Malawa - National Rural Development Programm - Phase III : Credit 1183 - Credit Agreement - Conformed

CREDIT NUMBER 1183 MAI DOCUMENTS Development Credit Agreement (National Rural Development Program - Phase III Project) between THE REPUBLIC OF MALAWI and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 1982 CREDIT NUMBER 1183 MAI DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1982, between THE REPUBLIC OF MALAWI (hereinafter called the Borrower) and THE INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association). 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 June 30, 1980 (herein- after called the General Conditions) with the same force and effect as if they were fully set forth herein. 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) "MOA" means the Borrower's Ministry responsible for Agriculture; and (b) "MR" means the Malawi Kwacha, the currency of the Borrower. 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 equi- valent to six million five hundred thousand Special Drawing Rights (SDR 6,500,000). 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 The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Associa- tion, 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. - 2 - Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the Project shall be governed by the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be September 30, 1986 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 ser-ice charge at the rate of three-fourths of one percent (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 semiannually on May 15 and November 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing November 15, 1991 and ending May 15, 2031, each installment to, including the installment payable on May 15, 2001, to be one-half of one percent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half percent (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. The Borrower shall carry out the Project through MOA with due diligence and efficiency and in conformity with appropriate administrative, financial and agricultural practices and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. (a) In order to assist the Borrower in carrying out the Project, the Borrower shall, not later than April 30, 1982, employ a Financial Controller whose qualifications, ex- perience and terms and conditions of employment shall be satisfac- tory to the Association. - 3 - (b) In order to assist the Borrower in carrying out Part B of the Project, the Borrower shall employ training consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. (c) In order to assist the Borrower in carrying out Part I of the Project, the Borrower shall, not later than June 30, 1982, employ a Public Health Specialist whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. (d) In order to assist the Borrower in carrying out Part H of the Project, the Borrower shall, not later than March 31, 1982, employ a Senior. Technical Assistant whose qualifications, and experience shall be acceptable to the Association. Section 3.03. (a) The Borrower undertakes to insure, or make 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, all goods and services financed out of the proceeds of the Credit shall be used exclusively for the Project until its completion. Section 3.04. (a) The Borrower shall furnish to the Associa- tion, promptly upon their preparation, the plans, specifications, reports, contract documents and construction 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 and procedures adequate to record and monitor the progress of the Project, including its cost and the benefits to be derived from it, to identify the goods and services financed out of the proceeds of the Credit and to disclose their use in the Project; (ii) shall enable the Association's accredited represen- tatives 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 at regular inter- vals all such information as the Association shall reasonably request concerning the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit and the goods and services financed out of such proceeds. (c) Upon the award by the Borrower of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. .(d) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, the Borrower shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance by the Borrower and the Association of their respective obligations under the Development Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.05. (a) The Borrower shall take or cause to be taken 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, promptly after such acquisition, evidence satis- factory to the Association that such land and rights in respect of land are available for purposes related to the Project. (b) Without limitation to the generality of Section 3.05 (a) above, the Borrower shall take all necessary measures to obtain appropriate written approvals for use of land required under Part M of the Project not later than September 30, 1982. - 5 - Section 3.06. The Borrower shall: (a) not later than December 31, 1982, prepare a Health Services and Primary Health Care Plan for carrying out Part I of the Project and furnish said Plan to the Association to comment thereon; and (b) not later than June 30, 1982, prepare and furnish to the Association to comment thereon, a Program for In-Service Training for Project staff. Section 3.07. The Borrower shall: (a) formulate a Plan for Siting of Boreholes under the Project with the assistance of its Department of Lands, Valuation and Water and the District Development Committees in the Project Area; and (b) furnish said Plan to the Association to comment thereon not later than June 30, 1982. 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 including, without limitation to the foregoing, separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account on the basis of certificates of expenditures. (b) Without limitation upon the generality of paragraph (a) of this Section, the Borrower shall cause MOA to: (i) have Project 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; - 6 - (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 including, without limitation to the foregoing, a separate opinion by said auditors in respect of expenditures and records referred to in Section 4.01 (a) of this Agreement as to whether the proceeds of the Credit withdrawn from the Credit Account on the basis of certificates of expenditures have been used for the purpose for which they were provided; and (iii) furnish to the Association such other information concerning said separate Accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. (c) The Borrower shall retain, until one year after the Closing Date, all records (orders, invoices, bills, receipts and other documents) evidencing the expenditures, on account of which, withdrawals are requested from the Credit Account on the basis of certificates of expenditures and shall enable the Asso- ciation's accredited representatives to examine such records. Section 4.02. The Borrower shall, not later than December 31, 1981, take all measures to conclude the financial arrangements satisfactory to the Association between the Borrower and its Agricultural Development and Marketing Corporation for the construction of marketing structures under Part E of the Project, not later than December 31, 1981. Section 4.03. Without limitation upon the generality of Section 3.01 of this Agreement, the Borrower shall in order to maintain ongoing Project activities: (a) allocate to MOA an additional amount of about one million Malawi Kwacha (MK 1,000,000) in fiscal year 1981/82 and maintain this level in real terms until the Project is completed; and (b) pay into the Farmers' Credit Fund under the Project an amount of up to one hundred twenty-five thousand Malawi Kwacha - 7 - (MK 125,000) at a time to be determined in consultation with the Association. ARTICLE V Termination Section 5.01. The date 4 '" ' , is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.02. The obligations of the Borrower under Articles III and IV of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 10 years after the date of this Agreement whichever shall be the earlier. ARTICLE VI Representatives 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: Ministry of Finance P.O. Box 30049 Capital City Lilongwe 3 The Republic of Malawi Cable address: Telex: FINANCE 4407 Lilongwe For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America -8- Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) 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. THE REPUBLIC OF MALAWI By Aa:4 i "- / Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By144:C Regional Vice President Eastern Africa -9- 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 SDR Equivalent) to be Financed (1) Vehicles, machinery, 710,000 100% of foreign equipment expenditures and and spare parts 85% of local ex- penditures (2) Civil works other 290409000 100% of foreign than office and expenditures and grading shed for 85% of local ex- the Pilot Tobacco penditures Scheme and the market facilities (3) Bulls, cows and 140,000 100% of foreign agricultural inputs expenditures and and supplies 85% of local ex- penditures (4) operating Costs (exclud- 1,660,000 85% of local ing agricultural inputs expenditures and supplies, forestry, Central Evaluation Unit, Survey Statistics Unit, and Pilot Tobacco Schemes) (5) Central Evaluation Unit 50,000 100% of foreign of the Ministry of expenditures and Agriculture 85% of local ex- penditures - 10 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (6) Survey and Statistics 980,000 100% of foreign Unit expenditures and 85% of local ex- penditures (7) Forest Reserves and 90,000 100% of foreign Fuelwood Plantation expenditures and 85% of local ex- penditures (8) Pilot Tobacco Scheme 140,000 100% of foreign expenditures and 85% of local ex- penditures (9) Unallocated 690,000 TOTAL 6,500,000 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 or for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance 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 and 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 - 11 - 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 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to October 13, 1981. 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. - 12 - SCHEDULE 2 Description of the Project The Project is a third phase of the Borrower's National Rural Development Program in the Karonga-Chitipa Area and consists of the following main components: Part A: Provision of Agricultural Extension Services to farmers. Part B: Provision of an In-Service Training Program for Project staff and continuation of a Farmers' Training Program. Part C: Provision of staff, housing and vehicles for the purpose of extending credit services to farmers. Part D: Continuation of agricultural research. Part E: Construction of about five input stores and about two marketing sheds and about six staff houses. Part F: Expansion of livestock activities through the construc- tion of about three new dips, rehabilitation of about forty-three existing dips, strengthening the activities of two existing Livestock Development Centers, the establishment of a Pilot Grazing Area and the construc- tion of slaughter facilities. Part G: Support for land husbandry activities through the provision of vehicles, survey equipment and staff houses. Part H: Establishment of a Pilot Burley Tobacco Scheme. Part I: Expansion of health services and facilities including the construction of two Maternity Centers and a Health Sub-Center. Part J: Construction of about thirty boreholes. Part K: Continuation of the Project Monitoring and Evaluation Section and strengthening of the MOA Central Evaluation Unit. - 13 - Part L: Strengthening of Project management through the provi- sion of a Financial Controller and a Planning Officer. Part M: Establishment of Forest Reserves and a Fuelwood Planta- tion. Part N: Establishment of a National Survey and Statistics Unit in MOA. The Project is expected to be completed by March 31, 1986. - 14 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part C hereof, purchase of goods and supplies estimated to cost the equivalent of one hundred thousand dollars ($100,000) or more shall be - 'ocured under contracts awarded in accordance with procedures consistent with those set forth in the current edition of the "Guidelines for Procurement under World Bank Loans and IDA Credits" dated March 1977 (here- inafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. To the extent practicable, goods shall be grouped in bid packages estimated to cost more than one hundred thousand dollars ($100,000) equivalent. 3. For goods to be procured on the basis of international competitive bidding, in addition to the requirements of paragraph 1.2 of the Guidelines, the Borrower shall prepare and forward to the Association as soon as possible, and in any event not later than sixty (60) days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably request, the Association will arrange for the publication of such notice in order to provide timely notification to prospective bidders of -he opportunity to bid for the goods and works in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods or works remain to be procured on the basis of international competitive bidding. 4. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international competitive bidding: (i) bidders shall be required to state in their bid the c.i.f. (port-of-entry) price for the imported goods, or the ex-factory price or off-the-shelf price of other goods offered in such bid; and - 1.5 - (ii) customs duties and other import taxes levied in connection with the importation or the sales and similar taxes levied in connection with the sale or delivery, pursuant to the bid, of the goods shall not be taken into account in the evaluation of the bids. B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A of this Schedule, goods manufactured in the Republic of Malawi 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 will 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: (1) Group A: bids offering, goods manufactured in the Republic of Malawi 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 the Republic of Malawi equal to at least twenty percent (20%) of the ex-factory bid price of such goods. (2) Group B: all other domestic bids. (3) -Group C: bids offering any other goods. (c) in order to determine the lowest evaluated bid of each group, all evaluated bids in each group shall first be compared among themselves, without taking into account customs duties and other import taxes levied in conhection with the importation and sales and similar taxes levied in connection with the sale or delivery, pursuant to the bids, of the goods. 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. - 16 - 4. If, as a result of the comparison under paragraph 3 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 evaluated 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 importer would have to pay for the importation of the goods offered in such group C bid; or (ii) fifteen percent (15%) of the c.i.f. bid price of such goods if said customs duties and taxes exceed fifteen percent (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 3 is the lowest evaluated bid it shall be selected. C. Other Procurement Procedures Notwithstanding the provisions set forth in Part A.1 above: 1. Contracts for goods and supplies which cannot be grouped in accordance with Part A.2 above and which are each estimated to cost less than the equivalent of one hundred thousand dollars ($100,000) up to an aggregate amount of two hundred fifty thousand dollars ($250,000) equivalent may be procured in accordance with the normal procurement procedures of the Borrower acceptable to the Association. 2. Contracts for civil works, including housing, stores, offices, boreholes, rehabilitation and construction of livestock dips and health facilities may be awarded in accordance with the normal procurement procedures of the Borrower acceptable to the Association, or the works shall be carried out by Force Account after obtaining the Association's prior approval. D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: - 17 - With respect to all contracts for goods and supplies estimated to cost the equivalent of one hundred thousand dollars ($100,000) or more:"' (a) before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitation 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 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 in- tends to award the contract and shall furnish to the Association, in sufficient time for its review, a detailed report, by the consultants referred to in Section 3.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommendations for award of the said consultants 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; and (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 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 the respective bids, recommendations for award and such other information as the - 18 - 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, promptlv inform the Borrower and state the reasons for such determination. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an exten- sion of the stipulated time for performance of such contract, or issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than fifteen percent (15%) of the original price, the Bor- rower shall inform the Association of the proposed modification, waiver, extension or change order and the reasons therefor. The Association, if it determines that the proposal would be inconsis- tent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of A D , 198F SC T FOR SECRETARY