Togo - 2nd Cocoa And Coffee Development : Credit 0945 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 945 TO Development Credit Agreement (Second Cocoa and Coffee Development Project) between REPUBLIC OF TOGO and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated July 23, 1979 HI-Imaw- CREDIT NUMBER 945 TO DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 23, 1979, between the REPUBLIC OF TOGO (hereinafter called the Borrower or Togo) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) the Borrower has undertaken, with the assistance of the Republic of France, a program for the rehabilitation and improvement of smallholder cocoa and coffee production; (B) 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; (C) the Borrower intends to contract from the Republic of France acting through the Fonds d'Aide et de Coopfration, a grant (hereinafter called the French Grant) in an amount of 15 million French Francs to assist in financing part of the Project on the terms and conditions set forth in an agreement (hereinafter called the Seconde Convention de Financement) to be entered into between the Borrower and the Republic of France; (D) the Borrower intends to contract from the Caisse Cen- trale de Coopgration Economique a loan (hereinafter called the First CCCE Loan) in an amount of about 9.4 million French Francs to assist in financing part of the Project on the terms aid conditions set forth in an agreement (hereinafter called the First CCCE Loan Agreement) to be entered into between the Borrower and the Caisse Centrale de Coopfration Economique; (E) the Borrower intends to contract, on or about June 30, 1982, from the Caisse Centrale de Coopfration Ecorpmique a loan (hereinafter called the Second CCCE Loan) in an amount of about 23.3 million French Francs to assist in financing part of the Project on the terms and conditions set forth in, an agreement (hereinafter called the Second CCCE Loan Agreement) to be entered into between the Borrower and the Caisse Certrale de Coopfration Economique; and (F) the Borrower has requested the Association acting as Administrator of a Special Action Account established by agree- ment, dated May 2, 1978, between the Association and the European Economic Community and its Member States for 'a credit in the amount of $4,600,000 equivalent (hereinafter called the Special Action Credit) to assist in financing part of the Project on the - 2 - -2- terms and conditions set forth in an agreement (hereinafter called the Special Action Credit Agreement) to be entered into between the Borrower and the Association; 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: 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 Agree- ments 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) "SRCC" means Socift6 Nationale pour la R6novation et le D6veloppement de la Cacaoyire et de la CafeiAre Togolaise, an agency of the Borrower; (b) "CNCA" means Caisse Nationale de Cr6dit Agricole, an agency of the Borrower; (c) "Project Area" means the plains of Litime and Kloto, and the plateaus of Akposso and Dayes; (d) "PCU" means the Project Credit Unit referred to in Sections 3.01 and 3.06 of this Development Credit Agreement; (e) "PCU Manager" means the expert referred to in Section 3.06 (b) of this Development Credit Agreement; (f) "IRAT" means Institut de Recherches Agronomiques Tropi- cales et des Cultures Vivriares; -3- (g) "IFCC" means Institut Frangais du Cafe, du Cacao et Autres Plantes Stimulantes; (h) "OPAT" means Office des Produits Agricoles du Togo, an agency of the Borrower; (i) "Cocoa-Coffee Development Project" means the Project carried out under the Development Credit Agreement between the Borrower and the Association dated August 6, 1974; (j) "Second Grant Agreement" means the agreement to be entered into between the Borrower and SRCC pursuant to Section 3.01 (b) (i) of this Development Credit Agreement, as the same may be amended from time to time, and includes all schedules and agreements supplemental to the Second Grant Agreement; (k) "Second Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and CNCA pursuant to Sec- tion 3.01 (b) (ii) of this Development Credit Agreement, as the same may be amended from time to time, and includes all schedules and agreements supplemental to the Second Subsidiary Loan Agree- ment; and (1) "CFA Francs" means the currency of the Borrower. 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 amopunt in various currencies equiva- lent to fourteen million dollars ($14,000,000). 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 shail otherwise agree, procurement of the goods and civil works to be financed out 44 of the lroceeds of the Credit, shall be governed by the provi- sions of Schedule 3 to this Agreement. Sectioh 2.04. The Closing Date shall be December 31, 1985 or such later date as the Association shall establish. The Associatio shall promptly notify the Borrower of such later date. Secti6n 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 semiannually on June 1 and December 1 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each June 1 and December 1 commencing December 1, 1989, and ending June 1, 2029, each installment to and including the installment payable on June 1, 1999, 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. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall cause: (i) SRCC to carry out Parts A, B, D (i), E, F and G of the Project; (ii) CNCA and PCU to carry out Parts C and D (ii) of the Project, all with due diligence and efficiency, under competent management and in conformity with sound administrative, financial and engineering practices, and shall provide, or cause SRCC, CNCA and PCU to be provided with, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall: (i) make available the proceeds of the Credit allocated from time to time to Categories (1), (4) and (5) of Schedule 1 to this Development Credit Agreement to SRCC under an agreement to be entered into between the Borrower and SRCC (hereinafter called the Second Grant Agreement) under terms -5- and conditions satisfactory to the Association, and (ii) lend to CNCA the proceeds of the Credit allocated from time to time to Categories (2) and (3) of Schedule 1 to this Development Credit Agreement, and such additional funds from its own resources as shall be required for carrying out Part C of the Project, all in accordance with an agreement to be entered into between the Bor- rower and CNCA (hereinafter called the Second Subsidiary Loan Agreement), under terms and conditions which shall have been approved by the Association, (such terms and conditions shall include, inter alia, those set forth in Schedule 4 to this Devel- opment Credit Agreement, as such Schedule may be modified from time to time by agreement between the Borrower and the Associa- tion). (c) The Borrower shall exercise its rights under the Second Grant and the Second Subsidiary Loan Agreements in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and, except as the Association shall otherwise agree, the Borrower shall not assign, amend, repeal, abrogate or waive the Second Grant or the Second Subsidiary Loan Agreements or any provision thereof. (O) The Borrower shall take and shall cause all its depart- ments and agencies to take all and any actions necessary on their part to enable SRCC and CNCA to perform all and any of their obligations under the Second Grant and the Second Subsidiary Loan Agreements, and shall not take any action or cause or allow any action to be taken which might interfere with the performance of such obligations. Section 3.02. In order to assist SRCC and CNCA in the carry- ing out of Parts D and F of the Project, the Borrower shall cause SRCC and CNCA to employ or continue to employ upon terms of reference, including conditions of employment, satisfactory to the Borrower and the Association, experts and consultants in the field of management, credit and agriculture whose qualifications and experience shall be acceptable to the Borrower and the Associa- tion. Section 3.03. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards inci- dent 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 the Borrower to replace or repair such goods. F --6 - -6- (b) Except as the Association shall otherwise agree, all goods and services financed out of the proceeds of the Credit shall be used exclusively for the Project until its completion. Section 3.04. (a) The Borrower shall furnish to the Associa- tion, 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 Association shall reasonably request. (b) The Borrower: (i) shall cause SRCC and CNCA to maintain records adequate to record and monitor the progress of the Project (including the cost and the benefits to be derived from it), to identify the goods and services financed out of the proceeds of the Credit made available to SRCC and onlent to CNCA by the Borrower, and to disclose the use thereof in the Project; (ii) shall enable the Association's accredited representatives to inspect the facilities and construction sites included in the Project and to examine the goods financed out of such proceeds and any relevant records and documents; and (iii) furnish to the Association all such information as the Association shall reason- ably request concerning the Project, the expenditure of the proceeds of e cldind the goods and services financed out of such proceeds, including, withods atin tonthe foregoing, regular quarterly and annual reports in respect of the Project's progress. (c) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.05. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire, 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 shall furnish to the Association, promptly after such acquisition, evidence satis- factory to the Association that such land and rights in respect of land are available for purposes related to the Project. 41, -7- Section 3.06. The Borrower shall: (a) cause CNCA to maintain until the recoF)ery of the credits made in accordance with Schedule 5 to this Agreement, a Project Credit Unit, to be responsible for: (i) reviewing and submitting for approval within two weeks by CNCA's Loan Committee, credits to farmers as required in the carrying out of Part C of the Project, on the basis of SRCC's technical recommendations and the Project Credit Unit's own assessment of each farmer's creditworthiness; (ii) disbursing the cash portion of such credits; (iii) keeping credit accounts for both cash portions and in-kind portions of such credits furnished to each farmer by SRCC;<' (iv) collecting repayments of principal of such credits and interest thereon; and (v) if necessary, providing marketing services to farmers who have received credits under Part C of the Project, in accordance with paragraph 4 (b) of Part C of Schedule 5. to this Development Credit Agreement; and (b) cause CNCA to maintain within PCU, until the recovery of the credits made in accordance with Schedule 5 to this Agreement, the position of PCU Manager. Such PCU Manager will (i) have qualifications and experience acceptable to the Association, (ii) be employed pursuant to terms,,and conditions satisfactory to the Borrower and the Association and (iii) have overall respon- sibility for the carrying out of Part C of the Project. Section 3.07. The Borrower shall cause SRCC to organize farmers desiring to participate in the carrying out of Part B of the Project in village production groups consisting of at least five farmers, in order to ensure the efficient carryin). out of Part B of the Project. Section 3.08. (a) The Borrower shall cause: (i) SRCC to study custom-based landlord-tenant and .,creditor-landlord rela- tionships in the Litim6 plain; and (ii) put into effect or shall cause to have put into effect not later than March 31, 1980 a landlord-tenant contract which shall be satisfactory to the Borrower and the Association resulting from this study. (b) The Borrower shall thereafter discuss and cause SRCC to discuss with the Association, at yearly intervals until the completion of the Project, the results of such implemented landlord-tenant contract and shall put into effect or cause to have put into effect all recommendations made by the Association as a result of such discussions. -8- Section 3.09. The Borrower shall cause PCU to charge an interest rate of 8.5% per annum on credits to farmers, and shall compensate PCU at a rate of 2.5% per annum on all outstanding farmer's credits in order for PCU to cover its total operating cost. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall cause SRCC, CNCA and PCU to maintain separate records adequate to reflect in accordance with consistently maintained sound accounting practices the operations, resources and expenditures in respect of the Project, and financial condition of SRCC, CNCA and PCU, including without limitation to the foregoing, separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account on the basis of certificates of expenditure. (b) The Borrower shall retain, until one year after the Closing Date, all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of which withdrawals are requested from the Credit Account on the basis of certificates of expenditure and shall enable the Association's accredited representatives to examine such records. (c) The Borrower shall cause SRCC, CNCA and PCU to: (i) have their accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; and (ii) furnish to the Association as soon as avail- able, but in any case not later than six months after the end of each such year, (A) certified copies of their financial statements for such year so audited and (B) the report of such audit by said auditors of such scope and in such detail as the Association shall have reasonably requested, including without limitation to the foregoing, a separate opinion by said auditors in respect of the expenditures and recordy referred to in Section 4.01 (b) of this Development Credit Agreement as to whether the pro- ceeds of the Credit withdrawn from the Credit Account on the basis of certificates of expenditure have been used for the purpose for which they were provided. -9- Section 4.02. The Borrower shall cause SRCC and PCU to take out and maintain with responsible in\surers, or to make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consfstent with sound practice. Section 4.03. The Borrower shall: (a) cause SRCC and PCU to maintain, at a banking institution acceptable to the Association,w two special accounts in the names of SRCC and PCU respectively; (b) deposit an additional CFA Francs 50,000,000 into the said SRCC bank account and an additional CFA Francs 25,000,000 into the said PCU bank account; and (c) replenish the said bank accounts quarterly, in advance, on the basis of SRCC and PCU's annual budgets, which budgets are to be submitted to the Association for its approval annually, in .advance, not later than May 31 of the year preceding the one for which the budget is prepared. Section 4.04. The Borrower shall cause SRCC to maintain at all times until the completion of the Project a General Manager and heads of SRCC's sections Finance and administration, Planting material production, Extension services and training, General services and engineering, and Road construction and maintenance whose qualifications and experience shall be acceptable to the Association. Section 4.05. The Borrower shall cause to have established within OPAT, not later thari March 31, 1980, a Cash Crop Analyzing Unit, shall review, on at least an annual basis, farmgate prices for cocoa and coffee and shall discuss with the Association the level of such farmgate prices at the time and after completion of any such review. Section 4.06. The Borrower shall: (i) cause SRCC and CNCA to adequately maintain the buildings, equipment, vehicles, roads and other facilities included in the Project and financed out of the proceeds of the Development Credit, and make all necessary,repairs and renewals thereof; and (ii) provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. -10- Section 4.07. The Borrower shall carry out, through OPAT, in the areas planted or replanted with cocoa within the Project Area, anticapsid triatinent campaigns, free of charge, to farmers and shall provide, promptly as needed, all the funds, facilities, services and other resources required for such campaigns. Section 4.08. The Borrower shall finance IRAT's 1979 oper- ating costs for the Centre Polyvalent of Adeta, estimated to be CFA Francs 9,000,000. Section 4.09. The Borrower shall provide PCU out of its own funds with CFA Francs 310,000,000 to enable PCU to continue extending credit in accordance with Part C of the Project after full disbursement of the proceeds allocated for such purpose under this Development Credit Agreement. Section 4.10. The Borrower shall take all necessary steps to contract, not later than December 31, 1979 or such later date as the Association shall agree, with the Republic of France acting through the Fonds d'Aide et de Coop&ration the French Grant. If the French Grant shall not have become effective on April 30, 1980 or such later date as the Association shall agree, the Borrower shall, at such time, provide funds, or make arrangements- to be provided with funds on terms and conditions acceptable to the Association, to meet the estimated expenditures required for the carrying out of the Project. Section 4.11. The Borrower shall take all necessary steps to contract, not later than June 30, 1982 or such later date as the Association shall agree, with the Caisse Centrale cle Cooperation Economique, the Second CCCE Loan. If the Second CCCE Loan Agree- ment shall not have become effective on September 30, 1982 or such later date as the Association shall agree, the Eorrower shall, at such time, provide funds, or make arrangements to be provided with funds from other sources on terms and conditions similar to those of the First dCCE Loan Agre6ment or on such other terms and conditions as the Association shall agree, to meet the estimated expenditures required for the carrying out of the Project. Section 4.12.. The Borrower shall establish, not later than November 30, 1979, an organization of licensed buyers of cocoa and/or coffee of a structure satisfactory to the Association, which shall ensure an adequate commercialization and, in coordi- nation with PCU, a satisfactory credit recovery. -"117- ARTICLE V Remedies of the Association 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) a default shall have occurred in the performance of the Borrower's obligations under Section 4.1.0 of the Development Credit Agreement. (b) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the French Grant, of the First CCCE Loan, the Second CCCE Loan or of the Special Action Credit 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 Seconde Convention de Financement, the First CCCE Loan Agreement, the Second CCCE Loan Agreement or the Special Action Credit Agreement providing therefor; or (B) the First CCCE Loan, the Second CCCE Loan or the Special Action Credit shall have become due and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under the Seconde Convention de Financement, the First CCCE Loan Agreement, the Second CCCE Loan Agreement or the Special Action Credit 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. -12- (c) a default shall have occurred in the payment of princi- pal or any other charge required under the Second Subsidiary Loan Agreement; (d) a default shall have occurred in the performance of any other obligation: (i) on the part of the Borrower under the Seconde Convention de Financement, the First CCCE Loan Agreement, the Second CCCE Loan Agreement, the Special Action Credit Agree- ment, the Second Subsidiary Loan Agreement or the Second Grant Agreement; or (ii) on the part of CNCA, under the Second Sub- sidiary Loan Agreement; or (iii) on the part of SRCC, under the Second Grant Agreement; (e) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of SRCC or of CNCA or of PCU or for the suspension of their respective operations; (f) an extraordinary situation shall have arisen which shall make it improbable that SRCC or CNCA will be able to perform their obligations under the Second Grant Agreement or the Second Subsid- iary Loan Agreement, respectively; and (g) a default shall have occurred in the performance of the Borrower's obligations under Section 4.11 of the Development Credit Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) the events specified in paragraphs (b) and (c) of Section 5.01 of this Development Credit Agreement shall occur and shall continue for a period of thirty days; (b) the events specified in paragraph (d) of Section 5.01 of this Development Credit Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower; and (c) an event specified in paragraphs (a), (e), (f) or (g) of Section 5.01 of this Development Credit Agreement shall occur. - 13 - ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of this Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the First CCCE Loan Agreement has been executed and delivered on behalf of CCCE and the Borrower, respectively, and such execution and delivery have been duly authorized and ratified by all governmental action and the conditions precedent to the initial disbursement under such First CCCE Loan Agreement have been fulfilled, subject only to the effectiveness of this Develop- ment Credit Agreement; (b) the Special Action Credit Agreement has been executed and delivered on behalf of the Association and the Borrower, respectively, and such execution and delivery have been duly .authorized and ratified by all governmental action and the condi- tions precedent to the initial disbursement under such Special Action Credit Agreement have been fulfilled, subject only to the effectiveness of this Development Credit Agreement; (c) the Second Subsidiary Loan Agreement has been executed and delivered on behalf of the Borrower and CNCA, respectively, and such execution and delivery have been duly authorized or ratified by all necessary corporate and governmental action; (d) the Second Grant Agreement has been executed and deliv- ered on behalf of the Borrower and SRCC, respectively, and such execution and delivery have been duly authorized or ratified by all necessary corporate and goVernmental action; (e) the Borrower has made fully available to SRCC the Centres Polyvalents of Adeta and Klabe-Azafi, including all land, buildits and stores, for the purposes of execution of Part G of the Project; (f) the Borrower has committed itself to the satisfaction of the Association to pay, through OPAT, a premium of CFA Francs 60,000 per hectare to farmers for cutting down and replanting of old unproductive cocoa plantations until the completion of the Project, such premiums to be disbursed in five equal annual tranches; and -14- (g) the Borrower has made the deposits described in Sec- tion 4.03 of this Agreement. Section 6.02. The date November 27, 1979, is hereby speci- fied for the-purposes of Section 12.04 of the Gen,ral Conditions. Section 6.03. The obligations of the Borrower under Article IV of this Agreement and the provisions of paragraph (c) of Section 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 10 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Ministre des Finances et de l'Economie 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: MinistAre des Finances et de l'Economie Lomf, Republic of Togo Cable address: Telex: MINFINANCES 5286 Lome 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) -7i -15- 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 firat above written. REPUBLIC OF TOGO By ls/ Yao Grunitzky Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By ls/ Roger Chaufournier Regional Vice President Western Africa )16- 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 amounts 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), SRCC (i) Buildings 150,000 50% (ii) Vehicles and equipment 390,000 50% (iii) Technical assistance 940,000 50% (iv) Studies 140,000 50% (v) Local personnel 4,460,000 50% and operating costs (2) PCU (i) Buildings, vehicles 90,000 50% and equipment (ii) Local personnel 660,000 50% and operating costs (iii) Technical assistance 100,000 50% (3) CNCA credits 2,100,000 50% of dis- to farmers bursements under credits -17- Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (4) Applied research and seeds production (a) by IFCC 1,220,000 50% (b) by IRAT 420,000 50% (5) Road construction 1,930,000 50% and maintenance (6) Unallocated 1,400,000 TOTAL 14,000,000 2. The disbursement percentages have ,been calculated in com- pliance with the policy of the Associaf:ion 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 for expen- ditures prior to the date of this Agreement, and unless the Association shall otherwise agree, no withdrawals shall be made for expenditures made or to be made prior to the disbursement of the proceeds of the Special Action Credit. 4. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph I above, if the Association has reasonably estiniated that the amount of the Credit then allocated to any C ,tegory 181 - 18 - 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 expen- ditures; 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 pro- ceeds 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 Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financ- ing out of the proceeds of the Credit. * .~-.',~1V -19- SCHEDULE 2 Description of the Project The Project is the third stage of the Borrower's program for the rehabilitation& and improvement of smallholder cocoa and coffee production and consists of the following parts: A. Expansion of Facilities 1. Construction of thirteen senior and junior staff houses, extension of office facilities for the field services and for a foodcrop research and seed multiplication center, and construction of fertilizer and equipment stores and sheds. 2. Acquisition of road construction equipment, trucks, pick-ups, personnel vehicles and bicycles for SRCC; acquisition of a tractor and agricultural machinery and equipment for a foodcrop research and seed multiplica- tion center. 3. Financing of the construction of small stores with a storage area of about 60 m2 in villages having reached an annual marketing level of about 60 tons of cocoa, coffee, or both. 4. Testing of improved methods of coffee processing. B. Planting 1. The propagation of planting materials, under the super- vision of SRCC, and the provision of such planting mate- rial to village nurseries and farmers participating in the Project. 2. Provision of services for the bringing to maturity and maintenance of cocoa and coffee plantations established under the Cocoa-Coffee Development Project. 3. The planting or replanting'and maintenance by about 17,000 farmers in the Project Area of: (a) about 7,500 hectares of toffee and about 4,000 hec- tares of cocoa; and I 20I (b) about 7,000 hectares of improved foodcrops such as maize, cassava, yam, rice, cowpeas, sorghum, groundnuts as well as plantains and cocoa yams in and outside coffee and cocoa plantations. 4. The carrying out in the Project Area planted with cocoa of: (a) a swollen shoot virus disease eradication program; and (b) anticapsid treatment campaigns, free-of-charge to the farmers. 5. The provision and improvement by SRCC of adequate agricultural extension services for cocoa, coffee and foodcrops to farmers participating in the Project. C. Credit Provision by CNCA through PCU of agricultural credit to farmers participating in the Project, in accordance with the terms and conditions set forth in Schedule 5 to this Development Credit Agreement. D. Organization and Management Strengthening of: (i) SRCC through (a) provision and employ- ment of a General Manager, a Financial Manager and other qualified section chiefs, as well as other staff; and (b) improved training of extension agents; and (ii) PCU through provision and employment of an experienced credit .specialist. E. Roads Construction, rehabilitation and maintenance of about 300 km of feeder roads within tie Project Area, and maintenance of about 160 km of feeder roads constructed under the Cocoa- Coffee Development Project. F. Studies 1. Evaluating the Project's managerial, economic, finan- cial and other performance and results as well as the feasibility of future investments in the cocoa and coffee sector. -21 - 2. Examining the Togolese plantain market and making detailed recommendations to SRCC for the marketing of Project production. Gø Research, Planting Materials and Seed Production Applied research on aspects of cocoa, coffee and foodcrop production in Togo, and production of primary planting materials and seeds under contracts with IFCC and IRAT, all in consultation with the Association. * * * The Project is expected to be completed by June 30, 1985. - 22 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part C hereof, contracts for goods and services shall be procured under contracts awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods and works to be procured on the basis of inter- national competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Association as soon as possible, and in any event not later than 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, inj such form and detail and containing such information as the Asa6dation shall reasonably request; the Association will arrang for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such noti8e annually as long as any goods or works remain to be procured a the basis of international compet- itive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding: (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 similar taxes on domestically supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in 23-[ Togo may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Togo if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in Togo equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. 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 dome'stically, to determine the lowest evaluated 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. 4. If, as a result of the comparison under paragraph 3 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 evaluated bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for uthe 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 3 is the lowest evaluated bid shall be selected. -24- C. Other Procurement Procedures 1. Contracts for vehicles, equipment and goods estimated to cost less than $50,000 equivalent but at least $10,000 equivalent may be awarded through competitive bidding on the basis of local advertising in accordance with procurement procedures acceptable to the Association; provided, however, that the aggregate amount of all contracts to be so awarded shall not exceed $2,300,000 equivalent. 2. Contracts for vehicles, equipment and goods estimated to cost less than $10,000 equivalent may be awarded following prudent shopping procedures, provided, however, that the aggregate amount of all contracts to be so awarded shall not excee-I $700,000 equivalent. 3. Contracts for civil works, mainly roads, housing, field offices and warehouses scattered over large areas, not exceeding in the aggregate $400,000 equivalent, may be awarded through local competitive bidding procedures acceptable to the Association or, after specific prior approval by the Association, may be carried out by SRCC through force account. D. Review of Procurement Decisions by the Association 1. Review of invitation to bid and of proposed awards and final contracts: With respect to all contracts for civil works, vehicles and road construction equipment estimated to cost $50,000 equivalent or more: (a) Before bids are invited, the Borrower shall furnish to the Association, 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 documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association'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 Association of the name of the bidder to which it intends to award the contract and the reasons for the intended award and -25- shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the Borrower's recommendation for award and such other information as the Association shall reason- ably request. The Association shall, if it determines that the intended award would be inconsistent with., the Guidelines or this Schedule, promptly inform the Borrower nd state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association'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 Association promptly after its execution and prior to the submission to the Association of the first application for with- drawal of funds from the Credit Account in respect of such con- tract. 2. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding para- graph, the Borrower shall furnish to the Association, 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, two conformed copies of such contract, together with the analysis of bids, recommendations for award and such other information as the Association shall reason- ably request. The Association 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 determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of -he contract by more than 25% of the original price, the Borrower shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. 26 - SCHEDULE 4 Suimmary of Termo and Conditions of the Second Subsidiary Loan Agreement The Borrower shall lend to CNCA, free of interest, the equivalent of that part of the proceeds of the Credit which shall be withdrawn for expenditures made or to be made under Categories (2) and <3) of Schedule 1 to this Development Credit Agreement and such additional funds from its own resources as shall be required for carrying out Part C of the Project, for a period of seventeen years including a grace period of four years for that part of the proceeds withdrawn for making credits to farmers for coffee replanting and six years for that part of the proceeds withdrawn -for making credits to farmers for cocoa replanting. iM- - 27 - SCHEDULE 5 Lending and Operating Policies and Procedures of CNCA in Respect of Part C of the Project A. Purpose CNCA will make credits to eligible farmers only for the purpose of assisting in the financing of eligible expenditures included in Part B.3 of the Project. B. Eligibility 1. In order to qualify for the granting of a credit, each applicant must show to the satisfaction of PCU that he meets all such creditworthiness and technical criteria as shall be reason- ably established from time to time by SRCC and PCU, respectively. 2. A farmer shall not be eligible to receive a credit unless he is a member of one of the village production groups referred to in Section 3.07 of this Development Credit Agreement. C. Terms and Conditions 1. Except as the Association shall otherwise agree, no credits shall exceed the amount of CFA Francs 80,000 per hectare in the case of cocoa farmers, and CFA Francs 95,000 per hectare in the case of coffee farmers. 2. The principal amount of each credit outstanding from time to time shall: (a) bear interest of eight and one-half per cent (8.50%) per annum to be capitalized during the grace period; and (b) (i) be repaid over a period of twelve years including a grace period of six years, in the case of cocoa planters; and (ii) be repaid over a period of eight years including a grace period of four years, in the case of coffee planters. 3. Any standard credit agreement between CNCA and a farmer shall include such other covenants as shall be satisfactory to the Association, inter alia, good husbandry (including adequate phytosanitary measures) and residence covenants on the part of the - 28 - farmer, disclosure and information covenants on the part of CNCA (in accordance with Part D of this Schedule) and adequate terms and conditions concerning supervision, suspension of disbursements and foreclosure and other enforcements of security in favor of CNCA. 4. Without limitation to the provisions of paragraph C.3 above the credit agreement shall contain the following security provi- sions: (a) whenever the debtor is a tenant or sharecropper farmer, the landlord having title to the land where the sub-loan proceeds will be invested, shall sign the credit agreement as joint obli- gor; and (b) farmers shall undertake to sell, upon the Project Credit Unit's request, such portions of their coffee and cocoa crops as the Project Credit Unit shall deem necessary to service the credit out of such sale proceeds, to a licensed buying agent of OPAT selected by the farmer and approved by the PCU. D. Disbursements and Records 1. Whenever any goods or services to be financed out of the proceeds of any credit and to be delivered in kind to the farmers are procured or paid for by CNCA directly or through SRCC's intervention, CNCA shall promptly notify-its debtors of the amounts charged to their respective credit accounts on account of such goods or services so procured or paid, such notification to be accompanied with copies of the debtor's receipt for such goods or services in the amounts so charged. 2. CNCA shall furnish semi-annual statements to each debtor, sheing-the amounts drawn on'the debtor's credit account, includ ing interest, payments made and the outstanding balance of the -respective credit. E. Supervision 1. SRCC shall ensure that amounts drawn on credit accounts are applied exclusively to expenditures on the farm development plan that such credit is intended to assist in financing. 4 <29 2 - 29 - 2. SRCC staff shall regularly visit the farms where farm devel- opment plans financed through credits are being carried out to ensure that debtors are efficiently and punctually carrying out such plans and complying with the provisions of their respec- tive credit agreements with CNCA. > 45 1 E REM1