Benin - Zou Province Rural Development Project : Credit 1314 - Credit Agreement - Conformed

OFFICIALI CREDIT NUMBER 1314 PFN Development Credit Agreement (Zou Province Rural Development Project) between PEOPLE' S REPUBLIC OF BENIN aud INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1983 CREDIT NUMBER 1314 BEN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated , 1983, between PEOPLE'S REPUBLIC OF BENIN (hereinafter called the Borrower or Benin) 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 intends to contract from the Republic of France, acting through the Fonds d'Aide et de Cooperation, a grant (hereinafter called the FAC Grant) in an amount equivalent to twenty--six million French Francs (FF 26,000,000) to assist in financing part of the Project on the terms and conditions set forth in an agreemenat (hereinafter called the FAC Grant Agree- ment) to be entered into between the Borrower and the Republic of France; (C) the Borrower intends to contract from .the Caisse Centrale de Cooperation Economique, an agency of the Republic of France, a loan (hereinafter called the CCCE Loan) in an amount equivalent to forty-seven million French Francs (FF 47,000,000) to assist in financing part of the Project on the terms and conditions set forth in an agreement (hereinafter called the CCCE Loan Agreement) to be entered into between the Borrower and CCCE; and (D) pursuant to an exchange of letters dated October 18, 1982 and 1983, between the Borrower and the Associa- tion, the Association has granted to the Borrower an advance in various currencies equivalent to two hundred eighty-one thousand dollars ($281,000) (hereinafter called the Project Preparation Advance) for the purpose of assisting the Borrower in the prepa- ration of the Project; and 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 heretc hereby 1gree as follows: -2- 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, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments 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 Gen- eral Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following addi- tional terms have the following meanings: (a) "MDRAC" means the Ministere de Developpement Rural et de l'Action Cooperative, the Borrower's ministry responsible for, inter alia, rural development, or any successor thereto. (b) "DRA" means the Departement de la Recherche Agronomique in the Borrower's ministry responsible for agricultural research, or any successcr thereto. (c) "CARDER Statutes" means the Statutes approved by the Borrower's Ordinance No. 75-84 of December 1975, as such Statutes may be amended from time to time. (d) "CARDER" means Centre d'Action Regionale pour le Developpement Rural established and operating pursuant to the CARDER Statutes and "CARDER-Zou" means the CARDER responsible for the Zou Province. (e) "GRVC" means Groupement Revolutionnaire a Vocation Cooperative, a farmers' cooperative existing under the laws of the Borrower. (f) "PMEU" means the Project Monitoring and Evaluation Unit to be established under Section 3.06 (d) (i) of this Agreement. (g) "SONAPRA Statutes" means the Statutes referred to in Section 6.01 (d) as such Statutes may be amended from time to time and "SONAPRA" means the Societe Nationale pour la Promotion -3- Agricole, established and operating pursuant to the SONAPRA Statutes. (h) "CAA" means the Caisse Autonome d'Amortissement, which forms a part of the Borrower's ministry responsible for financial affairs, or any successor thereto. (i) "CFA Francs" and "CFAF" mean the Franc de la Communaute Financiere Africaine, the common currency of the Borrower and the other members of the West African Monetary Union. (j) "Special Advance Account" means the Account referred to in Section 2.02 (c) of this Agreement. (k) "CNCA" means Caisse Nationale de Cr6dit Agricole, the Borrower's agency responsible for agricultural credit. (1) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and CNCA pursuant to Section 3.02 (b) of this Agreement. (m) "Special Input Account" means the Account to be opened by the Borrower pursuant to Section 3.03 (a) of this Agreement. (n) "French Franc" and "FF" means the currency of the Republic of France. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to eighteen million seven hundred thousand Special Drawing Rights (SDR 18,700,000). Section 2.02. (a) 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 Association, 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. -4- (b) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the prin- cipal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. (c) The Borrower shall, for the purposes of Parts A, B and D of the Project, open a Special Account in a bank acceptable to the Association and on terms and conditions satisfactory to the Association. Payments out of the Special Account shall be made exclusively to pay the reasonable costs of goods and services required to carry out those Parts of the Project to be financed under this Agreement in respect of Categories (1) and (2) of the table set forth in paragraph 1 of Schedule I hereto. (d) The Association shall, promptly after the Effective Date, withdraw, on behalf of the Borrower from the Credit Account and deposit into the Account referred to in paragraph (c) of this Section, an initial amount in the currency of the Borrower equivalent to eight hundred thousand Special Drawing Rights (SDR 800,000). Thereafter, at the request of the Borrower, the Association shall further withdraw from the Credit Account and deposit in the Special Account, such amounts as shall be required to replenish the Special Account with amounts equal to payments made out of the Special Account for expenditures for the Project eligible for financing under Categories (1) and (2) of the table set forth in paragraph 1 of Schedule 1 hereto, but only to the extent that the amount of any such deposit, together with any amount remaining on deposit in the Special Account as of the date of such request, shall not exceed, in the aggregate, the equivalent of eight hundred thousand Special Drawing Rights (SDR 800,000). Except as the Association shall otherwise determine, each such deposit, after the initial deposit, shall be withdrawn by the Association from the Credit Account under the same Categories set forth in the table in paragraph 1 of Schedule 1 to this Agreement and in the same respective amounts as have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph (e) of this Section. (e) Prior to or at the time of each request for a deposit by the Association into the Special Account, the Borrower shall furnish to the Association, in respect of each payment made by the Borrower out of the Special Account, such documents and other -5- evidence as the Association shall reasonably request showing that the payment was made on account of the reasonable cost of goods or services required for the Parts of the Project to be financed out of the proceeds of the Credit in accordance with Schedule 1 to this Agreement. Such documents shall include, but not be limited to, the separate accounts and the audits thereof referred to in Section 4.01 (b) of this Agreement. (f) If the Association shall have determined that any pay- ment out of the Special Account: (i) was made for any expenditure or in any amount not eligible for financing under Categories (1) and (2) of the table set forth in paragraph I of Schedule 1 here- to, or (ii) was not justified by the evidence furnished pursuant to paragraph (e) of this Section, the Borrower shall, promptly, upon notice from the Association and, unless otherwise determined by the Association prior to any further depcsit in the Special Account by the Association, deposit into the Special Account an amount equal to the amount of such payment or the portion thereof not so eligible or justified. (g) Notwithstanding the provisions of paragraph (d) of this Section, no further deposit into the Special Account shall be made by the Association when the Association shall have determined that all further withdrawals from the Credit Account can be made directly by the Borrower from the Credit Account under paragraph (a) of this Section, or when the total amount withdrawn from the Credit Account, plus the amount of any qualified agreement to reimburse made by the Association and any special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions shall have reached the equivalent of seventeen million one hundred thousand Special Drawing Rights (SDR 17,100,000), whichever shall be sooner. Withdrawal from the Credit Account of the remaining amount of the Credit for the Project shall follow such procedures as shall be agreed between the Borrower and the Association, and shall be made only to the extent that the Association shall be satisfied by the evidence submitted in support of the applications for such withdrawal that all payments by the Borrower out of the Special Account were made on account of the reasonable cost of goods or services required for those Parts of the Project to be financed out of the proceeds of the Credit in accordance with Schedule 1 to this Agreement. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the -6- Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agree- ment. Section 2.04. The Closing Date shall be December 31, 1989 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of this Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.06. 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 2.07. Commitment charges and service charges shall be payable semiannually on April 1 and October 1 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each April 1 and October 1 commencing April 1, 1993, and ending October 1, 2032, each installment to and, including the installment payable on October 1, 2002, 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 2.09. The currency of the Republic of France is hereby specified for the purposes of Section 4.02 of the General Conditions. -7- ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out Parts A and B of the Project through CARDER-Zou, Part B through CNCA, Part C through DRA, Parts D and F jointly through MDRAC with CARDER-Zou and DRA, and Parts E and G through SONAPRA, all with due dili- gence and efficiency and in conformity with appropriate agricul- tural, administrative, financial and engineering practices, and the Borrower shall provide, promptly as needed, the funds, facil- ities, services and other resources required for the purpose. Section 3.02. For the purpose of carrying out the Project, the Borrower shall: (a) make available to CARDER-Zou, MDRAC and SONAPRA, in the form of grants, the proceeds of the Credit withdrawn from time to time from the Credit Account for expenditures required under Parts A, D, F and G of the Project; (b) enter with CNCA into a Subsidiary Loan Agreement under terms and conditions satisfactory to the Association pursuant to which the Borrower shall, inter alia: (i) relend to CNCA the proceeds of the Credit withdrawn from time to time from the Credit Account for expendi- tures required under Part B of the Project; (ii) cause CNCA to pay interest to the Borrower at the rate of six per cent (6%) per annum on the amount so relent and outstanding to CNCA; and (iii) cause CNCA to onlend such proceeds at an interest rate of eleven per cent (11%) per annum to farmers. Section 3.03. (a) Pursuant to its obligations under Section 3.01 of this Agreement, and without any limitation upon the generality thereof, the Borrower shall, not later than February .28, 1983, cause SONAPRA to open a Special Input Account at the Banque Commerciale du Benin (BCB) and deposit into said Account the respective contributions of the Borrower, the FAC and the CCCE, to ensure the availability to SONAPRA, by October 31 of each year, the funds necessary to finance imports required under Parts A (v) and G of the Project. -8- (b) Further to its obligations under paragraph (a) of this Section, the Borrower shall, not later than October 31 of each year, cause CNCA to make available to SONAPRA, credit sufficient to cover farmers' contributions for input purchases. Section 3.04. Not later than June 30, 1984, the Borrower shall furnish to the Association, for its review and comment, the recommendations of the study referred to in Part F (iv) of Schedule 2 to this Agreement. Section 3.05. In order to assist the Borrower in carrying out the Project, the Borrower shall, not later than June 30, 1983 employ or cause to be employed the following: (a) specialists and consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, such specialists and consultants to be selected in accordance with principles satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981 including, in particular, for CARDER-Zou: (1) a Deputy Project Manager responsible for Technical Development, (2) a Financial Controller, (3) a Chief Accountant, (4) an Input Supply and Credit Specialist, (5) a Training Specialist, and (6) a Manager responsible for the Garages. (b) a Beninese Project Manager and a Beninese Deputy Pro- ject Manager for Administration and Finance whose qualifications, experience and terms and conditions of employment shall be satis- factory to the Association, to work in close cooperation with the consultants and specialists referred to in paragraph (a) of this Section. -9- Section 3.06. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be finahced out of the proceeds of the Credit against hazards inci- dent 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) The Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the purposes of the Project. Section 3.07. (a) The Borrower shall furnish to the Asso- ciation, promptly upon their preparation, the plans, specifica- tions, reports, contract documents and construction and procure- ment schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower shall: (i) 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) enable the Association's 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) furnish to the Association, at regular intervals, 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) Without any limitation upon the generality of para- graphs (a) and (b) of this Section, the Borrower shall: (i) cause CARDER-Zou, for Parts A and B; CNCA for Part B; DRA for Part C; MDRAC for Parts D and F and SONAPRA for Parts E and G of the Project, to furnish to the Association comprehensive quarterly progress and annual reports to be prepared in a format acceptable to the Association and to include such detailed financial, technical and budgetary information as the Association may reasonably request; and (ii) cause each annual report to be furnished to the Association not later than February 28 of the succeeding calendar year. - 10 - (d) The Borrower shall: (i) not later than September 30, 1983 establish, under the supervision of MDRAC, and, thereafter, maintain in existence, at least until completion of the Project, the PMEU provided for under Part D of the Project; (ii) not later than September 30, 1983, prepare and furnish to the Association for its review and concurrence, a detailed work program for the PMEU; and (iii) thereafter, promptly implement such work program as approved by the Association. (e) 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. (f) 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 ini- tial 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 Devel- opment Credit Agreement and the accomplishment of the purposes of the Credit. Section 3.08. 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 satisfac- tory to the Association, that such land and rights in respect of land are available for purposes related to the Project. Section 3.09. The Borrower shall cause CARDER-Zou to: (i) furnish to the Association its proposed work plan and associated budget for the first year of Project execution, for review and concurrence and, thereafter, promptly inplement such work plan and associated budget as approved by the Association; and (ii) thereafter, furnish to the Association, by December 31 of each year, its proposed annual work plan and associated budget for the following year for review and concurrence; and (iii) promptly implement such work plan and associated budget as approved by the Association. - 11 - ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall: (i) cause CARDER-Zou, CNCA and SONAPRA to maintain, and (ii) ensure that its departments or agencies responsible for carrying out the Project maintain records adequate to reflect, in accordance with consistently maintained appropriate accounting practices, the operations, resources and expenditures related to their respective parts of the Project. (b) Without limitation to the foregoing, the Borrower shall cause CARDER-Zou, CNCA and its departments or agencies responsible for carrying out the Project to: (i) maintain separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account on the basis of statements of expenditure; (ii) retain, until one year after the Closing Date, all records (contracts, 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 statements of expenditure; and (iii) enable the Association's representatives to examine such records. (c) The Borrower shall cause CARDER-Zou, CNCA and SONAPRA: (i) to have their 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) to 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 their 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, in- cluding, without limitation to the foregoing, a separate opinion by said auditors in respect of the expenditures and records referred to in paragraph (b) of this Section, as to whether the proceeds of the Credit made available to it and withdrawn from the Credit Account on the basis. of statements of expenditure have been used for the purpose for which they were provided; and (iii) to furnish to the Association such other information concerning the accounts and financial statements of CARDER-Zou, CNCA and SONAPRA and the audits thereof as the Association shall from time to time reasonably request. - 12 - (d) The Borrower shall, through MDRAC, ensure that each of its departments or agencies responsible for carrying out the Project: (i) have each of their accounts and financial statements (balance sheets, statements of income and expenses and relat"d statements) for each fiscal year audited in accordance with appropriate auditing principles consistently applied by auditors acceptable to the Association; (ii) 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 copy of the report of such audits by such 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 said accounts, records and expenditures and the audits thereof as the Association shall from time to time reasonably request. Section 4.02..The Borrower shall cause CARDER-Zou, MDRAC and SONAPRA: (a) to take out and maintain with responsible insurers or make other provisions satisfactory to the Association, for insur- ance against such risks and in such amounts as shall be con- sistent with appropriate practice; (b) to carry on their operations and conduct their affairs in accordance with sound administrative, financial, economic and agricultural practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers; and (c) at all times, to operate and maintain their plants, machinery, equipment and other property and, from time to time, promptly as needed, to make all necessary repairs and renewals thereof in accordance with sound engineering, financial and agricultural practices. Section 4.03 (a) The Borrower shall, not later than February 28 of each year, set the minimum farmgate prices for seed cotton in accordance with criteria satisfactory to the Association. (b) In order to recover an adequate portion of its costs for the support of cotton production in Benin, the Borrower shall: (i) progressively raise the prices charged to farmers for fertilizers and pesticides so as to phase out completely current - 13 - subsidies on these inputs by not later than February 28, 1989; (ii) not later than March 31 of each year, announce the new adjusted prices for fertilizers and pesticides; (iii) for the 1983/84 growing season, cause CARDER-Zou nd CNCA to charge interest at the rate of at least eleven peL cent (11%) per annum on seasonal and medium-term credits to cotton growers; (iv) for subsequent growing seasons, cause CARDER-Zou and CNCA to adjust such interest rate, in accordance with criteria satisfactory to the Borrower and the Association; (iv) annually, revise the cotton bareme to reflect the real cost of production as determined by CARDER-Zou's and SONAPRA's financial management; and (v) not later than January 1, 1986, institute charges for improved seed sufficient to cover variable costs of production. Section 4.04. The Borrower shall: (i) not later than June 30, 1983, furnish to the Association for its review and com- ment, a bonus system to reward good performance by CARDER-Zou's field extension personnel; and (ii) not later than December 31, 1983, increase the salaries of CARDER-Zou's personnel to the level of other state enterprises of the Borrower. ARTICLE V Remedies of the Association Section 5.01. For the purposes of Section 6.02 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (h) thereof, namely, that: (a) the Borrower or any other authority having jurisdic- tion, shall have taken action for the dissolution or disestab- lishment of CARDER-Zou or SONAPRA or for the suspension of their respective operations; (b) the SONAPRA Statutes or the CARDER Statutes shall have been amended, suspended or abrogated so as to affect materially and adversely the operations or financial conditions of SONAPRA or CARDER-Zou; and (c) (i) subject to subparagraph (ii) of this paragraph: (A) the right of the Borrower to withdraw the proceeds of the CCCE Loan or the FAC Grant made to the Borrower for the financing of the Project shall have been suspended, cancelled or terminated in whole or in part, pursuant to the terms of the agreement providing therefor; or -14 - (B) the CCCE Loan shall have become due and payable prior to the agreed maturity thereof; and (ii) subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obliga- tions under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obliga- tions of the Borrower under this Agreement. Section 5.02. For the purpose of Section 7.01 of the General Conditions, the following additional events are specified pur- suant to paragraph (d) thereof, namely, that: (a) any event specified in paragraph (a) or (b) of Section 5.01 of this Agreement shall occur; and (b) any event specified in paragraph (c) (i) (B) of Section 5.01 of this Agreement shall occur, subject to the proviso of paragraph c (ii) of that Section. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that: (a) The first annual work plan and associated budget to be furnished to the Association, pursuant to Section 3.09 (i) of this Agreement, has been approved by the Association. (b) The Special Advance Account has been opened as provided in Section 2.02 (c) of this Agreement and the Borrower has furnished evidence satisfactory to the Association that an initial deposit of two hundred thousand dollars ($200,000) (in the currency of the Borrower) has been made into said account. - 15 - (c) The CCCE Loan and FAC Grant Agreements have been duly signed and all conditions, if any, precedent to the effectiveness of, or initial disbursement under, said Agreements except for the effectiveness of this Agreement have been satisfied. (d) The Association has been notified by the Borrower that the SONAPRA Statutes have been approved and duly signed into law. (e) The Borrower shall have furnished to the Association the terms of reference of the cotton study, satisfactory to the Association, referred to in Part F (iv) of Schedule 2 to this Agreement. (f) The Borrower shall have furnished to the Association SONAPRA's -organigram, satisfactory to the Association, and its opening balance sheet. Section 6.02. The date ) is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 6.03. The obligations of the Borrower under Article IV of this Agreement and the provisions of paragraph (a) of Sec- tion 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date fifteen years after the date of this Agreement, whichever shall be the earlier. ARTICLE VII Representatives of the Borrower; Addresses Section 7.01. The Minister of the Borrower at the time responsible for Finance 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: Ministry of Finance P.O. Box 302 Cotonou People's Republic of Benin - 16 - Cable address: Telex: MINIFINANCES 5009 or Cotonou 5289 For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) 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. PEOPLE'S REPUBLIC OF BENIN By Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By lcd! A Regional Vice President Western Africa - 17 - 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. CARDER-Zou: (a) Vehicles 1,680,000 75% (b) Equipment and 420,000 100% Furniture (c) Operating Costs 3,160,000 55% including Local Salaries (d) Technical 2,100,000 100% Assistance (e) Consultant 220,000 50% Services 2. Technical Assistance 950,000 100% under Part D of the Project 3. CNCA: Credits to 260,000 100% Farmers 4. Fertilizer/Insecticide: (a) Incremental 2,710,000 75% Expenditures - 17 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (b) Imports 4,400,000 60% up to SDR 1,900,000 57% up to SDR 1,660,000 and 18% there- after 5. Initial deposit 800,000 under Section 2.02 (c) 6. Refunding of Project 270,000 Amount due Preparation Advance under Section 2.02 (b) of this Agreement 7. Unallocated 1,730,000 TOTAL 18,700,000 2. The disbursement percentages have been calculated in compli- ance with the policy of the Association that no proce-eds 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. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to the date of this Agreement; (b) payments made for expenditures under Category 3 unless the Association shall have received satisfactory evidence that - 19 - the Subsidiary Loan Agreement referred to in Section 3.02 (b) of this Agreement has been duly authorized by the Borrower and CNCA and constitutes a valid and binding obligation of the Borrower and CNCA in accordance with its terms; and (c) payments made for expenditures under Category 4, unless the Association shall have received satisfactory evidence that the obligations of the Borrower under Section 4.03 (b) (ii) of this Agreement are being fulfilled. 4. 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. 5. 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. - 20 - SCHEDULE 2 Description of the Project The Project is designed to expand agricultural production and improve the management and technical infrastructure of the Borrower's Zou Province so as to raise the income and living standards of farmers in such Province and promote the Borrower's export trade. The Project consists of the following Parts: Part A: Expansion and Improvement of the Technical Infra- structure and Field Activities of CARDER-Zou: (i) Strengthening and reorganization of the management and field services of CARDER-Zou. (ii) Strengthening and reorganization of the transportation, ginning and marketing services of CARDER-Zou. (iii) Construction, or reconstruction, of about 150 village wells and rehabilitation of about 200 ha of bottomlands. (iv) Improvement of animal husbandry through the introduc- tion of animal health care. (v) Provision of credit for agricultural inputs. (vi) Consolidation of existing GRVCs and establishment of new ones. (vii) Implementation of a comprehensive training program and provision of fellowships to senior CARDER personnel. (viii) Establishment of a seed multiplication farm. Part B: Ox-drawn Cultivation and Agricultural Equipment Provision, through CNCA, of medium-term agricultural credit to farmers for purchase of oxen and agricultural equipment. - 21 - Part C: Agricultural Research Applied research on foodcrops, cotton and farming systems carried out by units of the DRA. Part D: Technical Assistance to MDRAC: (i) Establishment and operation of a PMEU at Bohicon. (ii) Strengthening of the Planning and Studies Division of the MDRAC. Part E: Strengthening of SONAPRA Strengthening of SONAPRA's administrative and financial management procedures and transport and cotton marketing systems. Part F: Studies: (i) A study on the rural sector of the Zou Province. (ii) A study on the feasibility of a possible follow-up project. (iii) A study on and technical assistance for cotton ginning. (iv) A study on the cotton sector and the establishment of a cotton account for activities related to the cotton sector. Part G: Support to the Country-wide Recurrent Fertilizer/- Insecticides Import Program The Project is expected to be completed by June 30, 1989. - 22 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in eart C hereof, goods shall be procured 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" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international com- petitive 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 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 notifica- tion to prospective bidders of the 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 inter- national competitive bidding. 3. For the purpose of evaluation and comparison of bids for the supply of goods to be procured on the basis of international com- petitive 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; (ii) customs duties and other import taxes levied in connection with the importation, or the sales and simi- lar taxes levied in connection with the sale or delivery, pur- suant to the bid, of the goods shall not be taken into account in the evaluation of the bids; and (iii) the cost of inland freight and other expenditures incidental to the delivery of the goods to the place of their use or installation shall be included. - 23 - B. Preference for Domestic Manufacturers In the procurement of goods in accordance with the proce- dures described in Part A of this Schedule, goods manufactured in Benin may be granted a margin of preference in accordance with, and subject to, the following provisions: 1. 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. 2. After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in Benin 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 Benin equal to at least 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. 3. 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 connection 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. 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 fur- ther comparison only, an amount equal to: (i) the amount of cus- toms duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in - 24 - 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 3 is the low- est evaluated bid shall be selected. C. Other Procurement Procedures Contracts for equipment estimated to cost less than one hundred thousand dollars ($100,000) equivalent may be awarded on the basis of competitive bidding advertised locally, in accord- ance with procedures acceptable to the Association, provided, however, that the aggregate price of the contracts so awarded shall not exceed eight hundred thousand ($800,000) equivalent. D. Review of Procurement Decisions by the Association 1. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for goods estimated to cost the equivalent of one hundred thousand dollars ($100,000) or more: (a) Before bids are invited, the Borrower shall furnish or cause to be furnished 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 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 shall furnish to the Associa- tion, in sufficient time for its review, a detailed report on the evaluation and comparison of the bids received which presents its recommendations concerning the award of the contract and such other information as the Association sh,,ll reasonably request. The Association shall, if it determines that the intended award - 25 - 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 concurrenc-e, materially differ from those on which bids were asked or prequalification was 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 with- drawal of funds from the Credit Account in respect of such con- tract. 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 infor- mation as the Association shall reasonably request. The Associa- tion 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. 3. Before agreeing to any material modification or waiver of the terms and conditions of a contract, or granting an extension ,of the stipulated time for performance of such contract, or issu- ing any change order under such contract (except in cases of extreme urgency) which would increase the cost of,the contract by more than fifteen per cent (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 incon- sistent 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 sei 1F98 S. FOR SECRETARY