Benin - Technical Assistance Project : Credit 0716 - Development Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 716 BEN Development Credit Agreement (Technical Assistance Project) between PEOPLE'S REPUBLIC OF BENIN and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated June 3, 1977 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 3, 1977, between PEOPLE'S REPUBLIC OF BENIN (hereinafter called the Borrower) and INTERNATIONAL DEVELOP- MENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) the Borrower intends to contract from the Republic of France, acting through the Fonds d'Aide et de Coop6ration, a grant (hereinafter called the FAC Grant) in an amount of three million five hundred thousand French francs (FF 3,500,000) to assist in financing the Project, on the terms and conditions set forth in an agreement (hereinafter called the FAC Agreement) to be entered into between the Borrower and FAC; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: - 2 - ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association 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 additional terms have the following meanings: (a) "SONAGRI" means the Socift6 Nationale pour la Production Agricole, established and operating pursuant to the SONAGRI Statutes; (b) "SONAGRI Statutes" means the statutes approved by Decree No. 75-338 of December 29, 1975, of the Borrower, as such statutes may be amended from time to time; (c) "CARDER" means any Centre d'Action R6gionale pour le D6veloppement Rural established and operating pursuant to the Borrower's Ordinance No. 75-84 of December 29, 1975, as the same may be amended from time to time; -3- (d) "MDRAC" means the MinistAre de D6veloppement Rural et de l'Action Coop6rative, the Borrower's Ministry in charge of rural development, or any successor thereto; (e) "FAS" means the Fcnds Autonome de Stabilisation et de Soutien des Prix des Produits Agricoles, established and operating pursuant to the statutes approved by the Borrower's Ordinance No. 75-70, dated September 18, 1975, as the same may be amended from time to time; (f) "EPD" means the Evaluation and Planning Directorate of SONAGRI to be established under Part B of the Project; and (g) "CFA francs" and the letters "CFAF" mean the Franc de la Communaut6 Financiare Africaine, the common currency of the Borrower and the other members of the West African Monetary Union. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to one million seven hundred thousand dollars ($1,700,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit 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 Association, for expenditures made (or, if the Association 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 Credit. Section 2.03. Except as the Association shall otherwise agree, contracts for the purchase of goods or for civil works to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be June 30, 1980, or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. -5- Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on March 1 and September 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each March 1 and September 1 commencing September 1, 1987, and ending March 1, 2027, each installment to and including the installment payable on March 1, 1997, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the Republic of France is hereby specified for the purposes of Section 4.02 of the General Conditions. - 6 - ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out Part H of the Project through MDRAC and shall cause SONAGRI to carry out the other Parts of the Project with due diligence and efficiency and in conformity with appropriate administrative, agricultural, economic and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation upon its obligations pursuant to paragraph (a) of this Section, the Borrower shall make available to SONAGRI, on a grant basis, the proceeds of the Credit and of the FAC Grant allocated to Parts A through G of the Project. Section 3.02. (a) In order to assist MDRAC and SONAGRI in carrying out the Project, the Borrower shall employ, and cause SONAGRI to employ, specialists and consultants as set forth in paragraph A of Schedule 4 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association. Such specialists and consultants shall have qualifications and experience and be employed on terms and conditions which shall be satisfactory to the Association. (b) The Borrower shall take or cause to be taken all reasonable measures to facilitate the work of the specialists and -7- consultants referred to in paragraph (a) of this Section in the performance of their services for the Project and make available to them all information required for such work. (c) The Borrower shall cause SONAGRI not to amend or waive any of the terms and conditions of employment of any specialists or consultants employed for Parts A through G of the Project and financed out of the proceeds of the Credit, or to grant any material extension of time or any approval of sub-contracts or modifications thereof, or to agree to any substitution of personnel of such consultants, or to suspend payments under, or to terminate, any contract with such specialists or consultants, and the Borrower shall not take any such action in respect of the specialists or consultants employed for Part H of the Project, without the prior concurrence of the Association. Section 3.03. Without limitation upon the provisions of Section 3.01 (a) of this Agreement, the Borrower shall employ and cause SONAGRI to employ qualified local personnel as required for the diligent and efficient execution of the Project. Except as the Association may otherwise agree, such personnel shall include, inter alios, the staff listed in paragraph B of Schedule 4 to this Agreement which shall be appointed not later than September 30, 1977. -8- Section 3.04. (a) The Borrower shall cause MDRAC and SONAGRI to insure, or to make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by MDRAC or SONAGRI, respectively, to replace or repair such goods. (b) Except as the Association shall otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.05. (a) Promptly upon completion of any reports and studies prepared by specialists or consultants under the Project, including drafts the2eof, the Borrower shall furnish, or cause to be furnished, to the Association copies thereof in such number as the Association shall reasonably request. (b) The Borrower and the Association shall from time to time exchange views with respect to the evaluation and implementation of the recommendations and other conclusions contained in the documents referred to in paragraph (a) of this Section. Section 3.06. For the purpose of carrying out Part A of the Project, the Borrower shall cause SONAGRI: (i) to prepare, not later than March 31, 1978, a draft plan for the reorganization of -9- SONAGRI's administration and accounts; and (ii) promptly upon completion of such draft plan, to furnish it to the Association for its review and comments. Section 3.07. (a) The Borrower shall cause SONAGRI to furnish to the Association, promptly after the end of each quarter until the completion of the Project, a report on the activities of EPD during such quarter, the first such report to cover the quarter ending December 31, 1977. (b) The Borrower and the Association shall jointly review, in December of each year until completion of the Project, the findings and recommendations of EPD regarding agricultural producer prices and production incentives. (c) The Borrower shall furnish to the Association, for its review and comments, the proposals for the rural development projects to be prepared by SONAGRI under Part B (ii) of the Project for the Provinces of Borgou and Zou not later than June 30, 1978, and December 31, 1978, respectively. Section 3.08. In order to carry out Part C (i) of the Project, the Borrower shall cause the audio-visual workshop at Bohicon to be used to meet the needs of all its agricultural extension services. - 10 - Section 3.09. Not later than September 30, 1977, the Borrower shall cause SONAGRI to furnish to the Association, for its review and concurrence, a detailed program, including a budget, for the carrying out of Part D of the Project, and shall thereafter cause SONAGRI to carry out such program as agreed to by the Association. Section 3.10. Not later than December 31, 1977, the Borrower shall furnish to the Association, for its review and concurrence, a detailed program of the activities to be carried out by MDRAC in 1978 under Parts H (i), (ii) and (iii) of the Project. Section 3.11. (a) The Borrower shall furnish to the Association, in respect of Part H of the Project, and shall cause SONAGRI to furnish to the Association, in respect of the other Parts of the Project, promptly upon their preparation, the plans, specifications, contract documents and work and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to record the progress of Part H of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit allocated to said Part of the Project, and to disclose the use thereof in said Part of the Project; - 11 - (ii) shall cause SONAGRI to maintain records adequate to record the progress of Parts A through G of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit made available to SONAGRI, and to disclose the use thereof in said Parts of the Project; (iii) shall enable the Association's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iv) shall furnish, and. cause SONAGRI to furnish, to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. Section 3.12. The Borrower shall take or cause to be taken all such action as shall be necessary to make available, as and when needed, all such land and rights in respect of land as shall be required for the carrying out of the Project and the operation of the facilities included therein. - 12 - ARTICLE IV Other Covenants Section 4.01. The Borrower shall maintain or cause to be maintained records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations, resources and expenditures of MDRAC in respect of Part H of the Project. Section 4.02. (a) The Borrower shall cause SONAGRI, until completion of the Project, to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices the operations and financial condition of SONAGRI, including a separate account recording all expenditures under Parts A through G of the Project. (b) The Borrower shall cause SONAGRI to: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year until completion of the Project audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, buAt in any case not later than four months after 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 - 13 - detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of SONAGRI for such years and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. The Borrower shall cause SONAGRI, until completion of the Project, to take out and maintain with responsible insurers, or to make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 4.04. In order to strengthen the financial position of SONAGRI and to ensure the availability of resources to SONAGRI for the purpose of providing, on credit, seasonal inputs and agricultural implements to farmers, the Borrower shall, without limitation upon its obligations pursuant to Section 3.01 of this Agreement: (a) cause FAS to pay to SONAGRI, not later than September 30, 1977, the balance of the amounts due to SONAGRI on account of subsidies provided to farmers for agricultural inputs since January 1, 1974; (b) pay to SONAGRI, during 1978, a grant of four hundred fifty million CFA francs (CFAF 450,000,000) in three equal payments, the first of which shall be made not later than March 31, 1978; and .1 - 14 - (c) take or cause to be taken all action necessary to ensure that, in 1977 and each year thereafter until completion of the Project, the price for cotton sales by SONAGRI is set at a level at least adequate to enable SONAGRI to recover, in addition to its production and operating costs (including financial charges relating to cotton operations), the subsidies provided to cotton farmers in such year. Section 4.05. The Borrower shall cause SONAGRI, until completion of the Project, to manage its affairs, to carry out its operations and to maintain its financial position in accordance with appropriate administrative, economic, financial and agricultural practices, under qualified and experienced management, assisted by competent staff in adequate numbers. Section 4.06. The Borrower shall cause the facilities and equipment financed out of the proceeds of the Credit to be. adequately maintained and cause all necessary repairs and renewals thereof to be made promptly, all in accordance with appropriate agricultural, engineering, economic and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. - 15 - ARTICLE V Suspension Section 5.01. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified pursuant to paragraph (h) thereof: (a) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of SONAGRI or for the suspension of its operations. (b) The SONAGRI Statutes shall have been amended, suspended or abrogated so as to materially and adversely affect the operations or financial condition of SONAGRI. (c) (i) Subject to subparagraph (ii) of this paragraph, the right of the Borrower to withdraw the proceeds of the FAC Grant 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 FAC Agreement. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: - 16 - (A) such suspension, cancellation or termination is not caused by the failure of the Borrower to perform any of its obligations under the FAC Agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. - 17 - ARTICLE VI Effective Date; Termination Section 6.01. The following event is specified as an additional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the FAC Agreement has been duly signed and conditions, if any, precedent to initial disbursements under said Agreement, except for the effectiveness of this Agreement, have been fulfilled. Section 6.02. The date September 1, 1977, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.03. The obligations of the Borrower under Section 4.06 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date ten years after the date of this Agreement, whichever shall be the earlier. - 18 - ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of the Borrower at the time responsible for finance 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: Ministry of Finance P.O. Box 302 Cotonou People's Republic of Benin Cable address: Telex: MINIFINANCES 522 MINECOP Cotonou For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) - 19 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement 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. PEOPLE'S REPUBLIC OF BENIN By /s/ Thomas Boya Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Roger Chaufournier Regional Vice President Western Africa - 20 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amount of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Civil works, vehicles 200,000 67% and equipment for Parts A through F of the Project (2) Specialists and con- 670,000 100% sultants' services as provided in paragraphs A. 1 (a) and 2 (a) of Schedule 4 to this Agreement (3) Operating costs (ex- 80,000 67% cept salaries of lo- cal staff) of SONAGRI under the Project, in- cluding training visits abroad and fellowships for SONAGRI and CARDER personnel (4) Salaries of SONAGRI 30,000 39% staff referred to in paragraphs B. 1 and 2 of Schedule 4 to this Agreement (5) Civil works and equip- 130,000 67% ment under Part G of the Project - 21 - Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (6) Civil works, vehicles 170,000 67% and equipment for Part H of the Project and operating costs (ex- cept salaries of local staff) of MDRAC under the Project (7) Salaries of local MDRAC 120,0O 39% staff employed under Part H of the Project (8) Consultants' services 30,000 100% provided in para- graph A. 2 (b) of Schedule 4 to this Agreement (9) Unallocated 270,000 TOTAL 1,700,000 - 22 - 2. The disbursement percentages have been calculated in compliance with the policy of the Association that no proceeds of the Credit 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 Credit decreases or increases, the Association 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 policy of the Association. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made: (a) for expenditures prior to the date of this Agreement; and (b) for any expenditure in respect of Category (5) for a pilot rural development activity under Part G of the Project, unless the Association shall have agreed, before such expenditure has been incurred, to the carrying out of such activity under said Part of the Project on the basis of a detailed plan for such activity acceptable to the Association prepared by SONAGRI and furnished to the Association through the Borrower. - 23 - 4. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 5. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the - 2~4 - Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 25 - SCHFDUJLE 2 Description of the Project The Project is designed to assist the Borrower in planning and implementing its agricultural development policy and strengthening the institutions responsible therefor. The Project consists of the following Parts: Part A: Strengthening of the financial management of SONAGRI, including the establishment of effective accounting and cost control procedures and the training of SONAGRI and CARDER financial and accounting staff. Part B: Establishment and initial operation of an evaluation and planning directorate within SONAGRI for the purpose of: (i) assisting and evaluating the agricultural services of CARDERs:; (ii) preparing rural development projects for the Provinces of Borgou and Zou; and (iii) monitoring agricultural producer prices and production incentives. Part C: (i) Training of SONAGRI and CARDER technical staff and preparation of a training program for the purposes of the rural development projects to be prepared under Part B (ii) of the Project. (ii) Carrying out of a blacksmith training program. - 26 - Part D: A maize seed multiplication program, including the establishment of a seed production farm in the Province of Borgou. Part E: Provision of trucks and staff vehicles for SONAGRI. Part F: Preparation of rural development projects for the areas freed from onchocerciasis in the Provinces of Atakora and Borgou. Part G: A program of pilot rural development activities in the Provinces of Borgou and Zou, such as provision of agricultural inputs and village processing facilities. Part H: (i) A program of applied research (including training) on cotton production, and of cotton seed multiplication. (ii) A program of applied research on foodcrop production, including training and the establishment, equipping and initial operation of an experimental field station at Okpara. (iii) Establishment, equipping and initial operation of an experimental field station for the purposes of Part F of the Project. (iv) Carrying out of detailed agricultural surveys in the Provinces of Borgou and Zou. The Project is expected to be completed by December 31, 1979. - 27 - SCHEDULE 3 Procurement A. Procurement Procedures 1. Except as provided in paragraph 2 hereof, contracts for the purchase of goods or for civil works shall be procured on the basis of competitive bidding advertised locally in accordance with the applicable procedures of the Borrower. To the extent feasible, vehicles shall be grouped for purposes of bidding so as to permit bulk procurement. 2. Contracts estimated to cost less than the equivalent of $10,000 may be procured in accordance with other applicable procedures of the Borrower, including solicitation of price quotations from the local suppliers. B. Review of Procurement Decisions by the Association With respect to each contract to be financed out of the proceeds of the Credit, the Association shall be furnished, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, with two conformed copies of such contract, together with the analysis of the respective bids, price quotations or other offers received, as the case may be, a justification of the award and such other information as the Association shall reasonably request. The - 28 - Association shall, if it determines that the award of the contract was not consistent with this Schedule, promptly inform the Borrower or SONAGRI, as the case may be, and state the reasons for such determination. I - 29 - SCHEDULE 4 Technical Assistance and Staffing A. Technical Assistance 1. Specialists Part of the Project Approximate for which special- duration of ists' services are services (in to be used man-months) (a) SONAGRI: (i) a financial adviser*: A 18 (ii) an agricultural economist**: B 18 (iii) an agronomist*: B 12 (iv) a training specialist**: C (i) 24 (v) a blacksmith training specialist*: C (ii) 18 (b) MDRAC: a cotton research specialist**: H (i) 24 To be financed out of the proceeds of the Credit. * To be financed out of the proceeds of the FAC Grant. - 30 - 2. Consultants* Approximate Part of the Project aggregate for which consul- duration of Type of tants' services are services (in Consultants to be used man-months) (a) SONAGRI: (i) Finance and management (in- cluding external auditing) A 23 (ii) Agricultural B (ii) 10 project pre- F 25 paration (iii) Seed production D 2 (iv) Other as required 4 (b) MDRAC: (i) Cotton research H (i) 2 (ii) Food research H (ii) 2 B. Staffing 1. Part A of the Project Five accountants to be trained by the specialists and consultants referred to in paragraphs A. 1 (a) (i) and A. 2 (a) (i) of this Schedule. 2. Part B of the Project An agricultural economist and an agronomist. * To be financed out of the proceeds of the Credit. - 31 - 3. Part E (i) of the Project Six agronomists.