Republic of Malawi MINISTRY OF AGRICULTURE AGRICULTURAL COMMERCIALISATION PROJECT (AGCOM) PROJECT ID NO: P158434 IDA CREDIT NO: 60480-MW Financial Statements For the year ended 3 1st March, 2024 National Audit Office P 0 Box 30045 Lilongwe September 2024 TABLE OF CONTENTS CONTENTS PAGE Controlling Officer's Report 1 Statement of Management Responsibilities 6 Auditor General's Report 7 Statement of Financial Position 10 Statement of Receipts and Payments 11 Designated Account Activity Statement 12 Notes to the Financial Statements 13-25 MINISTRY OF AGRICULTURE AGRICULTURAL COMMERCIALIZATION PROJECT (AGCOM) PROJECT ID NO: P158434 AND IDA CREDIT NO: 60480-MW FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH, 2024 CONTROLLING OFFICER'S REPORT 1.0 Introduction The Ministry of Agriculture is implementing the Malawi Agricultural Commercialization Project (AGCOM) with funding from the International Development Agency (IDA) amounting to US$95 million (i.e., SDR70,100,000). The Project was approved on 23rd May 2017 while the Financing Agreement (FA) was signed on 2nd February 2018. The Project was declared effective on 1st June 2018. The original closing date of the Project was 31st May 2023 while the disbursement deadline date was 30th September 2023. The project was granted a no cost extension up to 31t May 2024 and the disbursement deadline was revised to 30h September 2024. In 2024 the project realized foreign exchange gain from translation of SDR to USD amounting to US$841,059. Therefore, the project budget was revised to US$95.8 million 1.2 Project Development Objective (PDO) The Project Development Objective (PDO) is to increase commercialization of agriculture value chain products selected under the project. The PDO refers explicitly to value chain products selected under the project because the value chains to be supported are not determined in advance; AGCOM is purposely designed to allow the market to decide which value chains buyers have strong prospective commercial linkages. This approach prevents the project from confining its impact at the outset to a small number of producers in particular value chains. Agricultural value chain products are products of farms and agribusinesses, including crop, livestock, and fisheries products sold domestically or exported, with or without processing, depending on market requirements. Commercialization refers to the proportion of marketed production from targeted farms and the proportion of marketed agribusiness products from the selected value chains. 1.3 PDO level indicators The following Project indicators measure progress toward the PDO i. Increase in yield of selected commodities by producer organizations participating in productive alliances (crops, livestock, and fisheries, etc.) ii. Selected agricultural value chain products linked to markets iii. Producer groups that meet market specifications defined by off-takers (% of members' women) iv. Increased value of gross sales by producer groups for products of agricultural value chains supported by the project 1.4 Project Components The above PDOs are being achieved through the Project's four components, namely: i. Building Productive Alliance. This component is supporting integration of small- scale, emerging farmers (defined as farmers cultivating not more than 8 ha) into value chains by improving their capacity to finance and execute productivity- enhancing investments and respond to the requirements of end-markets and buyers (off-takers). ii. Support Investment Enabling Services. This Component is focusing on organisation of Producer Organizations (POs). development of Productive Alliances (PAs), and advance access to markets (especially for mature PAs). Further this component is supporting improvements and trade environment that will both deepen and sustain market linkages and improve financing for PAs and POs. iii. Contingency Emergency Response. This Component focuses on establishment of a disaster recovery contingency fund that is triggered in the event of an eligible natural or human-induced crisis or emergency that has had (or is likely to have) major adverse socio-economic impacts during the life of the project. iv. Project Coordination and Management. This Component is financing and coordinating project implementation. The AGCOM PIU implemented key activities as well as fiduciary activities (including the management of finances and associated checks and balances, procurement contract management) with full oversight support provided by the members of the Project Technical Committee, Project Steering Committee, Ministry of Agriculture and other implementing agencies such as Ministry of Trade, MITC and MBS. 1.5 Key achievements during the year under review In the period under review April, 2023 to March, 2024 the project has made good implementation progress: Progress on Matching Grants In the reporting period, there has been no additional productive alliances established but disbursements to productive alliances that were already established amounting to USD 10,016,263 (Mwk 11,084,713,103). To date, the AGCOM Project has established 330 productive alliance (PA) subprojects against a target of 200 and disbursed USD25,406,439.83 to them. In the period under review, using the matching grants funds, the POs procured the following additional key assets; 24 tractors and related accessories, 62 warehouses and aggregation centers, 20 factory houses, 715 dairy animals, 12 vehicles and 58 processing machinery. Cumulatively, the POs have procured the following key assets: 116 tractors and their accessories, 260 warehouses and aggregation centers and 127 Factory Houses, 5,715 dairy animals, 162 transportation vans and 284 processing machinery and many others capital assets. The 184 POs that reported their data for the 2022/23 season increased their volume of sales by 26,500 metric tons, against end of project target of 15,000 metric tons representing 177% achievement and the value of sales is estimated at US$ 18.1 million compared to end year 2 target of US$ 10m representing 181%. Much of the increase is attributable to dairy and sugarcane value chains, which have steady domestic market and great potential for export market. The project has created a total of 16,652 jobs of which 13,769 are temporary jobs and 2,883 are permanent jobs as at 31" March, 2024. Disaggregating by gender, a total of 9,492 representing 57% were women and a total of 7,160 representing 43% were males. These jobs have been created by both PO s and off takers. Progress on Last Mile Infrastructure (LMI) In the period under review, 6 irrigation schemes namely, Salankhuku and Kanjedza (Phalombe), Masenjere and Muona (Nsanje), Nambuna (Dedza) and Limphasa (Nkhatabay) have been substantially completed; 12 roads under the approved LMI clusters have also been substantially completed; 5 electricity connections inclusive of Ntchisi East Coffee Growers (Ntchisi), Mbalame Milk Bulking group (Dowa), ACADES (Lilongwe), Mundundundu and Doroba (Mzimba) have been done and 12 Water Projects inclusive of Kawindula, Msomba Youth, Nkhwali Honey, Livuwu, Chakhola (Nkhatabay); Ntchisi East Coffee Growers, Mpalo Milk Bulking Group (Ntchisi); Hortspice (Lilongwe); Mzalangwe, Kanthunkhako, and Kapiri (Mzimba) have also been substantially completed. In total 39 Producer organizations have benefited from the LMI subprojects. Progress on Partial Credit Guarantee (PCG) During the implementation period seven POs accessed loans under the Partial Credit Guarantee (PCG) valued at USD57,801.04 (MWK 46,564,000). Cumulatively PCG has provided loans coverer of up to USD202,576.74 (MWK163,194,000). Progress on Access to Land for Agriculture Commercialization In the reporting period the project re- adjudicated and demarcated 2,890 land parcels for 1,926 for Katunga Maseya (KAMA) Cooperative in Chikwawa. These land parcels were the first land parcels under AGCOM to be registered using the newly developed Land Information Management System (LIMS). The system was developed under the project to improve efficiency and effectiveness in the delivery of land administration services in Malawi. It was officially launched by the State President His Excellency Dr Lazarus McCarthy Chakwera on 29th February, 2024 at Bingu International Convention Centre in Lilongwe. Cumulatively, the project has adjudicated and demarcated 15,634 land parcels, reaching out to over 22,592 households against the target of 12,000 households. During this period the project also engaged Traditional Leaders, District Commissioners and Judges of the Supreme Court of Appeal and High Court of Malawi on the operationalization of the land laws to improve access to justice on land matters by communities including smallholder farmers. Progress on Business Enabling Services In the period under review, the project funded reviews of veterinary, laws cooperatives societies act as a contribution to reforms. Under trade facilitation the Malawi Bureau of Standards (MBS) conducted 40 assessments of producer organisations that needed certification. Out these ten were approved by the MBS and to date six units have been certified. The project also completed the support and operationalization of the Malawi Business Registration System (MBRS) which was launched together with LIMS by the State President His Excellency Dr Lazarus McCarthy Chakwera on 29th February, 2024. 32 Project Disbursement and Expenditure As at 31 March, 2024 the overall cumulative disbursement of funds has increased to US$ 95,774,166 from US$ 85,353,498 reported in March, 2023. This represents an increase to 100.81 % from 89.85% reported in March, 2023 of the original US$ 95,000,000. The project disbursement has exceeded the signed amount because of exchange gains accumulated over the years. The total amount gained was allocated to matching grants. As at 31st March, 2024 overall cumulative expenditure stood at US$ 91,706,297 representing cumulative budget utilisation rate of 96% of the total revised project budget of US$ 95,841,059. The current financial year expenditure stands at USD 23,653,706 The Agricultural Commercialization (AGCOM) Project has spurred economic growth by increasing agricultural productivity and income levels for farmers. Since commercialization of agriculture is more about producing for the market with much focus on the volumes brought to the market and value of sales made as being yardsticks of commercialization. The impact assessment report revealed that in 2022/23 season the project registered an increase of 26,500 metric tons in volume traded with off takers and approximately an US$ 18.1 million increase in sales compared to the base year figures. Safeguards implementation All the proposed investments under AGCOM complied with the Malawi Government and World Bank safeguards policies to ensure that they are environmentally and socially viable. Under Matching Grants, the PIU facilitated development of ESMPs for all the 330 POs with a budget that is less than 5% of the total project budget to facilitate implementation of the measures highlighted in the plan. However, due to devaluation, 50% of the funds that were meant to support ESMP implementation were reallocated to support procurement of production assets such as tractors, warehouse construction etc. A total of 30 Contractor ESMPs were also developed and implemented across all infrastructural projects. Some of the notable mitigation measures that were implemented included: (i) 660,000 trees planted from 36,000 cut (with an average of 60% survival rate), (ii) 25km vetiver planted along canal embarkments, (iii) 100% compliance on the use of cement blocks (on 198 warehouses and 107 factory houses), (iv) compost manure making from animal dung to improve soil texture, (v) 17 burrow pits rehabilitated, (vi) 105 biogas facilities of 12 m3 installed for dairy farmers to help in managing waste, (vii) provision of employment to 675 people (M473; F202) in construction projects. The project also had a functional Grievance mechanism at the National, District and Community levels to resolve all grievances during implementation. A total of 330 CGRM and 30 WGRC were established and oriented during the implementation period. In summary, a total of 143 grievances were reported and all resolved. 1.6 Key challenges in the year under review During the year under review, the project experienced some administrative/operational, technical and financial challenges which included but not limited to the following: Forex Scarcity 4 This was the biggest challenge to project implementation affecting Producers Organisations that are importing various types of equipment. As the project is going to the end there are some POs that have not yet procured their productive assets as commercial banks are unable to pay to the foreign suppliers. The project engaged reserve bank of Malawi to assist but this worked only one time where two invoices only were settled. Fraud in POs Fraud is done by some Producer Organisations despite the PIU in collaboration with the two Ministries (Agriculture and Trade and Industry) providing finance management trainings and hand holding services. PIU in collaboration with Malawi Police manages this by investigating and seeking legal redress through the courts. The groups are also helped to elect new leadership. Oversubscription of POs in AGCOM There was oversubscription of POs in AGCOM one as many of them submitted their concept notes towards the end of the project. Successful groups that were not funded in AGCOM 1 have been carried over to AGCOM 2. Loan Defaults by POs There is high rate of weather based systemic defaulters of the Partial Credit Guarantee loans. This is being managed by MAIIC by investigating reasons for defaulting before the PCG can be used to cover that. Staff Turnover Reduced capacity of the AGCOM finance section as some key positions have not yet been filled due to failure to attract best evaluated candidates caused by uncompetitive remuneration offers. This is being handled by the ministry of Agriculture. Currency Devaluation The project was affected by the 45% devaluation that happened in November 2023, and the subsequent currency depreciation, resulting in other sub-projects failing to complete their tasks due to price escalation of materials, especially those involved in civil works such as warehouse construction and Last Mile Infrastructures (LMI). The project requested the World Bank to use AGCOM 2 funds to assist these POs. iclkxie V. Kampani SECRETARY FOR AGRIC LTURE 5 STATEMENT OF MANAGEMENT RESPONSIBILITIES The management of Malawi Agricultural Commercialization Project is required to prepare the financial statements for each financial year which give a true and fair view of the state of affairs of the project as at the end of the financial year and of the operating results for that year. The management is also required to ensure that the project keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the project and enable them to ensure that the financial statements comply with the financial agreements and statutes. In preparing the financial statements the management accepts responsibility for the following: * Maintenance of proper accounting records; * Selection of suitable accounting policies and applying them consistently; * Making judgment and estimates that are reasonable and prudent; * Compliance with applicable accounting standards when preparing the Financial Statements, subject to any material departures being disclosed and explained in the financial statements. The management also accepts responsibility for taking such steps as are reasonably open to them to safeguard the assets of the project and to maintain adequate systems of internal controls to prevent and detect fraud and other irregularities. SECRETARY FOR AGRICULTURE NATIONAL PROJECT COORDINATOR 6 Telephone: + 265 1 770 700 In reply please quote No. .................................. Facsimile: +265 1 773 071 NATIONAL AUDIT OFFICE E-Mail : ifo@nayomyP.O. BOX 30045 Website WW.2na4.mw CAPITAL CITY LILONGWE 3 All Communications should be addressed to: MALAWI National Audit Office AUDITOR GENERAL AUDITOR GENERAL'S REPORT TO THE SECRETARY FOR AGRICULTURE ON THE FINANCIAL STATEMENTS OF AGRICULTURAL COMMERCIALIZATION PROJECT (AGCOM) ID NO: P158434 AND IDA CREDIT NO: 60480-MW - FOR THE YEAR ENDED 31ST MARCH, 2024 Opinion I have audited the financial statements of the Agricultural Commercialization Project (AGCOM) comprising the Statement of Financial Position, Statement of Receipts and Payments and Statement of Designated Account Activity for the year ended 31st March, 2024 and the related notes to the accounts for the period then ended as set out on pages 9 to 27. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Agricultural Commercialization Project (AGCOM) as at 31st March, 2024 in accordance with the International Public Sector Accounting Standards (IPSAS), Donor terms of agreement and financial provisions. 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 the Agricultural Commercialization Project (AGCOM) and the Ministry of Agriculture in accordance with the International Standards of Supreme Audit Institutions - Code of ethics (ISSAI 30) as promulgated by the International Organization of Supreme Audit Institutions (INTOSAI), and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. 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. 7 I have determined that there is no need to communicate key audit matters in my report due the nature of the audited entity. Responsibilities of Management for the Project's Financial Statements According to Section 107 (1) of the Public Finance Management Act, 2022, Management of Agricultural Commercialization Project (AGCOM) is responsible for the preparation and fair presentation of the financial statements in accordance with International Public Sector Accounting Standards (IPSAS) Financial Reporting under the Cash Basis of Accounting, Donor terms of agreement and financial provisions, and for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation of the financial statements that are free from material misstatements, whether due to fraud or error. Auditor's Responsibilities for the Audit of the Project's Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatements, whether due to fraud or error, and to issue an auditor's 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 International Standards of Supreme Audit Institutions (ISSAIs) 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 Project's Financial Statements. As part of an audit in accordance with ISSAls, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: * Identify and assess the risks of material misstatements 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 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 internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. * 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. 8 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 in the audit of the financial statements of the current period and are therefore the key audit matters. I describe these matters in my auditor's 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. The engagement auditor on the audit resulting in this independent Auditor General's report is: Signature: . . ....... .... THOMAS K.B. MAKIWA NO1.1N NATIONAL AUDIT OFFICE JM LILONGWE MALAWI Date.. 9 г� т-� Go М л м г��ч `�rn e��t о ,'� ,-.� о о �") � ,t,. И �D iЧ 4 ОО CiC (э{] О � а м гтл й �`ct а гr+а `л и оо � N U] �J �С Р\ Г'1 М Л М М �' :h � ы� N N � ^ ,.�,� У•�,у 4р GD Vr �"' N � о и и rл д' о � � т м г�-- � ev ц';, � ,-и� � `� 00 +.� ц] ы � ri С1 ы й � N � �' N �, .�ч.. � � Ои0 О � ��'. д� G R N� �--� � о0 ©О �СЭ GD � \:J М �' аг i� ч-и sГ о И yL � �Lг сТ tiD � N�, N f V О� "" � +.D iЛ '„r: О ^� ,. 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(�, й � r * и сС Q -/� � '° � � © N и .w пу сС �. � С1 �.•} И � U 9D © w W W '� U s. iJ ы сб сл'✓� �С U � � � � � Q °? о `� � •� '� � с ° U .� � ��1 � Гsч '°г3 � и iэ а.> ^б а'' ?) ° UЭ а1 й � у� w � � гГ� О `L �"`� U s�-, � t О � ц � и 7� � •^ и � О CI, �� С/а � и�С �'з й �j и и Ср а] © � `77 ?, К� G'+3 ва❑,� ;� � д � � � � � v � ��, � � � ; � � � � � }; �" Q �1 � х � •� °' �, сп � � � с"i о � v v �1 � � � гк � й� '� � ,� л � ° с' ;� � ьГз пs `� +J � � �° ° '_ � р � ,� (,mj [� Г� � сС �' v ад :; .°�'� r � ,.°., и ^ � �' 43 Q) •L7 �.+ с.�л �_ W ,� [ы �, °" � .� "м'' � .� � � � :б :� й с, avi � � � ? � � й `� � `-� д . . . ° °' �, . _ � '� �� °� � а. �пз С й �' сэ г� � ¢' � b с"э �'�' й �" '�" �`� �' �7 г� ы г-, СЗ -- о 5�! й ° сС „�"' п5 еб сб Ф s.. ° С5 С ы сс �, ° СС "�+ J Р., � r.I� w 1'.� � О Е�+ W #�7 U ь--1 V] Lг, [_, L-�. 1�ч Р" GГ] � Н �i U rч пч U MINISTRY OF AGRICULTURE AGRICULTURAL COMMERCIALIZATION PROJECT (AGCOM) PROJECT ID NO: P158434 AND IDA CREDIT NO: 60480-MW 1ST FINANCIAL STATEMENTS FOR THE YEAR ENDED,) MARCH, 2024 DESIGNATED ACCOUNT ACTIVITY STATEMENT 2023/2024 2022/2023 PART I US Dollars US Dollars I Cumulative advances to end of current reporting period 79,954,368 44,318,259 2 Cumulative expenditure to end of last reporting period 56,019,527 26,093,148 J Outstanding Advance to be accounted (line I minus line 2) 23,934,841 18,225,111 PART 11 4=1Opening balance 15,956,532 12,225,111 5 Add/subtract: Cumulative adjustments (if any) - - Advances from World Bank during reporting period 7. 6,000,000 7 Add lines 5 and 6 7,978,309 6,000,000 Outstanding advances to be accounted for (add line 4 and 8 line 7) 23,934,841 181225,111 Closing DA balance at the end of current reporting period 9 (as of March 3 1) 2,781,294 11,534,662 10 Add/subtract: Cumulative adjustments (if any) - - I I Exp--nditures for current reporting period 21,153,546 6,690,449 12 Add I Ines 10 and line 11 21,153,546 6,690,449 13 Add lines 9 and line 12 23,934,841 18,225,111 14 Difference (if any) (line 8 minus line I')) - - PART III 15 Total forecasted amount to be paid by World Bank 2,864,751 33,299,433 Less: Closing DA balance after adjustments (line 9 plus 16 line 10) 2,781,294 11,534,662 17 Direct Payments 83,456 2,370,888 IS Add lines 16 and 17 2,864,751 13,905,550 Cash Requirement from IDA for next two reporting periods 19 (15 minus 18) 0 19,393,883 12 MINISTRY OF AGRICULTURE AGRICULTURAL COMMERCIALIZATION PROJECT (AGCOM) PROJECT ID NO: P158434 AND IDA CREDIT NO: 60480-MW FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2024 NOTES TO THE FINANCIAL STATEMENTS 1.0 ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these project financial statements are set out below: - 1.1 Basis of preparing the Financial Statements The Financial Statements have been prepared using the historical cost convention and in accordance with International Public Sector Accounting (IPSAS) with particular emphasis on cash basis financial reporting under the cash basis accounting. The cash basis accounting recognizes transactions and events only when cash is received or paid by the project. All receipts and payments received and made in the period are reflected in the financial statements. 1.2 Adoption of new Financial Statements Presentation The Statement of Financial Position in the current year has been revised with operating costs ceasing to be capitalized and instead recognized as a balancing expense to conform to IPSAS cash basis provisions. The adoption of this new presentation does not have any significant impact on the financial statement of the Project. 1.3 Foreign Currency Translation Foreign currency translation for income and expenditure account items are converted using the actual exchange rate at the date of draw down. All local expenditures paid from the local accounts/currency are translated back to the US Dollar at the actual rate at which the draw-down was converted at date of transfer from the designated account to local account. Where the expenditure cannot be fully met from the proceeds of a draw down, and part of the expenditure should be met from the proceeds of the subsequent draw down, which may have come at a different rate, the conversion rate of the total expenditure from the local currency to the US dollar is on First in First out (FIFO) basis. Thus, the preceding draw down should be exhausted before the subsequent draw down. Current assets and special fund balances are translated using the rate that was used at the time of receiving funds. Following the above policy, all receipts in reporting currency (USD) are reported at the same rate they were received. This means there are neither exchange gains nor losses recognised in the USD based report. 13 MINISTRY OF AGRICULTURE AGRICULTURAL COMMERCIALIZATION PROJECT (AGCOM) PROJECT ID NO: P158434 AND IDA CREDIT NO: 60480-MW FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2024 In addition to the reporting currency figures, the project also reports figures in the operating currency which is Malawi kwacha. These figures are reported at the exchange rate of each draw down from the designated account. Based on the draw down exchange rates, gains are recognised in the operating currency only for funds utilised. Gains are not reported on unutilized funding balances and direct payments from World Bank account to suppliers and contractors. 2.0 Foreign Exchange Gain/Loss To date the project has realized exchange gains amounting to MK8,014,050,778 from translation of drawdowns compared to the exchange rate of the day funds were received in the Designated Account. The exchange gains are being reported now after all the dollars received have been converted to Malawi Kwacha. 3.0 Bank Balances Bank balances are the amounts that remained in the bank as at 3 1 March, 2024 for the three project bank accounts, namely, Foreign Currency Denominated Account, and Local Currency Denominated Account both of which are held at Reserve Bank of Malawi and the NBS (CCA) Operating Account. 2023/2024 2023/2024 2022/2023 2022/20 Closing Closing Closing Closing Balance Balance Balance Balance Account No. Bank Account Name Bank (MWK) (USD) (MWK) (USD) Malawi Agricultural Commersalisation Project - Foreign Currency Reserve Bank 13006240193 Denominated Account of Malawi 892,331,164 530,087 8,535,661,620 14,059,2 Malawi Agricultural Commersalisation Project - Local Currency Reserve Bank 13006240191 Denominated Account of Malawi 3,789,606,187 2,251,207 1,947,307,120 1,897,15 Malawi Agricultural Commersalisation Project - 18444321 Operating Account NBS Bank Ltd - - Malawi Agricultural and Industrial Investment Corporation (MAllC) plc PCG Funds 1,038,322,500 1,288,895 1,084,886,500 1,346,6 Total 5,720,259,851 4,070,190 11,567,855,240 17,303,- 14 � �а�� � � ��а� � с�г�� а ° s� р � '� ° '�рС��, ел г� � о � го ,:, �у, .; ,.; � � ����Q�� ~' � � �� � � zm�� ;� � �, ��. �� �r�г�. � �, �гз�� о ' � � �� ��� � � ���� ,�w � Сд� � �� � и ��'`-�'О р � rr �. сз r, �' ь-� �� �� �� ��� ��Г1 о � го д' '�-�а,ь� r G� � � �i � 1 � jГJ � � F++ F+ vГ ь--+ ¢ у г�j г-С.� � °; � � у. ft�.-з °г � й° � .-+ Г~-r С � r-� �U-` L-" �' n с� °' ~ �' �. � р �' ° Сг� O0 -7�. С �i {� г� ,у �з � и � � � � и со � '� �' ��',, t" � � � I;� �г � ^'�^' f�D 'Г� � *'г "'j � ��-f !� � 1 г� �. � � п � ''гJ � ('�''� � и сь го р �.-� � � й � r� р и�- Л�'дi �� k7 с,� � Q �� G_ ы о� г�д� rb �., �' � �fi^. ��^' S � `��'. в�' i � д9 � � и � i/' г,.�"' R+ `�i' ы� � t-Н � `� � ,_� �, га � � GG о �q .. � а' � :�, � � � С�1 � � " � � у °` � з ю � С го �q � �` cD � д � � �7 �-Э .. � ' ^ г�г ..г � � tb N � О � ь�' � ь-� � � д. ° а' � � п а .�'.; � � � �' р� v� '{ [17 � ^т � " о � � р R• � (D О ;р � G _ сэ � ;� ,� b а' '� tP � � °_ � � � С�`1 :� ��� ; оо и п� с СС1 са "ц �д' � д� Сг1 � � �л С-' ° �7 а. � `s �^'� � � � � f�° Р-��' д°� г -к са � '� G � . � N 6„�, � �; �..р n �� � оо t^ �, а �- р О У г.°д г.� � .�.г. :-г П и � � � .у � G+ � � �_ п Г) ^` иа Г� �, со р •� � � � г� -+ � � �` г� р- � �„ у о � .� , � �- �ro � о �' � � � � � � �.. � �� А f7 .��м ��. р rи., fC1 � � � � � х с � и � � й'�6 П й ,..F �+ р N АС7о у О`'�О� � r � й G. "'"� . а � � � � �ti �' � fD UQ � : `D ,�,t r��+ n � С� г� �j гсi л G. С j �' ,� � � Гp�д„ �'�., г`�р L7 "� р W C�s �- t� r � � � О �t-I Fб � О � и �� � � � О � r' � `'� '-'" г.и- "'" . � � . „� г�р UQ г^� � ° и v О � й � (� р�,� 'Т1 � С7 � � � � � �� ��уС?� � у�,�. °tia° � --� v' .с, �к G а � 3 '.� � w w га G С� �-А +п � � � U1 'а" р � й � � г��-' ГЭ�� С17 г�ю -� �л 4� w^ ra ^: � cv р cD iп "� � � � �д "" з °" � � • �" � �' н.ь, й � . �� . �q Н е! к � � � � �."л./ С.--r `С� гТ "� f4 r"� r i�7 � С .�'ч, `С (�7 ','�� L�" � � �,р � м � cj Ги �- н+ ^' .`в С. �• S17 � _ .-t и � Гр О �' С � ('� Аэ �' �--�-' � � �.�,�,�� С � � Н и р � � и ! ＿一他！ 陣■d O 付 ;r� ��у� � � � ��� � � ° �'°�'� � � ���~� � � � � � � r � � � � о ��СС�} � � а � � �,�n� ���r� � �' � �W�r r� � а, ���� ага �� �у7�� � � � ©д�� � � .✓ � � г�д � � ;� д N � � � � � � д � � � � � � "' д -°- в � � w д � ,��` '�' �� ° "-' с�.7 � г.*а и�, t� � , � и и � � � � у�о t� � � � � х � � А Б•,,) д U4 й�С � � � � � fl7 ld N N � fi� -.1 J --Э � 00 44 О � LR � б � , � . С � �_ А7 rм н• N [�.3 lJ �у fD S� W W � � N � � � . � MINISTRY OF AGRICULTURE AGRICULTURAL COMMERCIALIZATION PROJECT (AGCOM) PROJECT ID NO: P158434 ATND IDA CREDIT NO: 60480-MW FINANCIAL STATEMENTS FOR THE YEAR ENDED 3 IST MARCH, 2024 5.0 Payments Project payments are done in both foreign currencies and Malawi Kwacha through the World Bank Direct Payment facility, Foreign Currency (USD) Designated Account and the NBS Credit Ceiling Authority operating account. Costs are recognized on actual payments. Foreign currency payments are accounted for at the exchange rate prevailing at the date of payment. Principal authority in translating the currency is the Reserve Bank of Malawi. 6.0 Depreciation Depreciation is not charged on assets when the Cash Basis method is used. The objective is to show how project funds have been utilized. 7.0 Taxation The Project costs funded under IDA Credit No 60480 - MW are "inclusive of taxes according to the Financing Agreement. 8.0 Property Plant & Equipment Property, Plant and Equipment are expensed in the project's books of accounts in the year of purchase and shown in the notes to the financial statements at the cost to the Project. The cost is the amount of funds actually paid. The breakdown of the cost of Property, Plant and Equipment for the year under review is as per schedule below: 2023/2024 2023/2024 2022/2023 2022/2023 MK USD MK USD Opening Balances 2,115,166,324 2,004,131 1,477,510,943 2,004,131 Office Equipment 69,812,625 66,271 637,655,381 629,642 Non-Current Assets for the Year 69,8' .2,625 66,271 637,655,381 629,642 Total Non-Current Assets 2,184,978,950 2,700,045 2,115,166,324 2,004,131 Opening Balances 55,923,419,590 65,418,809 28,573,404,737 37,488,539 Total Expenses for the year 26,273,93 1,215 23,587,435 27,350,014,853 27,930,270 Total operating Costs 82,197,350,804 89,006,245 55,923,419,590 65,418,809 19 MINISTRY OF AGRICULTURE AGRICULTURAL COMMERCIALIZATION PROJECT (AGCOM) PROJECT ID NO: P158434 AND IDA CREDIT NO: 60480-MW FINANCIAL STATEMENTS FOR THE YEAR ENDED 31sT MARCH, 2024 9,9 Project Operating Costs 2023/2024 2023/2024 2022/2023 2022/2023 MK US$ MK US$ Opening Balance 55,923,419,590 65,418,809 28,573,404,737 37,488,539 Total Expenses for the year 26,343,743,840 23,653,706 27,987,670,234 28,559,912 Less Total Assets 69,812,625 66.271 637,655.381 629,642 Add Operating Costs for the 26,273,931,215 23,587,435 27,350,014,853 27,930,270 year Closing Balances 82,197,350,804 89,006,245 55,923,419,590 65,418,809 20 MINISTRY OF AGRICULTURE AGRICULTURAL COMMERCIALIZATION PROJECT (AGCOM) PROJECT ID NO: P158434 AND IDA CREDIT NO: 60480-MW FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH, 2024 APPENDICES Appendix 1 Statement of Budget Comparison with Actual Expenditure USD USD USD Actual Planned Variance Variance Explanation 1.0 Building Productive Alliances 18.241,183 20,863,791 2,622.608 1.1 - Establishment of Producer Organisations and Productive Ailia l ces (Horizontal Alliances) 299,582 2,658,796 .7(240,787) 1.1. Com-munication Campaigns 173,212 169,287 (3,926) 1.1.3 -Call for proposals 2,672 3,688 .t16 Pa3ment to TS brokers increased as the POs implementation period extended and they 1, 1 4- Capac ity Building 2-723,698 2,4815,821 (237,877) needed more sup-port 12 - Cousuting Services to Prod acer O ganisations (Productive Alliances) 10,49,798 12,278,946 1,78248 - Support to PCs mncreased as the POs 1.2.1- Consultin Services to Producer implementation period extended and they ris tn0 14,036 (15,184) needed more support Revifstnds iiii1inpcinan1,2la2datviis0mpee n fnsv 1.2.2 - Sub ProJect Grants to Producer Some PO s delayed contributions for ther final Organisations (Matching Grants) 10,243.135 110.335,170 92-035 tranches so disbursements to them also delayed A few grOuPS are taking loans. Many are failing 1L2.3- Provision of Partial Credit Ouarantees because banks require collateral on the amount (PCG) 92.4413 1,797,740 1.705,297 not covered by AGCOM 13 - Lat Mile Infrastructure Investments 4,844,803 5,926,0492 1,081,24 F 1.3.1 - Feasibiiiy Assessment of Last Mnee Tinfrastructure 362,401 367,312 4,911 Completed and funds will be reallocated Somne LMI projects have not yet been 1.3.2 - Investments in all last mile infrastructure completed Therefore, cannot be invoiced/pad development for productive alliances 4,330574 5,406,288 1 075.714 now 1.3.3 - Grievances redress mechanism and other social and environmental issues in all areas of implementation of Last Mile Infrastructure 151,828 152,449 621 2.0 - Support Inve"tment Enabling Services 2,471.056 3.399,097 828.041 2.1 - Access toAricult1 63,038 123,276 608 - 2.1.5: Facilitate the enforcemenit of warehouse receipt systemt standards (Support to MBS)- Review of standards initial inspection and All planned activities completed and funds will surveiliance qult uisadc-iieo 3.038 _123,226 60,. 188 be reallocated 2.2- Access to land for actors in Agriculture Value Chain 1,656,615 1.802,489 145.874 - 2,2.1 - Land Reform frmplementation Unit (LRIUI) 426,748 549.629 122,881 Funds will be Utilised in Apri and May 2024 Sensitisation of new land laws needed more 2.212 - Public Engagement 1 19,543 108,484 (1 1,059) money 2.2.4 -OfcInrstructure, Equipment and 79 Furniture 9 198 10,O276 107 Ongoing 21 MINISTRY OF AGRICULTURE AGRICULTURAL COMMERCIALIZATION PROJECT (AGCOM) PROJECT ID NO: P158434 AND IDA CREDIT NO: 60480-MW FINANCIAL STATEMENTS FOR THE YEAR ENDED 31sr MARCH, 2024 2.2.5 - Management of Lands Records/Design, Develop and Organisations an Interoperable Land Remaining activities are for systCm users' Information System 1,101,126 1,134,100 32,974 orientation 23- Support for Business Enabling Services for Agribusiness and Farmers 851,403 1,473,382 62,97 - 2.3.1 - Support Public Private Dialogue Forums and Agribusiness Task Force 77,543 122,173 44,630 Funds will be Utilised in April and May 2024 2.3.2 - TWG Meetings on Business Reforms 769 - (769) 2.33 - Support2to TWG for TPSWAP 0,264 188.492 68,229 Funds will be Utilised in April and May 2024 2.3.4 - Support National Trade Facilitation Secretariat 39,781 101,777 61,995 Funds will be Utilised in April and May 2024 2,3,5 - Business Environment and Inter- Agency Coordination 17,126 19,546 2,420 Funds will be Utilised in April and May 2024 2.316 - Support to development Institutional Framevork for business formialisation in Malawi Activity completed and funds will be and Agribusiness Environment Reforms 318,259 616,022 297,763 reallocated 2.3.7 - Support to MITC 185,007 198,599 13,593 Funds will be Utilised in April and May 2024 23.8 - Certification, Surveillance & Audit Services by MBS 47,773 159.673 111.900 Funds will be utilised in April and Ma 2024 2.3.9 - Promoting Competition and fair trading in agriculture sector 44,881 67,101 22,219 Funds will be utilised in April and May 2024 Project Vlanagement & Coordination 2.841,467 3,513,079 671,612 - 4.1Project Management, Activities oversight and Results _2,650,999 3-271,482 620,482 - 4.1.1: Technical Assistance & Consultancies 63 ,255 1,026,701 463446 Ongoint 4.1.2: Project Planning, Monitoring and There was more work in te fial year than Evaluation 1,023,092 958-153 (64,938) what was anticipated 4.1.3: Finance and Audit 275,384 318,546 43,161 Ongoing 4.1.4: Procurement 199,299 210.152 10,854 Ongoing 4.1.5: Office Equipment, furniture and Vehicles 49,173 49,448 276 Ongoing 6 Office running costs 331.825 478,552 146.727 Ongoing 4.1.7: Vehicle and Genset r-Unning costs 208.971 229,929= 20,957 Onog 4.2 Sectoral and cross Sectoral Coordination with key Sector Agencies 190,468 241,597 51,129 - 4.2, 1: Pro)ect Implementation Supervision 1519284 140,436 (10,848) Overdraft covered by balance on PTC budget 4.2,2: Project Steering Committee (PSC) meetings 20,353 21,195 842 4.2.3: Project Technical Committee (PTC) meetings 18831 79.967 61,136 One meeting remaining TOTALS_ 23,653,706 27,775,967 4,122,260 22