Malawi - Shire Valley Agricultural Development Project : Credit 0114 - Credit Agreement - Conformed

CREDIT NUMBER 114 MAI Development Credit Agreement (Shire Valley Agricultural Development Project) BETWEEN REPUBLIC OF MALAWI AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED FEBRUARY 5, 1968 CREDIT NUMBER 114 MAI Development Credit Agreement (Shire Valley Agricultural Development Project) BETWEEN REPUBLIC OF MALAWI AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED FEBRUARY 5, 1968 0 Drtrlopment (eThbit Agreement AGREEMENT, dated February 5, 1968, between the REPUBLIC OF MALAWI (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). ARTICLE I Credit Regulations SECTION 1.01. The parties to this Agreement accept all the provisions of Development Credit Regulations No. 1 of the Association dated June 1, 1961 as amended Feb- ruary 9, 1967 (said Development Credit Regulations No. 1 being hereinafter called the Regulations), with the same force and effect as if they were fully set forth herein. SECTION 1.02. Unless the context otherwise requires, the following terms, wherever used in the Development Credit Agreement, have the following meanings: (a) "FMB" means the Farmers Marketing Board of the Borrower, e4tablished under the Farmers Mar- keting Ordinance, as amended in 1963. (b) "Subsidiary Loan Agreement" means the loan agreement between the Borrower and FMB, referred to in Section 4.02 of this Agreement. (c) "Project Area" means the area covering about 130,000 acres within the Chikwawa South Adminis- trative Sub-District in the Southern Region of the Borrower, as defined in the General Notice No. 866 of December 6, 1967. (d) "Project period" means the period during which the proceeds of the Credit will be disbursed. 0 4 ARTICLE II The Credit SECTION 2.01. The Association agrees to make available to the Borrower, on the terms and conditions in this De- velopment Credit Agreement set forth or referred to, a development credit in an amount in various currencies equivalent to three million seven hundred thousand dollars ($3,700,000). SECTION 2.02. The Association shall open a Credit Ac- count in the name of the Borrower and shall credit to such Credit Account the amount of the Credit. The amount of the Credit may be withdrawn from the Credit Account as provided in, and subject to the rights of cancellation and suspension set forth in, this Development Credit Agree- ment. SECTION 2.03. Except as the Borrower and the Asso- ciation shall otherwise agree, the Borrower shall be en- titled to withdraw from the Credit Account: (a) the equivalent of e percentage or percentages as may be established from time to time by agreement be- tween the Borrower and the Association of such amounts as shall have been expended for the rea- sonable cost of goods required for carrying out the Project; (b) such amounts as shall have been expended for the reasonable foreign currency cost of the goods re- quired to carry out the Project and not included in the foregoing sub-section (a); and (c) if the Association shall so agree, such amounts as shall be required by the Borrower to meet payments under the foregoing sub-section (b) 5 provided, however, that no withdrawals shall be made on account of expenditures made prior to the date of this Agreement. SECTION 2.04. The Borrower shall pay to the Associa- tion a service charge at the rate of three-fourths of one per cent (% of 1%) per annmm on the principal amount of the Credit withdrawn and outstanding from time to time. SECTION 2.05. Service charges shall be payable semi- annually on April 1 and October 1 in each year. SECTION 2.06. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each April 1 and October 1 commencing April 1, 1978 and ending October 1, 2017, each installment to and in- cluding the installment payable on October 1, 1987 to be one-half of one per cent ( of 1%) of such principal amount, and each installment thereafter to be one and one- half per cent (1%) of such principal amount. SECTION 2.07. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for purposes of Section 3.02 of the Regulations. ARTICLE III Use of the Proceeds of the Credit SECTION 3.01. The Borrower shall apply the proceeds of the Credit in accordance with the provisions of this Development Credit Agreement to expenditures on the Project described in the Schedule to this Agreement. The specific allocation of the proceeds of the Credit, and the methods and procedures for procurement of the goods to be financed out of such proceeds, shall be determined by agreement between the Borrower and the Association, sub- ject to modification by further agreement between them. 6 SECTION 3.02. Except as the Borrower and the Associa- tion shall otherwise agree, the Borrower shall cause all goods financed out of the proceeds of the Credit to be used in the territories of the Borrower exclusively in the carrying out of the Project. ARTICLE IV Particular Covenants SECTION 4.01. (a) The Borrower shall carry out the Project, or cause the Project to be carried out, with due diligence and efficiency and in conformity with sound ad- ministrative, agricultural, engineering, and financial prac- tices, and shall make available, promptly as needed, all funds, facilities, services and other resources required for the purpose. (b) Except as the Association shall otherwise agree, the construction works for the Project shall be carried out by contractors satisfactory to the Borrower and the Associa- tion and employed under contracts satisfactory to the Bor- rower and the Association. (c) Except as the Association shall otherwise agree, the Borrower shall, in the carrying out of the Project, employ qualified and experienced staff. (d) During the Project period, the Borrower shall ob- tain prior agreement of the Association with respect to any appointment to the post of Project Manager. (e) The Borrower shall furnish or cause to be furnished to the Association, promptly upon their preparation, the reports, plans, specifications, contract documents and work schedules for the Project and any material modifications subsequently made therein, in such detail as the Association shall reasonably request. SECTION 4.02. (a) The Borrower shall relend a part of the proceeds of the Credit, or the equivalent of such pro- ceeds, to FMB on terms and conditions satisfactory to the 7 Association pursuant to a loan agreement satisfactory to the Association. (b) The Borrower shall exercise its right under the loan agreement referred to in the foregoing sub-section (a) in such manner as to protect the interest of the Borrower and the Association; and, except as the Association shall other- wise agree, the Borrower shall not amend, assign, abrogate or waive any provision of such loan agreement. SECTION 4.03. The Borrower shall maintain or cause to be maintained records adequate to identify the goods financed out of the proceeds of the Credit, to disclose the use thereof in the Project and to record the progress of the Project (including the cost thereof) and shall enable the Association's representatives to inspect the Project, the goods and any relevant records and documents; and shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably request concerning the expenditure of the proceeds of the Credit, the Project, the goods to be financed out of the proceeds of the Credit, and the operations with respect to the Project of FMB and of the Ministries of the Borrower responsible for carrying out the Project. SECTION 4.04. (a) The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplishcd. To that end, each of them shall furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information shall include information with respect to financial and economic conditions in the territories of the Borrower and the international balance of payments position of the Borrower. (b) The Borrower and the Association shall from time to time exchange views through their representatives with 80 regard to matters relating to the purposes of the Credit and the maintenance of the service thereof. The Borrower shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit or the main- tenance of the service thereof. (c) The Borrower shall afford all reasonable opportunity for accredited representatives of the Association to visit any part of the territories of the Borrower for purposes related to the Credit. SECTION 4.05. The Borrower shall establish and main- tain separate accounts for the Project and shall cause such accounts and the accounts of FMB relating to the Project to be audited at least once a year by an independent auditor acceptable to the Association, and, unless the Asso- ciation shall otherwise agree, not Liter than four months after the end of the Borrower's fiscal year transmit to the Association certified copies of such accounts and a signed copy of such auditor's report. SECTION 4.06. The Borrower shall cause all works, facili- ties and equipment related to the Project to be adequately maintained and from time to time shall cause all necessary renewals and repairs thereof to be made in accordance with sound agricultural and engineering practices. SECTION 4.07. Except as the Borrower and Association shall otherwise agree, the Borrower undertakes to insure the imported goods to be financed out of the proceeds of the Credit against marine, transit and other hazards inci- dent to 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 useable by the Borrower to replace or repair such goods. SECTION 4.08. Except as the Borrower and the Asso- ciation shall otherwise agree, the Borrower shall use the 9 proceeds of payments which it receives from FMB under the Subsidiary Loan Agreement and which are not cur- rently required to service the Credit, for the purpose of agricultural development within the Project Area. The Borrower and the Association shall consult from time to time as to the procedure for ensuring effective use of such proceeds. SECTION 4.09. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes, and free from all restrictions, imposed under the laws of the Borrower or laws in effect in its territories. SECTION 4.10. This Agreement shall be free from any taxes that shall be imposed under the laws of the Borrower or laws in effect in its territories on or in connection with the execution, delivery or registration thereof. ARTICLE V Remedies of the Association SECTION 5.01. (i) If any event specified in paragraph (a) or paragraph (c) of Section 5.02 of the Regulations shall occur and shall continue for a period of thirty days, or (ii) if any event specified in paragraph (b) of Section 5.02 of the Regulations or in Section 5.02 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Associa- tion to the Borrower, then at any subsequent time during the continuance thereof, the Association, at its option, may declare the principal of the Credit then outstanding to be due and payable immediately, and upon any such declara- tion such principal shall become due and payable inmedi- ately, anything in this Development Credit Agreement to the contrary notwithstanding. SECTIoN 5.02. For the purposes of Section 5.02 (k) of the Regulations, the following additional event is specified: 10 The Borrower shall have amended the Farmers Mar- keting Ordinance, as amended in 1963, in such a way as to substantially alter the organization, powers or responsibilities of FMB, without the consent of the Association. ARTICLE VI Effective Date; Termination SECTION 6.01. The following event is specified as an additional condition to the effectiveness of this Develop- ment Credit Agreement within the meaning of Section 8.01 (b) of the Regulations: namely the Subsidiary Loan Agreement has bee. 'uly executed in form satisfactory to the Association and has become fully effective and binding on the parties thereto in accordance with its terms subject only to the effectiveness of the Development Credit Agree- ment. SECTION 6.02. The following is specified as an additional matter within the meaning of Section 8.02 (b) of the Regu- lations. to be included in the opinion or opinions to be furnis: a to the Association: namely, that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the parties thereto, ajid constitutes a valid and binding obligation of the parties thereto in accordance with its terms. SECTION 6.03, If this Development Credit Agreement shall not have come into force and effect by April 10, 1968, this Development Credit Agreement anl all the obligations of the parties hereunder shall terminate, unless the Asso- ciation, after consideration of the reasons for the delay, establishes a later date for the purposes of this Section. The Association shall promptly notify the Borrower of such date. 11 ARTICLE VII Miscellaneous SECTION 7.01. The Closing Date shall be December 31, 1973, or such other date as may from time to time be agreed between the Borrower and the Association. SECTION 7.02. The following addresses are specified for the purposes of Section 7.01 of the Regulations: For the Borrower: The Secretary to the Treasury Ministry of Finance P. 0. Box No. 53 Zomba, Malawi Alternative address for cables: Finsec Zomba For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Alternative address for cables: Indevas Washingtwn, D.C. SECTION 7.03. The Minister of Finance of the Borrower is designated for the pu.'rposes of Section 7.03 of the Regulations. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have 12 caused this Development Credit Agreement to be signed in their respective names and delivered in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF MALAWI By /s/ N. W. MBEKEANI Authorized Representative INTERNATIONAL DEVELOPMENT AssOCIATION By /s/ J. BuRKE- KNAPP Vice President 0 13 SCHEDULE Description of the Project The Project is the implementation over five years of an integrated series of measures to increase the efficiency of agriculture in the Project Area and consists of the fol- lowing: I. The Provision of Agricultural Inputs and Credit in Kind and Improvement of Marketing and Storage Facilities. This includes: (a) the provision of sprayers and insecticides and credits to farmers for such goods and the super- vision of the use and collection of the credits; (b) the construction and equipping of seven perma- nent produce markets; and. (c) the provision of a new crop storage facility with a capacity of about 540,000 cubic feet at the Bangula cotton ginnery. II. The Provision of Project Management, Administra- tive Services and Staff Training. This includes: (a) the establishment and staffing of a Project Or- ganization at Ngabu within the Agricultural Development Branch of the Department of Agri- culture; (b) tL i recruitment of qualified managerial, profes- sional, technical and administrative staff and the provision of in-service training; (c) the construction, equipping and maintenance of houses and offices for Project staff in the Project Area; (d) the purchase, operation and maintenance of vehicles, machinery and equipment; and 0 14 (e) the provision of administrative services. III. The Provision of an adequate extension service to insure the dissemination of required technical knowl- edge leading to improved cultural practices and pest control. IV. The Provision of Required Infrastructure in the Project Area. This includes: (a) the drilling of about 156 working boreholes to be operated by hand pumps to supply potable water for domestic and farm use; (b) the construction of about 160 miles of crop ex- traction roads and improvement of 24 miles of existing roads; and (c) the demarcation of new plots on about 20,000 acres of arable land for settlement of new families. The Project is expected to be completed by January 31, 1973.