Upper Volta - Livestock Development Project : Credit 0557 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 557 UV Development Credit Agreement (Livestock Development Project) BETWEEN REPUBLIC OF UPPER VOLTA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 18, 1975 CONFORMED COPY CREDIT NUMBER 557 UV Development Credit Agreement (Livestock Development Project) BETWEEN REPUBLIC OF UPPER VOLTA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 18, 1975 DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated June 18, 1975, between REPUBLIC OF UPPER VOLTA (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) The Borrower has established as autonomous agency the Office National de l'Exploitation des Resources Anirnales (hereinafter called ONERA), for the purpose inter alia of consolidating in a single national body activities in livestock marketing and meat processing; said Agency will have certain responsibilities in relation to the maintenance of the equipment and facilities procured under Parts C and D of the Project, as hereinafter provided and for said purpose the Borrower has agreed to relend to ONERA a portion of the proceeds of the Credit and to lend to ONERA additional funds required for the purpose, in accordance with arrangements acceptable to the Association as hereinafter provided; (C) Part A(l) of the Project will be carried out with the assistance of Banque Nationale de Developpement (hereinafter called BND), and as part of such assistance, the Borrower has agreed to relend to BND a portion of the proceeds of the Credit, and to lend to BND additional funds, in accordance with the provisions of a subsidiary loan agreement of even date herewith between the Borrower and BND and as hereinafter provided; (D) The BND has agreed to relend the amounts lent to it in accordance with Recital (C), and to lend certain additional funds out of its own resources, to groups participating in the group ranches to be established under Part A(1) of the Proje6t; (E) The Borrower has agreed to make available to the Project Unit to be established for purposes of the Project (hereinafter called PU), as a grant, a portion of the proceeds of the Credit, and certain additional funds, to assist in the financing of wells required for Part C(4) of the Project, as hereinafter provided; (F) The Borrower has agreed to make available to its Dedougou O.R.D. and its Bobo-Dioulasso O.R.D., as a grant, a portion of the proceeds of the Credit, 4 and certain additional funds, to assist in the financing of the veterinary services to be provided under Part B of the Project, as hereinafter provided; (G) The Borrower has agreed to relend to its Bobo-Dioulasso O.R.D. a portion of the proceeds of the Credit, and to lend to its said O.R.D. certain additional funds, to assist in the financing of the investments required for the Group Ranch Development Center to be established under Part A(2) of the Project, as hereinafter provided; (H) The Borrower has agreed to make available to PU, a portion of the proceeds of the Credit, and certain additional funds, to cover the costs of PU and the costs of Part E of the Project; (I) The Borrower proposes to authorize a treasury overdraft (avance de tresorerie) for PU in an amount of CFAF60 million and, in accordance with the provisions of the Subsidiary Loan Agreement, a treasury overdraft (avance de tresorerie) of CFAF60 million for BND, to prefinance the investment costs of the Project; WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; 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 Area" means an area of about 58,000 km2 in the west of the territory of the Borrower, comprising the areas covered by the O.R.D.s of Dedougou and Bobo-Dioulasso; 5 (b) "Group Ranch Development Area" means an area of about 300,000 hectares surrounding the village of Samorogouan, about 100 km west of Bobo-Dioulasso, bordered on the east by the Black Volta River and on the west by the Republic of Mali, in which the Group Ranches are to be established; (c) "Group Ranch" means any of the group ranches to be established under Part A(l) of the Project; (d) "Group Ranch Development Center" means the center to be established under Part A(2) of the Project; (e) "Group Ranch Statute" means a statut agreed to by the members of a Participating Group pursuant to the Borrower's Law No. 29-63 AN dated July 24, 1963, and providing for the establishment of Group Ranches in the Group Ranch Development Area, and defining the rights and obligations of the members of a Group Ranch. (f) the letters "O.R.D." mean an 'Organisme R9gional de Developpement", an organisme d'intgret public established under the laws of the Borrower pursuant to Law No. 20/65/AN of July 28, 1965; (g) "Project O.R.D." means the O.R.D. of Dedougou and the O.R.D. of Bobo-Dioulasso established by the Borrower's Decree No. 103 PRES.DEV.T, dated March 14, 1966 and Decree No. 70-251 PRES/AGRI-EL dated October 13, 1970, respectively; (h) the letters "ONERA" mean the Borrower's Office National de l'Exploitation des Resources Animales, an autonomous agency ("office") of the Borrower established and operating under the Borrower's Ministry of Planning, Rural Development and Tourism, pursuant to the Borrower's Decree No. 75-139 PRESAN, dated April 17, 1975, and includes any successor thereto; () the letters "BND" mean the Banque Nationale de Diveloppement of the Borrower, established pursuant to Law No. 6/61/AN of January 23, 1961, and includes any successor thereto; 0) "Subsidiary Loan Agreement" means the agreement between the Borrower and BND referred to in Section 3.05(e) of this Agreement, as such agreement may be amended from time to time with the approval of the Association; (k) the letters "PU" mean the Project Unit referred to in Section 3.02 of this Agreement; 6 (1) "Participating Group" (groupe d'exploitant) means any of the groups of pastoralist families and crop farmers, consisting each of about 35 pastoralist families and about 150 crop farming families owning livestock, participating in a Group Ranch; (m) "Group Ranch Development Loan" means a loan made or proposed to be made by BND to a Participating Group, with the guarantee of the Borrower, to finance investments for a Group Ranch, in accordance with the operating policies and procedures set forth or referred to in Section 3.15 of and Schedule 5 to this Agreement, and to be financed in part out of the proceeds of the Credit; (n) "PU Project Director" means the person referred to by that name in Schedule 4 to this Agreement; (o) "PU Assistant Director - Agro-economist" means the person referred to by that name in Schedule 4 to this Agreement; (p) "PU Civil Engineer" means the person referred to by that name in Schedule 4 to this Agreement; (q) "PU Accountant" means the person referred to by that name in Schedule 4 to this Agreement; (r) "PU Livestock Specialist" means the person referred to by that name in Schedule 4 to this Agreement; (s) "Development Center Manager" means the Manager of the Group Ranch Development Center; (t) "Policy and Steering Committee" means the Committee referred to by that name in Section 3.21 to this Agreement; (u) the letters "CFAF" mean the Franc de la Communaute Financidre Africaine, the common currency of the Borrower and the other members of the West African Monetary Union; (v) "Local Steering Committee" means the Committee referred to in paragraph A(l)(a) of Schedule 5 to this Agreement; and (w) "Group Ranch Committee" means the committee referred to in paragraph A(3) of Schedule 5 to this Agreement. 7 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 nine million dollars ($9,000,000). 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, 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, the goods, works and services (other than consultants services) for the Project to be financed out of the proceeds of the Credit, shall be procured in accordance with the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be December 31, 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 1%) 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 April 15 and October 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each April 15 and October 15 commencing October 15, 1985, and ending April 15, 2025, each installment to and including the installment payable on April 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 Republic of France is hereby specified for the purposes of Section 4.02 of the General Conditions. 8 ARTICLE II Execution of the Project Section 3.01. The Borrower shall carry out or cause to be carried out the Project through its departments and agencies referred to in Sections 3.02 and 3.04 of this Agreement with due diligence and efficiency and in conformity with appropriate agricultural, administrative and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) Except as the Association shall otherwise agree, for the purpose of providing overall management and co-ordination for the carrying out of the Project, the Borrower shall establish and thereafter maintain within its Ministry of Planning, Rural Development and Tourism, a Project Unit, to be located in Bobo-Dioulasso, having such organization, powers and responsibilities as are set forth in Schedule 4 to this Agreement, and shall provide the PU with such funds, facilities and other resources, and a suitably qualified staff, all as shall be required to enable the PU to efficiently carry out its functions. (b) Except as the Association shall otherwise agree, candidates for appointment to the positions of (i) PU Project Director, (ii) PU Assistant Director - Agro-Economist, (iii) PU Civil Engineer, (iv) PU Accountant, and (v) PU Livestock Specialist, shall have qualifications and experience, and shall be appointed upon terms and conditions, satisfactory to the Association, and counterpart personnel shall be appointed after the Association shall have received a reasonable opportunity to comment on the proposed candidate for the said appointments. Section 3.03. Except as the Association shall otherwise agree, the Borrower shall take all necessary steps to ensure that no investment plans shall be financed under the Project unless such plans have been evaluated and approved by PU as to their technical, financial and economic viability. Section 3.04. Except as the Association shall otherwise agree, the Borrower (i) shall carry out Part A of the Project through its Bobo-Dioulasso O.R.D., with credit for the necessary investments for Part A(1) to be provided through BND in accordance with the provisions of Section 3.05(e) of, and Schedule 6 to, this Agreement; (ii) shall carry out Part B of the Project through its Bobo-Dioulasso and Dedougou O.R.D.s; and (iii) shall carry out Parts C and D of the Project through PU, all in accordance with the operating policies and procedures set forth or referred to in Schedule 5 to this Agreement as such Schedule may be amended from time to time with the agreement of the Association. 9 Section 3.05. Without limitation upon the Borrower's obligations referred to in Section 3.01, or in paragraph (a) of Section 3.02, the Borrower shall, except as the Association shall otherwise agree: (a) make available to the PU, as required over the Project implementation period, as a grant, out of the proceeds of the Credit to the extent of the allocation therefor, and such additional funds as may be required to meet the costs of PU and the costs of Part E of the Project, estimated to amount in the aggregate to the equivalent of about $2,000,000 including contingencies; (b) make available to the Project O.R.D.s, as required over the Project implementation period, as a grant, out of the proceeds of the Credit to the extent of the allocation therefor, and such additional funds as may be required to enable the Project O.R.D.s to meet the expenditures for the veterinary services to be provided under Part B of the Project, estimated to amount in the aggregate to the equivalent of about $1,300,000 including contingencies; (c) make available to the Bobo-Dioulasso O.R.D., as required over the Project implementation period, as a loan without interest and repayable over 20 years including five years of grace, out of the proceeds of the Credit to the extent of the allocation therefor, and such additional funds as may be required to meet the costs over the Project implementation period of the Group Ranch Development Center, estimated to amount in the aggregate to the equivalent of about $700,000 including contingencies; (d) make available to ONERA, as required over the Project implementation period, as a grant, out of the proceeds of the Credit to the extent of the allocation therefor, and such additional funds as may be required to cover 90% of the costs of construction of wells for purposes of Part C(4) of the Project, estimated to amount in the aggregate to the equivalent of about $200,000 including contingencies (with the remaining 10% of said costs to be financed in accordance with the provisions of paragraph (f) of this Section 3.05 of this Agreement; (e) lend to BND, under a subsidiary loan agreement between the Borrower and BND in form and substance satisfactory to the Association, out of the proceeds of the Credit to the extent of the allocations therefor, and such additional funds as may be required, at an interest rate of 5-1/2% per annum, for a term of eighteen (18) years including six (6) years of grace, to meet the costs of the investments to be financed for purposes of Part A(1), of the Project, other than the portion of the costs of such investments which BND has agreed to finance out of its own resources, which amount so to be lent to BND is estimated at the equivalent of about $6,200,000, and which amount BND has agreed to finance out of its own 10 resources is estimated at the equivalent of about $1,100,000 in each case including contingencies. The Subsidiary Loan Agreement shall include, without limitation, such other terms and conditions as are set forth in Schedule 6 to this Agreement, as such Schedule may be amended from time to time with the agreement of the Association; and (f) lend and relend to ONERA, under arrangements satisfactory to the Association, out of the proceeds of the Credit to the extent of the allocations therefor and such additional funds as may be required to (i) meet the costs of the investments to be undertaken for purposes of Parts C(1), (2) and (3) of the Project, and to meet 10% of the costs of the investments to be undertaken for purposes of Part C(4) of the Project, at an interest rate of 10% per annum for a term of fifteen (15) years including five (5) years of grace for payment of interest and principal, estimated to amount in the aggregate to the equivalent of about $500,000 including contingencies; and (ii) to meet the costs of the investments to be undertaken for purposes of Part D of the Project, at an interest rate of 10% per annum, for a term of fifteen (15) years including five (5) years of grace for payment of interest and principal, estimated to amount in the aggregate to the equivalent of about $300,000, including contingencies. The said arrangements shall include, inter alia that ONERA shall make available to PU, as and when needed, the funds so relent and lent to it by the Borrower, in accordance with the provisions of paragraph (f) of this Section 3.05 of this Agreement. Section 3.06. 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, amend, abrogate or waive the Subsidiary Loan Agreement or any provision thereof. Section 3.07. Except as the Association shall otherwise agree, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, to assist in the carrying out of Part E(3) of the Project and in the preparation of detailed plans and tender documents for the facilities included in Part D of the Project. Section 3.08. Except as the Association shall otherwise agree, the Borrower shall maintain ONERA, for the purpose inter alia of maintaining the equipment and facilities under Part C and Part D of the Project. Section 3.09. Except as the Association shall otherwise agree, the Borrower shall (i) cause to be transferred to ONERA, promptly after the completion of the works to be carried out under Parts C and D of the Project, the ownership 11 and management of the existing holding ground at Bobo-Dioulasso, the existing Bobo-Dioulasso municipal livestock market, and municipal slaughter; (ii) not license or permit to be licensed within the Bobo-Dioulasso municipality or within a radius of 20 km from Bobo-Dioulasso (A) any livestock marketing facility or operation other than the Bobo-Dioulasso livestock market to be managed by ONERA; and (B) any slaughterhouse or slaughter facility or operation other than the Bobo-Dioulasso slaughterhouse to be managed by ONERA; (iii) take all necessary steps to enable ONERA to charge and collect marketing and slaughter fees sufficient to cover its investment and operating costs in relation to its facilities constructed under the Project and located in the Bobo-Dioulasso and Dedougou O.R.D's; (iv) cause the municipality of Bobo-Dioulasso to renounce (A) all marketing taxes presently levied and its right to levy marketing taxes in the future; and (B) all slaughter fees presently levied and its right to levy slaughter fees in the future. Section 3.10. Except as the Association shall otherwise agree, the Borrower shall, through its Department of Livestock and Animal Industry (Services de l'Elevage et des Industries Animales) of its Ministry of Planning, Rural Development and Tourism, take all necessary steps to ensure the maintenance of proper standards of hygiene in the Bobo-Dioulasso slaughterhouse included under Part D of the Project. Section 3.11. (a) Except as the Association shall otherwise agree, the Borrower shall cause to be carried out, through its Bobo-Dioulasso O.R.D., an integrated development program in the Group Ranch Development Area, including the development of crop farming and the provision of rural infrastructure (roads, schools, dispensaries, wells, etc.), and shall provide or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation or restriction upon the Borrower's obligations referred to in paragraph (a) of this Section 3.11, for the purposes of said paragraph (a), the Borrower shall provide or cause to be provided to the Group Ranch Development Center, a community development officer and an agriculturalist, and shall cause its Bobo-Dioulasso O.R.D. to allocate not less than nine extension officers to assist on a full-time basis crop farmers in the Group Ranch Development Area. Section 3.12. Except as the Association shall otherwise agree, candidates for appointment to the position of Development Center Manager shall have qualifications and experience, and shall be appointed upon terms and conditions, satisfactory to the Association. 12 Section 3.13. Except as the Association shall otherwise agree, the Borrower shall, on or before December 31, 1976, submit to the Association for its approval, and thereafter carry out, a plan for Project evaluation and monitoring. Section 3.14. Except as the Association shall otherwise agree, the Borrower shall, on or before December 31, 1976, submit to the Association for its approval, and thereafter carry out, a plan for recovering, the full costs of veterinary vaccination services provided under Part B of the Project, from the beneficiaries of the services provided. Section 3.15. Except as the Association shall otherwise agree, the Borrower shall take all necessary steps to ensure that no Ranch Development Loan is made unless the following conditions have been satisfied: (i) a Group Ranch Statute in form and substance satisfactory to the Association has been approved by all necessary governmental action, and is in full force and effect in relation to the Group Ranch for which the Ranch Development Loan is proposed; (ii) the ranch area for the Group Ranch has been surveyed and demarcated; (iii) the members of the Participating Group have been selected and have agreed to participate; (iv) a long-term lease has been given guaranteeing to the Participating Group the exclusive use of the land allocated to it, for a term of at least 50 years; and (v) the rights and obligations of the Participating Group as defined in the Group Ranch Statute have been agreed to by the group members. Section 3.16. The Borrower shall take all necessary steps to ensure the implementation of a staffing plan for the Project O.R.D.s in respect of the provision of veterinary services, as shall be agreed between the Borrower and the Association. Section 3.17. In order to assist the Samorogouan Group Ranch Development Center in carrying out pedological and sociological studies the Borrower shall cause the Bobo-Dioulasso O.R.D. to employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Borrower and the Association. 13 Section 3.18. (a) The Borrower undertakes to insure, or cause to be insured 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 Credit against hazards incident to the 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 3.19. (a) The Borrower shall furnish to the Association, promItly upon their preparation, the plans, specifications, reports, contract documents and work 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 records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Credit, and to disclose the use thereof in the Project; (ii) shall 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 to the Association all such information as the Association shall reasonably request concerning the Project, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. Section 3.20. The Borrower shall take 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 the Project and shall furnish to the Association, upon request, promptly after such acquisition, evidence satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. Section 3.21. For the purpose of providing policy direction to the PU and coordinating the activities of the departments and agencies of the Borrower having responsibilities with respect to the Project, the Borrower shall establish and maintain a Policy and Steering Committee including as its members, the Directors of Livestock, Agricultural Services, and Plan of the Ministry of Planning, Rural Development and Tourism of the Borrower; the Director of Commerce of the Ministry of Commerce, Industry and Mining of the Borrower, the Director of BND, the Permanent Secretary of O.R.D's and the Presidents of the Dedougou and Bobo-Dioulasso O.R.D's. 14 ARTICLE IV Other Covenants Section 4.01. (a) 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. (b) Without limitation or restriction upon the Borrower's obligations under paragraph (a) of this Section 4.01, or under Section 4.02 of this Agreement, the Borrower shall: (i) cause PU to establish and maintain accounts which will properly reflect the application of funds to the various components of the Project; (ii) cause the Group Ranch Development Center (A) to establish and maintain separate accounts in respect of each Group Ranch, adequate to reflect in accordance with consistently maintained sound accounting practices their respective operations and financial condition, and to identify expenditures incurred for purposes of Part A of the Project; and (B) to submit such accounts to BND twice annually; (iii) cause each Project O.R.D. to establish and maintain separate accounts in respect of the veterinary services to be provided under Part B of the Project; (iv) cause the Bobo-Dioulasso O.R.D. to establish and maintain separate accounts in respect of the Group Ranch Development Center; (v) cause ONERA to establish and maintain a satisfactory accounting system with respect to its Project related operations under the supervision of an experienced accountant; and (vi) cause BND to maintain separate accounts in respect of its receipts and expenditures in relation to Parts A(1), of the Project. 15 Section 4.02. (a) The Borrower shall cause BND, ONERA and each Project O.R.D. to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices their respective operations and financial condition. (b) The Borrower shall cause (i) BND to: have its respective accounts (including the separate accounts to be maintained by BND in accordance with the provisions of paragraph (b) of Section 4.01 of this Agreement) and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) ONERA, each Project O.R.D. and the Group Ranch Development Center to have the separate accounts to be maintained by ONERA, O.R.D. and the Group Ranch Development Center, respectively, in accordance with the provisions of paragraph (b) of Section 4.01 of this Agreement, for each fiscal year audited in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (iii) BND, ONERA, each Project O.R.D. and the Group Ranch Development Center, respectively, to 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 its financial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iv) furnish to the Association such other information concerning the accounts and financial statements of any of said agencies and the audit thereof as the Association shall from time to time reasonably request. Section 4.03. Except as the Association shall otherwise agree, the Borrower shall inform, as and when needed, the Association regarding its pricing and marketing policies in the livestock subsector. Section 4.04. The Borrower shall cause ONERA, the Group Ranches and the Group Ranch Development Center to take out and maintain with responsible insurers, or to make other provision satisfactory to the Association for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. 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: 16 (a) a default shall occur on the part of the Borrower or BND in the performance of any of its respective obligations under the Subsidiary Loan Agreement; (b) the Borrower's Law No. 6/61/AN of January 23, 1961, Law No. 20/65/AN of July 28, 1965, Decree No. 103 PRES.DEV.T dated March 14, 1966, Decree No. 70-251 PRES/AGRI-EL, dated October 13, 1970, and Decree No. 75-139 PRES AN, dated April 17, 1975, establishing or governing the operations of the BND, or the Bobo-Dioulasso O.R.D., and the Dedougou O.R.D., and ONERA respectively, shall have been amended, suspended, abrogated, repealed or waived in such a way as to materially and adversely affect the ability of the Borrower to carry out the covenants, agreements and obligations under this Agreement or the covenants, agreements and obligations of the Borrower or BND under the Subsidiary Loan Agreement; and (c) the measures referred to in Section 6.01(d) of this Agreement shall have been amended, suspended, abrogated, repealed or waived without the approval of the Association. 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) the event specified in paragraph (a) of Section 5.01 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 BND; and (b) any of the events specified in paragraphs (b) or (c) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. 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 PU Project Director has been appointed and has taken up his duties; (b) the execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and the BND, respectively, have been duly authorized or ratified by all necessary governmental and corporate action; 17 (c) the Borrower has authorized under arrangements acceptable to the Association, a treasury overdraft (avance de tresorerie) for PU in an amount of CFAF60 million and for BND in an amount of CFAF60 million, to prefinance the investment costs of the Project, and all governmental measures have been taken to provide that said funds are available to PU and BND, respectively, for said purposes; (d) the Borrower has taken all such measures in form and substance satisfactory to the Association, as are necessary to designate the Group Ranch Development Area a special development area and to enable Participating Groups to obtain security of tenure under leases with a term of not less than 50 years; and (e) The Borrower and ONERA have entered into the arrangements, in form and substance acceptable to the Association referred to in paragraph (f) of Section 3.05 of this Agreement. Section 6.02. 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 Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and BND, respectively, and constitutes a valid and binding obligation of the Borrower and PND, respectively, in accordance with its terms; (b) that the authorization for treasury overdrafts referred to in Section 6.01(c) of this Agreement has been approved by all necessary governmental action and the funds so allocated are available to PU and BND, respectively, for the purposes referred to; (c) the measures referred to in Section 6.01(d) of this Agreement have been duly and validly taken, and Participating Groups are enabled, by virtue thereof, to obtain security of tenure in relation to Group Ranches under leases with a term of not less than 50 years; and (d) the arrangements referred to under paragraph (e) of Section 6.01 of this Agreement have been duly authorized and ratified by the Borrower and ONERA, respectively, and constitute valid and binding obligations of the Borrower and ONERA, respectively, in accordance with their terms. Section 6.03. The date September 16, 1975 is hereby specified for the purposes of Section 12.04 of the General Conditions. 18 Section 6.04. The obligations of the Borrower under Sections 4.02 through 4.04 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date eighteen (18) years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of the Borrower at the time responsible for Finances of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 7.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere des Finances Ouagadougou Haute Volta Cable address: MINIFINANCES OUAGADOUGOU 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. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed 19 in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF UPPER VOLTA By /s / Tilsphore Yaguibou Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Roger Chaufournier Regional Vice President Western Africa 20 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) Civil works for: (a) Group Ranch Development (i) Group 1,160,000 Ranches (ii) Group Ranch 170,000 Development Center (b) Veterinary 370,000 75% Services under Part B of the Project (c) Livestock mar- 370,000 keting and meat processing (d) Project 90,000 Unit (2) Vehicles and Equip- ment for: (a) Group Ranch Development (i) Group 490,000 Ranches (ii) Group Ranch 110,000 Development Center (b) Veterinary Services 140,000 under Part B of the Project 21 Amount of the Credit Allocated Of (Expressed in Expenditures Category Dollar Equivalent) to be Financed 85%, or 100% of (c) Livestock marketing 100,000 foreign expendi- and meat processing tures (c. 3 cost). (d) Project 40,000 Unit 3 (3) Cattle (for Group 1,130,000 60% Ranch Development) (4) Expenditures for expatriate 970,000 100% of foreign personnel; foreign training, expenditures and consultants services for Parts A(2), D and E of the Project (5) Working Capital Group Ranch Development (excluding cattle) (i) 'Working 250,000 Capital for the Group Ranches (ii) Working 100,000 Capital for the Group Ranch Devel- opment Center (6) Operating Expenses (a) Operating Expenses 290,000 45% oF the Veterinary Services (b) Operating Expenses 310,000 75% of the Project Unit and Technical Services exclud- ing any expenditures for expatriate personnel and training abroad (7) Unallocated 2,910,000 TOTAL 9,000,0% 22 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; provided, however, that if the currency of the Borrower is also that of another country from the territory of which goods or services are supplied, expenditures in such currency for such goods or services shall be deemed to be "foreign expenditures"; (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; (c) The term "Working Capital for the Group Ranches" means such working capital as is referred to in subparagraph 7 of paragraph A of Schedule 5 to this Agreement; (d) the term "Working Capital for the Group Ranch Development Center" means such working capital as is referred to in subparagraph 10 of paragraph A of Schedule 5 to this Agreement; (e) the term "Operating Costs of the Veterinary Service" means all those expenditures occurring in the carrying out of a vaccination and cattle drenching service, including wages and salaries, building maintenance and repairs, vehicle operation and maintenance, maintenance of equipment, costs of vaccines and drugs, and office expenses during the first three years of the carrying out of the Project; and (f) the term "Operating Costs of the Project Unit and Technical Services" means all those expenditures occurring in the carrying out of the functions of said Project Unit and Technical Services including local salaries, maintenance of buildings and equipment, vehicle operation and maintenance, office and travel expenses, local training, field trials and cadastral surveys, but excluding any expenditures for expatriate personnel or training abroad. 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. 23 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; or (b) expenditures in respect of Part A(1) of the Project, until a Group Ranch Statute, in form and substance satisfactory to the Association, has been approved by all necessary governmental action and is in full force and effect in relation to the Group Ranch in respect of which the withdrawal is requested. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 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 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 financing out of the proceeds of the Credit. 24 SCHEDULE 2 Description of the Project The Project is a comprehensive five-year (1976-1980) program of the Borrower to assist livestock production in the Borrower's Dedougou and Bobo-Dioulasso O.R.D.s, through group ranch development and the improvement of livestock marketing, meat processing and veterinary services. The Project will assist about 300,000 traditional cattle producers and, in addition, will introduce modern commercial ranching to the traditional sector. The Project consists of the following Parts: Part A: Group Ranching (1) The establishment of nine group ranches of about 15,000 hectares each in the Group Ranch Development Area, including inter alia in respect of each Group Ranch: (A) investments in surveying, water development, pasture improvement, firebreaks, farm tracks, fencing, stock handling facilities, staff housing, farm equipment, breeding stock, and steers; and (B) the provision of working capital. Investments for each of the Group Ranches will be phased over about three years, with about three ranches to be established in each of the years 1976, 1977 and 1978, or in accordance with such other phasing schedule as may be agreed between the Borrower and the Association. (2) The establishment of a Group Ranch Development Center at Samorogouan, to provide technical support to the Group Ranches to be established under Part A(1) of the Project, and to provide assistance to crop farmers in the Group Ranch Development Area, including investments in staff housing, offices, farm equipment, machinery, farm infrastructure, draft oxen and provision for working capital. Part B: Veterinary Services A program to provide improved veterinary services throughout the Dedougou and Bobo-Dioulasso O.R.D.s, over a period of 5 years, including (i) vaccination of all cattle against rinderpest for two consecutive years and annual vaccination of weaners thereafter; (ii) annual vaccination of all cattle against contagious bovine pleuropneumonia; (iii) vaccination of cattle against anthrax, blackleg and pasteurellosis; and (iv) annual dosing of young stock for gastrointestinal parasites. The facilities and other items to be provided 25 for purposes of said program include buildings for two sector headquarters, about five veterinary posts, staff housing, about 36 new vaccination yards, the repair of about 23 existing vaccination yards, vehicles, veterinary equipment, a stock of vaccines and drugs for about two years, and other operating costs for about three years. The program will reach about 80% of the total cattle population in the Project Area by 1979. Part C: Livestock Marketing (1) Improvement of the three stock routes: (a) Ou.ahigouya-Tougan-Dedougou-Dobo-Dioulasso; (b) Djibasso-Kouka; and (c) Mali-Soin-Nouna-Kouka-Bobo-Dioulasso covering about 730 km, of which 250 km leading through cultivated areas are to be demarcated, so as to provide stock water and grazing at intervals of about 25 km along the routes so as to include about thirty small holding grounds of about 50 ha each. (2) Provision of a holding ground of about 6,000 hectares near Bobo-Dioulasso, including three watering points and about 40 km of firebreaks. (3) Construction and operation of a new livestock market at Bobo-Dioulasso to replace the existing market, with a daily capacity of about 200 head of cattle and 200 sheep and goats, including inter alia provision of surveying, fenced yards for cattle, sheep and goats, water supply, vaccination crush, weightbridges, a railway connection and loading ramp, and an office and shelter. (4) Construction of about 15 wells along the routes referred to under Part C(2) of the Project. Part D: Meat Processing The renovation of the existing municipal slaughterhouse at Bobo-Dioulasso, so as to allow inter alia for on-the-line butchering. Part E: Training, Research, Project Monitoring and Preparation (1) Provision of in-service training for local staff, and overseas fellowships for selected professionals in ranch management, dairy production, 26 pig production and agricultural economics, and study tours for the Project Director and Group Ranch leaders to group ranches in Kenya, and other senior staff to a country with a well-developed livestock industry. (2) Carrying out field trials, including field trials for methods of stylosanthes establishment, management of natural and improved pastures, and cattle fattening by smallholders. This Part of the Project includes provision to the Borrower's Ministry of Rural Development of additional seed, fertilizer, veterinary supplies, consultants' services and cattle for smallholder fattening. (3) The carrying out of studies to identify livestock projects. * * P The Project is expected to be completed by December 31, 1980. 27 SCHEDULE 3 Procurement A. General Procedures 1. Except as provided in Part A.2 hereof, contracts shall be let under procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in April 1972, as revised in October 1972 (hereinafter called the Guidelines), on the basis of international competitive bidding. 2. (a) Contracts for cattle purchases, on-farm development, seeds and other agricultural inputs, and vaccines, shall be let according to the Borrower's usual procedures. (b) Civil works contracts (including the purchase of equipment for said works) for buildings and construction, for the installation of 88 wells along stock routes, for ranch development and for the rehabilitation of the Bobo-Dioulasso slaughterhouse shall be awarded in accordance with local competitive bidding procedures based on local advertising. B. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in Upper Volta may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which wilt 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. (b) After evaluation, responsive bids will be classified in one of the following three groups: 28 (1) Group A: bids offering goods manufactured in Upper Volta if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in Upper Volta equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in Upper Volta. (3) Group C: bids offering any other goods. (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. 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. (d) If, as a result of the comparison under paragraph (c) 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 c.i.f. 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 importe'r 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 (c) is the lowest evaluated bid shall be selected. C. Review of Procurement Decisions by Association 1. Review of invitation to bid and of proposed awards and final contracts. With respect to all contracts for vehicles, equipment and civil works estimated to cost the equivalent of $100,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, 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 29 modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Borrower 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 the reasons for the intended award and shall furnish to the Association, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received, together with the recommendation for award 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 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. 2. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding paragraph, the Borrower 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 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 state the reasons for such determination. 30 SCHEDULE 4 Project Unit For the purpose of providing coordination for the carrying out of the Project, and for project monitoring, livestock planning, field trials, studies, and training a Project Unit (PU) shall be established and maintained within the Borrower's Ministry of Planning, Rural Development and Tourism and shall be located in Bobo-Dioulasso, with the following key staffing, powers and responsibilities. 1. Key Staffing of PU (a) a Project Director, a Voltaic national to be responsible through a Policy and Steering Committee referred to under Section 3.21 of this Agreement, to the Minister of Planning, Rural Development and Tourism; the Project Director shall be the manager and coordinator of the Project and in that capacity he would be responsible for the Project to proceed according to projected time schedules and to desired standards. (b) an Assistant Director - Agro-economist, to be recruited internationally and, Linder the direction of the PU Project Director, to be responsible for the financial and agro-economic aspects of the Project including (i) assistance in the preparation and the supervision of investment plans, (ii) the preparation of proposals for project monitoring and evaluation, (iii) cooperation with the Department of Livestock, the preparation of field trials, of curricula for in-service training, and of proposals for overseas training, and (iv) the identification and preparation of future livestock projects; (c) a Civil Engineer to be recruited internationally for a three year period, to be responsible, under the direction of the Project Director, for the civil works and rural infrastructure aspects of the Project; (d) a Livestock Specialist to be recruited at the end of the third year of the carrying out of the Project and, under the direction of the Project Director, to be concerned with the identification and preparation of future livestock projects; (e) an Accountant qualified and experienced and to be responsible for the PU accounts; and 31 (f) Voltaic Counterparts shall second the above-mentioned expatriate personnel. 2. Powers and responsibilities of PU: (a) PU shall ensure that no investment plans shall be financed under the Project unless such plans had been evaluated and approved by PU as to their technical, financial, and economic viability; (b) PU shall establish and maintain or cause to maintain accounts which shall properly reflect the application of funds to the various components of the Project; (c) PU shall supervise and assist in the carrying out of the project operations, in particular: (i) prepare in cooperation with the Bobo-Dioulasso O.R.D. and the Directorate of Livestock Services detailed plans and tender documents for the establishment of the Group Ranch Development Center at Samorogouan; (ii) prepare in cooperation with the Bobo-Dioulasso and Dedougou O.R.D.s and the Directorate of Livestock Services plans and tender documents for the veterinary component of the Project; (iii) assist the Bobo-Dioulasso O.R.D. in selecting consultants for pedological and sociological studies in the Samorogouan Group Ranch Development Area; (iv) to prepare in cooperation with the Project O.R.D.s and the Directorate of Livestock Services plans and tender documents for the development of stock routes, holding grounds and the Bobo-Dioulasso market; (v) prepare in cooperation with the responsible agencies of the Borrower terms of reference and select consultants for the preparation of detailed plans and tender documents for the reconstruction of the Bobo-Dioulasso slaughterhouse; and (vi) plan, in cooperation with the Project O.R.D.s and the Directorate of Livestock Services, field trials, such as 32 studies on the management of natural pasture, the use of firebreaks, pasture improvement, smallholder fattening etc. (d) PU shall assist the Borrower in the timely selection of qualified and experienced staff for employment by the Project executing department and agencies of the Borrower. (e) PU shall prepare, in consultation with the Association, for in-service and overseas training for Voltaic staff; (f) PU shall prepare a plan for project monitoring and evaluation to be submitted to the Policy and Steering Committee for transmittal to the Association within a year of the Effective Date. Such plan shall become operational after approval by the Association. PU shall prepare and submit progress reports to the Ministry of Planning, Rural Development and Tourism, for transmittal to the Association; (g) PU shall carry out studies to identify and prepare, inter alia, project possibilities in smallholder fattening and milk production; and (h) PU shall prepare detailed investment plans for an agricultural credit and rural infrastructure program in the Group Ranch Development Area. 33 SCHEDULE 5 Operating Policies and Procedures for the Carrying Out of the Project A. Group Ranching under Part A of the Project 1. Planning and Preparation. The Bobo-Dioulasso O.R.D. through its Samorogouan Group Ranch Development Center, shall be responsible for: (a) appointing in consultation with the local administration of the Borrower and PU a Local Steering Committee of no more than ten members, comprising leaders of the Peulh (chefs de campement) and crop-farming communities (chefs de terre), local Administration officials and the Development Center Manager. This committee shall assist in solving issues and shall advise the Development Center Manager on organizational matters concerning the group ranches; and (b) after identification of a group ranch area, hearings shall be held with potential group ranch members and with non-participating agriculturalists to explain and discuss the nature and operations of group ranches. * 2. Membership. After identification of a group ranch area, about 35 pastoralist families and 150 cattle-owning crop farmers shall be selected as members from the resident population; applicants from elsewhere shall be acceptable only with the consent of the residents and the Development Center Manager. The rights and obligations of the members, as defined in the group ranch statute, shall include: (a) the right to reside in the group ranch area in a location acceptable to the Group Ranch Committee and to the Development Center Manager; (b) the right to graze a certain number of individually-owned cattle, sheep and goats measured in tropical animal units (UBT) (cattle over 3 years = 1 UBT, sheep and goats = 0.2 UBT per head) in the group ranch area reflecting existing herd size before development, and to benefit from the increased grazing capacity expected to result from group ranch development. The distribution of grazing rights shall be revised, as and when needed, by the Group Ranch Committee in accordance with the above criteria; (c) an equal share in the surplus deriving from collectively-owned and managed cattle, which shall take up about 40% of the grazing capacity of the group ranch area; 34 (d) individual voting rights in group ranch affairs; (e) the transfer of all cattle to collective management which are not required for subsistence of the members (cows plus calves) or as draft animals for cultivation, but continuation of individual cattle ownership; (f) obligations as to management practices for individually kept livestock in the group ranch area in accordance with the group ranch statutes and as generally laid down from time to time by the Development Center Manager; (g) payment of management fees to the group ranch for services rendered to individually-owned livestock to be determined by the Group Ranch Manager in consultation with the Development Center Manager; (h) delegation to a Group Ranch Committee of the right to enter into debt commitments on behalf of the group ranch members; (i) individual liability for group ranch obligations, proportionate to the individual's share in grazing rights on the group ranch; and (j) the right to give up group ranch membership after payment of all financial obligations and redistribution of said grazing rights in accordance with decisions of the Group Ranch Committee. 3. Group Ranch Committee. A five-member Group Ranch Committee shall be elected by members. It would consist of pastoralists and livestock-owning crop farmer members. The Group Ranch Committee shall: (a) sign the application for registration of the group ranch; (b) undergo basic training, arranged for by the Development Center Manager, in order to be able to control ranch business affairs as necessary; (c) in cooperation with the Development Center Manager prepare a ranch development plan and forward a Ranch Development Loan application to BND; (d) propose an annual group ranch budget to the annual general meeting of the Group ranch; and 35 (e) the employment of group ranch managers and their assistant managers by the Group Ranch Development Center shall be made after consultation with the Group Ranch Committee. 4. Management. Cattle owned by group ranch members shall be transferred to collective management, excepting cows required for subsistence milk production, their calves, and draft animals required for cultivation. Feeder steers for fattening shall be purchased collectively, and not be transferred to individual ownership. Group ranch operating costs shall include salaries and wages, maintenance of farm structures and vehicles, administration fees and land rent, and the cost of animal management. Such costs shall be shared as follows on a per tropical animal unit basis: (a) collectively-owned and managed livestock shall be purchased on ranch account, and in addition to the identifiable special costs, an overhead fee shall be deducted from the proceeds of the sale of this livestock at the end of the fattening period; (b) individually-owned, but collectively managed livestock shall be charged with a management fee comprising the special costs of collective management and an overhead fee; the fee shall become due at the beginning of a financial year and shall be deducted from the proceeds from individually-owned but collectively-marketed livestock; and (c) individually-owned and individually-managed livestock (mainly lactating cows with calves and work oxen) shall be charged with an overhead fee only, to become due at the beginning of a fiscal year, and to be collected as deduction from the proceeds from the sale of individually-owned but collectively-marketed livestock. Group ranch fees shall be adjusted annually by the Development Center Manager. 5. The Group Ranch Manager shall be responsible for the day-to-day management of group ranch affairs including: (a) development and maintenance of demarcations and fences; (b) appropriate pasture management; (c) development and appropriate utilization of about 600 ha stylosanthes pastures as dry season grazing reserve; (d) control of grass fires through development and maintenance of firebreaks; 36 (e) development and operation of stock watering, dipping and cattle handling facilities; (f) enforcement of vaccination, drenching and of other animal health practices as required; (g) branding of all stock; (h) appropriate selection and culling techniques; (i) purchase of feeder steers to be owned and managed collectively; (j) selling of slaughter stock without unnecessary delays; (k) keeping financial and accounting records as required by the Group Ranch Development Center for accounting purposes; and (1) collection of group ranch fees. 6. Ranch staff to be employed for general ranch labor and communal herd management shall be recruited mainly among group ranch members and their families. 7. Group Ranch Development Loans. Following the preparation of the Group Ranch Development Plan and Group Ranch Development Loan application by the Development Center Manager, and upon its approval by the Group Ranch Committee and the PU Project Director, BND shall enter into an agreement with the Group Ranch for a Ranch Development Loan with conditions referred to in Schedule 6 of this Development Credit Agreement. Working capital shall be financed under the Group Ranch Development Loan for the first two years, when there shall be negligible incremental livestock sales, but increased operating costs. Such working capital to be so financed shall include said increased operating costs including: (i) the collective purchase and management of feeder steers; (ii) the collective management of individually owned livestock, and (iii) improved basic services (vaccination, dipping, etc.) for individually-managed livestock and including salaries and wages, maintenance of farm structures, vehicle and equipment maintenance and operation, and annual management costs plus an amount equal to 25% of the estimated shortfall to cover accounts receivable, and other liabilities of such Group Ranch. Group Ranch members shall pay fees during the first two years of operation of the Group Ranch, equivalent to their cash expenses for livestock management 37 before development as estimated by the Development Center Manager. The remainder shall be financed from a Group Ranch Development Loan, on the basis of estimates in the group ranch budget prepared by the Development Center Manager, as approved by the Project Unit, and to be reviewed annually by such Development Center Manager. 8. The Group Ranch Development Center shall operate under a qualified and experienced General Manager. The Center shall: (a) with the assistance of the Local Steering Committee select group ranch areas, survey and demarcate such areas, and select participants for each group ranch; (b) prepare investment plans for each group ranch and arrange and supervise contracts for planning and constructing water supplies, roads and firebreaks for the ranches; (c) establish a central workshop, to repair and maintain tractors and equipment for the ranches; (d) provide technical assistance in ranch management; (e) establish a stylosanthes (or other) seed production farm to supply the group ranches; (f) provide in-service training for group ranch managers and herders; (g) purchase, train and sell work oxen to crop farmers and train farmers in the management and use of draft oxen; and (h) keep group ranch accounts and forward them twice annually to the Bobo-Dioulasso O.R.D., PU and BND for audit. 9. The loan referred to in paragraph (c) of Section 3.05 of this Agreement for the Group Ranch Development Center shall finance fixed investments and working capital over a three-year period. Repayment of the Group Ranch Development Center loan referred to in paragraph (c) of Section 3.05 of this Agreement shall commence at the start of the sixth year after the start of the carrying out of the Project. Investment plans and tender documents shall be prepared by the Bobo-Dioulasso O.R.D. in cooperation with the PU, and approved by the Association. The Center shall keep AL- 38 its own accounts and annual budgets, prepared by the Development Center Manager, which shall be forwarded by the Bobo-Dioulasso O.R.D's General Manager to the PU Project Director for approval. Group ranches shall each start payment of one-ninth of the Group Ranch Development Center operating costs starting the second year of their development and such costs shall cover all operating costs not covered by sales revenue from the fourth year after the start of the carrying out of the Project (hereinafter referred to for purposes of this Schedule 5 as Group Ranch Contributions). Working capital to be financed under the Project during the first three years of the carrying out of the Project shall be the operating costs, including salaries and wages, maintenance of farm structures, vehicle and equipment maintenance and operation, office and travelling expenses, purchase of steers and animal management costs, which are not covered by sales nor by Group Ranch Contributions, plus an amount equal to 25% of the estimated shortfall to cover accounts receivable and other current liabilities. B. Veterinary Services under Part B of the Project Investments shall be planned and prepared in detail by the end of June for the following dry season, in cooperation with the Director of Livestock and assisted by PU. C. Livestock Marketing Facilities under Part C of the Project 1. All cultivation shall be prohibited within the demarcated areas of stock routes, holding grounds and the Bobo-Dioulasso livestock market. 2. Fees for the utilization of livestock marketing facilities shall be collected by ONERA. 3. Facilities which are constructed or upgraded under Parts C and D of the Project shall be transferred after the works under Parts C and D of the Project have been completed to ONERA which shall be responsible for their management. 4. Marketing and slaughter fees shall be reviewed by the Borrower as and when necessary, in consultation with the Association. 39 SCHEDULE 6 Summary of Terms and Conditions of Subsidiary Loan Agreement The Subsidiary Loan Agreement shall provide, inter alia, for an undertaking by BND to relend the amounts lent to it by the Borrower in accordance with Section 3.05(e) of the Development Credit Agreement, and to lend out of its own resources to Participating Groups, such amounts as shall be required to meet the costs of the investments to be undertaken for purposes of Part A(1) of the Project, at an interest rate of 10% per annum, for a term of thirteen (13) years including six (6) years of grace, estimated to amount in the aggregate to the equivalent of about $6,400,000 including contingencies.