Sierra Leone - Eastern Integrated Agricultural Dev Project III : Credit 1094 - Credit Agreement - Conformed

CREDIT NUMBER 1094 SL Development Credit Agreement (Eastern Integrated Agricultural Development Project III) between SIERRA LEONE and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1981 CREDIT NUMBER 1094 SL DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated / 2) , 1981, between SIERRA LEONE (hereinafter called th orrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). 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 June 30, 1980, 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 Agreewent, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "MAF" means the Ministry of Agriculture and Forestry of the Borrower; (b) "MOW" means the Ministry of Works of the Borrower; (c) "FFC" means the Farmers Finance Company, a company whose shares are owned in their majority by the Borrower; (d) "DOPC" means the Daru Oil Palm Company, a company whose shares are owned in their majority by the Borrower; (e) "PEMSU" means the Planning, Evaluation, Monitoring and Services Unit of MAF; (f) "CARE" means the Cooperative American Relief Everywhere, a non-profit institution; (g) "BADEA Loan" means the Loan for an amount of not less than $8,500,000 provided in the Loan Agreement entered into between Sierra Leone and the Bangue Arabe our le Developpement Economique en Airique; -2- (h) "First Agricultural Credit Agreement" means the Credit Agreement for Credit No. 323-SL of June 30, 1972, between the Borrower and the Association; (i) "Second Agricultural Credit Agreement" means the Credit Agreement for Credit No. 568-SL of July 2, 1975, between the Borrower and the Association; (j) "Agricultural Loan Agreement" means the Loan Agreement for Loan No. 1138-SL of July 2, 1975, between the Borrower and the International Bank for Reconstruction and Development; (k) "Special Account" means the account to be opened pur- suant to Section 2.03 (a) of this Agreement; (1) "Financing Agreement" means each of the agreements to be entered into by the Borrower with FFC and DOPC pursuant to paragraphs (b) and (c) of Section 3.01 of this Agreement, respec- tively; (m) "Leone" or "LE" means the currency of the Borrower; and (n) "Project Preparation Advance" means the amount advanced by the Association to the Borrower for the preparation of the Project under an agreement constituted by the Borrower's letter dated November 3, 1980 and the Association's letter dated December 18, 1980. 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 equiva- lent to nine million two hundred thousand Special Drawing Rights (SDR 9,200,000). 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 Associa- tion, 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. -3- Section 2.03 (a) The Borrower shall, for the purposes of Part B (ii) of the Project, open a Special Account, on terms and conditions satisfactory to the Association, in a commercial bank acceptable to the Association. Withdrawals out of the Special Account shall be made exclusively to pay the reasonable costs of goods and services required to carry out Part B (ii) of the Project and to be financed under this Agreement in accordance with the provisions of Section 2.02 and Schedule 1 hereto. (b) The Association shall, promptly, after the Borrower has' complied with its obligations under paragraph (a) above and Sections 3.01 (f) (ii) and 4.04 (a) of this Agreement, withdraw on behalf of the Borrower from the Credit Account and deposit in the Special Account an initial amount in Leones equivalent to SDR 230,000. Thereafter, at the request of the Borrower, the Associa- tion shall further so withdraw on behalf of the Borrower from the Credit Account and deposit in the Special Account such amounts as shall be required to replenish the Special Account with amounts equal to payments made out of the Special Account for expenditures for Part B (ii) of the Project eligible for financing under this Agreement, but only to the extent that the amount of any such deposit, together with any amount remaining on deposit in the Special Account as of the date of such request, shall not exceed in the aggregate the equivalent of SDR 230,000. Except as the Association shall otherwise determine, each such deposit after the initial deposit shall be withdrawn by the Association on behalf of the Borrower from the Credit Account under the same Categories set forth in the table in paragraph 1 of Schedule 1 to this Agreement, and in the same respective amounts, as have been justified by the evidence supporting the request for such deposit furnished pur- suant to paragraph (c) of this Section. (c) Prior to or at the time of each request by the Borrower for a deposit by the Association on behalf of the Borrower into the Special Account, the Borrower shall furnish to the Association in respect of each payment made by the Borrower out of the Special Account such documents and other evidence as the Association shall reasonably request, showing that the payment was made on account of the reasonable cost of goods or services required for Part B (ii) of the Project and to be financed out of the proceeds of the Credit in accordance with Schedule 1 to this Agreement. (d) If the Association shall have determined that any payment out of the Special Account (i) was made for any expendi- ture or in any amount not eligible for financing from the Credit -4- Account, or (ii) was not justified by the evidence furnished pursuant to paragraph (c) of this Section, the Borrower shall, promptly upon notice from the Association and, unless otherwise determined by the Association, prior to any further deposit in the Special Account by the Association, deposit in the Special Account an amount equal to the amount.of such payment or the portion thereof not so eligible or justified. (e) Notwithstanding the provision of paragraph (b) of this Section, no further deposit in the Special Account shall be requested by the Borrower when the Association shall have deter- mined that all further withdrawals from the Credit Account may be made directly by the Borrower from the Credit Account under Section 2.02 of this Agreement, or when the total amount withdrawn from the Credit Account for Part B (ii) of the Project plus the amount of any qualified agreement to reimburse made by the Association and of any special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions for such Part of the Project shall have reached the equivalent of SDR 1,526,000, whichever shall be sooner. Withdrawal from the Credit Account of the remaining amount of the Credit for Part B (ii) of the Project shall follow such procedures as shall be agreed between the Borrower and the Association and shall be made only to the extent that the Association shall be satisfied by the evidence submitted in support of the applications for such with- drawal that all payments by the Borrower out of the Special Account were made on account of the reasonable cost of goods or services required for Part B (ii) of the Project and to be financed out of the proceeds of the Credit in accordance with this Agreement. Section 2.04. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit, shall be governed by the provisions of Schedule 3 to this Agreement. Section 2.05. The Closing Date shall be September 30, 1986 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.06. 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. -5- Section 2.07. Service charges shall be payable semiannually on February 15 and August 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each February 15 and August 15 commencing February 15, 1991, and ending August 15, 2030, each installment to and including the installment payable on August 15, 2000, 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 2.09. The currency of the United Kingdom of Great Britain and Northern Ireland 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 carry out Parts B (except Part B (ii)), D and E of the Project through MAF and Part B (ii) of the Project through MOW, all with due diligence and efficiency and in conformity with appropriate agricultural, financial, administratir and engineering practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) The Borrower shall enter into a Financing Agreement with FFC, on terms and conditions satisfactory to the Association, such Agreement to include, inter alia: (i) the Borrower's obligation to transfer to FFC the proceeds of the Credit allocated under Cate- gories (1) and (4) (c) of paragraph 1 of Schedule 1 to this Agreement in the form of equity contributions; and (ii) FFC's commitment to carry out the obligations contained in paragraph (e) below. (c) The Borrower shall enter into a Financing Agreement with DOPC, on terms and conditions satisfactory to the Associa- tion, such Agreement to include, inter alia: (i) the Borrower's obligation to transfer to DOPC the proceeds of the Credit allo- cated under Category (4) (b) of paragraph 1 of Schedule 1 to this Agreement in the form of equity contributions; and (ii) DOPC's obligation to carry out Part C of the Project pursuant to para- graph (g) below. (d) Without any limitation or -restriction upon any of its other obligations under this Agreement, the Borrower shall take and cause to be taken all act.ion, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable FFC and DOPC to carry out Parts A and C of the Project, respectively, and shall not take or permit to be taken any action which would prevent or interfere with the carry- ing out of such Parts of the Project by FFC and DOPC. (e) The Borrower shall cause FFC: (i) to carry out Part A of the Project with due dili- gence and efficiency and to make available to the farmers who are beneficiaries of the Project financial assistance in conformity with the terms and conditions for Credits set forth in Schedule 4 to this Agreement; (ii) to use the proceeds of the equity contributions referred to in Section 3.06 (b) exclusively for purposes of Part A of the Project; and (iii) to provide, promptly as needed, the seeds, fertil- izers and other agricultural inputs to the farmers included in Part A of the Project, in accordance with appropriate agricultural and technical practices. (f) The Borrower shall: (i) carry out, acting by MOW, Part B (ii) of the Project in accordance with annual road construc- tion programs, satisfactory to the Association, approved by MAF, MOW and CARE; (ii) enter into contractual arrangements, satisfactory to the Association, with CARE for the provision by CARE of the engineering, technical and labor services required to carry out Part B (ii) of the Project, such arrangements to include, inter alia, the obligations of the Borrower to provide CARE with the funds and facilities necessary to maintain -7- the roads included in Part B (ii) of the Project for a period of not less than two years from the date of completion of such Part of the Project. (g) The Borrower shall cause DOPC to carry out Part C of the Project in accordance with appropriate agricultural and financial practices. (h) The Borrower shall, for purposes of Part D (iv) of the Project: (i) by April 30, 1981, initiate the execution of the baseline socioeconomic survey under terms satisfactory to the Association; (ii) by April 1, 1982, complete the survey referred to in (i) above; (iii) by April 30, 1982, furnish to the Associa- tion for comment the conclusions of the survey referred to in (i) and (ii) above; (iv) thereafter based on the conclusions of the survey referred to in (i) and (ii) above, not later than April 30 of each year put into effect a monitoring and evaluation program under terms satisfactory to the Association; and (v) furnish to the Association for comments not later than May 1 of each year the conclusions of the programs referred to above. Section 3.02. The Borrower shall: (a) in order to assist MOW in the design of the annual road construction program referred to in sub-paragraph f (i) of Section 3.01 to this Agreement and in the technical supervision of the execution of such program, emrloy an engineering consultant whose qualifications and experience,, and terms and conditions of employ- ment, shall be satisfactory to the Association; (b) in order to assist the Borrower in the preparation of the research program referred to in Part D (v) of the Project, by September 1, 1981, employ consultants whose qualifications and experience, and terms and conditions of employment shall be satisfactory to the Association; and (c) in order to assist the Borrower in the carrying out of Part D (iii) of the Project, employ consuLai.ts whose qualifi- cations and experience, and tertms and ccnditicns of employment shall be satisfactory to the Assodiatioa. Section 3.03. (a) The Borrcwer undert.kes to insure and shall cause FFC and DOPC to insure, or make or cause to be made adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Cree4t against ha"nrds incident to the 8- 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. (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 3.04. The Borrower shall: (a) appropriate and release on a quarterly basis the funds, other than the proceeds of the Credit, necessary for MAF, FFC and DOPC to carry out the Project and to maintain the existing levels of agricultural production in the Borrower's Eastern Province in the immediately following quarter, the amount of such funds to be determined in accordance with quarterly budgets submitted by MAF, FFC and DOPC; and (b) provide in a timely manner the foreign exchange neces- sary to acquire, promptly as needed, the goods (including agricul- tural inputs) necessary to carry out the Project, to maintain the existing crop and planted areas and such areas to be rehabili- tated or established under the Project. Section 3.05. The Borrower shall: (i) for purposes of carry- ing out Part D of the Project (A) employ and, thereafter, maintain as head of MAF's regional agricultural office at the Borrower's Eastern Province, an agricultural professional, whose qualifica- tions and experience shall be satisfactory to the Association, and (B) employ a senior training officer whose qualifications and experience, and terms and conditions of employment shall be satisfactory to the Association; (ii) for purposes of carrying out Part E of the Project, employ a Projects coordinator, a senior credit specialist, a senior sector planner, a Project planner, a financial controller and a Project economist whose qualifications and experience, and terms and conditions of employment, shall be satisfactory to the Association. Section 3.06. (a) The Borrower shall grant or cause to be granted to FFC a license enabling FFC to act as a buying agent for cocoa and coffee products in the territory of the Borrower. (b) Except as the Association shall otherwise agree, the Borrower shall: (i) not later than ninety days after the Effective -9- Date, make an equity contribution to FFC under terms satisfactory to the Association, in an amount of not less than LE 100,000; (ii) thereafter, make additional equity contributions in an aggregate amount of not less than LE 400,000 (excluding the contribution referred to in (i) above), under terms satisfactory to the Association, the proceeds of such contributions to be made avail- able by the Borrower to FFC promptly after FFC's request; pro- vided, however, that an amount of not less than LE 200,000 shall be so contributed not later than a year after the Effective Date and the remaining LE 200,000, not later than two years after the Effective Date. Section 3.07. The Borrower shall: (i) establish and maintain an engineering services unit in charge of the supervision of Part B of the Project, and confer to such unit authority and resources satisfactory to the Association; and (ii) employ as head of the unit referred to in (i) above an engineer whose qualifications and experience, and terms and conditions of employment, shall be satisfactory to the Association. Section 3.08. The Borrower shall by June 1, 1981, enter into contractual arrangements with DOPC, satisfactory to the Associa- tion, to establish the terms and conditions of a loan of LE 1,900,000 made by the Borrower to DOPC, such arrangements to include, inter alia: (i) the conversion of not less than LE 1,000,000 into equity to be held by the Borrower in DOPC; (ii) the waiver of all interest and other charges accrued on such loan up to the date of the contractual arrangements referred to above; and (iii) the repayment of the remaining LE 900,000 in a period of not less than ten years and with interest at a rate which shall not exceed 11% yearly on the outstanding balance; provided, however, that DOPC shall not pay any amount of the loan until the current DOPC's accumulated loss of LE 683,000 has been totally absorbed by the profits derived from the operations of DOPC. Section 3.09. (a) The Borrower shall furnish, and cause FFC and DOPC to furnish, to the Association, promptly upon their preparation, the plans, specifications, reports, contract docu- ments 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 maintain, and cause FFC and DOPC to maintain, records and procedures adequate to record and monitor the progress of the Project (including its cost and the benefits - 10 - to be derived from it), to. identify the goods and services financed out of the proceeds of the Credit, and to disclose their use in the Project; (ii) shall enable, and cause FFC and DOPC to 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 (iii) shall furnish, and cause FFC and DOPC to furnish, to the Association at regular intervals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the pro- ceeds of the Credit and the goods and services financed out of such proceeds. (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, FFC, DOPC and the Association of their respective obligations under the Develop- ment Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.10. Not later than one month after June 30 and December 31 of each year, the Borrower shall prepare a report, of such scope and in such detail as the Association shall reasonably request, on the execution and physical progress of the Project. Section 3.11. (a) 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 carrying out Part C of the Project and for the construction (and operation) of the facilities included in Part B of the Project and shall furnish or cause to be furnished 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. (b) In regard to the acquisition of the land required for Part C of the Project, the Borrower shall compensate, or cause DOPC to compensate, the landholders affected by such land acqui- sition on terms and conditions satisfactory to the Association. - 11 - 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, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. Section 4.02. (a) The Borrower shall cause FFC and DOPC to maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices the operations and financial condition of FFC and DOPC. (b) The Borrower shall cause FFC and DOPC to: (i) have their accounts and financial statements (balance sheets, state- ments of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able to the Association; (ii) furnish to the Association as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of such financial statements for such year as so audited and (B) the reports of such audits by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning the accounts and financial statements of FFC and DOPC and the audits thereof as the Association shall from time to time reasonably request. Section 4.03. The Borrower shall cause FFC and DOPC to take out and maintain with responsible insurers, or to make other provision satisfactory to the Association for5 insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 4.04. The Borrower shall, acting by MOW: (a) (i) by March 1, 1981, prepare and furnish to the Association a program satisfactory to the Association, to upgrade to an all-weather capability the roads from Manowa Junction to Sefadu and from Daru to Joru, and (ii) by March 31, 1981, put into effect the program referred to in (i) above. - 12 - (b) (i) by January 31 of each year, prepare and furnish to the Association a program, satisfactory to the Association, detailing the civil works to be carried out during each such year for the maintenance of the trunk and feeder roads included in Schedule 5 to this Agreement and those to be completed under the Project, and (ii) by March 1 of each year, put into effect the program referred to in (b) (i) above. Section 4.05. The Borrower shall take or cause to be taken all action necessary to terminate, by January 1, 1985, the exist- ing Borrower's subsidies on the sale of fertilizers, such action to include the reduction, by January 1 of each year, starting January 1, 1982, of 25% of the subsidies in effect on the date of this Agreement. Section 4.06. (a) From time to time and at least once every calendar year, the Borrower and the Association shall review the adequacy of, and, if necessary, revise, the interest rates for seasonal and medium-term loans to be made under the Project. (b) From time to time and at least once every year, the Borrower shall: (i) review with the Association DOPC's prices for out growers' oil palm fresh fruit bunches and palm oil; and (ii) based on the review referred to in (i) above, fix DOPC's prices for out growers' oil palm fresh fruit bunches and palm oil at a level which is in line with the prevailing prices in the domestic market for such goods. Section 4.07. Except as the Association shall otherwise agree, the Borrower shall convert or cause to convert into FFC's equity the profits obtained by FFC from its operations as a financial and commercial enterprise. Section 4.08. The Borrower shall, by July 1, 1981, take all action necessary to integrate into MAF the organizational units established by the Borrower in its Eastern Province for purposes of carrying out the projects referred to in the First and Second Agricultural Credit Agreements, such integration to be carried out by the Borrower in accordance with appropriate administrative, personnel and managerial practices. 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: 13 - (a) a default shall have occurred in the performance of any obligation of the Borrower (other than an obligation to pay monies) on the part of the Borrower under the First Agricultural Credit Agreement, the Second Agricultural Credit Agreement and the Agricultural Loan Agreement; (b) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of FFC or DOPC or for the suspension of its operations related to the carrying out of the Project; (c) (i) Subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the BADEA Loan made to the Bor- rower 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) such Loan 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 such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consis- tent with the obligations of the Borrower under this Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and. shall continue for a period of 30 days after notice thereof shall have been given by the Association to the Borrower; and (b) any event specified in paragraph (b) or (c) (i) (B) of Section 5.01 of this Agreement shall. occur. - 14 - ARTICLE VI Amendment to the Second Agricultural Credit Agreement Section 6.01. The Second. Agricultural Credit Agreement is hereby amended by the deletion of Section 4.03 of such Agreement and the substitution therefor of Section 4.05 of this Agreement. ARTICLE VII Effective Date; Termination Section 7.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning *of Section 12.01 (b) of the General Conditions: (a) that the Banque Arabe pour le Developpement Economique en Afrique has notified the Association that all conditions precedent to the first disbursement of the BADEA Loan have been fulfilled, subject only to the effectiveness of this Agreement, if such be the case; (b) that the Financing Agreements to be entered into by the Borrower with FFC and DOPC, have been duly executed on behalf of the parties thereto; and (c) that the Borrower has employed the senior training officer and the senior credit specialist referred to in Section 3.05 of this Agreement. Section 7.02. The date /1V /q/ is hereby specified for the purposes of Section . of the General Conditions. ARTICLE VIII Representatives of the Borrower; Addresses Section 8.01. The Minister of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 8.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: - 15 - For the Borrower: The Financial Secretay The Ministry of Finance Freetown Sierra Leone MINFIN Freetown 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) 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. SIERRA LEONE By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By 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. SDR's) to be Financed (1) Goods and services 1,900,000 100% of foreign for Part A of the expenditures and Project 90% of local expenditures (2) Civil works (a) for Part B (ii) 1,756,000 100% of the Project (b) for Part B (iii), 610,000 100% of foreign (iv) and (v) of expenditures the Project and 85% of local expenditures (3) Internationally 762,000 100% recruited staff and consultant services for Parts D and E of the Project (4) Operating costs 100% of foreign (excluding salaries) expenditures and 90% of local expenditures (a) for Parts D (i) 1,300,000 and E (i) of the Project (MAF abd PEMSU) - 17 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR's) to be Financed (b) for Part C of the 78,000 Project(DOPC) (c) for Part E (ii) 316,000 of the Project (FFC) (5) Vehicles and equipment 1,220,000 100% for Part B (ii) of the Project (6) Initial withdrawal 230,000 for Special Account under Section 2.02 (c) to prefinance goods and services under Category (2) (a) (7) Refinancing of advance 78,000 for Project preparation (8) Unallocated 950,000 TOTAL 9,200,000 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 or for j!ocds or services supplied from the territory of the Borrower. - 18 - 3. The disbursement percentages have been calculated in com- pliance 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. 4. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of payments made for: (a) expenditures prior to the date of this Agreement, pro- vided, however, that the Association, on behalf of the Borrower, shall, on or promptly after the Effective Date of this Agreement, withdraw from the Credit Account under Category (7) of paragraph 1 above, the proceeds of the Credit allocated under such Category necessary to pay itself the outstanding amount of principal of, and accrued charges on, the Project Preparation Advance. (b) expenditures under Category (4) (b) of such paragraph, until evidence satisfactory to the Association has been provided to the Association, that DOPC has acquired the land referred to in Section 3.11 of this Agreement and has complied with its obliga- tions under paragraph (b) thereof; (c) expenditures under Category (2) (a) and (5) of such paragraph, until evidence, satisfactory to the Association, has been provided to the Association that the Borrower has put into effect the program referred to in Section 4.04 (a) of this Agree- ment; and (d) expenditures under Category (2) (a) and (6) of such paragraph until evidence, satisfactory to the Association, has been furnished to the Association that: (i) the Special Account has been opened on the terms and conditions referred to in Section 2.03 (a) of this Agreement; and (ii) the Borrower and CARE have entered into the contractual arrangements referred to in Section 3.01 (f) (ii) of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in - 19 - paragraph I 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 expendi- tures; 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. 6. 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 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. - 20 - SCHEDULE 2 Description of the Project The Project is the third phase of a program designed to promote agricultural development in the Eastern Province of the Borrower, covering about 15,350 square kilometers. The Project consists of the following parts: Part A. Crop Development Provision of labor, agricultural inputs, machinery and equipment, to be made available through seasonal and medium term financing to farmers under the conditions set forth in Schedule 4 to this Agreement, as required to: (i) increase production of about 2,000 ha of inland swamp rice; (ii) increase production of about 10,000 ha of upland rice and cassava crops; (iii) rehabili- tate about 800 ha of existing coffee and of about 1,000 ha of existing cocoa holdings; and (iv) plant about 2,000 ha of new coffee holdings and about 800 ha of new cocoa holdings. Part B. Civil Works (i) Construction of about 300 wells in villages with population of less than 1,000 inhabitants each; (ii) construction of about 300 km of penetration roads and chiefdom tracks, of which at least 170 km will correspond to penetration roads. (iii) construction of about five houses for project manage- ment, extension offices and project engineer; (iv) construction of a workshop for maintenance of vehicles and equipment for the Project in the Kono district; and (v) construction of about four new farm service centers and installation of about four drying floors in existing farm service centers of FFC. Part C. DOPC Planting and cultivation of about 300 ha of oil palms and acquisition and utilization of vehicles and equipment to increase DOPC's nucleus estate palm oil production capability. - 21 - Part D. Extension Services, Training and Studies (i) Extension and related farm services for Part A of the Project; (ii) A health education program, for the use and maintenance of the wells included in Part B (i) of the Project; (iii) A training program, in the Borrower's territory and abroad, for the management staffs of MAF, FFC, DOPC and PEMSU in charge of the Project; (iv) A baseline socioeconomic survey followed by annual monitoring and evaluation programs in the area comprised in the Project. (v) A research program, to be prepared by December 31, 1981, for improving smallholder's production of cocoa, coffee and oil palm. Part E. Support Services (i) Personnel, vehicles and equipment for PEMSU to allow PEMSU to carry out its planning, project execution, monitoring and evaluation activities; and (ii) Personnel, vehicles and equipment for FFC to allow FFC to carry out its agricultural inputs distribution and buying agent activities. The Project is expected to be completed by March 31, 1986. - 22 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Paragraph B hereof, goods and civil works 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 B 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 or FFC or DOPC, as the case may be, 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, in such form and detail and containing such information as the Association shall reasonably request; the Association will arrange 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 or FFC or DOPC, as the case may be, shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of inter- national competitive 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 the imported goods, or the ex-factory price or off-the-shelf price of other goods, offered in such bid; (Ii) customs duties and other import taxes levied in connection with the importation, or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids; and (iii) the cost to the Borrower or FFC or DOPC, as the case may be, of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. - 23 - B. Other Procurement Procedures 1. Contracts for the purchase of goods and works estimated to cost, after grouping in accordance with paragraph 1.1 of Part A of the Guidelines, less than $50,000 but more than $10,000, and, unless the Association shall otherwise agree, in an aggregate value of up to $1,900,000, and contracts for works under Part B (iii), (iv) and (v) of the Project shall be awarded in accordance with local competitive bidding procedures, satisfactory to the Association, or following evaluation and comparison of quotations furnished by at least three suppliers, provided that at least two foreign suppliers were invited to furnish such quotations. 2. Contracts for goods and works estimated to cost after group- ing in accordance with paragraph 1.1 of Part A of the Guidelines, the equivalent of $10,000 or less shall be awarded following evaluation and comparison of quotations furnished by at least three suppliers. 3. Contracts for civil works under Part B (ii) of the Project shall be procured through the contractual arrangements referred to in Section 3.01 (f) (ii) of this Agreement. C. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in Sierra Leone 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 manufact,red in Sierra Leone if the biddei shall have established to the satisfaction of the Borrower and the Associ- ation that the manufacturing cost of such goods includes a value adde' in Sierra Leone equal to at least 20% of the ex-factory bid price of such goods. - 24 - (2) Group B: all other domestic bids. (3) Group C: bids offering any other goods. 3. In order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in connection with the importation, and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. 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 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 3 is the lowest evaluated bid shall be selected. D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for goods estimated to cost the equivalent of $50,000 or more: (a) Before bids are invited, the Borrower or FFC or DOPC, as the case may be, shall furnish to the Association, for its com- ments, 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. - 25 - (b) After bids have been received and evaluated, the Bor- rower or FFC or DOPC, as the case may be, 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 shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and FFC or DOPC, as the case may be, and 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 withdrawal of funds from the Credit Account in respect of such contract. 3. With respect to each contract not governed by the preceding paragraph, the Borrower or FFC or DOPC, as the case may be, 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 the respective bids, recommendations for award and such other information as the Association shall reasonably 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 FFC or DOPC, as the case may be, and state the reasons for such determination. 4. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an exten- sion 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 the contract by more than 10% of the original price, the Borrower or FFC or DOPC, as the case may be, 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 Agree- ment, shall promptly inform the Borrower and FFC or DOPC, as the case may be, and state the reasons for its determination. - 26 - SCHEDULE 4 Terms and Conditions of Financial Assistance to Farmers The goods and services to. be provided under Part A of the Project, shall be made available by FFC to the farmers benefitting from the Project, with financial assistance made available to them by FFC in accordance with the following terms and conditions: A. Seasonal Credits: (a) interest rate: 20% annually on outstanding amounts; and (b) agricultural inputs eligible for financing: (i) seed, cassava sets and tools for upland rice and cassava plantations; (ii) seed fertilizer and labor for swamp rice plantations; (iii) seedlings, insecticides and fungicides for cocoa rehabilitation; (iv) seedlings, fertilizers and pesticides for coffee rehabilitation; (v) fertilizer, pesticides, tools and labor from the fourth year onward for new cocoa planta- tions; and (vi) fertilizers and pesticides from the sixth year onward for coffee planting. B. Medium Term Loans: (a) interest rate: 15% annually; (b) agricultural inputs eligible for financing and payment period: (i) tools, pedal thresher and first-year seed for swamp rice holdings; to be paid in 4 years, including 1 year of grace; - 27 - (ii) sprayers for cocoa rehabilitation; to be paid in 5 years, including 1 year of grace; (iii) seedlings, fertilizers, pesticides, sprayers and labor for new cocoa holdings; to be paid in 10 years, including 4 years of grace; (iv) crop loss credit, seedlings, fertilizers, chemical products and tools for coffee rehabilitation; to be paid in 5 years, including 2 years of grace; and (v) seedlings, fertilizers, chemical products, tools and labor for new coffee holdings; to be paid in 8 years, including 4 years of grace; and (c) farmers' initial payment of 10% of the cost of agricultural inputs. - 28 - Schedule 5 Trunk and feeder roads included in maintenance program Blama - Konta Blama - Gandehun Kenema - Joru Joru - Zimmi Mano Junction - Panguma Panguma - Dodo Segbwema Junction - Manowa Junction Manowa Junction - Sefadu Sefadu - Kainkordu Manowa Junction - Pendembu Kailahun - Morfindor Kailahun - Koindu Daru - Joru INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the 2S? day of 198. FOR SECRETARY