MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF

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1 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF Public Disclosure Authorized GRANT AGREEMENT NO TF RECEIPTS AND PAYMENTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2016 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized r

2 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF RECEIPTS AND PAYMENTS ST A TEMENT FOR THE YEAR ENDED 30 JUNE 2016 t CONTENTS Page Statement of management responsibilities Audit summary 2-9 Receipts and payments statement Independent auditor's report Receipts and payments statement - by Component Statement of financial position Accounting Policies and notes Internal controls Auditors report Compliance with agreement terms Auditor's report Designated account Auditor's report Appendices Receipts and payments statement by category Statement of expenditure - Cumulative expenditure Statement of expenditure - Budget & Expenditure List assets Bank reconciliation - RBM Holding Account Bank reconciliation - NBM Designated Account Bank reconciliation - Rf A Designated Account Cost centre balances Appendix I Appendix II Appendix III Appendix IV Appendix V Appendix VI Appendix VU Appendix VIII

3 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF STATEMENT OF MANAGEMENT RESPONSIBILITIES FOR THE YEAR ENDED 30 JUNE 2016 Management of the Agricultural Sector Wide Approach - Support Project - MDTF are required to prepare the receipts and payments statement for each financial period which gives a true and fair view of the state of affairs of the project as at the end of the financial period and of the operating results for the period. Management are 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 to enable them to ensure that the receipts and payments statement comply with the financial agreements and statutes. In preparing the receipts and payments statement the management accept 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 receipts and payments statement, subject to any material departures being disclosed and explained in the Receipts and payments statement; preparation of receipts and payments statement on a going concern basis. 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. Management are of the opinion that the receipts and payments statement give a true and fair view of the state of the financial affairs of the project and of its operating results. The Projects' receipts and payments statement has been approved by the management on -~~JJ~ J..~.<?.1.b... and are signed on their behalf by: M_Ll_ CA cu_ c_z_ PRINCIPAL SECRETARY - 1 -

4 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF GRANT AGREEMENT NO TF RECEIPTS AND PAYMENTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2016 AUDIT SUMMARY Background and project identifications t The accompanying reports are given in connection with the Agricultural Sector Wide Approach - Support Project - MDTF under Grant Agreement No TF O The Ministry of Agriculture, Irrigation and Water Development has been implementing the Agriculture Sector Wide Approach Support Project (ASWAp-SP) from November 2008 with joint initial financing from the Kingdom of Norway and the World Bank. Following the satisfactory performance of the project at mid-term in May 2011, and in response to Malawi Government's request for additional financing, the World Bank provided US$30 million to the project. The additional financing aims to: i) scale up on-going activities to increase the number of farmers receiving support from the project; ii) include new interventions in the field of agriculture diversification and access to markets; iii) undertake a restructuring (change of project name, additional component, revision ofresults framework and closing date extension). Scaling up of the activities and extension of closure of the project allows for a more comprehensive improvement of overall governance of the agriculture sector by building technical, managerial as well as administrative capacities in the Ministry at all levels and therefore, allow for coordinated financial support to the ASWAp through the establishment of the Multi Donor Trust Funds (MDTF). In January 2014, Government of Malawi negotiated the second Additional Financing (AF2) and signed the grant agreement on 15 1 April The AF2 is a grant amounting to US$ I 20 million for the Malawi ASWAp Support Project Programmatic MDTF (TF ) created by the World Bank in 2013 to receive various donors' contributions towards the ASWAp. This arrangement allows for new donors to join the MDTF as well as existing donors to add their additional contributions. At the moment the MDTF has received the following contributions: US$39. l million equivalent from European Union (EU); US$7.2 million equivalent from Flanders International Cooperation Agency (FICA), US$2.5 million from United States Agency for International Development (USAID), US$37. l million equivalent from Royal Norwegian Ministry of Foreign Affairs and US$ l 8.9 million equivalent from the Department of Foreign Affairs and Trade of the Republic of Ireland. With the Additional Financing 1 & 2, the project was restructured to reflect changes to the project design, including additional sub-components and components. Also the results framework, implementation arrangements, fiduciary arrangements, safeguards and loan covenants were revised and updated. It is expected that the Additional Financing I &2 will increase the number of smallholder farmer households benefitting from project' s interventions to 3 million (50% of whom shall be women), and 780 km of rural roads will be improved. The closing date of the project has also been extended to June

5 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF GRANT AGREEMENT NO TF RECEIPTS AND PAYMENTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2016 AUDIT SUMMARY (CONTINUED) Project objectives t The ASWAP-SP' s overall developmental objective is to improve the effectiveness and sustainability of investments in the agricultural sector with an aim of fostering food security and agriculture-led economic growth. The specific objectives of the project include:- (i) To strengthen institutional capabilities necessary to further develop, and implement, a harmonized and aligned investment framework leading towards a full-fledged SWAp in the agricultural sector; (ii) To increase the land, water and nutrient use efficiency of maize and legume based rain fed cropping systems targeted by the government' s Agricultural Sector Wide Approach (ASWAp); (iii) To increase the resilience of the maize supply system to cope with climate risks and shocks. (iv) To improve the agricultural business environment and promote agribusiness partnerships in support of agricultural diversification; (v) To improve the Land Administration capacity to increase the number of title deeds delivered and draw lessons from the Community Based Rural Land Development Project (CBRLDP); (vi) To improve market access to the most productive agricultural areas through the improvement and sustainable maintenance of feeder roads. Project Components ASWAp SP has four components as follows: Institutional development and capacity building in support of the Agriculture Sector Wide Approach The objective of this component is to strengthen institutional capabilities necessary to improve planning, implementation, monitoring and evaluation of public investments in the agricultural sector. The component originally included four sub-components, but has now been increased to five to provide for the scale-up of activities but also to strengthen the land administration capacity. These subcomponents are: - i) ASW Ap Management and Coordination Support, ii) Planning, Monitoring and Evaluation Support; iii) Technical Systems and Skills Development; iv) Administrative Systems Development; and, v) Land Administration. Following the implementation of component one activities there will be a) alignment of MoAIWD organization and budget with the ASWAp investment framework; b) improved delivery of core agricultural public services prioritized with respect to the achievement of the ASWAp objectives; c) timely production of reliable statistics on the agricultural sector's production, performance and evolution; d) land information system operational; and, e) improved alignment of the agricultural portfolio

6 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF WORLD BANK GRANT AGREEMENT NO TF RECEIPTS AND PAYMENTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2016 AUDIT SUMMARY (CONTINUED) Sustainable food security agricultural growth and diversification This component supports existing and generalized maize-based subsistence farming system, but also encourages diversification and marketing (in particular through cereals, legumes and horticultural crops) and promotes public-private investments. This will translate into developing expanded and new research and extension activities to increase the adoption rate of selected technologies, diversified crops (maize, sorghum, millet, legumes, cassava, sweet potato and bananas, agro-forestry products, etc.) Fisheries and livestock production by farmers. In addition to providing a wider income base for households, this will increase the sources of nutrition available to families. The component and the project supports scaling up research and extension activities to increase the adoption rate of selected technologies by FISP beneficiaries. It also supports expanded coverage and improvements in quality of extension activities to reach out to more farmers by promoting innovative and more pluralistic extension methodologies through use of lead farmers, contracting out to NGOs, plant clinic operations, and ICT based extension through use of national and community radio and Television stations, print media and phone text messages. Under this component the project is providing more direct support to the design, programming and implementation of the FISP, including increasing maize and legume seeds availability; ensuring a close monitoring and evaluation (including independent impact evaluation). It further supports to improve the quality of seeds through enhanced seed certification and quality monitoring procedures and capacities. Through this component there will be a) additional lead farmers trained to relay extension activities; b) additional NGOs recruited to fill the extension service coverage gap; c) increased number of farmers receiving technical advice from 900,000 to 1.2 million; d) increase in hectares under conservation agriculture from 150,000 hectares (original target) to 200,000 ha; and e) available annual tonnage oflegumes seeds will increase to 4,000mt. Project coordination The component will ensure coordination and consistency in implementation of project activities. The Additional Financing 1&2 will provide assistance to the ASWAp secretariat within Ministry of Agriculture, Irrigation and Water Development which has a critical role in coordinating the different Ministries and Departments in charge of the execution of ASWAp-SP activities. Additional support will consist of technical studies, consultancies and technical assistance, the details of which will be determined in the course of project implementation. AF2 will also provide additional resources to strengthen the mobility of staff, especially at the grassroots level with the procurement of vehicles, motorcycles and bicycles. Communication, connectivity and computerization improvement of the different MoAIWD levels will continue to ensure better circulation of information, collection of data and timely reporting. It is anticipated that there will be timely reporting on project implementation and financial management; accelerated procurement processes; as well as improved implementation coordination as demonstrated by an increased number of activities jointly implemented by different MoAIWD Departments, participating Ministries and other stakeholders. -4-

7 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF GRANT AGREEMENT NO TF RECEIPTS AND PAYMENTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2016 AUDIT SUMMARY (CONTINUED) Improvement and maintenance of unpaved roads This is a new component to the project aimed at facilitating farmers' access to agricultural markets through improvements to unpaved rural roads. The component is financed under Additional Financing 1&2 and Works will be concentrated in 10 selected districts (5 selected on AFl and the other 5 on AF2) based on their agricultural potential to create networks of rural access roads which will allow transportation of inputs and produce between the fields and the main roads throughout the year. The component will involve a combination of spot-improvement, rehabilitation and surfacing of unpaved roads using low-volume sealed road techniques, with solutions being selected to provide the requisite levels of access for individual roads. A total of 780krn of roads will be improved. Project Targeting The project is designed to operate in all the 28 districts across the country and will directly benefit approximately 3,000,000 rural smallholder farmers. Audit scope, objectives and procedures Audit objective Our audit was conducted in accordance with International Standards on Auditing and "the Terms of Reference for the Assignment," issued by the Agricultural Sector Wide Approach - Support Project - MDTF. Our specific objectives were to : - Express an opinion on whether the receipts and payments statement has been prepared in accordance with International Public Sector Accounting Standards (IPSAS) and give a true and fair view of the operations of the project for the period ended 30 June Carry out an assessment whether the ASWAp-SP -MDTF has used all the funds received from pooled partners only on the eligible expenditures, in accordance with the financing agreement Review quarterly financial reports produced in accordance with the financing agreement Check that ASWAp-SP-MDTF bank accounts have been maintained in accordance with the provisions of the Financing Agreement and funds disbursed out of the Accounts were used only for the purpose intended in the Financing Agreement An assessment of the adequacy of the financial management systems of the ministry, including internal controls will have to be done

8 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF GRANT AGREEMENT NO TF RECEIPTS AND PAYMENTS ST A TEMENT FOR THE YEAR ENDED 30 JUNE 2016 AUDIT SUMMARY (CONTINUED) An assessment of compliance with the prov1s1ons of the Financing Agreement. The assessment should cover checking compliance with the Public Finance Management Act of 2003, Treasury and Desk instructions and all circulars issued to update the instructions. The audit would also check whether expenditure charged to the program as eligible expenditures has been correctly classified. Goods, seeds, and services financed have been procured in accordance with the governing legal agreements, the Malawi Government Public Procurement Law (Public Procurement Act of 2003) and the Financing Agreement wherever applicable. Ineligible expenditures included in withdrawal applications are identified and reimbursed to the Designated Accounts. These should be separately noted in the audit reports Detailed objectives (a) (b) (c) (d) (e) All Bank funds have been used in accordance with the conditions of the grant agreement with due attention to economy and efficiency and only for the purposes for which they were provided. Counterparts funds have been used in accordance with the grant agreement with due attention to economy with the bank and efficiency and only for the purposes for which they were provided. Goods, seeds and services financed have been procured in accordance with grant agreement and in accordance with the bank and Malawi Government procedures were provided. All necessary supporting documents, records and accounts have been kept in respect of all project activities. Clear linkages exist between the books of account and the receipts and payments statement presented to the bank. Bank accounts have been maintained in accordance with the provisions of the grant agreement and in accordance with the bank's rules and procedures; (t) (g) The accounting policies adopted are compliant with World Bank accounting policies; The receipts and payments statement has been prepared in accordance with International Public Sector Accounting Standards and give a true and fair view of the financial position of the project as at period end; The overall objectives can be met by meeting the detailed objectives outlined in the terms of reference. Our audit included such tests as we considered necessary to enable us to obtain reasonable assurance on whether:- -6-

9 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF GRANT AGREEMENT NO TF RECEIPTS AND PAYMENTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2016 AUDIT SUMMARY (CONTINUED) Pre-audit steps Familiarization with project' s records in respect of the following; Financial statements Examination of the receipts and payments statement including budgeted amounts by category; Reconciliation of the receipts less payments to the bank accounts and cash on hand; For expenditure, examination of source documents, verification of adequate authorization and verification that expenditure was allowable under the purposes for which the financing was provided; Review of accounting records and ensuring that these have been maintained in accordance with Internationally accepted principles hereunder, that Agricultural Sector Wide Approach - Support Project - MDTF has kept adequate records of the cash and bank transactions; Review of procedures used to control funds, and of bank accounts, including ensuring that funds have been deposited in a separate bank account in the name of the auditee and that accrued interests are reflected in the statement from the bank; The conversion of one currency to another has been supported by an official receipt from the bank or an official exchange institution, stating the exchange rate; Determination that project income was used to further the project's objectives; Review of procurement procedures to ensure that they are in accordance with the Grant agreement and the Bank's rules and procedures. Internal control structure Obtaining a sufficient understanding of the internal control structure to plan the audit and determine the nature, timing and extent of tests to be performed; Documentation and evaluation of the control environment, the accounting system and the control procedures; Assessment of control risk, that is the effectiveness of the internal control structure, policies and procedures of the Agricultural Sector Wide Approach - Support Project - MDTF in preventing or detecting material misstatements in the receipts and payments statement: -7-

10 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF GRANT AGREEMENT NO TF RECEIPTS AND PAYMENTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2016 AUDIT SUMMARY (CONTINUED) Compliance with grant agreement terms Identification of the agreement terms and determination of those which if not observed could have a material effect on the receipts and payments statement; Assessment of each material requirements and the risks that non-compliance could occur; Design of audit steps and procedures to test for errors, irregularities, and illegal acts, that provide reasonable assurance of detecting instances of non-compliance; For all payments, verifying that they have been made in accordance with agreement terms and applicable regulations; Verifying that expenditure by category was within the approved categories and the approved list of goods and services; Determination that the receipts and payments statement are supported by the books and records from which the Receipts and payments statement are prepared; Determination that the special account has been maintained in accordance with the provisions of the grant agreement and the Bank' s rules and procedures; Assessment of the physical status of implementation of the project components in relation to the level of disbursement made so far against the targets as set out in the Project Implementation Manual. Agricultural Sector Wide Approach - Support Project - MDTF did not prevent us from conducting any tests and procedures deemed necessary to form a reasonable basis for our opinion. Audit results Receipts and payments statement The results of our tests disclosed the following questioned amounts: Unsupported payments Payments for activities with no reports Inadequate procurement procedures Questioned subsistence allowances In our opinion, except for the matters noted above, the receipts and payments statement, give a true and fair view of the financial position of the project as of 30 June 2016 and of its receipts and expenditures and cash flows for the year then ended in accordance with the grant agreement and the Bank' s rules and regulations. -8-

11 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF WORLD BANK GRANT AGREEMENT NO TF RECEIPTS AND PAYMENTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2016 AUDIT SUMMARY (CONTINUED) Internal controls We noted some weaknesses in the system which have been reported m a separate letter to management. Below is the summary of the weaknesses: Payments not supported by adequate third party documentation Bank reconciliations not being properly done i.e Stale cheques still appearing on the bank reconciliations Delays in despatching cheques Procurement procedures not properly done No evidence that usage of fuel purchases was monitored through the use of logbooks Non insurance of project assets The fixed asset register is not properly updated as it does not include serial numbers and location of some assets No evidence that loose minutes were prepared and approved In our opinion, except for the matters reported, internal controls were adequate for the period. Compliance with agreement terms In our opinion, the provisions of the Financing Agreement were complied with during the period under review except for the following:- Non compliance with the budget provisions Delays in submitting of progress reports The position of additional Procurement Specialist has been vacant since December 2015 Tompro Accounting System was not in operation within 3 months Core functional analysis was not undertaken within 12 months Designated Account In our opinion the designated account, has been properly maintained in accordance with the provisions of the financing agreement and funds disbursed out of the accounts were used only for the purpose intended in the Financing Agreement

12 GRAHAM CARRI I Chartered Accountants AUDITOR'S REPORT TO THE DELEGATION OF THE MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF GRANT AGREEMENT NO TF Scope We have audited the receipts and payments statement of Agricultural Sector Wide Approach - Support Project - MDTF under Ministry of Agriculture, Irrigation and Water Development Grant no. TF for the period ended 30 June Management's responsibility for the receipts and payments statement Management is responsible for the preparation and fair presentation of the receipts and payments statement in accordance with International Public Sector Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of receipts and payments statement that is 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. Auditor's responsibility Our responsibility is to express an opinion on the receipts and payments statement based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the receipts and payments statement is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the receipts and payments statement. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the receipts and payments statement, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the receipts and payments statement 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 entity's internal control. An 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 receipts and payments statement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion AOL House, 2"d Floor. City Centre I P.O.Box 898 Lilongwe Malawi Tel: (+265) I I O l Fax: , lilongwe~ grahamcanmw.com Nexia International is a worldwide network of independent auditors. business advisors and consultants Partners: C.M.C Banda-Lilongwe, D. ~gwira(mrs)-blantyre. Offices in Lilongwe and Blantyre.

13 GRAHAM CARRI I Chartered ccountants A member o Nexia international Audit Opinion In our opinion:- (a) The receipts and payments statement has been prepared in accordance with International Public Sector Accounting Standards ( IPSAS) and give a true and fair view of the operations of the project for the period ended 30 June 2016 Except for the notes I, and 3 of the Annexure to the Audit Report on pages 12 (b) The ASWAp SP MDTF used all the funds received only on eligible expenditures and in accordance with the conditions of the Financing Agreement Except for the notes 1, and 3 of the Annexure to the Audit Report on page 12 (c) Goods, seeds, and services financed have been procured in accordance with the governing legal agreements, the Malawi Government Public Procurement Law (Public Procurement Act of 2003) and the Financing Agreement wherever applicable Except for note 2 of the Annexure to the Audit Report on page 12 C~Cv Graham Carr 3Qth December 2016 ) r,

14 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF ANNEXURE TO THE AUDIT REPORT FOR THE YEAR ENDED 30 JUNE MISSING OR UNSUPPORTED PAYMENTS The results of our tests disclosed the following questioned costs of MK 134, 780,630 (payments that are not supported with adequate documentation amounting to MK88,431,739, missing vouchers and documentation of the process of evaluation of tenders and quotations amounting to MK 18,089,562, payments not verified to activity reports amounting to MK28,259,329). In absence of adequate documentation, we are unable to ascertain the validity of the expenditure incurred and how the selection of the suppliers was made. PROCUREMENT PROCEDURES We were not provided with adequate evidence that standard procurement procedures outsourcing 3 quotations from prequalified suppliers/tendering process) were followed on payments amounting to MK 1, 725,267. In absence of adequate documentation, we are unable to verify how the selection of the suppliers was done and if the goods and services were procured at competitive prices. 3. QUESTIONED SUBSISTENCE ALLOWANCE Allowances amounting to MK297,500 have been questioned as the number of days for the activities were not reasonable

15 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF RECEIPTS AND PAYMENTS STATEMENT FOR THEYEAR ENDED 30 JUNE 2016 RECEIPTS AND PAYMENTS STATEMENT BY COMPONENT Notes 2016 MK'OOO Opening balance 4,500,731 Sources of funding World Bank 3 9,162,564 Government of Malawi 4 229,159 Othe income 5 11,532 Exchange gain 6 686,206 Total financing 14,590,192 Uses of funds Instituitional Development and capacity Building ASWAP Management and Coordination support 128,428 Planing, Monitoring and Evaluation Support 844,559 Technical Systems Development 16,371 Administration Systems Development 349,479 1,338, US$ 9,789,830 12,588, ,652 18,789 22,813, ,245 1,497,188 36, ,714 2,427, *Restated *Restated MK'OOO US$ 20,788,676 48,388,044 26,421 59,775 6,142 14,197 20,821,239 48,462,016 99, , ,906 1,659,693 44, , , ,392 1,282,179 2,978,244 Sustainable Food Security & Agric Growth Divers Sustainable Productivity Growth Initiative 4,187,041 Strengthening Market Based Agric Risk Management 444,588 Promotion of Legume Production and Marketing 300,670 Promotion of Agribusiness through PPs 4,932,299 6,833, , ,298 8,187,916 14,586, ,633,396 97, ,518 68, , , ,497 14,863,074 35,272,463 Project Coordination 1,854,904 Rural Roads 11 Total expenditure 8,126,051 2,963, ,578, , ,976 16,431,537 38,924,683 Promotion of Agribusiness 7 (111,029) (252,497) Unspent funds 6,464,141 9,235,173 4,500,731 9,789,830 *Prior year figures have been restated in respect of promotion of Agribusiness through PPs expenses which are supposed to be paid from Additional Financing 1 but were included in the 2015 financial year

16 t MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF STATEMENT OF FINANCIAL POSITION AS AT J UNE 2016 Notes *Restated *Restated MK'OOO US$ MK'OOO US$ ASSETS Fixed Assets Motor vehicles 8 1,194,396 1,738,322 Office Equipment 8 34,776 78, , ,222 Office 8 215, ,725 24,185 59,293 Total financing 1,444,378 2,287, , ,515 Current Assets World Bank Designated Accounts 9 5,997,026 8,417,953 2,995,999 6,458,103 Project Bank Account 9 115, , ,958 1,121,831 Cost Center balances , , , ,152 Advances , , ,377 1,945,744 6,464,1 41 9,235,170 4,500,730 9,789,830 Total Assets 7,908,519 11,522,178 4,674,492 10,202,345 Cummulative Project Expenditures 23,002,181 49,963,712 16,146,746 38,259,671 30,910,700 61,485,890 20,821,238 48,462,016 LIABILITIES AND FINANCING World Bank credit 3 29,951,240 60,976,477 20,788,676 48,388,044 Government Conh ibution 4 255, ,427 26,421 59,775 Other income 5 17,674 32,986 6,142 14,197 Exchange gain 6 686,206 Total Liabilities and Financing 30,910,700 61,485,890 20,821,238 48,462,016 *Prior year figures have been restated in respect of promotion of Agribusiness through PPs expenses which are supposed to be paid from Additional Financing 1 but were included in the 2015 financial year. The receipts and payments statement was authorised for issue by the project management on... ~g..)_j.?.j..?:-.<?.!~..... and was signed on its behalf by: &A_u_~Cfc PRINCIPAL SECRETARY

17 I MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF NOTESTOTHESOURCESNDUSESOFFUN DSSTATEMENT FOR THEYEAR ENDED 30 JUNE 2016 BACKGROUND 2 The Agriculture Sector Wide Approach Support Project - Multi Donor Trust Fund is a World Bank managed project that is financed by a multiple of donors. It is implemented within the ASWAp framework to advance specific objectives within the Agricultural Sector.This is a grant amounting to US $ million to be implemented in two and a half years beginning O 1 April, 2014 when the grant agreement was signed to 31 December The closure date is 30 June ACCOUNTING POLICIES The principle policies adopted in the preparation of the receipts and payments statement are set out below: 2.1 Basis of preparation The receipts and payments statement has been prepared in accordance with International Public Sector Accounting(IPSAS) with particular emphasis on cash basis financial reporting under the cash basis accounting. 2.1 Cash basis accounting The cash basis accounting recognises transactions and events only when cash is received or paid by the project. 2.2 Income Receipts represent funding received from World Bank. Funds are deposited into a special Account with the National Bank of Malawi from where transfers are made to the holding account. 2.3 Expenditure These represent all expenditure actually paid through the special account and from the local operating account. 2.4 Foreign currency translation The receipts and payments statement of the programme is expressed in Malawi Kwacha, which is the functional and presentation currency of the programme. Actual expenditure is translated into United States Dollars using the exchange rates that National Bank of Malawi used to convert the proceeds from the special account. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items are included in the receipts and payments statement for the period. The average of the period end buying and selling of United States Dollar was: K wacha/dol lar Fixed assets Capital expenditure is expended in the project's books of account in the period in which the payment for such item is made. There is no provision for depreciation. 3 WORLD BANK CREDIT These represents the amount the World Bank disbursed during the period under review. Some amounts were disbursed into the project designated account while others the Bank was paying direct to the suppliers

18 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF NOTES TO THE SOURCES AND USES OF FUNDS STATEMENT (CONTINUED) FOR THEYEAR ENDED 30 JUNE 2016 WORLD BANK CREDIT (CONTINUED) PAYEE Opening balance UNOPS - Motor Vehicles Advance into Designated account Advance into Designated account DATE 01 /02/ 16 17/02/ /02/ 16 PARTICULARS WA MDTF 14 WA MDTF 15 AMOUNT REQUESTED US$ 1,123,631 6,464,802 5,000,000 TOTAL AMOUNT US$ 48,388,044 1, 123,631 6,464,802 5,000,000 TOTAL AMOUNT MK'OOO 20,788, ,102 4,735,712 3,603,750 Total for the year 12,588,433 12,588,433 9,162,564 Total World Bank Credit to date 12,588,433 60,976,477 29,951,240 4 Government Contribution These amounts relate to Government officers that are engaged on project activities. They comprise of salaries of these officers which the government pays and proportional to the amount they spend on project related activities. Opening balance MK'OOO 26,421 US$ 59, / 16 Contribution Total Government Contribution to date 5 Other income This comprises of interest received in the designated account. Opening balance 229, ,580 MK'OOO 6, , ,427 US$ 14, /07/ /08/15 30/09/15 31 / 10/1 5 30/ 11/15 31 / 12/ /01 /1 6 29/02/ /03/16 30/04/ /05/ 15 30/06/1 6 30/06/ 16 Interest on Designated Account Interest on Designated Account Interest on Designated Account Interest on Designated Account Interest on Designated Account Interest on Designated Account Interest on Designated Account Interest on Designated Account Interest on Designated Account Interest on Designated Account Interest on Designated Account Interest on Designated Account Interest on Designated Account - RF A 1,561 1,559 1, ,042 1,077 1,042 1,051 2,773 2,770 2, ,573 1,479 1,422 1,470 1,423 1,458 Total for period 1 July 2015 to 30 June 2016 Total Interest financing to date 11,532 17,674 18,789 32,

19 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF NOTES TO THE SOURCES AND USES OF FUNDS STATEMENT (CONTINUED) FOR THEYEAR ENDED 30 JUNE FOREIGN EXCHANGE GAIN MK'OOO Foreign exchange gain 686,206 I (i) The foreign exchange gain arose from the following: Designated Account- Headquarters Bank Statement balance as at 30 June 2016 was $3.416 million converted at MK had a bank balance of MK2.434 billion while the cashbook balance was MKl.706 billion resulting in an exchange gain ofmk727 million. (ii) Designated Account- RF A Bank Statement balance as at 30 June 2016 was $5.001 million converted at MK ! had a bank balance of MK3.563 billion while the cashbook balance was MK billion resulting in an exchange loss ofmk.41 million. 7 PRIOR YEAR ADJUSTMENT The budget under component 2.4 is budgeted under ASWAP Additional Financing I as such all payments are supposed to be paid from AF!. MDTF paid these expenses on behalf of AF! because of the cashflow situations that were prevailing during the implementing period. These expenditures are therefore to be refunded by AF! and expenditure included in the previous finacial year have now been reversed and included in advances. 8 FIXED ASSETS MK'OOO US$ MK'OOO US$ Motor vehicles Appendix IV I, 194,396 1,738,322 & Fittings Appendix IV 34,776 78,960 24,185 59,293 Office Equipment Appendix IV 215, , , ,222 1,444,378 2,287, , ,515 9 BANK BALANCES Holding Account Appendix V 115, , ,958 l,!21,831 Designated Accounts Headquarters- Ministry Appendix VI 2,433,952 3,416,510 2,995,999 6,458,103 RFA Appendix VII 3,563,074 5,001,443 5,997,026 8,417,953 2,995,999 6,458,

20 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF NOTES TO THE SOURCES AND USES OF FUNDS STATEMENT (CONTINUED) FOR THEYEAR ENDED 30 JUNE COST CENTER BALANCES These are amounts that were remaining as at 30 June 2016 from beneficiary cost centers. Cost centers are funded periodically. These funds are spent following prepared cashflows and implementation plans of those cost centers. District councils use consolidated District Development Fund Accounts while ADD 's use Holding accounts held at the Reserve Bank of Malawi MK'OOO US$ MK'OOO US$ District Councils Appendix VIII 66,042 90,155 51, ,921 Agriculture Development Divisons Appendix VIII 119, ,641 67, , , , , , ADVANCES These represents amounts recoverable by the project for the transfers to /expenses made on behalf of the Ministries and Additional Financing 1 activities Ministry of Trade and Industry Ministry of Lands and Housing Additional Financing 1 activities 166, , , , , ,513 1,271, , , , ,377 1,945,

21 GRAHAM CARRI I Chartered Accountants A member of Nexia International MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF GRANT AGREEMENT NO TF AUDITORS REPORT ON INTERNAL CONTROLS FOR THE YEAR ENDED 30 JUNE 2016 We have audited the receipts and payments statement of Agricultural Sector Wide Approach - Support Project - MDTF as of 30 June 2016, and have issued a report thereon dated 30th December We conducted our audit in accordance with International Standards on Auditing and Ministry of Agriculture, Irrigation and Water Development's terms of reference pertaining to external audit. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the receipts and payments statement is free from material misstatement. In planning and performing our audit of the Agricultural Sector Wide Approach - Support Project - MDTF for the period ended 30 June 2016, we considered its internal controls as a basis of designing our audit procedures for the purpose of expressing our opinion on the Receipts and payments statement, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. Our consideration of internal controls was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal controls that might be significant deficiencies or material weaknesses. ' A deficiency in internal controls exists when the design or operation of a control does allow management or employees, in the normal course of performing their assigned functions to prevent or detect and correct misstatement on a timely basis. A material weakness is a deficiency or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented or detected and corrected on a timely basis. Upon examining the internal controls, the following was noted: Payments not supported by adequate third party documentation Bank reconciliations not being properly done i.e Stale cheques still appearing on the bank reconci I iations Delays in despatching cheques to service providers /beneficiaries I ADL House, 2 11 d Floor. City Centre I P.O.Box 898 Lilongwe Mala~i Tel: (+265) , , Fax: , lilongwe'ctgrahamcanmw.com :\'exia International is a worldwide network of independent auditors, business advisors and consultants Partners: C.M.C Banda-Lilongwe, D. '\gwira('vlrs)-blantyre. Offices in Lilongwe and Blantyre.

22 GRAHAM CARRI I Chartered ccountants A member of Nexia lnternat,onal Procurement procedures not properly done in accordance with Public Procurement Act of No evidence that usage of fuel purchases was monitored through the use of logbooks Non insurance of project assets The fixed asset register is not properly updated as it does not include serial numbers and location of some assets No evidence that loose minutes were prepared and approved Except for the above findings, internal controls were adequate for the period. Information contained in this report may be privileged. This report is intended solely for the use of Agricultural Sector Wide Approach - Support Project - MDTF and the World Bank but this is not intended to limit the distribution of the report if it is a matter of public record. Graham Carr 30th December

23 GRAHAM CARRI I Chartered Accountants A member of Nexia International MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF GRANT AGREEMENT NO TF AUDITORS REPORT ON COMPLIANCE WITH AGREEMENT TERMS FOR THE YEAR ENDED 30 JUNE 2016 We have audited the receipts and payments of Agricultural Sector Wide Approach - Support Project - MDTF for the period ended 30 June 2016, and have issued a report thereon dated 30th December We conducted our audit in accordance with International Standards on Auditing and terms of reference for the audit. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Receipts and payments statement is free from material misstatement. Compliance with the terms of the grant agreement and the World Bank's rules and procedures is the responsibility of Agricultural Sector Wide Approach - Support Project - MDTF. As part of obtaining reasonable assurance about whether receipts and payments statement is free of material misstatement, we performed tests of compliance with certain provisions of agreement terms and the project document. However, our objective was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. Material instances of non-compliance are failures to follow requirements or violations of agreement terms that cause us to conclude that the aggregation of misstatement resulting from those failures or violations is material to the receipts and payments statement. The results of our tests of compliance disclosed the following material instance of non-compliance: - Non compliance with the budget provisions Delays in submission of progress reports The position of additional Procurement Specialist has been vacant since December 2015 Tompro Accounting System was not in operation within 3 months Core functional analysis was not undertaken within 12 months We considered these instance of non-compliance in forming our opm1on on the receipts and payments statement are presented fairly, in all material respects and this report does not affect our report on receipts and payments statements dated 30th December Except as described above, the results of our test of compliance indicate that, with respect to the items tested, the project complied in all material respects with the provisions referred to in the third paragraph of this report. With respect to items not tested, nothing came to our attention that caused us to believe that the project had not complied, in all material respects, with those provisions I AOL House, 2"d Floor, City Centre\ P.0.Box 898 Lilongwe Malawi Tel: (+265) Fax: , lilongwe agrahamcarmrn.com Nexia International is a worldwide network of independent auditors, business advisors and consultants Partners: C.M.C Banda-Lilongwe, D. ~gwira(mrs)-blantyre. Offices in Lilongwe and Blantyre.

24 GRAHAM CARRI I Chartered Accountants A member of Nexia International Financial information contained in this report may be privileged. This report is intended solely for the use of Agricultural Sector Wide Approach - Support Project - MDTF and the World Bank but this is not intended to limit the distribution of the report if it is a matter of record. c~~ev Graham Carr 30th December

25 GRAHAM CARRI I Chartered Accountants ~ Ne;1i International MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH - SUPPORT PROJECT - MDTF GRANT AGREEMENT NO TF DESIGNATED ACCOUNT NUMBER & FOR THE YEAR ENDED 30 JUNE 2016 We have audited the accompanying statement of special account number I I 6024 and I for the Agricultural Sector Wide Approach - Support Project - MDTF Grant Agreement No TF for the period ended 30 June Management's responsibility for the statement of special account Management is responsible for the preparation and fair presentation of the statement of special account in accordance with International Public Sector Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of statement of special account 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. Auditor's responsibility Our responsibility is to express an opinion on the statement of special account based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the statement of special account is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the statement of special account. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the statement of special account, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the statement of special account 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 entity's internal control. An 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 statement of special account. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, The reported bank balance give, a true and fair view of the financial position of designated account numbers and as at 30 June The designated accounts have been maintained in accordance with the provisions of the Financing Agreement and funds disbursed out of the account were used only for the purpose intended in the Financing Agreement c~~~ Graham Carr 3Qth December 20 I ADL House, 2"d Floor. City Centre I P.O.Box 898 Lilongwe Malawi Tel: (+265) O I I I Fax: 0 I lilongwe a, grahamcarrnm.com Nexia International is a worldwide network of 111dependent auditors, business advi~or~ and consultants Partners: C.M.C Banda-Lilongwe, D. '.\gw1ra(\1rs)-blantyre. Offices in Lilongwe and Blantyre.

26 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF RECEIPTS AND PAYMENTS STATEMENT FOR THEYEAR ENDED 30 JUNE 2016 Appendix I ANNEX I - RECEIPTS AND PAYMENTS STATEMENT BY CATEGORY Actual Exp.(excluding Govt & Beneficiary) Apportionment Table for the Period June June 2015 Categories AMOUNT AMOUNT ASWAP Description MWK US DOLLARS I 2 Goods, works, non-consulting services, consultants'services, operating costs and training under Part I (a), (b), (c) and (d) 3, 193, ,390, and part 3 of the Project Goods, works, non-consulting services, consultants'services, operating costs and training under Part I (e) of the Project Goods, works, non-consulting services, consultants'services, operating costs and training under Part 2 (a), (c) and (d) of 745, ,354, the Project Goods, works, non-consulting services, consultants'services, operating costs and training under Part 2 (b) of the Project 4,187, ,833, I ' Non-consulting services, consultants'services, operating costs and training under Part 2 (e) of the Project 6 Goods, works, non-consulting services, consultants'services, operating costs and training under Part 4 (a) and (b)ofthe - - Project Total 8,126, ,578,

27 -, MINISTRY OF AGRJCUL TURE, IRRJGA TJON AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF STATEMENT OF EXPENDITURE (SOE) FOR THE YEAR ENDED 30 JUNE 2016 A endix II CUMMULATIVE EXPENDITURE P roject component & activity Previous Previous Adjust.To Adjust.To Current Current Cummulative Cummulative Exped Exped Previous Previous Expend Expend Expend Expend Expend Expend US$ MK'OOO US$ MK'OOO US$ MK'OOO US$ MK'OOO J nstitutional Development and 1.0 Capacicy Building ASW AP Management and I.I Coordination Su Ort ASW AP Secretariat(including actual Govt contribution) 117,027 51, ,768 26, ,795 77,293 Capacity Strengthening Team 7,010 3, , ,175 36,223 20,336 Leadership & Management skills training 58, , ,264 85, , ,576 ASWAP Orientation and Visibility 49,746 19,076 49,746 19, ,958 99, , , , , Agriculture Sector Planning 704, , , , , ,957 Monitoring and Evaluation 955, ,916 1,269, ,591 2,225,604 1,096,507 1,659, ,906 1,497, ,559 3, 156,881 1,568, Technical S stems DeveloP-ment Technical Assistance 71,968 27,828 71,968 27,828 Professional Training 37,233 17,042 36,234 16,371 73,467 33, ,201 44,870 36,234 16, ,435 61,

28 - MINISTRY OF AGRICULTURE, IRRIGATlON AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF STATEMENT OF EXPENDITURE (SOE) FOR THEYEAR ENDED 30 JUNE 2016 A endix II CUMMULATIVE EXPENDITURE Project component & activity Previous Previous Adjust.To Adjust.To Current Current Cummulative Cummulative Exped Exped Previous Previous Expend Expend Expend Expend Expend Expend US$ MK'OOO US$ MK'OOO US$ MK'OOO US$ MK'OOO 1.4 Administration S)'.stems Develo ment Financial Management 430, , , , , ,920 Human Resource Management 153,243 62,543 37,362 22, ,605 85,145 Procurement Management 105,759 46, , , , ,850 Administration Management 288, ,726 80,144 46, , ,115 Sustainable Food Security & Agric 2.0 Growth Divers Sustainable Productivity Growth 2.1 Initiative 977, , , ,479 1,618, ,030 2,978,245 1,282,180 2,427,3 81 1,338,837 5,405,626 2,621,017 Use of improved technology options tmprovea seea aevetopment ana use tor 3,499,113 1,570,570 5,152,578 3,249,018 8,651,691 4,819,588 cerials & legumes 1,191, ,970 1,395, ,388 2,587,134 1,155,358 Improved crop nutrient management 107, , , ,553 Sustainable land and rainwater amanagement 9,434 3, , , , ,516 Reducing Post- harvest Losses 6, ,069 86, ,568 86,972 Etticient Agricultural research and extention serv. Delivery 26, ,421 Farm Input Subsidy Program (FISP) 29,818,797 12,084,924 29,818,797 12,084,924 34,633,398 14,586,291 6,833,515 4,187,041 41,466,913 18,773,

29 ,.. MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF STATEMENT OF EXPENDITURE (SOE) FOR THEYEAR ENDED 30 JUNE 2016 A endix II CUMMULA TIVE EXPENDITURE Project component & activity Previous Previous Adjust.To Adjust.To Current Current Cummulative Cummulative Exped Exped Previous Previous Expend Expend Expend Expend Expend Expend US$ MK'OOO US$ MK'OOO US$ MK'OOO US$ MK'OOO Strengthening Market Based Agric 2.2 Risk Mngmt Strategies Rainfall Index Based Early Warning Models 114,181 45, ,585 70, , ,528 Macro Weather Insurance 33,684 13, , , , ,255 Micro Weather Insurance 37,805 16, ,647 17,283 Maize Supply/Price Hedging Strategies 12,259 4, , , , ,782 Capacity tlmlctmg tor integrated Commodity Risk Mngmt. 37,589 17,264 13,656 8,192 51,245 25, ,518 97, , ,588 1,060, ,304 Promotion of Legume Production and 2.3 Marketin Improved Access to Certified Legume Seed 74,104 34, , , , ,662 Support for Legume Crop Diversification 76,948 33,603 66,164 44, ,112 78, ,052 68, , , , ,

30 .. MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF STATEMENT OF EXPENDITURE (SOE) FOR THE YEAR ENDED 30 JUNE 2016 A endix II CUMMULATIVE EXPENDITURE Project component & activity Previous Previous Adj ust.to Adjust.To Current Current Cummulative Cummulative Exped Exped Previous Previous Expend Expend Expend Expend Expend Expend US$ MK'OOO US$ MK'OOO US$ MK'OOO US$ MK'OOO Promotion of Agribusiness through 2.4 PPPs Enhancement of business environment in Agriculture 41,483 17,524 (41,483) (17,524) Promotion of Agribusiness PPPs Matching Grants 4,476 1,987 (4,476) (1,987) Support to Farmers Organisation 206,538 91,518 (206,538) (91,518) 252, ,029 (252,497) (111,029) 35,272,465 14,863,074 (252,497) (111,029) 8,187,916 4,932,299 43,207,884 19,684, Project Coordination Engange Project Staff 95,469 35, , , , ,182 Project Vehicles and Management 133,879 57,123 2,168,576 1,375,499 2,302,455 1,432,622 Facilitate Conduction of Meetings 37,309 16,889 4, 161 3,048 41,470 19,937 Conduct Monitoring of the project by Management 156,469 70, ,684 70, , ,522 Office Running Costs 250, , , , , , , ,284 2,963,2 19 1,854,904 3,637,195 2, 141, Rural Roads Improvement and Maintenance of Rural Roads (15) ( 11) (15) (11) TOTAL USES OF FUNDS 38,924,686 16,431,538 (252,497) (l l 1,029) 13,578,53 1 8,126,051 52,250,690 24,446,

31 _..,. MINISTR Y OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF STATEMENT OF EXPENDITURE (SOE) FOR THEYEAR ENDED 30 JUNE 2016 A endix Ill BUDGET AND EXPENDITURE Project component & activity Allocation Allocation C urrent Current Variance Variance Expend Expend 1.0 Institutional Development and Capacity Building 1.1 ASW AP Management and Coordination Su ort US$ MK'OOO US$ MK'OOO US$ MK'OOO ASW AP Secretariat(including actual Govt contribution) 89,929 62,950 45,768 26,188 44,161 36,762 Capacity Strengthening Team 142, ,000 29, , ,644 82,825 Leadership & Management skills training 106,429 74, ,264 85,065 (71,835) (10,565) ASWAP Orientation and Visibility 142, , , , Planning, Monitoring and Evaluation Su ort 482, , , , , ,022 Agriculture Sector Planning 117,070 81, , ,967 (110,128) (63,018) Monitoring and Evaluation 4,204,3 81 2,943,067 1,269, ,591 2,934,391 2,243,476 4,321,451 3,025,016 1,497, ,559 2,824,263 2,180, Technical S stems Develo~ment Technical Assistance 714, , , ,000 Professional Training 714, ,000 36,234 16, , ,629 1,428,572 1,000,000 36,234 16,371 1,392, , dministration S1-stems Develo ment Financial Management 219, , , ,611 (41,410) 2,689 Human Resource Management 7,143 5,000 37,362 22,602 (30,2 19) (17,602) Procurement Management 43,214 30, , ,877 (219,584) (99,627) Administration Management 33,714 23,600 80,144 46,389 (46,430) (22,789) 303, , , ,479 (337,643) (137,329) 29.

32 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF STATEMENT OF EXPENDITURE (SOE) FOR THEYEAR ENDED 30 JUNE 2016 A endix Ill BUDGET AND EXPENDITURE Project component & activity Allocation Allocation Current Current Variance Variance Expend Expend US$ MK'OOO US$ MK'OOO US$ MK'OOO 2.0 Sustainable Food Security & Agric Growth Divers 2.1 Sustainable Productivi!)' Growth Initiative 6,535, 165 4,574,616 2,427,3 81 1,338,837 4,107,784 3,235,779 Use of improved technology options 5,35 1,305 3,478,348 5, 152,578 3,249, , ,3 30 Improved seed development and use for cerials & legumes 2,922,994 2,046,096 1,395, ,388 1,527,444 1,300,708 Farm Input Subsidy Programme 5,000,000 3,500,000 5,000,000 3,500,000 Sustainable land and rainwater amanagement 50,000 35, , ,663 (117,318) (70,663) Reducing Post- harvest Losses 89,510 62, ,069 86,972 (28,559) (24,3 15) 13,41 3,809 9, 122, 101 6,833,515 4, 187,041 6,580,294 4,935, Strengtl:iening Market Based Agric Risi<: Mngmt Rainfall Index Based Early Warning Models 51,857 36, ,585 70,387 (57,728) (34,087) Macro Weather Insurance 21,429 15, , ,352 (247,888) (107,352) Micro Weather Insurance (842) (372) Maize Supply/Price Hedging Strategies 31, , , ,285 (400,549) (223,035) Capacity Building for Integrated Commodity Risk Mngmt. 182, ,000 13,656 8, , , , , , ,588 (537,806) (245,038) , , , , , , , ,000 66,164 44, , , , , , , , ,058 14,600,717 9,951,379 8,187,916 4,932,299 6,412,801 5,019,

33 - - MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT P ROJECT MDTF STATEMENT OF EXPENDITURE (SOE) FOR THEYEAR ENDED 30 JUNE 2016 A endix Ill BUDGET AND EXPENDITURE Project component & activity Allocation Allocation Current Current Variance Variance Expend Expend US$ MK'OOO US$ MK'OOO US$ MK'OOO 3.0 Project Coordination Engange Project Staff 288, , , ,686 (39,307) 15,9 14 Project Vehicles and Management 1,435,714 I, 109,500 2,168,576 1,375,499 (732,862) (265,999) Facilitate Conduction of Meetings 294, ,000 4, 161 3, , ,952 Conduct Monitoring of the project by Management 261, , ,684 70, , , 113 Office Running Costs 582, , , , , ,163 2,862,210 2,108,047 2,963,219 1,854,904 (101,009) 253, Rural Roads Improvement and Maintenance of Rural Roads 10,340,3 70 7,029, ,340,355 7,029,589 Road Management Capacity Building 212, , , ,087 Road Component Project Management 1,843, ,780 1,843, ,780 12,396,106 8,057, ,396,091 8,057,456 OTAL USES OF FUNDS 36,394, ,691,509 13,578,531 8,126,051 22,815,667 16,565,

34 MINISTRY OF AGRICULTURE, IRRIGATION AND W ATER DEVELOPMENT AGRICULTURAL SECTOR WIDE A PPROACH SUPPORT PROJECT MDTF GRANT AGREEM ENT NO. TF LIST OF ASSETS AS A T JUNE 2016 A endix IV DATE PURCHASED CHEQUE NUMBER NUMBER INVOICE QUANTITY SUPPLIER GIL CODE TYPE/CLASS DESCRIPTION COST AT LOCATION ACQUISITION RATE us$ I Malawi Revenue Authority 0 19/ASWA 13.0 l P/IPC/015/1 Cargoline Services /0 1/ 16 Transfer for dollar account 120 UNO PS Actor Imports & Exports Agency Declaration I Malawi Revenue Authority I Toyota Malawi Ltd WA MDTF 14 Motor Vehic 37 UNO PS Malawi Revenue Authori ty Motor Cycles Processing fee Motor Cycles Clearing Costs Motor Cycles Motorcycle Crash 120 Motor Cycles Motorcycle Crash Helmets Motor Cycles Duty & Processing fee Motor Vehicle Toyota Prado TX 3.0 Motor Vehicles Motor Vehicles Motor Vehi cles Duty on 6 Motorvehicles - 500, Various ,2 16, Various , , 738, Various , , 11 2, Various , , 756, Various , , I 00, Hqs , , IO 1, I, 123, ,869, Various , ,194,395, I, 738, Mapanga Conference Room Tables 1,758, DAES , I Mapanga Mapanga / Direct / Direct Direct Direct Round Table Conference Room Chairs Executive Desk Executive Leather High back Swive l Chair Executive Office Desks Executive Leather Chairs 74, DAES ,859, DAES , , HQ , HQ , ,360, HQ , ,999, HQ , I Direct Executive Leather Hi gh back Swivel Ch 233, HQ / OF/06/448 5 Oasis Executive L Shape Offi ce Desks 2,2 13, , / OF/06/448 9 Oasis Visitors Chairs with Steel Base 524, , / OF/06/448 3 Oasis Steel Filing Cabinets 349, / OF/06/448 4 Oas is / OF/06/448 2 Oasis Executive Swivel High back Chairs Executive Swivel Secretary Chairs 699, , , / Game Stores L Back Chairs 494, Daes , / Game Stores Tables 530, Daes , / I Oasis / I Oasis Furn iture Executive L shape Offi ce Desk Executive Chair 466, Hqs , , Hqs / Oasis Furn iture Furn iture Visitor Chairs 256, Hqs

35 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF LIST OF ASSETS AS AT JUNE A.A.M.Furnishers A.A.M.Furnishers / OF/06/ OASIS / OF/06/ OASIS / Game Stores / Game Stores A.A.M. Furnishers A.A.M. Furnishers A.A.M. Furnishers A.A.M. Furnishers A.A.M. Furnishers Annendix [V Exective Maron Carpet 2,970, Hqs , Curtains 983, Hqs , ,184, , Executive Office Chairs 652, AFMS Office , Executive L Shape Office Desks 1,048, AFMS Office , Plastic Tables 738, Daes , PLastic Chairs 806, Daes , Executive Tables 3,343, TA Office , Executive Chairs 1,215, TA Office , Visitors Chairs 1,125, TA Office , Book Shelves 644, TA Office , Filling Cabinets 1,019, TA Office , ,591, , ,776, , / fnspiron TECHNOLOGY Office Equipment AO Scanners 25,000, Lands , / fnspiron TECHNOLOGY fnv IT Centre I Lords Best Collection MZ H H Wholesallers MZ H H Wholesallers MZ H H Wholesallers MZ H H Wholesallers MZ H H Wholesallers MZ H H Wholesallers fnv IT Centre fnv36360 I IT Centre MZ H H Wholesallers MZ H H Wholesallers MZ H H Wholesallers MZ H H Wholesallers MZ H H Wholesallers 26/02/ / Q~ Globe Computers 26/02/ 15 ''.. ' 1111.JU6'1/JlSJU/J Globe Computers lo~ Office Eauipment Office Equipment Trimble GPS (Hand held) 8,854, Lands , HP Probook Laptop computers 1,991, HQ , Fridge and Fridge guard 229, HQ Heavy duty Push Bicycles 3,640, HQ , Heavy duty Push Bicycles 4,368, HQ , Heavy duty Push Bicycles 5,460, HQ , Heavy duty Push Bicycles 1,820, HQ , Heavy duty Push Bicycles 5,642, HQ , Heavy duty Push Bicycles 3,640, HQ , HP Desk Top Computers 5,215, HQ , HP Proliant Server ML 310 1,967, HQ , Heavy duty Push Bicycles 4,368, HQ , Heavy duty Push Bicycles 6,553, HQ , Heavy duty Push Bicycles 1,820, HQ , Heavy duty Push Bicycles 7,281, , Heavy duty Push Bicycles 7,099, , Dell Optiplex 7010 i5 Computers 3,569, , UPS 650 VA APC 389,

36 MINISTRY OF AG RI CULT RE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF LIST OF ASSETS AS AT JUNE '." "-1 'J!SJU/J 26/02/15 R, /003832/ /02/ ' I /003832/ /02/15 do31,i: /02/ 15 'l /003832/ /02/ 15 I, Globe Computers I Globe Computers I Globe Computers I Globe Computers I Globe Computers 01/04/ / I Globe Electronics Ltd 01/04/ / I Globe Electronics Ltd 01/04/ / I Globe Electronics Ltd / Oasis / Oasis / Oasis / Oasis / Oasis / Compubyte / Compubvte /002681/ Blockbuster / / Blockbuster / / Blockbuster /002681/ Blockbuster /002681/ Blockbuster / CCU20021 I Computer Connections Ltd / ~~ULI 2 Computer Connections Ltd / ccr:nuul1 a 2 Computer Connections Ltd / Globe Electronics Ltd / Globe Electronics Ltd / Globe Electronics Ltd / Globe Electronics Ltd / Globe Electronics Ltd / Globe Electronics Ltd /04068 CT5598 II Ctech Systems Office Equipment Office Equipment Office Equipment Office Equipment Office Equipment Office Equipment Office Equipment - - A.ooen d 1x. IV HP 450 GI Laptops,Si 8GB (15" BAGs) 3,959, , Dell Optiplex 9020 i5 Computer 643, FISHERIES , UPS 650 VA Epro 68, FISHERIES HP Laser Jet 40 ID Printers 248, FISHERIES HP Si Laptops 768, FISHERIES , HP 450 GI Laptops 7i 8GB , HQ , HP MFP276 Laser Jet Color Printer 407, HQ HP 5590 Flatbed SCANNER 233, HQ L Shape t.xecut1ve umce cna1r 873, , ~...,~ uuve umce uesk with Locable 1,380, HQ In,..,~, , Upright Fridge 2 doors (200 Litres) 996, HQ , Steel filing cabinents 4 Drawers 699, HQ , Book Shelf 5 Compartments 786, HQ , HP Probook Laptops 2,405, HQ , Extension Cords 368, HQ Office Tables 920, HQ , Office Chairs 349, HQ Book Shelves 314, HQ Visitors chairs 744, HQ , Filing cabinets 454, HQ APC 1500 Back Up AV 298, HQ External Hard Drive 152, HQ HP Probook 450 GI Laptop i5 1,463, HQ , Dell Optiplex 9020 Desktop i-5 4GB 2,912, Hqs , HP 1536 DNF Printer 1,631, Hqs , Brother Fax Machine 699, Hqs , HP 5590 Scanner 699, Hqs , External 500GB HDD 349, Hqs Sharp MX23 l O Photocopier 10,019, Hqs , HP 7i 8GB Laptop 4,050, Hqs , / VNM70582 I VN Computer World & Document Centre Office Equipment Laptop 594, Hqs ,

37 - MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF LIST OF ASSETS AS AT JUNE / VNM70582 I / VNM70582 I Mapanga VN Computer World & Document Centre VN Computer World & Document Centre / I Computer Connections Ltd / I Computer Connections Ltd / /09 2 Compubyte / /09 2 Compubyte / Oasis Consumer Electronic I Services Office Equipment UPS 168, Hqs Office Equipment External Hard Drive 75, Hqs - A,DDCn d. IX rv Office Equipment Executive L shape Office Desk 2,500, Daes , Office Eq uipment HP Probook 640 Note book Laptop 623, Hqs , Office Equipment Multi Compartment Back Pack 30, Hqs Office Equipment HP Probook 450s Laptop computers 1,332, Hqs , Office Equipment Laptop Bags 68, Hqs Office Equipment Executive Swivel High back Chairs 2,62 1, Daes , Office Equipment Sony HUE Z5E Video Camera 2,995, Daes , ,576, , I Globe Electronics Ltd / / / /10/ /10/2015 Direct Transfer - Desionated Direct Transfer - Desianated 019/ASWA P- 019/ASWA P- 019/ASWA P / /ASWAP 2 14 Globe Electronics Ltd 13 Globe Electronics Ltd Globe Electronics Ltd Comet Trawel Fjardnet / Game Stores Office Equipment Laptop Computer 8GB DDR3 873, Deputy ASWAo Head , Office Equipment Dell Optilex 3020 i5 4GB 750 Desk top 7,339, Hqs&ADDs Office Equipment HP Laserjet 401DN Printers 3, 786, Hqs& ADDs Office Equipment APC SMART 650VA UPS 1,223, Hqs&ADDs Fis hing Nets Fishing Nets 4,496, Fisheries Fishing Nets Fishing Nets 1,522, Fisheries Office Equipment SISCO SR Port Gigabit Switch 768, Hqs Inspired Computer Technology Consultants Office Equipment KIC 344L Fridge 1,064, Vet , , , , , , , / Game Stores / I Keiretsu Construction Limited 10/02/2016 Direct Transfer - Desionated Comet Trawel 10/02/2016 Direct Transfer - Desionated Fjardnet 05/05/2016 Dire ct Transfer - Desianated Fjardnet /007424/ /ASWAP I Canotech Office Equipment ASW A Y Multiplug 55, Vet Office Equipment Solar Pump 4,318, Dwambazi Livestock , Fishing Nets Fishing Nets 4,496, Fisheries Fishing Nets Fishing Nets 5,516, Fisheries Fishing Nets Fishing Nets 830, Fisheries Office Equipment , , , Photocopier Machine 8,800, Accounts Offic ,

38 - MINISTRY OF AGRICULTURE, lrriga TION AND WATER DEVELOPMENT AGRJCUL T URAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF GRANT AGREEM ENT NO. TF LI ST OF ASSETS AS AT J UNE / I Lords Best Collection Globe Computer Systems Ltd Globe Computer Systems Ltd 2 Globe Computer Systems Ltd 200 Tayub Executive Furnishings Globe Electroni cs Ltd ASWAP/IP C/0 15/ Click Africa AS WAP/IP C/0 15/ Click Afri ca /009594/ Consumer Electroni c Servi ces /009594/ Consumer Electronic Servi ces I Samfur Freight I Samfur Freight / Trans Maritime Ltd Office Equipment Office Equipment Office Equipment Office Equipment Office Equipment Offi ce Equipment Offi ce Equipment Office Equipment Offi ce Equ ipment - Upright Fridges 658, TA Office A,DDen d" IX IV , HP 250 G4 Laptop i5 8GB & 5 USB Fla 4,625, IT Offices , UPS APC Smart 1500 VA LCD 230V 266, Computer Roo Extern al Hard Dri ve 2TB 560, Computer Roo Carpet supply & Fining 5,5 10, ASWAP Secre , Olympus VN 70 I Recorders 2,020, DAES , HP Laser Jet Printer M225 Dw 838, TA Offices , OMEGA 5 WAY Multiplug sage Protec 90, TA Offices UN-70 1 PC Video Camera 1, 11 8, DAES , Office Equipment Sony- HUR- Z5E Proffessional Camera 4,0 13, DAES , Equipment Fishing nets 485, Fisheries Equipment Fishi ng nets 80, Fisheries II 0.53 Equipment Freight charges- Trawal fis hinhg nets 269, Fisheries ,629, I , ,206, , ,444,377, ,287,

39 MINISTRY OF AGRICULTURE, IRRIGATION AND WATER DEVELOPMENT AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF RECEIPTS AND PAYMENTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2016 Appendix V BANK RECONCILIATION -RBM HOLDING A/C NO Balance as per bank statement Add: Uncleared deposits MK'OOO MK'OOO 331,530,562 17,981,095 Less: Unpresented cheques (233,853,908) (233,853,908) Cash book balance 115,657,

40 MINISTRY OF AG RI CULTURE AND FOOD SECURITY AG RI CULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF RECEIPTS AND PAYMENTS ST A TEMENT FOR THE YEAR ENDED 30 JUNE 2016 Appendix VI BANK RECONCILIATION - NBM DESIGNATED A/C N Amount US$ Balance as per bank statement 3,416,510 Exchange rate as at 30/06/16 Cash book balance in MK ,433,952,465 I

41 MINISTRY OF AGRICULTURE AND FOOD SECURITY AGRICULTURAL SECTOR WIDE APPROACH SUPPORT PROJECT MDTF RECEIPTS AND PAYMENTS STATEMENT FOR THE YEAR ENDED 30 JUNE 2016 BANK RECONCILIATION - NBM DESIGNATED A/C N Appendix VII Amount US$ Balance as per bank statement 5,001,443 Exchange rate as at 30/06/ Cash book balance in MK 3,563,073,