Tanzania - Second National Sites And Services Project : Credit 0732 - Project Agreement - 1 - Conformed

CONFORMED COPY CREDIT NUMBER 732 TA Project Agreement (Second National Sites and Services Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and SMALL INDUSTRIES DEVELOPMENT ORGANIZATION Dated November 3, 1977 CREDIT NUMBER 732 TA PROJECT AGREEMENT AGREEMENT, dated November 3, 1977 between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and SMALL INDUSTRIES DEVELOPMENT ORGANIZATION (hereinafter called SIDO). WHEREAS by the Development Credit Agreement of even date herewith between United Republic of Tanzania (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equivalent to twelve million dollars ($12,000,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that SIDO agree to undertake such obligations toward the Association as hereinafter set forth; WHEREAS by a subsidiary loan agreement between the Borrower and SIDO, the proceeds of the credit provided for under the Development Credit Agreement will be made available to SIDO on the terms and conditions therein set forth; and WHEREAS SIDO, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: -2- ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. -3- ARTICLE II Execution of the Project Section 2.01. SIDO shall carry out Part F (1) of the Project described in Schedule 2 to the Development Credit Agreement with due diligence and efficiency and in conformity with appropriate administrative, financial and industrial practices. Section 2.02. (a) SIDO shall duly perform all its obligations under the SIDO Subsidiary Loan Agreement, which obligations shall include, inter alia, that SIDO shall be repaid the funds lent to participants in Part F (1) of the Project in eight years including up to two years of grace at an interest rate of eight per cent per annum. (b) Except as the Association shall otherwise agree, SIDO shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the SIDO Subsidiary Loan Agreement or any provision thereof. Section 2.03. (a) In order better to implement Part F (1) of the Project in Tanga and in Tabora, SIDO shall have appointed by September 30, 1977, for each town, a Project Coordinator and a Project Economist. (b) SIDO shall have appointed, by December 31, 1977, a Technical Advisor in Tanga and in Tabora and other consultants, if necessary, all acceptable to the Borrower and the Association and all on terms and conditions satisfactory to the Borrower and the Association to assist in carrying out Part F (1) of the Project. -4- Section 2.04. SIDO agrees that (a) the respective Project Coordinators will be responsible, subject to appropriate review by regional authorities, for the selection of candidates and the preparation and organization of projects for its on-going hire- purchase program in Tanga and Tabora towns and for the selection of candidates to utilize the infrastructure in the clusters described in Part F of the Project; (b) the respective Project Economists will be responsible for preparing feasibility studies for small projects, developing financing packages, arranging and supervising credit from various sources, and following up on collections; (c) about 50% of the hire-purchase funds with respect to Part F (1) (b) of the Project shall be used for industries located on the clusters described in Part F (2) of the Project and the remaining amounts shall be used for industries located off such clusters; and (d) eligible participants for Part F of the Project shall include cooperatives, associations and individual artisans. Section 2.05. With respect to Part F (1) of the Project, SIDO shall submit by September 30, 1977, ten feasibility studies acceptable to the Association. Section 2.06. Except as the Association shall otherwise agree, contracts for the purchase of equipment and materials included in Part F (1) (b) of the Project shall be procured in accordance with the provisions set forth or referred to in Schedule 3 to the Development Credit Agreement. -5- ARTICLE III Financial Covenants Section 3.01. (a) SIDO shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices, its operations and financial condition. (b) SIDO shall establish and maintain a separate Project Account to be used exclusively for purposes of the Project and shall record therein all receipts and payments for or in connection with the Project. Section 3.02. SIDO shall: (i) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six 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 (iii) furnish to the Association such other information concerning the accounts and financial statements of SIDO and the audit thereof as the Assocation shall from time to time reasonably request. - 6 - ARTICLE IV Consultation, Information and Inspection Section 4.01. The Association and SIDO shall cooperate fully to assure that the purposes of the Credit are accomplished. To that end, the Association and SIDO shall from time to time, at the request of either party, exchange views through their representatives with regard to the performance of their respective obligations under this Agreement, the administration, operations and financial condition of SIDO, and other matters relating to the purposes of the Credit. Section 4.02. The Association and SIDO shall promptly inform each other of any condition which interferes or threatens to interfere with, the accomplishment of the purposes of the Credit, or the performance by either of them of its obligations under this Agreement or the performance by the Borrower or SIDO of their . respective obligations under the SIDO Subsidiary Loan Agreement. Section 4.03. SIDO shall enable the Association's representatives to examine the records referred to in Section 3.01 of this Agreement and any relevant documents. ARTICLE V Effective Date; Termination; Cancellation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of SIDO thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date 20 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify SIDO of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the Development Credit Agreement. - 8 - ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by the Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address herein- after specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Deyelopment 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) For SIDO: Small Industries Development Organization P.O. Box 2476 Dar es Salaam United Republic of Tanzania Cable address: SIDEV Dar es Salaam -9- Section 6.02. SIDO shall furnish to the Association suffi- cient evidence of the authority and the authenticated specimen signature of the person or persons who will, on behalf of SIDO, take any action or execute any documents required or permitted to be taken or executed by SIDO pursuant to any of the provisions of this Agreement. Section 6.03. This Agreement may be executed in several coun- terparts, each of which shall be an original, and all collectively but one instrument. - 10 - 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ W. A. Wapenhans Regional Vice President Eastern Africa SMALL INDUSTRIES DEVELOPMENT ORGANIZATION By /s/ Paul Bomani Authorized Representative