Cameroon - Small And Medium-Scale Enterprise Project : Credit 0575 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 575 CM Development Credit Agreement (Small and Medium-Scale Enterprise Project) BETWEEN UNITED REPUBLIC OF CAMEROON AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 30, 1975 CONFORMED COPY CREDIT NUMBER 575 CM Development Credit Agreement (Small and Medium-Scale Enterprise Project) BETWEEN UNITED REPUBLIC OF CAMEROON AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JULY 30, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 30, 1975, between UNITED REPUBLIC OF CAMEROON (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Association to assist in the financing of the Project described in Section 3.01 of this Agreement by extending the Credit as hereinafter provided; (B) Part A of the Project will be carried out by Banque Camerounaise de Developpement (hereinafter called BCD) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to BCD the proceeds of the Credit as hereinafter provided; (C) Part B of the Project will be carried out by the Borrower with the assistance of organizations specialized in the provision of technical assistance services; (D) The Borrower has requested the United Nations Development Programme (hereinafter called UNDP) to provide financial assistance towards the financing of the technical assistance provided to small and medium-scale enterprises in Cameroon; (E) BCD intends to contract from the Caisse Centrale de Coope'ration Economique (hereinafter called Caisse Centrale), an agency of the Republic of France, a loan (hereinafter called the Caisse Centrale Loan) in an aggregate principal amount of thirteen million five hundred thousand French francs (FF13,500,000) to assist in financing such project, on the terms and conditions set forth in agreements between Caisse Centrale and BCD (hereinafter called the Caisse Centrale Loan Agreement); and (F) The Association is willing to make the Credit available upon the terms and conditions set forth hereinafter and in a project agreement of even date herewith between the Association and BCD; NOW THEREFORE the parties hereto hereby agree as follows: 4 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, subject, however, to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions). (a) the following subparagraph is added to Section 2.01: "13. The term 'Project Agreement' has the meaning set forth in paragraph (b) of Section 1.02 of the Development Credit Agreement." (b) the words "Investment Projects" are substituted for the words "the Project" at the end of Section 5.03; (c) Section 6.03 is deleted and replaced by the following new Section: "Section 6.03. Cancellation by the Association. If (a) the right of the Borrower to make withdrawals from the Credit Account shall have been suspended with respect to any amount of the Credit for a continuous period of thirty days or (b) by the date specified in Section 2.04(e) of the Project Agreement no applications for approval or requests for authorization to withdraw from the Credit Account in respect of any portion of the Credit shall have been received by the Association, or having been so received, shall have been denied or (c) after the Closing Date an amount of the Credit shall remain unwithdrawn from the Credit Account, the Association may, by notice to the Borrower, terminate the right to request such approvals and authorization or to make withdrawals from the Credit Account, as the case may be, with respect to such amount or portion of the Credit. Upon the giving of such notice such amount or portion of the Credit shall be cancelled." (d) the words "and the Project Agreement" are added after the words "the Development Credit Agreement" in Section 6.06; and (e) the words "or the Project Agreement" are added after the words "the Development Credit Agreement" in Section 10.02. 5 Section 1.02. Wherever used in this Agreement, 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) "BCD" means the Banque Camerounaise de Developpement, a societe d'econonie mixte d'intert national of the Borrower, operating pursuant to Decree No. 64/DF/487 of December 16, 1964. (b) "Project Agreement" means the agreement between the Bank and BCD of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement; (c) "Financing Agreement" means the agreement to be entered into between the Borrower and BCD pursuant to Section 3.01(b) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the Financing Agreement; (d) "Government Loan" means the loan provided for in the Financing Agreement; (e) "sub-loan" means a loan or credit made or proposed to be made by BCD out of the proceeds of the Government Loan to an Investment Enterprise for an Investment Project and "free-limit sub-loan" means a sub-loan, as so defined, which qualifies as a free-limit sub-loan pursuant to the provisions of Section 2.02(b) of this Agreement; (f) "investment" means an investment other than a sub-loan made or proposed to be made by BCD out of the proceeds of the Government Loan in an Investment Enterprise for an Investment Project; (g) "Investment Enterprise" means an enterprise to which BCD proposes to make or has made a sub-loan or in which it proposes to make or has made an investment; (h) "Investment Project" means a specific development project to be carried out by an Investment Enterprise utilizing the proceeds of a sub-loan or investment; (i) "Francs CFA" and "FCFA" mean the currency of the Borrower; (j) "French Francs" and "FF" mean the currency of the Republic of France; 6 (k) "foreign currency" means any currency other than the currency of the Borrower; (1) "Statutes" means the statutes of BCD dated December 16, 1964, as amended to the date of this Agreement; (m) "Statement of Policy" means the statement of lending and investments policy approved by the Directors of BCD on May 26, 1975 as amended to the date of this Agreement; (n) "subsidiary" means any company of which a majority of the outstanding voting stock or other proprietary interest is owned or effectively controlled by BCD or by any one or more subsidiaries of BCD or by BCD and one or more of its subsidiaries; (o) "CAPME" means Centre National d'Assistance aux Petites et Moyennes Entreprises, an etablissement public a' caractere industriel et commercial, established and operating pursuant to the Borrower's Law No. 70/LF/7 of May 20, 1970 and Decree No. 71/DF/332 of July 19, 1971; (p) "SATEC" means Societe d'Aide Technique et de Cooperation, a Societe d'Etat of the Republic of France, established and operating pursuant to Article 2.1 of the Law of April 30, 1946 and the Arrete of November 2, 1956; and (q) "AFCA" means Association pour la Formation des Cadres de l'Industrie et de l'Administration, a French private non-profit organization, established and operating pursuant to Loi du ler juillet 1901 of the Republic of France. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to three million dollars ($3,000,000). Section 2.02. (a) The Borrower may withdraw from the Credit Account the equivalent of up to fifty per cent (50%) of such amounts as shall have been expended (or, if the Association shall so agree, amounts required to meet expenditures to be made) by BCD for an Investment Project to finance the 7 reasonable cost of goods, works and services required for the Investment Project in respect of which the withdrawal is requested; provided, however, that no withdrawal shall be made (i) in respect of taxes levied by, or in the territory of, the Borrower on goods, works or services, or on the importation, manufacture, procurement or supply thereof, and (ii) in respect of a sub-loan or investment unless (A) the sub-loan or investment shall have been approved by the Association, or (B) the sub-loan shall he a free-limit sub-loan for which the Association shall have authorized withdrawals from the Credit Account. (b) A free-limit sub-loan shall be a sub-loan for an Investment Project in an amount to be financed out of the proceeds of the Credit which shall not exceed the sum of (i) FCFA 15 million, when added to any other outstanding amounts financed or proposed to be financed out of the proceeds of the Credit for such Investment Project or (ii) $1,500,000 equivalent, when added to all other free-limit sub-loans financed or proposed to be financed out of the proceeds of the Credit, the foregoing amounts being subject to change from time to time as determined by the Association. (c) Except as the Association and the Borrower shall otherwise agree, no withdrawals shall be made on account of expenditures made by an Investment Enterprise in respect of a sub-loan subject to the Association's approval, or in respect of an investment, if such expenditures shall have been made before the date of this Agreement or more than ninety days prior to the date on which the Association shall have received in respect of such sub-loan or investment the application and information required by Section 2.04(b) of the Project Agreement or, under a free-limit sub-loan, more than ninety days prior to the date on which the Association shall have received in respect of such free-limit sub-loan the request and information required by Section 2.04(c) of the Project Agreement. Section 2.03. The Closing Date shall be December 3 1, 1980 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. 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 2.05. Service charges shall be payable semi-annually on May I and November I in each year. Section 2.06. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each May I and November 1 commencing 8 November 1, 1985 and ending May 1, 2025, each installment to and including the installment payable on May 1, 1995, 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 2.07. The currency of the United States of America is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE I Use of the Proceeds of the Credit Section 3.01. (a) The purpose of the Project is to assist the Borrower and BCD in financing such productive facilities and resources in Cameroon as will contribute to the economic and social development of the country. The Project consists in (i) the financing by BCD of specific development projects in all productive sectors except agriculture, housing and trade through loans to and investments in small and medium-scale private enterprises in Cameroon, in furtherance of the corporate purposes of BCD (Part A of the Project) and (ii) the financing by the Borrower of technical assistance provided by CAPME, SATEC and AFCA to small and medium-scale private enterprises in Cameroon (Part B of the Project). (b) The Borrower shall relend the proceeds ot the Credit to BCD under a financing agreement to be entered into between the Borrower and BCD under terms and conditions which shall have beei, approved by the Association. (c) The Borrower shall exercise its rights under the Financing Agreement 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, nor amend, abrogate or waive the Financing Agreement or any provision thereof. Section 3.02. Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause BCD to perform in accordance with the provisions of the Project Agreement and the Financing Agreement all the obligations therein set forth, shall take and cause to be taken all action necessary or appropriate to enable BCD to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. Section 3.03. The Borrower shall make arrangements, satisfactory to the Association, to provide technical assistance services to Investment Enterprises in 9 Cameroon. To that end, the Borrower shall inter alia (i) cause CAPME to make arrangements with organizations capable of providing such technical assistance services on terms and conditions satisfactory to the Association, and (ii) approve the selection of eight technical assistance experts (six to be employed by SATEC and two to be employed by AFCA), provided through financial assistance by UNDP, only after their qualification, experience and proposed terms and conditions of employment shall have been established to the satisfaction of the Association. ARTICLE IV Remedies of the Association Section 4.01. 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 due and punctual payment of any amount payable by BCD to the Borrower under the Financing Agreement; (b) a default shall have occurred in the performance of (i) any other obligation of BCD under the Financing Agreement, or (ii) any obligation of BCD under the Project Agreement; (c) any part of the principal amount of any loan to BCD having an original maturity of one year or more shall, in accordance with its terms, have become due and payable in advance of maturity as provided in the relative contractual instruments, or any security for any such loan shall have become enforceable; (d) BCD shall have been unable to pay its debts as they mature or any action or proceeding shall have been taken by BCD or by others whereby any of the property of BCD shall or may be distributed among its creditors; (e) a change shall have been made in the Statutes which will materially and adversely affect the financial condition or operations of BCD; (f) a change shall have been made in the Statement of Policy without the Association's consent; (g) a resolution shall have been passed for the dissolution or liquidation of BCD; (h) a subsidiary or any other entity shall have been created or acquired or taken over by BCD, if such creation, acquisition or taking over would adversely 00 10 affect the conduct of the BCD's business or BCD's financial situation or the efficiency of the BCD's management and personnel or the carrying out of the Project; (i) an extraordinary situation shall have arisen which shall make it improbable that BCD will be able to perform its obligations under the Project Agreement; and (j) (i) subject to subparagraph (ii) of this paragraph: (A) the right of BCD to withdraw the proceeds of the Caisse Centrale Loan made to BCD for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the Caisse Centrale Loan Agreement, or (B) the Caisse Centrale Loan shall have become due and payable prior to the agreed maturity thereof; (ii) subparagraph (i) of this paragraph shall not apply'if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of BCD to perform any of its obligations under such agreement, and (B) adequate funds for the Project are available to BCD from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement and of BCD under the Project Agreement. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraphs (b) and (h) of Section 4.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower; (b) any event specified in paragraphs (c), (d), (e), (f), (g) and (j)(i)(B) of Section 4.01 of this Agreement shall occur; and (c) the event specified in paragraph (a) of Section 4.01 of this Agreement shall occur and continue for a period of 30 days. 11 ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01(b) of the General Conditions: (a) the execution and delivery of the Project Agreement on behalf of BCD have been duly authorized or ratified by all necessary corporate and governmental action; (b) the execution and delivery of the Financing Agreement on behalf of the Borrower and BCD, respectively, have been duly authorized or ratified by all necessary corporate and governmental action; (c) the conditions precedent, if any, to initial disbursements under the Caisse Centrale Loan Agreement have been fulfilled; (d) the Borrower shall have made arrangements, satisfactory to the Association, for the provision of technical assistance services to Investment Enterprises as required by Section 3.03 of the Development Credit Agreement; (e) the two financial analysts and the engineer referred to in Section 2.02 of the Project Agreement have been retained by BCD; and (f) BCD shall have furnished to the Association certified copies of its financial statements and the report of its auditors for the fiscal year ending June 30, 1975. Section 5.02. The following are specified as additional matters within the meaning of Section 12.02(b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) That the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, BCD, and is legally binding upon BCD in accordance with its terms; and (b) That the Financing Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and BCD, and is legally binding upon the Borrower and BCD in accordance with its terms. 12 Section 5.03. The date December 1, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The obligations of the Borrower under Article III of this Agreement and the provisions of Section 5.02 of this Agreement and those of Section 5.03 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Ministre de l'Economie et du Plan of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6,02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere de l'Economie et du Plan Yaound6 Cameroon Cable address: Telex: MINEP 8268 KN Yaound6, Cameroon 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) 13 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. UNITED REPUBLIC OF CAMEROON By /s / F. X. Tchoungui Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s / R. Chaufournier Regional Vice President Western Africa