!J- December, 2016 AR/SATTFP/2015/2016,. 1 1~1.. !... Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized

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1 Public Disclosure Authorized,~,! ~ ' s, I l. THE UNITED REPUBLIC OF TANZANIA NATIONAL AUDIT OFFICE 1 1~1.. ~f ::. :, Public Disclosure Authorized }!. Public Disclosure Authorized REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE SOUTHERN AFRICA TRADE AND TRANSPORT FACILITATION PROJECT (SATTFP) FOR THE YEAR ENDED 30TH JUNE, 2016 Public Disclosure Authorized Controller and Auditor General, National Audit Office, 16 Samora Machel Avenue, P.O. Box 9080, Dar es Salaam, Tanzania. T~l: 255 (022) /8, Fax: 255 (022) ocag@nao.go.tz Website: December, 2016 AR/SATTFP/2015/2016,.!J- I i ) 1 I /. : :,.. - ~!.....

2 TABLE OF CONTENTS 1.0 GENERAL INFORMATION Mandate Vision, Mission and Core Values The Project Background and Objectives Financial Overview Audit Objectives Audit Scope Audit Methodology AUDIT REPORT ON THE FINANCIAL STATEMENTS... 4 Audited financial Statements and Notes to the Financial Statements... 7 STATEMENT OF RESPONSIBILITY ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE, Office of the Controller and Auditor General AR/SATTFP/2015/

3 1.0 GENERAL INFORMATION 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. 1 O (1) of the Public Audit Act No.11 of 2008 the Controller and Auditor General is the statutory auditor of all Government revenues and expenditures including the revenues and expenditures of the RSSP II Vision, Mission and Core Values Vision To be a centre of excellence in public sector auditing. Mission To provide efficient audit services in order to enhance accountability and value for money in the collection and use 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, the report becomes a matter of public record and its distribution may not be limited. Office of the Controller and Auditor General AR/SATTFP /2015/2016 1

4 1. 3 The Project Background and Objectives The project development objective of the Southern Africa Trade and Transport Facilitation Program - Phase 1 (APL-1) is to facilitate the movement of goods and people along the Dar es Salaam Corridor in Tanzania, whilst supporting improvements in the services for HIV I AIDS and road safety. The project proposes to achieve this objective through: (a) the rehabilitation and upgrading of the Mafinga - lgawa road section, the refurbishment of the infrastructure and the establishment of a One-Stop Border Post on the Songwe/Kasumulu border crossing with Malawi, the establishment of three one-stop inspection stations, one at Vigwaza and at two other as yet unconfirmed locations in Tanzania; (b) introduction of interventions in the area of road safety and improvements in HIV I AIDS and health services; (c) other necessary implementation assistance, institutional support and priority studies in the area of trade facilitation; and (d) the strengthening of the key institution charged with improving the operations of the Dar es Salaam Corridor, the Dar es Salaam Corridor Committee, support for its work program, thereby improving corridor management and monitoring. 1.4 Financial Overview The activities of the SATIFP are financed mainly by IDA Credit of USD 210 million and IDA Regional Grant of USD 3 million. During the year the project had a total fund available of USD 20,472,000 that was made up of the receipts of USD 10,662,000 from the International Development Associations (IDA) and other income with an opening balance of USD 9,810,000. A total of USD 9,712,000 equivalent to 47 percent of the amount available was utilized ending up with unspent balance of USD 10, 760,000. Details Amount (USD) Opening Balance 9,810,000 Receipts During the year. 10,662,000 20,472,000 Total Funds Available 9, 712,000 Less: Expenditure During the Year Closing Balance as at 30m June, , 760, Audit Objectives 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 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 Office of the Controller and Auditor General ARISA TIFP /2015/2016 2

5 activities of the Southern Africa Trade and Transport Facilitation Project (SAITFP). 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 TANROADS. 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 TANROADS 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. Office of the Controller and Auditor General AR/SATIFP /2015/2016 3

6 2.0 AUDIT REPORT ON THE FINANCIAL STATEMENTS To: RE: The Chief Executive Officer, Tanzania National Roads Agency, P.O. Box 11364, DAR ES SALAAM. REPORT OF THE CONTROLLER AND AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE SOUTHERN AFRICA TRADE AND TRANSPORT FACILITATION PROJECT (SATTFP) FOR THE YEAR ENDED 30TH JUNE, 2016 Introduction I have audited the financial statements of the SA TTFP which comprises of the statement of financial position as at 30th June, 2016, its statement of financial performance, statement of change in equity and cash flows statement for the year then ended, Statement of comparison of budget and actual amounts and a summary of significant accounting policies and other explanatory information attached as Annexure I to this audit report. Management's Responsibility for the financial statements Management of TANROADS is responsible for the preparation and fair presentation of these financial statements in accordance with International Public Sector Accounting Standards (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 as per the Statement of Management responsibility on the Financial Statements. Attached in Annexure II. Responsibility of the Controller and Auditor General My responsibility as an auditor is to express an opinion on the financial statements based on my audit. I conducted my audit in accordance with, International Standards of Supreme Audit Institutions (ISSAls) and such other procedures I considered necessary in the circumstances. These standards require that, I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making the risk assessments, I considered internal control system relevant to the preparation and fair presentation of the financial statements 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 controls. The audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. Office of the Controller and Auditor General AR/SATTFP /2015/2016 4

7 In addition, Sect. 10 (2) of the Public Audit Act No.11 of 2008 requires me to satisfy myself that, the accounts have been prepared in accordance with the appropriate accounting standards. 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 auditee has complied with the provisions of the Law and its Regulations. I believe that, the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Unqualified Opinion In my opinion, the financial statements present fairly, in all material respects, the Financial Position of the Southern Africa Trade and Transport Facilitation Project (SATIFP) as at 30th June, 2016, and of its Financial Performance and its Cash Flows for the year then ended in accordance with the International Public Sector Accounting Standards (IPSAS) Accrual basis of accounting and the Project Document. 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 t he procurement transactions and processes I have reviewed as part of this audit, I state that, Southern Africa Trade and Transport Facilitation Project (SATIFP) procurement transactions and processes have generally complied with the requirements of the Public Procurement Act No. 7 of 2011 and its underlying Regulations of of. s. Assad CONTROLLER AND AUDITOR GENERAL December, 2016 Copy: The Chief Secretary, State House, P.O. Box 9120, 1 Barack Obama Road, DAR ES SALAAM. Office of the Controller and Auditor General AR/SATTFP /2015/2016 5

8 Permanent Secretary and Paymaster General, Ministry of Finance, P.O. Box 9111, 1 Madaraka Street DAR ES SALAAM. Permanent Secretary, Ministry of Works, Transport & Communication (Works Sector), P.O. Box 91 11, 7 Samora Machel Avenue, DAR ES SALAAM. World Bank Representative, P.O. Box 2054, DAR ES SALAAM. Office of the Controller and Auditor General AR/SATIFP /2015/

9 Annexure I Audited financial Statements and Notes to the Financial Statements Office of the Controller and Auditor General ARISA TTFP /2015/2016 7

10 STATEMENT OF MANAGEMENT RESPONSIBILITY FOR THE YEAR ENDED 30TH JUNE 2016 Pursuant to Section 25(4) of the Public Finance Act, 2001 (R.E. 2004), the Management is required to prepare financial statements for each financial year, which give a true and fair view of receipts and payments of the reporting entity as at the end of the financial year. It also requires Management to ensure the reporting entity keeps proper accounting records, which disclose with reasonable accuracy at any time the financial position of the reporting entity. They are also responsible for safeguarding the assets of the entity. The Project Management accepts responsibility for annual financial statements for the year ended 30th June 2015 which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Public Sector Accounting Standards Accrual Bas is (IPSAS - Accrual) and in the manner required by Section 25(4) of the Public Finance Act, 2001 (R.E. 2004), Section 15(1) of the Executive Agencies Act No. 30 of 1997 (amended 2009), the Agency's Accounting Manual and the Financing Agreeme nt. The Project Manageme nt is of the opinion that the financial statements give a true and fair view of the state of the financial affairs of the Project. Management, further, accepts responsibility for maintenance of accounting records that may be re lied upon in the preparation of financial statements, as well as adequate systems of internal financial control. Management is responsible for safeguarding the assets of the Project and hence for taking reasonable steps for prevention and detection of frauds, errors and irregularities. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. To the best of the Management's knowledge, the system of internal control has operated adequately throughout the reporting period and that the records and underlying accounts provide a reasonable basis for the preparation of the financial statements for the financial year 2014/2015. The Management accepts responsibility of the integrity of the financial statement, the information it contains and its compliance with the Public Finance Act, 2001, the Executive Agencies Act, 1997, instructions from the Treasury and the Financing Agreement. Procurement of goods, works, consultancy, and non-consultancy services to the extent that they are reflected in these financial statements have been done in accordance with the Public Procurement Act No. 7 of At the time of preparing this report, there was no evidence that came to the attention of the Project Management to signify that the Project will cease its operatio ns; therefore, the Southern Africa Trade and Transport Facilitation Project expects to continue in operation as a going concern from the date of this statement. Eng. Victor Seff FOR CHIEF EXECUTIVE Southern Africa Trade and Transport Facilitation Project (Credit No Z and Grant No. GR.H844- TZ) 7

11 ~ - ;,,,,, _... A DECLARATION OF THE HEAD OF FINANCE AND CHIEF ACCOUNTANT OF TANZANIA NATIONAL ROADS AGENCY (SOUTHERN AFRICA TRADE AND TRANSPORT FACILITATION PROJECT) The National Board of Accountants and Auditors (NBAA) according to the power conferred under thp. A11ditors and Accountants (Registration) Act. No. 33 of 1972, as amended by Act No. 2 of 1995, requires financial statements to be accompanied with a declaration issued by the Head of Finance/Accounti ng responsible for the preparation of financial statements of the entity conce rned. It is the duty of a Professional Accountant to assist the Board of Directors/Governing Body/Management to discharge the responsibility of preparing financial statements of an entity showing true and fair view of the entity position and performance in accordance with applicable International Accounting Standards and statutory financial reporting requirements. Full legal responsibility for the preparation of financial statements rests with the Management as under Management Responsibility statement on an earlier page. I, CPA Henry B. Mwakibete being the Ag. Head of Finance and Chief Accountant of Tanzania National Roads Agency (Southern Africa Trade and Transpo rt Facilitation Project), hereby acknowledge my responsibility of ensuring that financial statements for the year ended 30 1 h June 2016 have been prepared in compliance with applicable accounting standards and statutory requirements. I, thus, confirm that the financial statements give a true and fair view position of the Southern Africa Trade and Transport Facilitation Project as on that date and that they have been prepared based on properly maintained financi al records. Signed by: ~ 1 : '----- Position: Ag. Head of Finance and Chief Accountant -- NBAA Membership No.:... ~.Pt.. ~\ ~j Southern Africa Trade and Transport Facilitation Project (Credit No TZ and Grant No. GR.H844 - TZ) 8

12 TANZANIA NATIONAL ROADS AGENCY SOUTHERN AFRICA TRADE AND TRANSPORT FACILITATION PROJECT STATEMENT OF FINANCIAL POSITION FOR THE PERIOD ENDED 30 1 h JUNE 2016 ASSETS Current assets Notes US$ '000 US$ '000 Cash and cash equivalents 3 10,760 9,810 Mobilization Advances 4 13,218 13,386 23,977 23,196 Non-current assets WIP Infrastructure Assets 5 8, Total non-current assets 8, TOT AL ASSETS 32,423 23,302 LIABILITIES Current liabilities Retention Money Deferred Recurrent Grant ,866 Total current liabilities 1,254 1,866 Long Term liabilities Deferred Capital Grant 7 31, ,699 Total long term liabilities 31,139 21,699 TOTAL LIABILITIES 32,393 23,565 NET ASSETS 30 (264) NET ASSETS/EQUITY Accumulated Deficit (264) TOTAL NET ASSETS 30 (264) ~ ~ : Chief Executive Director of Business Support.l.~./..(~!J.l?..l.b :.. ~.}.~.. ~.~4 Date Date Southern Africa Trade and Transport Facilitation Project (Credit No TZ and Grant No. GR.H844 - TZ) 9 " 'IIJ!'""_. t" ~-,. : - - ~ '., I, ~..,"!'. I --""'.. '.

13 TANZANIA NATIONAL ROADS AGENCY SOUTHERN AFRICA TRADE AND TRANSPORT FACILITATION PROJECT STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEA ENDED 30 JUNE 2016 I J Revenue US$ ' US$ '000 Amortized Recurrent Grant Interest Received Translation Gain , Total revenue 2, Expenses Component 2-Mitigation of Social Costs Component 3-lmplementation Assistance and Institutional Support Component 4 - Improved Corridor Management and Monitoring Translation Loss ,026 1, Total expenses 2,199 1,180 Surplus/(deficit) during the year 294 (264) Date Director of Business Support l i e.. - l;). - J.-0 {6.... T Date Southern Africa Trade and Transport Facilitation Project (Credit No Z and Grant No. GR.H844-17) 10 I -

14 TANZANIA NATIONAL ROADS AGENCY SOUTHERN AFRICA TRADE AND TRANSPORT FACILITATION PROJECT STATEMENT OF CASH FLOW FOR THE YEAR ENDED 30TH JUNE 2016 Cash flows from operating activities Receipts Recurrent Grant Received Interest Rece ived Payments Note US$ US$ '000 ' , Mobilization advances paid Payment to Suppliers Cash generated from operations 4 8 (128) (1 3,386) (2, 199) (913) {1,357) (11,517) Net cash from operating activities {1,357) (11,517) Cash flows from investing activities Development Grants Received IDA WIP Infrastructure Assets Net cash from investing activities ,440 21,699 (7, 385) (106) 2,055 21,593 Net increase in cash and cash equivalents ,077 Cash and cash equivalents at beginning of period Loss on Exchange Translation Cash and cash equivalents at end of period , (267) 10,760 9,810 - k,"'"'"'"'"' ' " "'"'"'"'"'"'"'"'"'"'"'" ' "' I J Chief Executive.!4. /(.~l.~p.. /.f Date... ~ ~'.~..... Director of Business Support... Ft.~.!.. ~.~.~./4. Date Southern Africa Trade and Transport Facilitation Project (Credit No TZ and Grant No. GR.H844-72) 11

15 TANZANIA NATIONAL ROADS AGENCY SOUTHERN AFRICA TRADE AND TRANSPORT FACILITATION PROJECT STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 30TH JUNE 2016 Deferred Accumulated Caeital Grant surplus/deficit Total US$ '000 US$ '000. US$ '000 At 01 July 2015 (264) (264) For the Year At 30th June A. l I Chief Executive /L;-/ 1:z. /.2.ar Date Director of Business Support Date Southern Africa Trade and Transport Facilitation Project (Credit No TZ and Grant No. GR.H844 - TZ) 12

16 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30th JUNE Statement of Compliance and Basis of Preparation The financial statements of the Project have been prepared in accordance with International Public Sector Accounting Standards (IPSAS) and comply with the Public Finance Act, 2001 as amended in 2004, the Executive Agencies Act, 1997 and the Financing Agreement. The financial statements are presented in United States Dollars (US$), which is the functional and reporting currency of the Project and all values are rounded to the nearest thousand dollar (US$ '000). The accounting policies will be applied consistently to all the years to be presented. The financial statements have been prepared on the basis of historical cost basis, unless stated otherwise. The cash flows statement is prepared using the direct method. The financial statements are prepared on an accrual basis. There are no comparison figures as these are the first statements for the project. 2. Summary of Significant Accounting Policies The accounting policies adopted for preparation of Project's financial statements, which will be consistent with those of subsequent years, are shown below. a) Foreign currency translation Functional and presentation currency Items included in the fina ncial statements of the Project are measured using the funct ional currency. Financial Statements are prepared in United States Dollars which is the currency of the Credit Agreemen t. Therefore, United States Dollar is the Project's functional and presentation currency. Payments are normally made in the currency or currencies in which the bid price was stated. However, if the payment of a portion of the bid price is made in other currencies, the exchange rates applied are those used in the bid and thus the contract. On the date of payment portions denominated currencies other than US$ are converted into US$ using prevailing exchange rate at the date of transaction. Monetary items in the statement of financial position are translated by using exchange rate at the closing date. Exchange gains and losses resulting from the settlement of such transactions and from the translation at yearend exchange rates of monetary assets and liabilities denominated in other currencies are recognized in the statement of financial performance. Southern Africa Trade and Transport Facilitation Project (Credit No Z anc' Grant No. GR.H844-17) 13 -,-,:r... _..,...,~.. -

17 I J b) Cash and cash equivalents Cash and bank balances in the statement of financial position comprise cash at banks and in hand and shortterm deposits with an original maturity of three months or less, and is measured at amortized cost. For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. c) Revenue recognition The Project receives its revenue from the IDA in line with the signed Loan Agreement between the World Bank and the Government of Tanzania. Revenue from the World Bank is accounted for on accrual basis. Revenue from the World Bank is accrued and recognised in the financial statement when it is probable that future economic benefit will flow to the Project and if the benefits are reliably measured. The following specific recognition criteria must also be met before revenue is recognized: Recurre nt grants are recognised as income when such grant has been rece ived and expensed to match expenditure incurred with the Grants received. Capital grants are deferred until when the Project assets are fully recognised in the book of the project implementing entity or whoever may be allocated such assets. Thereafter, the grant is amortised and recognised as income in systematic and rational basis over useful life of the assets. This means since the road project assets are still in progress and other assets have not yet been allocated to the entity the grant received will be deferred until when the full asset recognised in the financial stateme nt and start depreciating. d) Interest income Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. e) Property, plant and equipment The project costs are accumulated in the items of work- in-progress infrastructure assets which are measured at cost. The cost of work-in-progress infrastructure assets include costs of material, direct labour and any other costs directly attributable to bringing the asset to a condition where it is ready for its intended use. Work-inprogress infrastructure asset is ready for its intended use once hand over certificate is issued and at this point Southern Africa Trade and Transport Facilitation Project (Credit No TZ and Grant No. GR.H844 - TZ)

18 work-in-progress is recognised as an item of property, plant and equipment; for this particular project, it will be infrastructure asset. f) ProvisioM Provisions are recognised when the Project has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Project expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in surplus/deficit net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. g) Taxes The Project being a Government Project is exempted from tax on the surplus/deficit for the year. h) Events after reporting date Events after the reporting period are those events, favourable and unfavourable, that occur between the end of the reporting period and the date when the financial statements are authorised for issue. Two types of events can be identified : those that provide evidence of conditions that existed at the end of the reporting period (adjusting events after the reporting period); and those that are indicative of conditions that arose after the reporting period (non-adjusting events after the reporting period). i) Judgments The preparation of the Project's financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. In the process of applying the Project's accounting policies, management has made no specific judgments. Southern Africa Trade and Transport Facilitation Proj ect (Credit No TZ and Grant No. GR.H844 - TZ) 15 ~~.. '

19 j) Related parties The Project regards a related party as a person or an entity with the ability to exert control individually or jointly, or to exercise significant influence over the project or vice versa. Members of the project steering comm ittee and members of the project im plementation team are regarded as related parties. 3. Cash Book Account Balances The project maintains four cash books; two in United States dollars and two in Tanzan ia Shillings. The two dollar accounts are maintained at the Bank of Tanzania (BOT) while the two shilling accounts are maintained at Exim Bank (T) Limited. The balances as per cash books as at 30th June 2015 were as follows : 30th June 30th June Cash Book Balances BOT CREDIT USO 10,111 7,933 BOT GRANT USO EXIM CREDIT TZS 461 1, 192 EXIM GRANT TZS Closing Balance 10,760 9, Mobilization Advances The mobilization advances represent the amounts advanced to the various contractors/consultants exclusively for the cost of mobilization in respect of works or services as per the agreement. The advanced amount is interest - free, payable in proportion of foreign and local currencies of contract price, but in no event exceed the agreed percentage. The Amount advanced is subject to percentage recovery from interim payment certified or in voiced. During the year, the Project advanced a total of US$ 127 million to Consu ltants; however, up to 3Q 1 h June 2016 US$ 295 has been recovered leaving unrecovered amount of US$ 13,218. The outstanding advanced amount is analysed hereunder: Mobilization Advances 30th June th June 2015 China Civil Eng.Pkg China Railway Seventh Group Lea International Associates Lea International Associates UWP Closing Balance 6,991 6, ,218 6,991 6, ,386 Southern Africa Trade and Transport Facilitation Project (Credit No TZ and Grant No. GR.H844 - TZ) 16,~ ~ ~ :.... -~...., ~ -=-..1. ',.'.Q

20 5. Project Expenditure/Work in Progress Project Expenditure represents the gross amounts of invoices raised for senices rendered or Interim Payment Certificates (IPC) approved for the construction works done. Invoices rose in currencies other than USO before the end of period and remain unpaid are accrued using BOT exchange rate as at the end of the period. The figure of Project Expenditure per lot is made up as follows: WIP Mafinga -lgawa Lot 1 Mafinga -lgawa Lot 2 Mafinga -lgawa Supervision Expenditure for the year 30th June ,699 3, ,446 30th June While the payment made to each lot for the year were as follows: Payment for WIP Mafinga -lgawa Lot 1 Mafinga -l gawa Lot 2 Mafinga -lgawa Supervision 30th June ,363 3, ,385 30th June Deferred Recurrent Grant This refers to amount of recurrent grant which was disbursed during the year but was not spent. Deferred Recurrent Grant 30th June th June 2015 Opening Balance Recurrent Grant Disbursed Recurrent Grant Amortized Closing Balance 1, , , , Deferred Capital Grants These are cumulative funds received for capital expenditure but have been deferred for amortisation until the assets are recognised into respective categories of assets. This includes expenditure for infrastructure. During the year, a total of US$ 9,440 million making total deferred capital grant of US$ 31, 139 as follows: Southern Africa Trade and Transport Facilitation Project (Credit No Z and Grant No. GR.H844-1Z) 17

21 30th June 30th June Deferred Capital Grants Opening Balance 21,699 Capital Grant Disbursed 9,440 21,699 Capital Grant Amortized Closing Balance 31,139 21, Amortised Recurrent Grant This refers to amount of disbursed recurrent grant which was spent during the year and hence expensed. 30th June Amortized Recurrent Grant 30th June Component 2 37 Component 3 1, Component 4 1, Total 2, Interest Received So far the amount of interest of US$ million earned from maintaining the operational account at Exim Bank (T) Limited in Dar es Salaam. Interest Received Total 30th June th June Loss on Exchange Translation 30th June th June 2015 Total Balances After Translation Balance as Per Cash Book Before Translation Exchange Gain/loss 10,760 10, ,810 10,077 (267) Southern Africa Trade and Transport Facilitation Project (Credit No TZ and Grant No. GR.H844 - TZ) 18

22 11. Funds received from IDA IDA Loan proceeds represent cumulative amount advanced to a designated account and eligible expenditures directly paid to the clients under the financing agreement. For the Financial Year ended 30 1 h June 2016, a total ot US$ 10,368 million was disbursed to designated account after submission of the forecasted expenditure for the respective period as analysed hereunder: Fund Received From IDA 30th June th June 2015 Recurrent Grant 928 2,779 Capital Grant 9,440 21,699 Total 10,368 24, Accumulated surplus/(deficit) Open ing balance (264) 30th June th June 2015 During th e year 294 (264) Total 30 (264) 13. Retention money During the year US$ 659 thousand was retained from contractors as per req uirements of the contract. SCHEDULE FOR RETANTION MONEY FOR THE YEAR ENDED 30TH JUNE 2015 SN PAYEE RETENTION X RATE RETENTION TZS USD CHINA RAILWAY SEVENTH GROUP 174,711, , , CHINA RAILWAY SEVENTH GROUP 103,394, , , CHINA RAILWAY SEVENTH GROUP 142,719, , , CHINA RAILWAY SEVENTH GROUP 107,587, , , Southern Africa Trade and Transport Facilitation Project (Credit No TZ and Grant No. GR.H844 - TZ) 19 i :...,.-.~1'fll'1r~. t. _._. ~.1

23 _) 1 CH INA CIVIL ENGINEERING 391,498, , , CH INA CIVIL ENGINEERING 159,821, , , ,079, 732, Statement of Expenditure {SOE) Statement of Expenditure {SOE) refers to expenditure incurred for eligible payments of project activities valued below the "prior review threshold" mean ing that they do not need procurement process to be reviewed by IDA at all stages in the standard manner. These are usually small valued shopping and operating expense purchases. IDA req uires that the annual audits include thorough verification of expenditures incurred under shopping procedures or otherwise for which the Bank did not get involved in every stage of the procurement process. The maximum values for SOE are as follows :-! 1 i) Contracts for civil works valued at less than US$ 1,000,000 equivalent each ii) Contracts for goods valued at less than US$ 500,000 equivale nt each iii) Contracts for consulting firms and individual consultants valued at less than US$ 200,000 and US$ 100,000 equivalent each respectively. iv) Training and incremental operating costs. During this financial year, US$ 0.85 million was accounted under SOE. Out of which US$ 0.14 million was spent for development expend iture and US$ 0.71 million was spent for recurrent expenditure as detailed in Annex I. 15. Statement of Receipt and Payment It is a requirement of the Bank under financial management guidelines to include Statement of Receipts and Payments in as annex to the financial statements. This is attached as Annex II. Southern Africa Trade and Transport Facilitation Project (Credit No TZ and Grant No. GR.H844 - TZ) 20

24 APPENDIX I A STATEMENT OF EXPENDITURE {SOE) DEVELOPMENT DATE NAME OF PAYEE US$ I /24/2015 GODFREY MASHAURI 7, /3/2015 YOHAKIMU GALIWASU MBWALE 7, /11 /2015 POL YTECH BUSINESS INSTITUTE. - 4, /1 7/2015 GODFREY MASHAURI 7, /1 5/2015 YOHAKIMU GALIWASU MBWALc 7, /16/2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 1, /4/2015 GODFREY MASHAURI 7, /12/2015 ENG.YOHAKIMU GALIWUSA MBWALE 7, /1 8/2015 EMMANUEL H.MATECHI 8, /18/2015 GODFREY MASHAURI 7, /8/2015 Richard G. McCaffrey 7, /8/2015 GODFREY MASHAURI 7, /8/2015 Richard G. McCaffrey /11 /2015 YOHAKIMU GALIWASU MBWALE 7, /17/2015 Richard G. McCaffrey 7, /30/2014 bankcharges /24/2014 HAMZA OMARY /24/2014 GWANDUMI MWANGOSI /31/2014 bank charges /17/2015 HARUNAALLY /18/2015 ANGELA.R. MCHOME 9, /18/2015 JUSTIN MOSHI /18/2015 RENATUS KIHONGO /18/2015 LEORNARD DEUSDEDIT /18/2015 LEONARD NGAYUNGI /18/2015 FRANCIS MBUY A /1 8/2015 COMMISSIONER LARGE TAXPAYERS /28/2015 bank charges /2/2015 GWANDUMI MWANGOSI /2/2015 HAMZA OMARY /2/2015 YOHAKIMU MBWALE /2/2015 COMMISSIONER LARGE TAXPAYERS 2, /17/2015 COMMISSIONER LARGE TAXPAYERS /31 /2015 bank charge march /1 /2015 RICHARD GEORGE MAJIGE /1/2015 COMMISSIONER LARGE TAXPAYERS 3, /1/2015 NYANDA E.MAJI /1 /2015 HARUNA ALLY /1 /2015 LUTENGANO E.MWANDAMBO /1/2015 HAMZA OMARY /1/2015 FESTO IFUNYA /1/2015 YOHAKIMU MBWALE Page 1 of 2

25 DATE NAME OF PAYEE US$ 4/1 /2015 HAMISI WAZIRI /14/2015 MALEWA M. MALEWA /30/2015 bank charges /7/2015 YOHAKIMU MBWALE /7/2015 ZAFARANI MADAY! /7/2015 YUSUPH SAIDI /7/2015 DEODATH I.KIMARIO /12/2015 JONAS MGONGOLWA /12/2015 Asha Hussein /14/2015 COMMISSIONER LARGE TAXPAYERS 3, /15/2015 COMMISSIONER LARGE TAXPAYERS /15/2015 COMMISSIONER LARGE TAXPAYERS /31/2015 bank charges - May /4/2015 COMMISSIONER LARGE TAXPAYERS 2, /4/2015 COMMISSIONER LARGE TAXPAYERS /8/2015 COMMISSIONER LARGE TAXPAYERS /8/2015 COMMISSIONER LARGE TAXPAYERS 1, /9/2015 COMMISSIONER LARGE TAXPAYERS 3, /9/2015 COMMISSIONER LARGE TAXPAYERS 3, /9/2015 YOHAKIMU MBWALE /10/2015 MALEWA M. MALEWA /23/2015 HAMZA OMARY /24/2015 TANZANIA STANDARD (NEWSPAPER) LTD /30/2015 interest june /30/2015 BANK CHARGES Total 140, Page 2 of 2 :~,_,;..-,.,...

26 ANNEX I 8 STATEMENT OF EXPENDITURE (SOE)- GRANT Date Name of Payee Amount US$ 10/31 /2014 KENNEDY MPUKUSHA MWAMBA 7, /31/2014 MOSES MFUNE 7, /31 /201 4 EVANCE MOYO 6, /31/201 4 OLYMPIA QORRO 2, /31 /2014 PETER MASI 9, /3/2014 OCTAVIAN KOMBA 4, /3/2014 OLYMPIA QORRO 2, /11/2014 VERA INTERNATIONAL TRAVEL & TOURS LTD 3, /1 2/20 14 PETER MASI 1, /26/2014 CECILIA PATRICK 2, /26/2014 OCT AVIAN KOMBA 4, /26/2014 MOSES MFUNE 7, /27/2014 OLYMPIA QORRO 3, /27/2014 OLYMPIA QORRO /27/2014 OLYMPIA QORRO 3, /28/2014 KENNEDY MPUKUSHA MWAMBA 7, /28/2014 EVANCE MOYO 6, /28/201 4 PETER MASI 9, /29/201 4 PETER MASI 9, /29/201 4 OCT AVIAN KOMBA 4, /29/2014 MOSES MFUNE 7, /29/2014 KENNEDY MPUKUSHA MWAMBA 7, /29/2014 EVANCE MOYO 6, /29/2014 OLYMPIA QORRO 3, /29/2014 CECILIA PATRICK 2, /3/2015 PETER MASI 9, /3/2015 OLYMPIA QORRO 3, /5/2015 KENNEDY MPUKUSHA MWAMBA 3, /5/2015 MOSES MFUNE 3, /5/2015 PETER MASI 3, /5/2015 EVANCE MOYO 6, /5/2015 MOSES MFUNE 7, /5/2015 KENNEDY MPUKUSHA MWAMBA 7, /5/2015 CECILIA PATRICK 2, /6/2015 CANCEL TRF /1 3/2015 OCT AVIAN KOMBA 4, /24/2015 CECILIA PATRICK 13, /4/2015 KENNEDY MPUKUSHA MWAMBA 7, /4/2015 PETER MASI 9, /4/2015 MOSES MFUNE 7, /4/2015 OLYMPIA QORRO 3, /4/2015 OCT AVIAN KOMBA 4, /4/2015 OLYMPIA QORRO 3, /5/2015 EVANCE MOYO 6, /5/2015 CECILIA PATRICK 2, Page 1 of 4,... -t.,.~. ' ~ - ~ '".. I.. ~. '!.:,,-.:~-... _., :.,::.-::.,.~

27 Date Name of Payee Amount US$ 3/11 /2015 PETER MASI /11/2015 KENNEDY MPUKUSHA MWAMBA /11 /2015 LAMECK MOSES MFUNE /1 3/2015 CECILIA PATRICK 2, /13/2015 CECILIA PATRICK /1 3/2015 CECILIA PATRICK 2, /1 8/2015 PETER MASI 9, /23/2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 5, /24/2015 MOSES MFUNE 7, /24/2015 KENNEDY MPUKUSHA MWAMBA 7, /24/2015 OCTAVIAN KOMBA 4, /24/2015 EVANCE MOYO 6, /31 /2015 OLYMPIA QORRO 3, /15/2015 OCTAVIAN KOMBA 34, /23/2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 3, /27/2015 OCTAVIAN KOMBA 4, /27/2015 MOSES MFUNE 7, /27/2015 CECILIA PATRICK 2, /27/2015 OLYMPIA QORRO 2, /27/2015 PETER MASI 9, /27/2015 KENNEDY MPUKUSHA MWAMBA 7, /27/201 5 EVANCE MOYO 6, /11/2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 1, /11 /2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 1, /11/2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 6, /11 /2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 4, /11/2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 4, /15/2015 OCT AVIAN KOMBA 23, /1 5/2015 KENNEDY MPUKUSHA MWAMBA 1, /1 5/2015 CECILIA PATRICK 1, /15/2015 MOSES MFUNE 1, /1 5/2015 PETER MASI 1, /1 5/2015 OLYMPIA QORRO 24, /20/2015 EVANCE MOYO 1, /28/2015 CECILIA PATRICK 2, /28/2015 MOSES MFUNE 7, /28/2015 OCTAVIAN KOMBA 4, /28/2015 OLYMPIA QORRO 3, /28/2015 EVANCE MOYO 6, /28/2015 PETER MASI 9, /2/2015 JAMES KIBOLE MANUMBU 9, /4/2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 8, /4/2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 5, /4/2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 8, /4/2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 2, /8/2015 KENNEDY MPUKUSHA MWAMBA 7, /11 /2015 Ms BUILD ALL CONTRACTORS LTD 2, Page 2 of 4.-M l'f'..,... _. a ~"'.-:: ~,.. -=L.u... ~ ~ - U"I..,,.t UU. 1111,... 'ti.,,.... : ~.J

28 Date Name of Payee Amount US$ 11/5/2014 COMMISSIONER LARGE TAXPAYERS 3, /7/2014 Lanor International Limited 1, /7/2014 Lanor International Limited 3, /10/2014 VERA INTERNATIONAL TRAVEL & TOURS LTD /10/2014 CECILIA PATRICK /25/2014 COMMISSIONER LARGE TAXPAYERS /25/2014 COMMISSIONER LARGE TAXPAYERS 6, /25/2014 COMMISSIONER LARGE TAXPAYERS 1, /25/2014 COMMISSIONER LARGE TAXPAYERS 1, /25/2014 COMMISSIONER LARGE TAXPAYERS /25/2014 COMMISSIONER LARGE TAXPAYERS /30/2014 BANK CHARGES /30/2014 FUNDS RECEIVED FROM DONOR /30/2014 BANK TRANSFER TO TZS ACCOUNT /12/2014 MICHAEL OKIO 1, /17/2014 COMMISSIONER LARGE TAXPAYERS /18/2014 CECILIA PATRICK /24/2014 OCT AVIAN KOMBA /31 /2014 BANK CHARGES /31 /2014 BANK CHARGES /5/2015 Lanor International Limited 1, /5/2015 Lanor International Limited 3, /6/2015 LAMECK MOSES MFUNE 1, /13/2015 KENNEDY MPUKUSHA MWAMBA /14/2 015 COMMISSIONER LARGE TAXPAYERS /14/2015 COMMISSIONER LARGE TAXPAYERS /16/2015 KIMBERLITE INVESTMENT 18, /20/2015 CECILIA PATRICK- TZS /31 /2015 bank charges /3/2015 CECILIA PATRICK- TZS /5/2015 COMMISSIONER LARGE TAXPAYERS 2, /13/2015 CECILIA PATRICK- TZS /18/2015 COMMISSIONER LARGE TAXPAYERS /18/2015 KIMBERLITE INVESTMENT 12, /28/2015 Bank charges /2/2015 COMMISSIONER LARGE TAXPAYERS 2, /9/2015 FURNITURE & CARPET WORLD (2012) LTD 29, /9/2015 CECILIA PATRICK- TZS /10/2015 LAMECK MOSES MFUNE 2, /10/2015 KENNEDY MPUKUSHA MWAMBA /19/2015 KIMBERLITE INVESTMENT 3, /23/2015 COMMISSIONER LARGE TAXPAYERS /23/2015 OLYMPIA LOUIS QORRO /23/2015 OLYMPIA LOUIS OORRO 12, /24/2015 COMMISSIONER LARGE TAXPAYERS 2, /24/2015 CECILIA PATRICK- TZS /31 /2015 bank charges march Page 3 of 4 ~... o;.. ~......,._.. ~.. '....,.,,,.,,..,... -

29 J Date Name of Payee Amount US$ 4/8/2015 COMMISSIONER LARGE TAXPAYERS /9/2015 MIS G & L BRIGHT AGENCY AND SERVICES LTD 44, /21 /2015 CECILIA PATRICK- TZS /30/2015 Bank charge Apriil /15/2015 COMMISSIONER LARGE TAXPAYERS 3, /15/2015 CECILIA PATRICK /31 /2015 bank charges /2/2015 COMMISSIONER LARGE TAXPAYERS /2/2015 CECILIA PATRICK- TZS 3, /3/2015 KIMBERLITE INVESTMENT 13, /3/2015 COMMISSIONER LARGE TAXPAYERS /4/2015 COMMISSIONER LARGE TAXPAYERS 2, /4/2015 VERA INTERNATIONAL TRAVEL & TOURS LTD 1, /5/2015 KENNEDY MPUKUSHA MWAMBA /5/2015 LAMECK MOSES MFUNE /5/2015 OLYMPIA LOUIS QORRO /9/2015 COMMISSIONER LARGE TAXPAYERS /30/2015 BANK CHARGES 9.69 Total 713, Page 4 of 4

30 ANNEX II STATEMENT OF RECEIPTS AND PAYMENTS RECEIPTS OPENING BALANCE 9, RECEIPT FROM IDA 10, DIRECT PAYMENT INTEREST RECEIVED TOTAL 20, PAYMENTS Component 1 - Improvement of the Physical Infrastructure 7, Component 2-Mitigation of Social Costs Component 3-lmplementation Assistance and Institutional Support 1, Component 4 - Improved Corridor Management and Montorinq 1, TOTAL PAYMENT 9, BALANCE 10, ,JIM,r,- -...:., --~ '.,~, --,:....,._.;. ' ~"l,... ~J,. ~... " , ~ :;.,, ~...-:t..