Tanzania - Dairy Development Project : Credit 0580 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 580 TA Development Credit Agreement (Dairy Development Project) BETWEEN UNITED REPUBLIC OF TANZANIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED AUGUST 15, 1975 CONFORMED COPY CREDIT NUMBER 580 TA Development Credit Agreement (Dairy Development Project) BETWEEN UNITED REPUBLIC OF TANZANIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED AUGUST 15, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated August 15, 1975, between UNITED REPUBLIC OF TANZANIA (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 Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) Certain Parts of the Project will be carried out by Tanzania Rural Development Bank (hereinafter called TRDB) as a financial intermediary with the Borrower's assistance and, as part of such assistance, the Borrower will make available to TRDB part of the proceeds of the Credit as hereinafter provided, and certain Parts of the Project will be carried out under the supervision of the Tanzania Livestock Development Authority (hereinafter called LIDA); (C) 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, TRDB and LIDA; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agreements of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Agreement" means the agreement between the Association, TRDB and LIDA of even date herewith, as the same may be amended from time to time, and such term includes, all schedules to the Project Agreement; 0 4 (b) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and TRDB 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 Subsidiary Loan Agreement; (c) "DAFCO" means Tanzania Dairy Farming Company, a subsidiary of LIDA; (d) "NARCO" means National Ranching Company, a subsidiary of LIDA; (e) "TDL" means Tanzania Dairies Limited, a subsidiary of LIDA; (f) "TSC" means Tanzania Sisal Corporation; (g) "Ujamaa village" means a village duly registered as a cooperative under the Borrower's Cooperative Societies Act, 1968; (h) "NAFCO" means National Agricultural and Food Corporation; (i) "KNCU" means Kilimanjaro Native Cooperative Union Ltd; and (j) "Beneficiaries" means the following entities to which TRDB proposes to make, or has made, a loan under the Project: DAFCO, NARCO, NAFCO, KNCU, TDL, TSC and the 50 Ujamaa villages carrying out Part B of the Project. 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 ten million dollars ($10,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule I to this Agreement, as such Schedule may be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, contracts for the purchase of goods or for the carrying out of works or services (other than 5 consultants' services) for the Project to be financed out of the proceeds of the Credit, shall be awarded in accordance with the provisions set forth, or referred to in Section 2.04 of the Project Agreement. Section 2.04. The Closing Date shall be April 30, 1981 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of- 6%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semi-annually on May 15 and November 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each May 15 and November 15 commencing November 15, 1985 and ending May 15, 2025, each installment to and including the installment payable on May 15, 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 2.08. 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 the Project, or cause the Project to be carried out, with due diligence and efficiency and in conformity with appropriate financial, administrative and agricultural practices and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause TRDB and LIDA to perform in accordance with the provisions of the Project Agreement and the Subsidiary Loan Agreement all their respective obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, 6 facilities, services and other resources, necessary or appropriate to enable TRDB and LIDA to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) The Borrower shall relend the proceeds of the Credit under Category (1) of paragraph 1 of Schedule 1 to this Agreement to TRDB under a subsidiary loan agreement to be entered into between the Borrower and TRDB under terms and conditions which shall have been approved by the Association. (d) The Borrower shall exercise its rights under the Subsidiary Loan 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 Subsidiary Loan Agreement or any provision thereof. Section 3.02. In carrying out Part E(3) of the Project, the Borrower shall (i) furnish to the Association a detailed plan, acceptable to the Association, for the program of applied investigational work for animal disease control, not later than December 31, 1976, or such other date as the Association shall agree, and (ii) employ a specialist whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 3.03. The Borrower and the Association shall consult, at the request of one or the other but in any case not less than once every year, on the level of milk prices in Tanzania, with a, view to ensuring that said milk prices are set at levels sufficient to assure adequate returns to producers and processors operating efficiently. 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) TRDB or LIDA shall have failed to perform any of its obligations under the Project Agreement; (b) an extraordinary situation shall have arisen which shall make it improbable that TRDB or LIDA will be able to perform its obligations under the Project Agreement; and 7 (c) the organization, powers and responsibilities of any Beneficiary shall have been altered in such a way as to affect materially and adversely the execution of the Project or the efficient operation of such Beneficiary. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified pursuant to paragraph (d) thereof, namely that any event specified in 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 and TRDB or LIDA as the case may be. 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 TRDB and LIDA have been duly authorized or ratified by all necessary corporate and governmental action; (b) the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and TRDB, respectively, have been duly authorized or ratified by all necessary corporate and governmental action; and (c) not less than three of the dairy farm group managers referred to in Part E(1) of the Project have been recruited and have taken up their posts. 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, TRDB and LIDA, and is legally binding upon TRDB and LIDA in accordance with its terms; and (b) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and TRDB, is legally binding upon the Borrower and TRDB in accordance with its terms. Section 5.03. The date November 28, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. 8 Section 5.04. The provisions of Sections 4.01 and 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty-five years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. 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 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: The Principal Secretary The Treasury P.O. Box 9111 Dar es Salaam United Republic of Tanzania Cable address: Treasury Dar es Salaam For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: INDEVAS Washington, D.C. 0 9 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 TANZANIA By /s / Paul Bomani Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Stanley Please Acting Regional Vice President Eastern Africa 10 SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Loans made by TRDB: 80% of amounts disbursed under such loans (a) under Part A 3,800,000 of the Proj- ect (b) under Parts 2,700,000 B through D of the Project (2) Technical assist- 100% of foreign ance: expenditures or 80% of local ex- penditures (a) salaries and 1,700,000 fees (b) equipment and 300,000 vehicles (3) Unallocated 1,500,000 TOTAL 10,000,000 11 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 and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in compliance 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: (a) expenditures prior to the date of this Agreement, except that withdrawals may be made in respect of Category (2) on account of expenditures incurred after May 1, 1975 in an aggregate amount not exceeding the equivalent of $50,000; (b) expenditures under Category (1)(a) for each dairy production unit until the Association has received evidence that a farm group manager has been appointed to supervise such unit; and (c) expenditures under Category (1)(a) for each of the dairy production units to be established by NAFCO, TSC and KNCU until the Association shall have approved the contract between DAFCO and such respective Beneficiary referred to in Section 2.08(c) of the Project Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in 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 expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the 12 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 itent 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 financing out of the proceeds of the Credit. 13 SCHEDULE 2 Description of the Project The Project is the first phase of the Borrower's long-term program to develop dairy farming. The Project consists of the following Parts: A: The establishment, development and operation by DAFCO, NAFCO, TSC and KNCU of about 17 dairy production units of about 350 cows each, located at 9 locations. B: The establishment of small dairy production units of about 20 cows each by 50 Ujamaa villages. C: The establishment by NARCO of a dairy heifer breeding unit. D: The carrying out by TDL of the following: (1) The construction of two collection centers and the purchase and use of one milk tanker to improve its milk collection in the Dar es Salaam area; (2) The purchase and use of one milk tanker to improve its milk collection in the Arusha area; and (3) The expansion of its milk processing facilities at Dar es Salaam to double the present capacity. E: The utilization of technical assistance as follows: (1) By LIDA: the employment of five dairy farm group managers, and one manager for the heifer breeding unit; one specialist in: (i) machinery maintenance; (ii) dairy husbandry; (iii) pasture improvement; and (iv) dairy economics; consultancy work on irrigation, milk processing and farm structures; and the procurement and operation of the necessary equipment and vehicles. (2) By TRDB: the employment of one financial specialist and a project preparation team consisting of one dairy husbandry specialist, one pasture specialist, one agriculturalist and one 14 specialist in animal resources and livestock extension services; and the procurement and operation of the necessary equipment and vehicles. (3) By the Livestock Development Division of the Borrower's Ministry of Agriculture: the employment of a veterinary economist to conduct a program of applied investigational work for animal disease control; and the procurement and operation of the necessary equipment and vehicles. The Project is expected to be completed by October 31, 1980.