) under the
coordination of Project Coordination Unit (PCU). The Project implementation became
effective on 26th August 2016 and expected closing period August 31st 2021.
The project is an IPF and will be implemented over the period of 5 years under three
components namely:
Component!: Strengthening of SAGCOT Support Institutions. This component is
strengthening the capacity of SAGCOT Support Institutions in order to pursue their functions
of information and data provision, support of investment planning and guidance, government
private sector intermediation, enhance business enabling environment and investment
promotion. The component is supporting two institutions: SAGCOT Centre Ltd and Tanzania
Investment Centre.
Component 2: Strengthening Smallholder-Business linkages. The objective of this
component is to link smallholder farmers in agricultural value chains so as to : increase the
number of smallholders linked to agribusinesses in successful commercial partnerships; and
Increase the revenues derived by smallholders and rural communities from these partnerships
through agricultural productivity growth, income and employment.
Component 3: Project Management, Monitoring and Evaluation. This component ensures
coordination between implementation agencies at all levels and with other IDA financed
projects.
2 SUMMARY OF ACHIEVEMENT DURING THE YEAR 2016/17
2.1 Strengthening of SAGCOT Support Institutions
2.1.1 SAGCOT Centre
The SAGCOT Initiative's first quarter in 2017 was marked by a number of events, activities
and milestones that mainly focused on the SAGCOT Annual Forum. The latter was themed
4
"Unleashing Agricultural Opportunities". The objectives for the forum was to expose
participants to investment opportunities and strategies for implementation in the SAGCOT; to
jointly discuss bottlenecks to investment in agriculture in the Ihemi Cluster; to highlight
possible policy concerns; and to identify solutions and agree on next steps. It was attended by
over 500 participants over 2 days (learning journey and the main event). The event exposed a
lot of untapped agricultural opportunities, still very much available, not only in the Ihemi
Cluster, but in the Corridor as a whole such as mechanization farming for tomato, potato and
soya value chains; the event also exposed unmet demand for soya supply and to the animal
feeds industry, lead sector players for potato processing, funding (affordable agri-finance) and
crop insurance gaps for smallholder farmer and SMEs and in developing industry and market
standards among many others.
SCL's Policy Department had a bilateral meeting with the President's Office Regional
Authorities and Local Governments (PO RALG) in Dodoma, Tanzania and agreed to formalize
a strategic policy partnership between PO RALG and SCL. SCL had representation at the
Annual Forest Dialogue Steering Committee Meeting in the USA February, 2017. The
Committee expressed interest in following up with SCL's dialogue and Partners to give a
stronger voice to pastoralist issues. SCL also launched the Ihemi Cluster Field Office on 7th
March 2017, an event that was graced by the Regional Commissioner of Iringa: Mrs Amina
Masenza.
Lastly during this Period the SAGCOT was assessed through the Funders Review and the
Centre obtained an "A" Rating due the progress it had made in 2016. This Annual Review was
conducted jointly by SCL's main Funders during the year, whereby SCL' s key documents and
its financial and management systems were assessed. Funders also sought feedb ack from
investors, government officials, and civil society organizations. As part of the review exerci se,
the Funders spoke to SCL's partners in the Ihemi cluster (Iringa and jombe).
SCL held the Cluster Review Meeting attended by 120 participants in Njombe. During the
event, Partners in the Ihemi Cluster appraised the 2016 Ihemi Compact Review Agreement.
This led to the signing of the 2017 tripa1iite agreement between the Public (Regional
Governments) and The Private Sector Actors in the Cluster.
SCL continued facilitating inclusive value chain development and commissioned a stud y
(tomato value chain analysis) to aid advancement of the sub sector. In addition, partners were
assisted to commit to action through Strategic Partnerships and this led to the development of 4
draft Terms of Reference and objectives for the same.
SCL facilitated the second Ihemi Cluster, Land Use Dialogue Meeting tackling competing land
use approaches in the corridor. It was agreed that a participatory and integrated approach be
developed to reconcile the different perspectives and interests at stake and increase land
productivity in the region in the pursuit of sustainable landscapes and economic growth by
August 2017.
Through the Green Reference Group (GRG) the Centre developed and pre-tested Green
Growth Verification Tools to assist Partners self-assess their environmental and social
safeguards to aid compliance to sustainable and green growth. SCL also commissioned the
5
services of Agrilnsight to design an online platform that visualizes the agricultural landscape of
the Ihemi cluster as well as allow for Partners (investors, planners, agribusinesses, LGAs,
farmers) of the platform to make better and more effective investment decisions. S
SCL signed one Strategic Policy MoU with Sokoine University of Agriculture (SUA) to
support policy research. In addition the Centre's 2 policy studies were commissioned: one on
local inclusivity and the other on bulk fertiliser procurement.
2.1.2 Tanzania Investment Centre
1. Tanzania Investment Centre has continued to call, promote and facilitate potential
investors coming into the country to invest in the corridor.
11. TIC has continued to monitor and evaluate investment in the corridor and in the whole
country.
2.2 Strengthening Smallholder-Busin ess linkages
2.2. 1 SAGCOT Catalyst Trust
The Project Development Objective is to increase the adoption of new technologies and
marketing practices by smallholder farmers through expanding and creating partnerships
between smallholder farmers and agribusinesses in the Southern Corridor of Tanzania.
1. SAGCOT Catalyst Trust Fund (CTF) under the Project Coordination Unit (PCU) has
recruited 6 Staff under World Bank financing
11. Expression of Interests (EOis) for Fund Manager were evaluated and six companies
have been shortlisted
iii. Request for Proposal has been submitted to the World Bank for no objection
1v. CTF has started to develop ToR for online submission of concept note for the
applicants of the matching grant.
2.3 Project Management, Monitoring and Evalu ation
2.3. 1 Project Coordin ation Unit (PCU)
PCU has continued coordinating all the Project Components to contribute to achieving project
results. The following mi lestone has been achieved:
1. PCU has continued to coordinate Financial Management activities on behalf of all three
IAs
11. PMO has appoi nted a ew SAGCOT Investment Project (SIP) Coordinator designated
for coordination of all Project Activities.
6
111. PCU has coordinated preparation and submission of 3 !As Annual Project Work plans
and Budget 2017/2 018. The AWP and Budget were submitted to World Bank.
IV . PCU coordinated at least 5 SIP meetings to discuss pro gress on implementation of
project activities .
v. PCU participated in the inauguration of SAGCOT act1v1t1es workshop which was
conducted in Mbeya. In this meeting Mbalali Cluster was formed . Mbeya Regional
Commissioner and Songwe Regional Commissioner welcomed and accepted formation
of Mbalali Cluster.
v1. PCU Sensitized the Procurement Management Unit (PMU) and Ministerial Tender
Board (MTB) at PMO about the SIP Project and it closely works with the PMU and the
MTB.
v11. PCU coordinated preparation of Annual Training Plan.
v111. PCU Prepared Quarterly Financial Report and submitted it to World Bank
3 CHALLENGES AND REMEDIAL ACTIONS
Despite notable achievements, SIP project sti ll faces a number of challenges including the
following:
1. Processes and procedures for recruiting Procurement Specialist at PCU has delayed
procurement activities such as goods and services at component level
11. Uncertainty in the enabling environment arising from lack of consistent and structured
tracking of policies such as on tax , inputs ; e.g. the issue of bulk fertiliser procurement,
land and water among other constraints in the enabling environment
111. Limited incentives for investors to industrialise within the clusters due to the lack of
clear policy
IV. Limited information about export markets and industry standards that can drive
production, processing and marketing in some value chains iv. Poor infrastructure in
key production locati ons within the clusters in terms of feeder roads, electricity supply
to factories and processing plants.
Remedial Action
Single Source was objected for procuring Procurement Specialist. The option for competition
using Invitation for CV s took long as per the Procurement Act requirements. The evaluation of
CVs for PCU Procurement Specialist has been carried out. The report is to be sent to WB for
No objection
7
4 FUNDS TRANSFERRED TO SAGCOT INVESTMENT PROJECT DURING THE
YEAR 2016/17
Since its inception SAGCOT Investment project under credit no. Q787 and Q9280 and
57760TA has been disbursed a total of USD 7,760,000. out of this amount USD 3,360,000 was
disbursed during preparation of project (i.e SAGCOT PPA Q787 and Q9280) . After
effectiveness date 26th August 2016 a total amount of USD 4,400 ,000.00 was disbursed to
support implementation of SAGCOT Investment Project. The actual expenditure during the
year 2016/17 was USD 132,867.34 out of planned fund of USD 4,400,000 which representing
overall ratio of 3% .
8
5 STATEMENT OF MANAGEMENT RESPONSIBILITIES FOR THE FINANCIAL
STATEMENTS FOR THE YEAR ENDED 30m JUNE 2017
It is Management's responsibility to prepare financial statements which give a true and fair
view of the state of affairs of the project showing the results of the operations of the project at
the end of each financial year. The management responsibility at any time, is to ensure that
proper accounting records disclose with reasonable accuracy the financial position of the
project. Further, the management is responsible for safeguarding the assets of the project,
ensuring the project ' s compliance with all regulatory and legal requirements; and consequently
taking reasonable steps for the prevention and detection of fraud, error and other irregularities.
The management accept responsibility for the annual financial statements of SAGCOT
Investment Project, which have been prepared using appropriate accounting policies and
standards supported by reasonable and prudent judgments and estimates, in conformity with
111
International Public Sector Accounting Standards for the year ending 30 June 2017. The
Management is of the opinion that the financial statements give a true and fair view of the state
of financial affairs of the Project and its financial performance. The Management accept
responsibility for the maintenance of accounting records as well as adequate systems of
internal financial control which may be relied upon in the preparation of financial statements.
No matter has come to the attention of the Management to indicate that the proj ect will not
remain a going concern for at least the next twelve months from the date of this statement.
C : 3 ~AN£NT SEC.Kc'' /< ,
Accounting Officer /IR.IME. MINISTERS Off :CI:.
Date: -~'<\.~\~\\_"\A_\i'
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9
6 STATEMENT OF DECLATION OF THE HEAD OF FINANCE ON THE
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30m JUNE 2017
The National Board of Accountants and Auditors (NBAA) According to the power conferred
under the Auditors and Accountants (Registration) ACT No. 33 of 1972, as amended by Act
No.2 of 1995, requires financial statements to be accompanied with the statement of
declaration issued by the Head of Finance/Accounting responsible for the preparation of
financial statement of the entity concerned.
It is the duty of professional accountant to assist the Management to discharge the
responsibility of preparing the financial statement of the project showing true and fair view
position of the project in accordance with the International Public Sector Accounting Standards
(IPSAS) and the requirements Financing Agreement/Development Credit Agreement. Full
legal responsibility for financial statements rests with the management.
I Veronica Amos being the Head of Finance of The Southern Agricultural Growth Corridor of
Tanzania Investment Project hereby acknowledge my responsibility of ensuring that financial
statements for the year ended 3Qth June 2017 have been prepared in compliance with the
International Public Sector Accounting Standards and the Financing Agreement/Development
Credit Agreement.
I thus confirm that the financial statements give true and fair view position of the Private
Sector Competitiveness Project as on that date and that they have been prepared based on the
: : : :·i~~i~:~ ,~ . .
NBAA Membership No .. r..
f.(P.AUJ.. ../3.. f
Date:. Sept.filib.e/:!. .,2017
10
7 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30TH
JUNE 2017
2017 2016
Notes USD USD
Revenue from non-exchange
transactions
Grants revenue 4 132,867 335 ,910
Amortisation of capital grants 4 14,284 8,947
147,151 344,857
Revenue from exchange
transactions
Foreign currency exchange
gain/(loss)
Other income
Total revenue 147,151 334,857
Expenses
Depreciation 9 14,284 8,947
Salaries and staff benefits 5 75,225 107,687
Operating expenses 6 57,642 228,224
147,151 344,858
Surplus/( deficit) for the year
Note 4-9 forms an integral part of these financial statements
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ACCOUNTING OFFICEJt> ~\b\e, M. DATE
11
8 STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2017
2016/17 2015/16
Notes USD USD
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents 8 4,283 ,840 16,708
Other receivables 0 0
4,283,840 16,708
NON CURRENT ASSETS
Property, Plant and equipment 7 48 ,190 58 ,153
48,190 58,153
TOT AL ASSETS 4,332,030 74,861
LIABILITIES
CURRENT LIABILITIES
Deferred income grant 10 4,283 ,146 16,708
Other payables 12 694
4,283,840 16,708
NON-CURRENT LIABILITIES
Capital Grants 11 48 ,190 58 ,153
TOT AL LIABILITIES
4,332,030 74,861
NET ASSETS 0
0
NET ASSETS
Accumulated Surplus 0 0
....~::-:U.:-..... WtET,.J<l ........ ~~.\~.\.~~.! ...... .
ACCOUNTING OFFICE~ E.RMAN£NT ~ S OfflCI DATE
PRIME. MlhllST
12
9 STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 30 JUNE
2017
ACCUMULATED
TOTAL
SURPLUS
USD USO
AtOl July2016
Surplus/(deficit) for the year
At 30 June 2017
AtOl July2015
Surplus/(deficit) for the year
At 30 June 2016
13
10 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30TH JUNE 2017
2016/17 2015/16
Note USD USD
Cash Flows from Operating Activities
Receipts
Grants received 4,400 ,000 100,000
Other income
4,400,000 100,000
Payments
Payments Employees & Service Providers (128 ,546) (3 35 ,9 10)
Cash flows used in operating activities 4,271,454 (235,910)
Cash Flows from Investing Activities
Acquisition of property, Plant and equipment (4,321) 0
Cash flows used in investing activities (4,321) 0
Cash Flows from Financing Activities
Decrease in cash and cash equivalent 4,267,133 (235,910)
Cash and cash equivalent at 01 July 16,708 252,6 18
Cash and Cash Equivalent at 30 June 8 4,283,840 16,708
Note 1-8 form integral part of these financial statements
~A•,
......................... ......... PE; :AME.NT SECRETARY
ACCOUNTING OFFICEfJUMf. M, -
·•NISTE.R'S OfflCI
.........\~.!~.}.~\~ .......... .
DATE
14
11 STAEMENT OF COMPARISON BETWEEN BUDGET AND ACTUAL AMOUNTS
FOR THE YEAR ENDED ON 30TH JUNE 2017
Budget Item Original Final Budget Actual Variance Budget
Budget (USD) (USD) (USD) (USD) Utilization
in%
Component 1:
Strengthening
SAGCOT 1,400,000 0%
1,400,000 1,400,000
Support
Institutions 0
Component 2
Strengthening
smallholder 2,435,283 3%
2,500,000 2,500,000
business
linkages 64,717
Component 3:
Project
Management, 431 ,850 14%
500,000 500,000
Monitoring and
Evaluation 68,150
Grand Total 4,400,000 4,400,000 132,867.34 4,267,133 3%
15
12 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH
JUNE, 2017
NOTE 1: PRINCIPAL ACCOUNTING POLICIES
(i) Basis of Preparation
These financial statements of SAGCOT Investment Project includes all sub-
Programme's covered in the Development Credit Agreement number 57660 TA
between Government of Tanzania and International Development Association (IDA)
The financial statements have been prepared in accordance with International Public
Sector Accounting Standards accrual basis.
(ii) Expenditure Recognition
Expenditures for the supply of goods and services are generally recognized at the time
of payment. However, invoices not paid at the end of the year for services offered and
goods supplied are accrued and included in the list of creditors.
(iii) Foreign Currency Translation
All amounts are in USD . All transactions denominated in local and other foreign
currencies are translated into United States Dollars at the approximate exchange rate
ruling at the date of settlement/transaction basing on the Bank of Tanzania US$
exchange rates. The resulting differences from conversion and translation are disclosed
in the statement of financial performance as reconciling item.
(iv) Property, Plant and Equipment
Property, Plant and equipment are stated at cost less depreciation and impairments.
Depreciation is provided so as to allocate the cost of assets on a straight-line basis over
the expected useful lives of the assets concern. The principal rates used for this
purpose are:
O/o
Motor Vehicles 20
Office Equipment 12.5
Software 40
Furniture & Fittings 12.5
Computer Equipment 33 .33
The assets ' residual values and useful lives and methods of depreciation of property and
equipment are reviewed and adjusted if appropriate, at each reporting date.Gains and
Losses on disposal of assets are determined and included in the results for the year.
(v) Reporting Currency
As per Development Credit Agreement the reporting currency is USD . These financial
statements are therefore presented on the basis of USD currency.
16
(vi) Employee's benefits
a) Retirement benefit obligation
The project employees are members of Government Employee Provident Fund GEPF.
The scheme will bear all pension obligations. Both employer and employees
contribute the statutory fee to the pension funds and the amounts are charged to the
statement of financial performance when due.
b) Other entitlements
The estimated monetary liability fo r employees' accrued annual leave entitlement at
the reporting date is recognized as an expense accrual. The Project also accrues and
pays gratuity of 25% of basic salary to its employees who employed in contract terms.
Termination benefits are also payable when employment is terminated before the
normal retirement/contract expiry date or whenever an employee accepts voluntary
redundancy in exchange for these benefits.
(vii) Cash and cash equiva lent
Cash and cash equivalents are carried in the statement of financial position at face value.
For the purpose of cash flow statements cash and cash equivalents, comprise cash in
hand and cash at bank.
(viii) Financial Risk Management
The project activities expose it to a variety of financial risks mainly currency risk. The
project's overall risk management Programme focuses on the identification and
management of risks and seeks to minimize potential adverse effects on its financial
performance. The disclosures below summarize the way the Fund manages key risks.
(ix) Foreign Currency Risk
Foreign currency risk arises when future commercial transactions or recognized assets
and liabilities are denominated in a currency that is not the entity's functional currency.
The project transacts both in United States Dollar and Tanzanian Shillings. The foreign
exchange exposures are reviewed and contro lled by the project on a regular basis.
(x) Revenu e recognition
Revenue from non-exchange transactions
Grants
Grants are not recognized until there is reasonable assurance that the project will comply
with the conditions attaching to them and the grants will be received . Grants whose
17
primary condition is that the project should purchase, construct or otherwise acquire non-
current assets are recognized as deferred income in the statement of financial position
and transferred to statement of financial performance on a systematic and rational basis
over the useful lives of the related assets. Other grants are recognized as income over the
periods necessary to match them with the costs for which they are intended to
compensate, on a systematic basis. Grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of giving immediate financial
support to the project with no future related costs are recognized in the statement of
financial performance in the period in which they become receivable.
Revenue from exchange transaction
Fees
The project recognizes revenues from fees when the event occurs and the asset
recognition criteria are met. To the extent that there is a related condition attached that
would give rise to a liability to repay the amount, deferred income is recognized instead
of revenue. Other non-exchange revenues are recognized when it is probable that the
future economic benefits or service potential associated with the asset will flow to the
entity and the fair value of the asset can be measured reliably .
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and
at the effective interest rate applicable.
NOTE 2: SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND
ASSUMPTIONS
The preparation of the project's financial statement requires management to make
judgments, estimates and assumptions that affect the reported an1ounts of revenues,
expenses, assets and
Liabilities and the disclosure of contingent liabilities, at the reporting date. Uncertainty
about these assumptions and estimates could require a material adjustment to carrying
amount of the asset or liability affected in the future periods.
Judgments
In the process of applying the project's accounting policies, no significant judgments
were made by management.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimati on
uncertainty at the reporting date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year
are discussed below:
18
Asset useful lives
The useful lives of items of property, plant and equipment are estimated annually and are
in line with the rate at which they are depreciated . During the year under review the
management reviewed useful lives for property, plant and equipment. The useful lives
are disclosed in ote 1 to these financial statements.
Impairment of non-financial assets
The project assesses whether there are any indicators of impairment for all non-financial
assets at each reporting date. If indicators exist, an impairment test is done and any
identified impairment loss is recognized in the financial statements . There is no
impairment of non-financial assets during the year.
NOTE 3: ST AND ARDS ISSUED BUT NOT YET EFFECTIVE
• IPSAS 33 - First-time Adoption of Accrual Basis International Public Sector
Accounting Standards:
• IPSAS 34 - Separate Financial Statements
• IPSAS 35 - Consolidated Financial Statements
• IPSAS 36 - Investments in Associates and Joint Ventures
• IPSAS 37 - Joint Arrangements
• IPSAS 38 - Disclosure of Interests in Other Entities.
All the above standards are effective for accounting period beginning on or after O1
January 2017.
• IPSAS 39 - Employee Benefits with effect from 151 January 20 18
The standards have no impact in the financial statements of the SAGCOT investment
Project.
NOTE4:GRANTSREVENUE
2016/17 2015/16
USD USD
Recurrent grants Note 10 132,867 335 ,910
Amortisation of capital grant Note 13 14,284 8,947
147,151 344,857
NOTES:
SALARIES AND STAFF BENEFITS
Gratuities 3,497 1,80 I
Leave passage 1,506 943
Consultancy fees 70,222 104943
19
75,225 107,687
NOTE6:
OPERA TING EXPENSES
Advertisement & Publicity 33,917 1,109
Conference facilities 5,040 4,432
Consultancy fee 0 72,422
Diesel 1,364 4,3 47
Communication 0 600
Internet and Email Connection 609 7,132
Freight & Clearing Charges
Ground Travel(Bus, Railway, Taxi, Etc) 400 0
Motor Vehicle 4,321 67,099
Motor Vehicle insurance Premium 0 1,363
Office consumables 0 3,232
Computers and Accessories 0 1,439
Other Operating Cost 6,117 0
Per Diem-Domestic 4,700 16,100
Per Diem-Foreign 0 8,750
Printing and Photocopying Costs 0 1,500
Service and repair(vehicles) 1,175 1,489
Staff Training Costs
Transport cost 0 14,650
Travel Ticket- Foreign 0 22,559
57,643 228,224
NOTE 8:CASH AND CASH EQUIVALENTS
2016/17 2015/16
USD USD
BOT - USD Account 4,283 ,840 16,708
4,283.840 16,708
20
NOTE 9: PROPERTY, PLANT AND EQUIPMENT
Motor
Vehicle
USD
Cost
As at 1 July 201 6 67,099
Additions 4,32 1
At 30 June 2017 71 ,420
Accumulated
depreciation
As at 1 July 20 17 8,947
Charge for the year 14,284
At 30 June 20 17 23,231
Carrying amount
At 30 June 2017 48,190
At 30 June 2016 58,153
21
2016/17 2015/16
USD USD
NOTE 10: RECURRENT GRANTS
Balance at 1 July 16,708 252,6 18
Receipts during the year
Government of Tanzania 0 0
World Bank 4,400,000 100,000
Grants available 4,416,708 352,618
Grants utili sed during the year 132,867 335,9 10
Closing balance - Deferred income
4,283,840 16,708
as at 30 June NOTE 11
NOTE 11 :DIFFERED INCOME GRANT
Cash and bank balance 4,283,840 16,708
Accounts Payables (694) 0
4,283,146 16,708
NOTE 12: OTHER PAYABLES
Accounts paya ble 694
694
NOTE 13: ACCOUNTS RECEIVABLE
Staff debtors 0 0
As at 30 June 0 0
NOTE 14: RELATED PARTY TRANSACTIONS AND DISCLOSURES
The ent ity regards a related party as a person or an entity with the ability to
exert contro l individually or jointly, or to exercise significant influence over
the entity, or vice versa. Members of key management are re garded as related
parties and comprise the Project Coordinator, Financial Management
Specialist and Procurement Speciali st.
15 KEY MANAGEMENT PERSONNEL REMUNERATIONS
There were no short term benefits (i .e. consultancy fees, gratuity and socia l
security contributions) which were paid to Key management
30.06.2017 1 30.06.2016 1
USD USO
Consultancy fee 0 0
Leave passage 0 0
Gratuity 0 0
Total 0 0
16 TAXATION
The PSCP Project is subject to income tax laws of Tanzania under the
lncome Tax Act, 2004 except where tax exem ptions has been sought and
granted by the Tanzania Revenue Authority (TRA).
17 CONTINGENT LIABILITIES
As at 30th June, 2017, there were no contingent liabilities requiring discl osure
in these finan cial statements.
18 EVENTS AFTER THE REPORTING PERIOD
There are no material events, adjusting or non-adj usting, which have
occurred between the reporting date and the date when financial statements
are authorized for issue.
19 COMPARATIVE FIGURES
Where necessary, comparati ves figures have been adj usted to conform to
chan ges in presentation in the current year.
20 RA TE OF EXCHANGE FOR BALANCE SHEET ITEMS
All Assets and liabilities in the Balance Sheet, denominated in loca l
currency have been converted at the exchange rate of I USD =2,2 19.05
TZS, a rate ruling at the reporting balance sheet date. The resulting
differences from conversion and tran slation have been disclosed in the
financial statement of the statement of receipts and payments.
23