Ghana - Upper Region Agricultural Development Project : Loan 1291 - Loan Agreement - Conformed

CONFORMED COPY LOAN NUMBER 1291 T-GH LOAN AGREEMENT (Upper Region Agricultural Development Project) between REPUBLIC OF GHANA and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 28, 1976 LOAN AGREEMENT AGREEMENT, dated June 28, 1976, between REPUBLIC OF GHANA (hereinafter called the Borrower) and INTERNATIONAL BANK FOR RE- CONSTRUCTION AND DEVELOPMENT (hereinafter called the Bank). WHEREAS (A) the Borrower has requested the Bank to assist in the financing of the Project described in Schedule 2 to this Agree- ment by making the Loan as hereinafter provided; (B) the Bank has determined that the Borrower is eligible to receive this Loan as an intermediate term loan, as that term is defined in Resolution No. 75-111 of the Executive Directors of the Bank establishing an Interest Subsidy Fund for the Third Window (hereinafter called the Fund) and upon the terms and con- ditions set forth in such Resolution; (C) the Administrator of the Fund (hereinafter called the Administrator), subject to the terms and conditions set forth in the Resolution referred to in (B) above, is obligated to pay to the Bank semi-annually from the resources of the Fund an amount equal to four per cent (4%) per annum of the outstanding amounts of principal on intermediate term loans, of which this Loan is one; (D) the Borrower has requested the United Kingdom of Great Britain and Northern Ireland (hereinafter called the United Kingdom) to assist in financing part of the Project by an allocation of £4,000,000 from the Capital Aid (1975) Loan Agreement entered into between the Borrower and the United Kingdom (hereinafter called the U.K. Loan Agreement); -2 (E) The United Kingdom has agreed to make available to the Borrower, technical services to assist in the implementation of the Project, through its existing Technical Assistance Program for the Borrover; and WHEREAS the Bank has agreed, on the basis inter alia of the foregoing, to make the Loan to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -3- ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Loan and Guar- antee Agreements of the Bank, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Loan and Guarantee Agreements of the Bank being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following addi- tional terms have the following meanings: (a) "ADB" means the Agricultural Development Bank, a body corporate established pursuant to the Agricultural Credit and Co- operative Bank Act, 1965 (Act 286), as amended, of the Borrower; (b) "CDB" means the Cotton Development Board, a statutory board established by the Borrower by Cotton Development Board Decree 1969 (No. NLCD 353); (c) "FSC" means the Farmers Service Company (Upper Region) Limited, a company to be established under the Companies Code, 1963, of the Borrower; -4- (d) "GBC" means the Ghana Broadcasting Corporation, a body corporate established by the Borrower by Ghana Broadcasting Cor- poration Decree 1968 (No. NLCD 22); (e) "URADPEC" means the Upper Region Agricultural Develop- ment Project Executive Committee referred to in Part A of Schedule 5 to this Agreement; (f) "URPMU" means the Upper Region Agricultural Development Project Management Unit referred to in Part B of Schedule 5 to this Agreement; (g) "URDECO" means the Upper Regional Development Corporation, a body corporate established under the Regional Development Corpora- tion Decree 1973 (No. NRCD 140); (h) the sign "0" means cedis in the currency of the Borrower; and (i) the sign "T" means pounds in the currency of the United Kingdom of Great Britain and Northern Ireland. ARTICLE II The Loan Section 2-01. The Bank agrees to lend to the Borrower, on the terms and conditions in the Loan Agreement set forth or re- ferred to, an amount in various currencies equivalent to twenty-one million dollars ($21,000,000). Section 2.02. The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Bank, for expendi- tures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Loan. Section 2.03. Except as the Bank shall otherwise agree, contracts for the purchase of goods or for civil works to be financed out of the proceeds of the Loan, shall be procured in accordance with the provisions of Schedule 4 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1982 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the rank a commitment charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. -6- Section 2.06. The Borrower shall pay interest at the rate of four and eighty-five hundredths per cent (4.85%) per annum on the principal amount of the Loan withdrawn and outstanding from time to time; provided, however, that if the Administrator shall at any time determine that the resources of the Fund shall not be suffi- cient to pay to the Bank at the next succeeding semi-annual inter- est payment date of the Loan the amount scheduled to be paid by the Administrator at that interest payment date as specified in para- graph (C) of the Preamble to this Agreement, the Borrower shall, upon notification by the Administrator of such determination and the amount of the resulting shortfall, pay additional interest on such principal amount of the Loan equal to such shortfall. Section 2.07. Interest and other charges shall be payable semi-annually on January 15 and July 15 in each year. Section 2.08. The Borrover shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out the Project, or cause it to be carried out, through the URPMU, ADB, CDB, FSC and GBC with due diligence and efficiency and in conformity with appro- priate administrative, financial, agricultural and engineering practices, and shall provide, promptly as needed, the funds, facil- ities, services and other resources required for the purpose. (b) The Borrower shall establish and maintain an account with a commercial bank in Bolgatanga, which shall be under the control of the URPMU Project Manager and such persons as he may designate, and shall arrange for and maintain an overdraft facility in respect of such account of not less than 03 million. (c) The Borrower shall ensure the proper management of the Project and coordination among the agencies carrying out the Proj- ect through the URADPEC and URPMU, in each case in accordance with the provisions of Schedule 5 to this Agreement, and through the committees referred to in Section 3.07 of this Agreement. (d) Except as the Bank may otherwise agree, the proceeds of the Loan shall be applied in the manner indicated in Schedule 6 to this Agreement and the Borrower shall ensure that the other. financial arrangements set out therein are implemented. Section 3.02. In order to assist the Borrower in carrying out the Project, the Borrower shall employ, or cause to be employed, specialists of the kind indicated below, whose qualifications, experience and terms and conditions of employment shall in each case be satisfactory to the Bank: (a) A radio broadcasting engineer to prepare, in consultation with GBC, specifications and tender documents for FM transmission and to supervise procurement and installation of broadcasting equipment; (b) A plant breeder specialized in small grains; and (c) Specialists to assist with the planning of those areas which are freed of onchocerciasis in the Upper and Northern Regions. Section 3.03. (a) The Borrower undertakes to insure, cause to be insured, or make adequate provision where applicable for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transporta- tion and delivery thereof to the place of use or installation, and for such insurance ary indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Bank shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. -9- Section 3.04. (a) The Borrower shall furnish, or cause to be furnished, to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall rea- sonably request. (b) The Borrower: (i) shall maintain, or cause to be maintained, records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof in the Project; (ii) shall enable the Bank's accredited representa- tives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the expenditure of the proceeds of the Loan and the goods and services financed out of such proceeds. Section 3.05. (a) The Borrower shall take all such action as shall be necessary to make available as and when needed all such land and rights in reppect of land as shall be required for carrying out the Project, including about 20,000 hectares of land suitable for ranching, and shall furnish to the Bank, evidence satisfactory to the Bank that such land and rights in respect of land are avail- able for purposes related to the Project. (b) For the purposes of ranch development under Part A(5) of the Project, the Borrower shall lease land, out of the land referred - 10 - to in paragraph (a) of this Section, to the participating ranchers for a period of not less than 45 years on terms and conditions satisfactory to the Bank. Loans to ranchers in respect of such ranches shall not be made out of the proceeds of the Loan until, in each case, such a lease has been concluded with the farmers involved. (c) URPMU shall provide FSC access to sufficient land and facilities in each farmer service center to enable FSC to supply inputs and marketing facilities to farmers. Section 3.06. Goods and livestock imported by URPMU and FSC and capital equipment imported by GBC and CDB, for the Project, shall be exempt from all import restrictions and customs duties, and the Borrower shall, when required, make foreign excharige avail- able to such agencies for such imports. The Borrower shall take appropriate action to give effect to the foregoing within two months of the Effective Date, or such later date as the Bank may agree. Section 3.07. The Borrower shall establish and maintain a Project Coordinating Committee and a Project Technical Committee, in accordance with the details set forth in Schedule 5 to this Agreement. Section 3.08. ,a) The senior management staff listed below shall be appointed, and replaced when necessary, in a timely fashion, and their qualifications, experience and terms and con- ditions of their employment shall be satisfactory to the Bank: - 11 - (i) URPMU staff: Project Manager, Chief of Field Operations, Chief Accountant, Senior Communica- tions and Training Officer, Senior Project Evaluation Officer, Senior Land Development Officer, Ranch Development Officer and Senior Irrigation Officer. (ii) FSC staff: General Manager and Chief Accountant. (b) In respect of each appointment of such Project Manager, Chief of Field Operations and General Manager: (i) if it is pro- posed to appoint a Ghanaian national, the Borrower shall ensure that the Bank is consulted prior to such appointment; and (ii) if it is proposed to appoint a person other than a Ghanaian national, the Borrower shall ensure that the Bank's approval is obtained prior to such appointment. (c) Other senior staff of URPMU, FSC, ADB, URDECO and GBC involved in the Project shall be appointed, and replaced when necessary, in a timely fashion and shall be adequately experienced and qualified for their respective tasks. Section 3.09. The Borrower shall give priority to the recruit- ment of staff required for carrying out the Project, and once appointed, URPMU staff would not be transferred to other duties for a minimum of three years except with the concurrence of the URADPEC. - 12 - ARTICLE IV Other Covenants Section 4.01. (a) It is the policy of the Bank, in making loans to, or with the guarantee of, its members not to seek, in normal circumstances, special security from the member concerned but to ensure that no other external debt shall have priority over its loans in the allocation, realization or distribution of for- eign exchange held under the control or for the benefit of such member. To that end, if any lien shall be created on any public assets (as hereinafter defined), as security for any elfternal debt, which will or might result in a priority for the benefit of the creditor of such external debt in the allocation, realization or distribution of foreign exchange, such lien shall, unless the Bank shall otherwise agree, iggo facto and at no cost to the Bank, equally and ratably secure the principal of, and interest and other charges on, the Loan, and the Borrower, in creating or per- mitting the creation of such lien, shall make express provision to that effect; provided, however, that, if for any constitutional or other legal reason such provision cannot be made with respect to any lien created on assets of any of its political or admini- strative subdivisions, the Borrower shall promptly and at no cost to the Bank secure the principal of, and interest and other charges on, the Loan by an equivalent lien on other public assets satisfac- tory to the Bank. (b) The foregoing undertaking shall not apply to: (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; -13- and (ii) any lien arising in the ordinary course of banking trans- actions and securing a debt maturing not more than one year after its date. . (c) As used in this Section, the term "public assets" means assets of the Borrower, of any political or administrative subdi- vision thereof and of any entity owned or controlled by, or oper- ating for the account or benefit of, the Borrower or any such subdivision, including gold and other foreign exchange assets held by any institution performing the functions of a central bank or exchange stabilization fund, or similar functions, for the Borrower. Section 4.02. The Borrower shall maintain or cause to be maintained separate records adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures, in respect of the Project, of the departments or agencies of the Borrower responsible for carry- ing out the Project or any part thereof. Section 4.03. (a) The Borrower shall cause ADB, CDB, GBC, FSC and URPMU to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices their respective operations and financial condition related to the Project. (b) The Borrower shall cause each of the foregoing agencies to: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing prin- ciples consistently applied, by independent auditors approved by the Auditor General of the Borrower and acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than fraur months er the end of each such year, (A) certified copies of its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning the accounts and financial statements of each of the foregoing agencies and the audit thereof as the Bank shall from time to time reasonably request. Section 4.04. The Borrower shall cause CDB, FSC, GBC and URPMU to take out and maintain with responsible insurers, or to make other provision satisfactory to the Bank for, insurance against such risks and in such amounts as shall be consistent with appro- priate practice. Section 4.05. The Borrower shall, by June 30, 1977, or such other date as the Bank may agree, submit to the Bank for its com- ments a paper setting out the Borrower's proposed agricultural pricing and subsidy policies. Section 4.06. (a) FSC shall be permitted and enabled to pro- cure, directly, by importation or otherwise, all farm inputs it requires, except fertilizer, for supplying farmers in the Upper Region. If FSC is required to supply any input to farmers at sub- sidized prices in accordance with the Borrower's laws or policy in effect at the time, then the Borrower shall pay FSC in advance amounts equivalent to the subsidy at the time in force, calculated on the basis of a formula and according to a timetable, both ac- ceptable to the Bank. - 15 - (b) The Borrower shall make arrangements satisfactory to the Bank to provide CDB with the funds it requires to purchase, as delivered, all seed cotton produced in the Upper Region at official prices prevailing at the time. Section 4.07. The Borrower shall ensure that not less than seventy per cent of the GBC broadcasts from the Upper Region, Regional Broadcasting Network shall originate from and be directed to the Upper Region and that the annual broadcasting budget and programming policy for the Upper Region shall be mutually approved by the URADPEC and the GBC. Section 4.08. (a) The Borrower shall establish and maintain FSC in accordance with such regulations as shall be agreed upon between the Borrower and the Bank. (b) The Borrower shall exempt FSC from all import duties, sales, income and other taxes and import restrictions during the first five years of FSC's Operations. The Borrower shall take all such action as may be required, to give effect to the foregoing within two months of the Effective Date, or such later date as the Bank may agree. (c) In the event that the commercial banks of the Borrower fail to subscribe to the share-capital of FSC in an amount of up to 04,000,000, the Borrower undertakes to take appropriate steps to increase its equity participation in FSC by an equivalent amount. - 16 - (d) The Borrower shall ensure that FSC's regulations are not amended save with the Bank's consent. (e) The Borrower shall ensure that, except as the Bank may otherwise agree, PSC engages in no business except participation in the implementation of the Project until the fifth anniversary of the date of this Agreement. -17 - ARTICLE V Remedies of the Bank Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (k) thereof: (a) (i) Subject to subparagraph (ii) of this paragraph: (A) The right of the Borrower to withdraw the proceeds of any grant or loan made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) any such loan shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Bank that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its ob- ligations under such agreement, and (B) adequate funds for the Project are available to the Borrower - 18 - from other sources on terms and conditions consis- tent with the obligations of the Borrower under this Agreement. (b) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution of FSC, URADPEC or URPMU or for the suspension of any of their operations. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following events are specified pursuant to para- graph (h) thereof, namely that the event specified in paragraph (a) (i) (B) or (b) of Section 5.01 of this Agreement shall occur. -19 - ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) The Borrower has established the account described in Section 3.01 (b) of this Agreement and an initial deposit of 03 mil- lion has been made in such account. (b) The Borrower has made arrangements satisfactory to the Bank for an overdraft facility of at least 03 million in respect of the account referred to in paragraph (a) of this Secti(,n. (c) The Borrower has appointed URPMU's Project Manager and Chief of Field Operations. (d) FSC has been established in accordance with the provi- sions of Section 4.08 (a) of this Agreement and its Managing Director has been appointed. (e) The Borrower has reached an agreement with the United Kingdom on the terms and conditions of the allocation of £4,000,000 from the U.K. Loan Agreement. (f) The committees referred to in Section 3.07 of this Agreement have been established. -20- Section 6.02. The date September 28, 1976, is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. -21- ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Senior Principal Secretary of the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Principal Secretary Ministry of Economic Planning P.O. Box M76 Acera, Ghana Cable address: ECONOMICOM Accra For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INTBAFRAD Washington, D.C. -22- IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF GHANA By /s/ Samuel E. Quarm Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By /s/ E. Peter Wright Acting Regional Vice President Western Africa - 23 - SCHEDULE 1 Withdrawal of the Proceeds of the loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of ex- penditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Vehicles and equip- 2,900,000 100% of foreign ment (other than expenditures or farm equipment), 86% of local saw gins and as- expenditures sociated equip- ment, veterinary drugs and aerial photography (2) Fertilizer, ranch 6,000,000 100% of foreign and farm equipment expen,aditures or and supplies, 65% of local batteries, tran- expenditures sistor radios and livestock (3) Salaries, allowances 800,000 100% and recruitment costs of internationally recruited staff and foreign training of local staff -24- Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (4) Buildings (excluding 3,600,000 50% buildings for CDB and FSC), including fur- nishings, and construc- tion materials for dams, soil conser- vation works, wells and grain stores (5) Vehicle and plant 2,100,000 50% operating costs, in- cluding spare parts, for URPMU and GBC (6) Unallocated 5,60o,000 TOTAL 21,000,000 - 25 - 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. Proceeds of the Loan withdrawn to finance farm inputs through FSC are intended to finance only incremental amounts required to expand the supply of inputs to farmers in the Upper Region. Accord- ingly, FSC shall, after the first year of Project implementation, withdraw proceeds of the Loan to finance farm inputs only to the extent they cannot be financed out of the repayments of loans made to farmers and payments made by the Borrower to FSC pursuant to Section 4.06 of this Agreement. 4. The disbursement percentages have been calculated in compli- ance with the policy of the Bank that no proceeds of the Loan shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Loan decreases or increases, the Bank may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned polioy of the Bank. - 26 - 5. Notwithstanding the provisions of paragraph 1 above, no with- drawals shall be made in respect of payments made for expenditures prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of $750,000, may be made in respect of Categories (1), (3) and (4) on account of payments made for such expenditures before that date but after May 1, 1976. 6. Notwithstanding the allocation of an amount of the Loan or the disbursement percentages set forth in the table in paragraph 1 above, if the Bank has reasonably estimated that the amount of the Loan then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Bank may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Loan which are then allocated to another Category and which in the opinion of the Bank are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then appli- cable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 7. If the Bank shall have reasonably determined that the pro- curement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expen- ditures for such item shall be financed out of the proceeds of the Loan and the Bank may, without in any way restricting or lim- iting any other right, power or remedy of the Bank under the Loan Agreement, by notice to the Borrower, cancel such amount of the -27- Loan as, in the Bank's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Loan. -28 - SCHEDULE 2 Description of the Project The Project is a five-year (1976/77 - 1980/81) investment program of the Borrower with a view to increasing agriculture production and establishing permanent farm support services in the Upper Region, and consists of the following: Part A: Farm Development and Supporting Services 1. Establishing about 90 farm service centers to provide improved extension services to small farmers and management advice to a relatively few larger farmers, health and nutrition services, marketing facilities, farm equipment maintenance and input supply facilities; 2. Providing farm inputs, for cash or on credit, through the FSC and ADB, including insecticides, seed dressings, improved seeds, fertilizers, spare parts, farm equipment and oxen in amounts sufficient to increase production on about 108,000 hectares of seasonal crops, including millet, sorghum, dwarf sorghum, maize, groundnuts, yams, cotton, rice, cowpeas and tomatoes; 3. Improving on-farm grain storage by providing cement for plastering and concrete lids for traditional stores; -29- 14. Improving animal health and extension services and improved animal husbandry through provision of increased trained staff, vaccines, vehicles and equipment; 5. Establishing ten small (2,000 hectares) ranches by vesting the required land in URPMU and leasing it to individuals or groups of farmers; 6. Developing and staffing seven applied research and demonstration units to adapt crop research results for application in the Upper Region at existing agricultural stations, together with an associated seed multiplication program; 7. Establishing a pilot functional literacy scheme built around classes designed to reach about 1,500 farmers; 8. Expanding the GBC's broadcasting facilities in the Upper Region, broadcasting programs to further the Project in three major languages and supplying through FSC about 22,000 radio receivers to farmers in the Upper Region; 9. Improving human nutrition and health through agricul- tural extension services, the functional literacy pro- gram and the radio; and S - 30 - 10. Providing in-service training for Project staff at the existing Navrongo Agricultural Institute and funds and travel grants for visits to selected projects and schemes for specialized management training outside Ghana. Part B: Physical Infrastructure, Works and Equipment 1. Constructing about 120 new small earth dams with a mini- mum capacity of 120,000 cubic meters, with downstream irrigation works where feasible, and rehabilitating about 100 existing dams to provide water for dry season gar- dening, fruit tree nurseries and fish ponds developed under the Project and cattle, and improving water con- servation; 2. Construction of works and implementation of other measures to protect at least 160,000 ha of farm land, including catchment areas of such dams; 3. Providing materials and supervision for self-help construction of about 700 village wells with pumps; 4. Constructing simple offices and stores at about 90 farm service centers, offices for the URPMU and FSC at Bol- gatanga and at seven district administration centers and housing for Project staff; 5. Providing vehicles and other equipment for the TTRPMU, GBC and FSC; - 31 - 6. Constructing two 9,000 ton per annum cotton ginneries; and 7. Construction of facilities and installation of broadcasting equipment of sufficient power to reach the entire Upper Region through a main radio station at Bolgatanga and transmission stations at Tumu, Lawra, Wa and Bavku. Part C: Institutional Support 1. Establishing and supporting the FSC; 2. Strengthening the Bolgatanga Regional Branch of the Agricultural Development Bank through provision of an experienced loan officer and vehicles; 3. Strengthening the URDECO, partic larly its transport and wholesale divisions; and 4. Strengthening the Ministry of Agriculture within the Upper Region through establishment of the URPMU. Part D: Development Planning Establishing, under direct control of the URPMU, a special Onchocerciasis Survey Unit to prepare in consultation with the Coordinating Committee of the National Onchocerciasis Program of Ghana a ten-year development plan and feasibility studies - 32 - for investment projects for areas freed from onchocerciasis in the Upper Region and Northern Region of Ghana. * * * * The Project is expected to be completed by June 30, 1982. - 33 - SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (expressed in dollars) January 15, 1983 355,000 July 15, 1983 365,000 January 15, 1984 375,000 July 15, 1984 385,000 January 15, 1985 390,000 July 15, 1985 405,000 January 15, 1986 410,000 July 15, 1986 420,000 January 15, 1987 435,000 July 15, 1987 44o,ooo January 15, 1988 455,000 July 15, 1988 465,000 January 15, 1989 475,000 July 15, 1989 490,000 January 15, 1990 495,000 July 15, 1990 515,000 January 15, 1991 520,000 July 15, 1991 540,000 January 15, 1992 550,000 July 15, 1992 560,000 January 15, 1993 575,000 July 15, 1993 590,000 January 15, 1994 605,000 July 15, 1994 620,000 January 15, 1995 635,000 July 15, 1995 650,000 January 15, 1996 665,000 July 15, 1996 680,000 January 15, 1997 700,000 July 15, 1997 715,000 January 15, 1998 730,000 July 15, 1998 750,000 January 15, 1999 770,000 July 15, 1999 785,000 January 15, 2000 810,000 July 15, 2000 825,000 January 15, 2001 850,000 Premiums on Prepayment The following percentages are specified as the premiums pay- able on repayment in advance of maturity of any portion of the principal amount of the Loan pursuant to Section 3.05 (b) of the Gene:ral Conditions: Time of Prepayment Premium Not more than three years before maturity 1.05% More than three years but not more than six years before maturity 2.10% More than six years but not more than eleven years before maturity 3.90% More than eleven years but not more than sixteen years before maturity 5.65% More than sixteen years but not more than twenty-one years before maturity 7.45% More than twenty-one years but not more than twenty-three years before maturity 8.15% More than twenty-three years before maturity 8.85% - 35 - SCHEDULE 4 Procurement A. International Competitive Bidding Except as provided in Parts B and D hereof, contracts for the purchase of goods and services shall be procured in accor- dance with procedures consistent with those set forth in Part A of the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in August 1975 (hereinafter called the Guidelines), on the basis of international competi- tive bidding. B. Other Procurement Procedures 1. Contracts for equipment and materials estimated to cost less than $50,000 equivalent may be let through normal government pro- curement procedures, provided that the aggregate of such contracts shall not exceed $1,000,000 equivalent. 2. Contracts for civil works and procurement of construction materials and furnishings may be let on the basis of competitive bidding advertised locally in accordance with procedures accept- able to the Bank. C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods except those to be procured in accordance with -36 - local procedures: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex- factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and sim- ilar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expen- ditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Ghana may be granted a margin of pref- erence in accordance with, and subject to, the following provi- sions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the infor- mation required to establish the eligibility of a bid for such preference and the following methods and stages that will be fol- lowed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Ghana if the bidder shall have established to the satis- faction of the Borrower and the Bank that the manu- facturing cost of such goods includes a value added in Ghana equal to at least 20% of the ex-factory bid price of such goods. - 37 - (2) Group B: all other bids offering goods manufactured in Ghana. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evalu- ated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this fur- ther comparison only, an amount equal to (i) the amount of cus- toms duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. - 38 - D. Procurement Without Contracting Construction of new dams, improvements to existing dams, soil conservation works, farmer service center buildings and village wells may be carried out under force account by URPMU. E. Review of Procurement Decisions by the Bank 1. With respect to all contracts for equipment and materials estimated to cost the equivalent of $50,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Bank, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said docu- ments or procedures as the Bank shall reasonably request. Any further modification to the bidding documents shall require the Bank's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Bank of the name of the bidder to which it intends to award the contract and shall furnish to the Bank, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Bank shall reasonably request. The Bank shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. - 39 - (c) The terms and conditions of the contract shall not, with- out the Bank's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Bank promptly after its execution and prior to the submis- sion to the Bank of the first application for withdrawal of funds from the Loan Account in respect of such contract. 2. With respect to each contract to be financed out of the pro- ceeds of the Loan and not governed by the preceding paragraph, the Borrower shall furnish to the Bank, promplUy after its execu- tion and prior to the submission to the Bank of the first applica- tion for withdrawal of funds from the Loan Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Bank shall reasonably re- quest. The Bank shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such de- termination. 4o -S SCHEDULE 5 Organizational Arrangements A. Upper Region Aricultural Development Project Executive Committee (URADPEC) 1. URADPEC shall be chaired by the Regional Commissioner of the Upper Region and shall include the following as members: senior representatives from Accra of the Ministries of Finance, Agriculture, Labour, Social Welfare and Cooperatives and Economic Planning; re- presentatives of the Attorney General of Ghana, Director General of GBC, the Bank of Ghana and ADB; Upper Region Regional Adminis- trative Officer, the URPMU Project Manager, member of the House of Chiefs and two Upper Region farmers appointed by the Upper Region House of Chiefs in consultation with URPMU. 2. URADPEC shall be responsible to the Commissioner of Agricul- ture and shall have the following responsibilities: (a) Policy: URADPEC shall determine agricultural and develop- ment policy in the Upper Region, and shall consult with the Borrower and the Bank when any major changes in policy may be required. (b) Finance: (i) URADPEC shall approve the annual budget of URPMU and shall ensure that sufficient Government funds are readily available to the Project; (ii) URADPEC shall, subject to the approval of the Auditor General of the Borrower, appoint independent auditors for URPMU; (iii) URADPEC shall submit audited statements of accounts of URPMU to the Commissioner of Finance within four months of the end of each financial year; (iv) URADPEC shall approve the opening of URPMU bank accounts; and (v) the Chairman of URADPEC shall approve the monthly cash flow statements submitted by the manager of URPMU. (c) Staff and Personnel Matters: In consultation with the Project Manager of URPMU, URADPEC shall be responsible for approv- ing the appointment of all senior URPMU staff and employees, their terms and conditions of employment, and annual review of salaries and allowances. (d) Award of Contracts: URADPEC shall, on the advice of the Manager of URPMU, be responsible for approval of any single con- tract valued at more than 050,000 in accordance with general guidelines of the Borrower applicable to Government contracts. (e) Interdepartmental Coordination: URADPEC through its mem- bers would be responsible for the coordination at Ministry level for those issues that may affect the implementation of the Project. B. Upper Region Agricultural Development Project Management Unit (URPMU) 1. URPMU will be responsible to URADPEC for the day-to-day opera- tions of the Project and will be managed by a Project Manager who will report directly to the Chairman of URADPEC. In particular, URPMU will be responsible for carrying out the following objectives: (a) development of the Upper Region with a view to increasing production of agriculture and raising the living standards of the rural population; (b) establishment of about 90 farm service centers that would provide crucial services to farmers including extension and manage- ment advice; (c) improvement of animal health services including provi- sion of vaccines;, (d) development of small-scale ranching schemes; (e) establishment of applied research and demonstration units; (f) operation of a pilot adult functional literacy program; (g) establishment, through Ghana Broadcasting Corporation, of a Regional radio broadcasting network; (h) improvement of human nutrition; -43- (i) training of staff; (j) construction of dams, fish ponds and soil conservation works, and the establishment of a special unit to be known as the "Soil and Water Conservation Working Account" to construct the works; (k) provision of material assistance to villagers for build- ing 700 village wells; (1) construction, through Cotton Development Board, of two ginneries and associated storage at Wa and Zvarungu, respectively; (m) development of supporting infrastructure such as houses and buildings; and (n) any other activities to ensure the success of the Project. 2. The main duties of URPMU shall be: (a) the implementation of the Project within the Upper Region following the policy guidelines of the URADPEC; (b) the preparation of annual budgets and cash flows for ap- proval by URADPEC. In particular URPMU shall submit to the Chairman of the URADPEC monthly cash flow statements indicating any changes in requirements for Government funds due to changes in project ex- penditures. Unless informed to the contrary within five days of dispatch of such statements to the Chairman of URADPEC, the Mana- ger shall be authorized to make the proposed expenditures; (c) the recruitment of Project staff, in consultation, when necessary with other Government departments, and for senior staff, with approval of URADPEC; (d) the advertisement, negotiations, calling for tenders, and, after approval from URADPEC for those of more than 050,000, conclusion of such contracts with persons and organizations ei- ther inside or outside Ghana for the erection of buildings, the construction of civil works and the supply of goods, services and materials as may seem to be requisite for the proper dis- charge of its duties; (e) the operation of URPMU bank accounts; and (f) the preparation of reimbursement claims against Project expenditure, for submission to external financing agencies. 3. URPMU shall be responsible for evaluating and planning new agricultural projects for the Upper Region, and would be respon- sible for advising the Irrigation Department of the Ministry of Agriculture on the suitability of selected land for possible ir- rigation schemes. 4. URPMU shall establish a special heavy plant and equipment unit, including contingent workshop facilities, to be known as the "Soil and Water Conservation Working Account" (SWCA). The SWCA will have a separate bank account under the control of URPMU, shall operate on a commercial basis in respect to costs and operating charges, and shall be free 1o hire operating staff at commercial wage rates, in- cluding the payment of bonuses based on work output. SWCA will take SI45- over the operations of the Department of Irrigation's workshops at Zwarungu, and would, at cost, provide a maintenance service for irrigation plant and equipment. 5. The Manager of URPMU shall be an ex officio member of the Board of the Upper Regional Development Corporation and vill be chairman of Farmers Services Company (UR) Ltd. 6. URPMU shall prepare quarterly and annual reports for simulta- neous submission to URADPEC, Commissioners of Finance, Economic Planning and Agriculture, the Bank and the Ministry of Overseas Development of the United Kingdom. 7. URPMU shall be delegated any additional duties and powers by URADPEC to ensure the attainment of its objectives. C. Project Coordinating Committee The Project Coordinating Committee (PCC) shall be chaired by the Upper Region Regional Administrative Officer and shall include as members: URPMU Project Manager and Chief Administrative Officer; General Manager, FSC; Upper Region Regional Directors of Social Welfare and Community Development, and Education; Upper Region Re- gional Managers of ADB, GBC, Ghana Highways Authority; representa- tives of the Ghana Water and Sewerage Corporation and Secretariat of the National Coordinating Committee of the Onchocerciasis Pro- gram; Upper Region Representative of the Ministry of Economic Plan- ning; and General Managers of URDC and CDB. The PCC shall meet regularly to coordinate relevant regional operating departments and agencies. - 46- D. Project Technical Committee 1. The Project Technical Committee (PTC) shall be chaired by URPMU's Chief of Field Operations and shall include as members: Ministry of Agriculture departmental heads from Accra, represen- tatives of the Crop Research Institute and the Institute of Sta- tistical, Social and Economic Research and URPMU's Planning and Evaluation Officer. The PTC shall meet regularly to review tech- nical aspects of the Project. 2. Both the PCC and PTC shall report the results of their discus- sions to URADPEC and URPMU. In the event of any failure of PCC or PTC to resolve issues, the matter in dispute shall be referred to URADPEC for final decision. - 47- SCHEDULE 6 Financial Arrangements 1. FSC shall be capitalized as follows: (a) The proceeds of the Loan withdrawn to provide FSC with vehicles and equipment, shall be provided by the Borrower to FSC, in exchange for its shares. (b) The Borrower shall, out of the proceeds of the U.K. Loan and otherwise, ensure that FSC is provided additional equity of at least $3,500,000 equivalent, as required by FSC, in exchange for its shares. This amount shall have been committed not later than three months after the date of this Agreement and shall be payable to FSC as called by FSC's Board of Directors. 2. All proceeds of the Loan withdrawn for farm inputs to be supplied through FSC, or otherwise for the benefit of FSC (with the exception of amounts withdrawn for vehicles and equipment) shall be lent by the Borrower to FSC, promptly upon withdrawal from the Loan Account, on terms and conditions which shall at all times be satisfactory to the Bank, and which shall include repay- ment through equal semi-annual installments of principal and interest combined over twenty-five years including seven years' grace and interest at the rate of 8.85% per annum. The Borrower and the Bank shall review the financial performance, capital struc- ture and future program of FSC prior to the fifth year. -48- 3. All payments to FSC pursuant to Section 4.06 of this Agree- ment shall be in addition to the amounts referred to above. 4. ADB. All proceeds of the Loan withdrawn for long-term loans to ranchers and for medium-term (more than 18 months) loans to farmers made through ADB shall be lent by the Borrower to ADB, promptly upon withdrawal from the Loan Account, on terms and con- ditions which shall at all times be satisfactory to the Bank and which shall include repayment through equal semi-annual install- ments of principal and interest combined over twenty-five years including seven years' grace and interest at the rate of 8.85% per annum. 5. CDB. All proceeds of the Loan withdrawn for construction of cotton ginneries and related storage facilities by CDB shall be relent by the Borrower to CDB, promptly upon withdrawal from the Loan Account, on terms and conditions which shall at all times be satisfactory to the Bank and which shall include repayment over fifteen years including five years' grace and interest at the rate of 8.85% per annum. 6. GBC. All proceeds of the Loan withdrawn in respect of the design and installation of radio broadcasting facilities and the operation thereof shall be provided to, or for the benefit of, GBC by way of grant. 7. Loans to Farmers Out of the Proceeds of the Loan. Loans by ADB to ranchers for ranch development shall be repayable within thirteen years, including five years' grace. Loans by ADB to ranch- ers for working capital shall be repayable within eighteen months. 849 Loans by ADB to farmers other than ranchers shall be repayable with- in five years. Interest on such loans plus service charges, if any, will be so fixed as to yield a minimum of 12% per annum. The cri- teria for lending by ADB to farmers and ranchers and the other terms and conditions of such loans shall at all times be satisfactory to the Bank.