Conformed Copy - C1966 - Agricultural Marketing and Estate Development Project - Amendment 3

Page 1 November 19, 1992 The Honorable Louis Chimango Minister of Finance Ministry of Finance P.O. Box Lilongwe, Malawi Dear Mister Minister, Re: Agricultural Marketing and Estate Development Project (Credit Number 1966 MAI) Amendment I refer to (a) the Development Credit Agreement between the Republic of Malawi (the Borrower) and the International Development Association ( the Association) and (b) the Project Agreement between the Association and the Reserve Bank of Malawi (RBM) for the above referenced Project dated March 31, 1989 and amended in an exchange of letters between the Borrower and the Association, and the Association and RBM, respectively, dated October 1, 1992, October 7, 1992 and October 8, 1992. In order to assist the Borrower in its drought recovery efforts and its request to use part of the proceeds of Credit 1966 MAI for drought recovery purposes, we propose to amend the Development Credit Agreement as follows: 1. Section 1.02 of the Development Credit Agreement Add new paragraphs (u) and (v) to read an follows: (u) "SACA" means the Smallholder Agricultural Credit Administration within MOA, and (v) "Credit Number 1851 MAI" means the Credit for an amount of SDR 4,600,000 granted by the Association to the Borrower to assist the Borrower in the financing of Smallholder Agricultural Credit Project pursuant to a Development Credit Agreement dated December 22, 1987 between the Borrower and the Association. 2. Section 3.01 (a)(i) of the Development Credit Agreement In line 1 add Part A.3 so that the said line 1 will now read: "(i) shall carry out Parts B, C and D of the Project with ..." 3. Section 3.06 of the Development Credit Agreement Add a new Section 3.06 to read as follows: "The implementation of Part D of the Project shall be carried out by SACA in conformity with the provisions of Schedule 4 to the Development Credit Agreement for Credit Number 1851 MAI". 4. Schedule 1 to the Development Credit Agreement - Withdrawal of the Proceeds of the Credit 4.1 The table set forth in paragraph 1 of Schedule 1 is amended an follows: 4.1.1. A new category (9) is added to read: "(9) Seasonal Credit under Part D of the Project 4,200,000 100% 4.1.2. The "unallocated" category in renumbered as Category (10). 4.1.3. The table set forth in the table in paragraph 1 of Schedule 1 to the Development Credit Agreement is amended to read an in the Annex to this letter. Page 2 4.2. Paragraph 2 of Schedule 1 to the Development Credit Agreement 4.2.1. The word "and" at the end of paragraph 2(a) is deleted, the at the and of paragraph 2(c) in deleted, and replaced by "; and", and new paragraphs 2(d) and (a) are added to read as follows: "(d) the term "incremental seasonal credit" means the aggregate principal amount of credit, repayable in lose than a twelve-month period, provided or to be provided to farmers, clubs or farmers countrywide, in a crop year ending on September 30 of a given year and ending on September 30 of the following year less the aggregate amount of such credit provided in the preceding crop year; (e) the term "Eligible Expenditures" means expenditures for goods for incremental seasonal credit, over and above any such credit financed or to be financed from the proceeds of any such loan, credit or grant under any scheme administered by MOA." 5. Schedule 2 to the Development Credit Agreement 5.1 The paragraph dealing with the objectives of the Project is amended to read as follows: "The objectives of the Project are to (a) improve the marketing of smallholder farmers' crops by supporting the Borrower's efforts to develop a multi-channel marketing system; (b) improve resource utilization and productivity on estates by providing seasonal and medium-term credit to intensify and diversify production; and (c) strengthen the Borrower's drought recovery efforts through the provision of seasonal credit to farmers." 5.2 Add new part D to read as follows: "Part D: Seasonal Credit - Smallholder Farmers Seasonal credit to smallholder farmers for the purchase of inputs for crops." Please confirm your agreement to the forgoing proposed amendment by signing, dating and returning the enclosed copy of this letter to us at which time the amendment shall constitute a binding agreement between the Borrower and the Association. Very truly yours, INTERNATIONAL DEVELOPMENT ASSOCIATION Stephen Denning Director Southern Africa Department Africa Region Confirmed: REPUBLIC OF MALAWI By: Authorized Representative Date: December 2, 1992 Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent to be Financed (1) Sub-loans (a) under 4,330,000 100% of expendi- Part A.1 (a) tures incurred of the Project under Sub-loans made by Partici- pating Banks Page 3 (b) under 2,250,000 100% of expendi- Part A.1 (b) tures incurred of the Project under Sub-loans made by Partici- pating Banks (2) SEDOM Credits 1,100,000 100% of expendi- under Part A.2 tures incurred of the Project under SEDOM credits (3) Vehicles, equipment 150,000 100% and office supplies (4) Technical assistance 620,000 100% and overseas training (5) Operating costs 150,000 42% (6) Civil Works 500,000 90% (7) Information (M & E) 150,000 100% and studies (8) Refunding of Project 550,000 Amount due pursuant Preparation Advance to Section 2.02 (d) this Agreement (9) Eligible Expenditures 4,200,000 100% for incremental seasonal (10) Unallocated 200,000 Credit TOTAL 14,200,000