Liberia - Second Lofa County Agricultural Development Project : Credit 1242 - Credit Agreement - Conformed

OFFICIAL REDIT NUMBER 1242 LBR DOCUMENTS Development Credit Agreement (Second Lofa County Agricultural Development Project) between REPUBLIC OF LIBERIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated , 1982 CREDIT NUME7R 1242 LBR DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated tA_-.Q > , 1982, between REPUBLIC OF LIBERIA (herdinafter called the Borrower) and INTERNA- TIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Associa- tion). 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 African Development Fund (hereinafter called ADF) a loan (hereinafter called the ALIF Loan) in an amount of FUA 8,954,600 equivalent to $9,600,000 to assist in financing the Project on the terms and conditions set forth in an agreement (hereinafter called the ADF Loan Agreement) to be entered into between the Borrower and ADF; 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 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 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 General Conditions and in the Preamble to this Agreement havE the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Project Area" means the Upper Region of Lofa County of the Borrower; -2- (b) "Special Account" means the account referred to in Section 2.02 (c) of this Agreement; (c) "Project Preparation Advance" means the project prepa- ration advance granted by the Association to the Borrower pursuant to an exchange of letters dated December 21, 1981 and February 19, 1982, between the Borrower and the Association; (d) "ACDB" means Agricultural and Cooperative Development Bank; (e) "LPMC" means Liberia Produce and Marketing Corporation, a corporation of the Borrower; and (f) "Financing Agreement" means the agreement to be entered into between the Borrower and ACDB pursuant to Section 3.03 of this Agreement. 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 thirteen million three hundred thousand Special Drawing Rights (SDR 13,300,000). 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. (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 principal amount of the Project Preparation Advance withdrawn and outstand- ing 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. -3- (c) The Borrower shall, for the purposes of the Project, open a Special Account in the National Bank of Liberia on terms and conditions satisfactory to the Association. Payments out of the Special Account shall be made exclusively to pay the reason- able costs of goods and services required to carry out the Project and to be financed under this Agreement in accordance with the provisions of the table set forth in paragraph 1 of Schedule 1 hereto. (d) The Association shall, as of the Effective Date, withdraw on behalf of the Borrower from the Credit Account and deposit in the Special Account an initial amount in the currency of the Borrower equivalent to one hundred seventy thousand Special Drawing Rights (SDR 170,000). Thereafter, at the request of the Borrower, the Association on behalf of the 7orrower 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 this Agreement, but only to the extent that the amount of any such deposit, together with any amount remain- ing on deposit in the Special Account as of the date of such request, shall not exceed in the aggregate the equivalent of one hundred seventy thousand Special Drawing Rights (SDR 170,000). Except as the Association shall otherwise determine, each such deposit after the initial deposit shall be withdrawn 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 deposits furnished pursuant to paragraph (e) of this Section. (e) Prior to or at the time of each request by the Borrower for a deposit into the Special Account, the Borrower shall furnish to the Association in respect of each payment out of the Special Account such documents and other evidence as the Association shall reasonably request, showing that such payment was made to pay the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit in accordance with Schedule 1 to this Agreement. (f) If the Association shall have determined that any payment out of the Special Account (i) was made for any expen- diture or in any amount not eligible for financing by withdrawal from the Credit Account, or (ii) was not justified by the evidence -4- furnished pursuant to paragraph (d) of this Section, the Borrower shall, upon notice from the Association, and, unless otherwise agreed by the Association, prior to any further deposit in the Special Account, deposit in the Special Account or refund to the Association an amount equal to the amount of such payment or of the portion thereof not so eligible or justified. (g) Notwithstanding the provisions of paragraph (d) of this Section, no further deposit in the Special Account shall be made when (i) the Association shall have determined that all further withdrawals can be made directly by the Borrower from the Credit Account under Section 2.02 (a) of this Agreement, or (ii) when the total amount withdrawn from the Credit Account, plus the amount of any qualified agreement to reimburse made by the Association and of any special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions, shall have reached the equivalent of SDR 12,960,000, whichever shall be sooner. Withdrawal from the Credit Account of the remaining amounts 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 withdrawals that all payments by the Borrower out of the Special Account and out of the proceeds of the Credit were made on account of the reasonable cost of goods or services required for the Project and 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 Project and to be financed out of the proceeds of the Credit shall be governLd by the provisions of Schedule 3 to this Agree- ment. Section 2.04. The Closing Date shall be June 30, 1987 or such later date as the Association shall establish. The Asso- ciation shall promptly notify t-ne Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Associ- ation a commitment charge at the rate of one-half of one percent (1/2 of 1%) per annum on the principal amount of the Credit not withdrawn from time to time. The commitment charge shall accrie from a date sixty days after the date of the Development Credit Agreement to the respective dates on which amounts shall be -5- withdra-dr by the Borrower from the Credit Account or shall be cancel)Jed. (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. Seztion 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 and service charges shall be payable semiannually on January 15 and July 15 in each year. Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each Januuary 15 and July 15 commencing July 15, 1992, and ending January 15, 2032, each installment to and including the install- ment payable on January 15, 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 United States of America 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 its Ministry of Agriculture with due diligence and effi- ciency and in conformity with appropriate agricultural, adminis- trative and financial practices., and shall provide, promptly as needed, the funds, facilitie,, services and other resources required for the purpose. -6- Section 3.02. In order to assist the Borrower in the carrying out of the Project, the Borrower shall employ: (a) consultants whose selection, qualifications, experience and terms and conditions of employment shall be satisfactory to the Borrower and the Association in accordance with the prin- ciples and procedures described in 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; and (b) a monitoring and evaluation specialist and a cooperative specialist whose selection, qualifications, experience and terms and conditions of employment shall be satisfactory to the Borrower and the Association. Section 3.03. The Borrower shall, for purposes of carrying out Part D.1 of the Project: (a) furnish to the Association, not later than October 31, 1982 a plan of action satisfactory to the Association and carry out such plan not later than June 30, 1983; (b) provide its Cooperative Development Agency in the Project Area with such funds, staff and other resources as required for the purpose; (c) employ, not later than Decem- ber 31, 1982 and thereafter, a qualified and experienced person as Assistant Registrar of Cooperative Societies for the Lofa County of the Borrower; and (d) review, not later than August 31, 1985, with the Association the progress made in the execution of Part D.1 of the Project, and take promptly such measures as shall be necessary or advisable as a result of said review. Section 3.04. The.Borrower shall enter into a Financing Agreement, satisfactory to the Association, with ACDB providi-- for the transfer to ACDB, for purposes of Part D.2 of the Project, of the proceeds of the Credit allocated to Category (1) of Sched- ule 1 to this Agreement on the terms and conditions set forth in Schedule 4 to this Agreement. The Borrower shall not change or fail to enforce any provision of the Financing Agreement. Section 3.05. For purposes of carrying out Part E of the Project, the Borrower shall: (a) not later than September 30, 1982, furnish to the Association a plan of action, satisfactory to the Association, in respect of the management and operations of LPMC; and (b) promptly thereafter and not later than June 30, 1984, carry out such plan. Section 3.06. For purposes of carrying out the Project, the Borrower shall assign persons whose qualifications and experience shall be satisfactory to the Association to the - 7 - followii.g positions of the Borrower in the Project Area: County Agricultural Officer, Agricultural Manager, Financial Controller and Comrercial Services Manager. Section 3.07. (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 'se or installation, and for such insurance any indemnity shall 0 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 3.08. (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 prc edures adequate to record and monitor the progress of the Project (in- cluding its cost and the benefits to be derived from it), to identify the goods and services financ- out of the proceeds of the Credit, and to disclose their use in the Project; (ii) shall 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) shall 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) 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. -8- (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 3.09. 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 satisfactory to the Association that such land and rights in respect of land are available for purposes related to the Project. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained separate accounts 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 respons- ible for carrying out the Project or any part thereof. (b) Without limitation to the foregoing, the Borrower shall: (i) maintain or cause to be maintained 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. -9- (c) The Borrower shall: (i) have the accounts referred to in paragraphs (a) and (b) of this Section and the Special Account 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 soor 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 audit by such 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 auditor.s in respect of the expenditures and records referred to in paragraph (b) of this Section as to whether the proceeds of the Credit 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) furnish to the Association such other information concerning said separate accounts and Special Account, records and expenditures and the audit thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall: (a) review with the Association any proposals to reorganize the services provided by the Ministry of Agriculture of the Borrower in the Project Area which may affect the carrying out of the Project and shall give due consideration to the Association's comments thereon; and (b) take all action necessary to make efficient use of the manpower resources oF the Borrower's agencies responsible for the carrying out of the Project, including reduction of such agencies' staff whenever necessary for their efficient operation. Section 4.03. (a) The Borrower shall operate the facili- ties included in the Project in accordance with appropriate administrative and agricultural policies and practices and with due regard to economy. (b) The Borrower shall cause such facilities to be ade- quately inspected and maintained, cause all necessary repairs and renewls thereof to be made in accordance with sound admini- strative and technical standards, and provide, promptly as needed, the funds, facilities and services and other resources required for the purpose. - 10 - ARTICLE V Remedies of the Association Section 5.01. (a) For the purposes of Section 6.02 of the General Conditions, the following additional event is specified pursuant to paragraph (h) thereof, namely, that, subject to para- graph (b) of this Section: (i) the right of the Borrower to withdraw the proceeds of any loan 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 (ii) any such loan shall have become due and payable prior to the agreed maturity thereof. (b) Paragraph (a) of this Section shall not apply if the Borrower establishes to the satisfaction of the Association that (i) such suspension, cancellation, termination or prematuring is not caused by the failure of the Borrower to perform any of its obligations under such agreement, and (ii) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. Section 5.02. For the purposes of Section 7.01 of the General Conditions, the following additional event is specified pursuant to paragraph (d) thereof, namely, that the event speci- fied in paragraph (a) (ii) of Section 5.01 of this Agreement shall occur, subject to the proviso of paragraph (b) 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: (a) that the Special Account has been opened; - 11 - (b) that the Borrower and ACDB have entered into the Financing Agreement; and (c) that ADF has notified the Association that all condi- tions of effectiveness of the ADF Loan Agreement have been ful- filled, subject only to the effectiveness of this Agreement if such be the case. Section 6.02. The following is specified as an additional matter, 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, namely, that the arrangements referred to in Section 6.01 (b) of this Agreement are legally binding on the parties thereto. Section 6.03. The date , is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. Section 6.04. The obligations of the Borrower under Section 4.03 of this Agreement and the provisions of Section 5.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date 25 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 Finance 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: Ministry of Finance Broad Street Monrovia Liberia - 12 - Cable address: Telex: MINFIN 4221 Monrovia, Liberia 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. REPUBLIC OF LIBERIA By $ Z OWC Aithorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By CA ~& Regional Vice President Western Africa - 13 - 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) Agricultural 3,600,000 100% of foreign inputs expenditures and 90% of local expen- ditures (2) Civil works 260,000 100% of foreign expenditures and 70% of local expen- ditures (3) Vehicles and 1,460,000 100% of foreign Equipment expenditures and 90% of local expen- ditures (4) Consultants' 690,000 100% of for- services eign expendi- tures and 85% of local expenditures (5) Staff salaries 3,860,000 90% (Part D of the Project) - 14 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (6) Operating expenses of 1,890,000 100% of foreign the Borrower, other than expenditures staff salaries, in and 90% of respect of Part D of local expendi- the Project tures (7) Initial deposit in 170,000 Special Account (8) Refunding of Project 80,000 Amount due Preparation Advance (9) Unallocated 1,290,000 TOTAL 13,300,000 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; 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". 3. The disbursement percentages have been calculated in compli- ance 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 - 15 - of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expen- ditures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 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 expendi- tures; 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 Associa- tion's reasonable opinion, represents the amount of such expendi- tures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 16 - SCHEDULE 2 Description of the Project The purpose of the Project is to increase agricultural production and farmers' incomes in the Project Area. The Project consists of: Part A: Extension Services and Training 1. Training of extension agents and provision of extension services to farmers in the Project Area. 2. Training of farmers of the Project Area at the Training Center in Kolahun. Part B: Crop Development Improvement of crop cultivation, including upland rice, swamp rice, cassava, coffee and cocoa. Part C: Plant Production and Research 1. Provision of coffee, cocoa, rice and cassava seed material to farmers in the Project Area. 2. Establishment of nurseries and seed gardens throughout the Project Area to grow coffee and cocoa seedlings. 3. Carrying out of a research program to diversify the range of crops produced in the uplands area of Lofa County and to improve the cropping systems employed by farmers. P4rt D: Cooperatives and Credit 1. Improvement of cooperative societies in the Project Area, including training for cooperative managers and construction of buildings to be used as sub-centers by the cooperative societies. - 17 - 2. Provision of agricultural inputs to farmers through cooperative societies in the Project Area and the financing thereof by: (a) making medium-term loans to rehabilitate existing farms and to establish new farms of swamp rice, coffee and cocoa; and (b) making short-term loans to meet farmers' sea- sonal requirements; all such loans to be made on the terms and conditions set forth in Schedule 4 to this Agreement. Part E: LPMC Improvement of the management and operations of LPMC. Part F: Schistosomiasis Monitoring and control of Schistosomiasis organisms in swamp areas of the Project Area. Part G: Land Planning, Road Construction, Wells, Latrines 1. Surveying, designing and laying out irrigation and drainage works for swamp rice, selection of areas suitable for growing coffee and cocoa, and selection of location of farm access tracks. 2. Construction or upgradinj,,, of about 170 kilometers of feeder roads and of about 60 kilometers of farm access tracks, and maintenance of about 600 kilometers of existing feeder roads. 3. Construction of about 160 wells in villages and of about 100 village latrines. Part H: Vehicles and Equipment Acquisition of vehicles and equipment required for purposes of the Project. - 18 - Part I: Studies Feasibility studies for purposes of developing the agri- cultural sector of the Borrover Part J: Monitoring and Evaluation Monitoring and evaluation of the carrying out of the other Parts of the Project and establishment and operation of a Central Monitoring and Evaluation Unit for purposes of: (a) developing evaluation procedures applicable to all agricultural projects; (b) coordinating and assisting in the monitoring and evaluation of such projects; (c) training of staff in monitoring and evaluation of agricultural projects; and (d) carrying out of field investigations for baseline studies. The Project is expected to be completed by June 30, 1986. -19- SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part 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 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 60 days prior to the date of availability to the public of the first tender or prequalification documents relating thereto, as the case m 7 be, a general procurement notice, in such form and detail and cocaining such information as the Association shall reasonably request; the Association will arrange for the publica- tion of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods in question. The Borrower shall provide the necessary information to update such notice annually so long as any goods remain to be procured on the basis of international competitive bidding. 3. Equipment, vehicles or fertilizer shall be grouped so as to permit such bulk procurement as shall be consistent with sound technical and procurement practices. Contracts for such groups shall be for not less than $75,000 equivalent. 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; (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; 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. - 20 - 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 Liberia 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 Liberia 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 Liberia 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 impor- 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 evalu- ated 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 further comparison only, an amount equal to: (i) the amount of customs duties and other import taxes which a non-exempt importer would - 21 - 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 3 is the lowest evaluated bid shall be selected. C. Other Procurement Procedures 1. Contracts for civil works, and contracts for equipment, vehicles or fertilizer costing between $10,000 equivalent and $75,000 equivalent may be procured under local competitive bidding procedures acceptable to the Association; provided, however, that, in case no responsive bids are received, such contracts may be procured as provided in paragraph 2 below. 2. Contracts for goods costing less than $10,000 equivalent may be procured by negotiated purchase after solicitation of quotations from at least three suppliers. 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 $75,000 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 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 Bor- rower 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 Association, in - 22 - sufficient time for its review, a detailed report on the evalua- tion and comparison of the bids received, and such other informa- tion as the Association shall reasonably request. The Association shall, if it determines that the intended award would be incon- sistent 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 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 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 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. 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 issuing any change order under such contract (except in cases of extreme urgency) which would increase the cost of the contract by more than 15% of the original price, the Borrower 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 inconsistent with the provisions of this Agreement, shall promptly inform the Borrower and state the reasons for its determination. -23- SCHEDULE 4 Terms and conditions of Financing Agreement 1. The proceeds of the Credit allocated to Category (1) of Schedule 1 to the Development Credit Agreement shall be transferred to ACDB in exchange for shares of comion stock of ACDB. 2. The Borrower shall require ACDB to use such proceeds for purposes of Part D.2 of the Project, and, to this effect, to invest such proceeds in the equity of cooperative societies participating in the Project, such equity investment to be in such amounts as the society concerned shall have lent to its member farmers to finance their investment or seasonal requirements. 3. The Borrower shall require ACDB to enter into contractual arrangements with each cooperative society participating in the Project whereby the cooperative society will undertake: (a) to make loans to its members on the following terms: (i) short-term loans to meet farmers' seasonal require- ments shall be repayable over a period of not more than one year and bear interest at an annual rate of not less than 15%; (ii) loans for the development of swamp rice, cocoa and coffee plantations shall bear interest at an annual rate of not less than 12% and shall be repayable over a period of: (A) 3 years, including a grace period of one year, in the case of swamp rice development; (B) 12 years, including a grace period of five years, in the case of cocoa plantations; and (C) 10 years, including a grace period of five years, in the case of coffee plantations; - 24 - interest shall be capitalized during the grace period in all cases; (iii) the amount of any loan shall not exceed twenty times the amount invested in the cooperative society by the member concerned; (iv) overdue amounts shall bear an additional interest rate of 2% per annum; and (v) no member of a Town Cooperative Unit (TCU) shall be eligible for a new loan from the cooperative society unless the TCU concerned has recovered at least 90% of all amounts due to the cooperative society on account of loans made by it to members of such TCU; (b) (i) to open an interest bearing account with ACDB and to deposit in such account all funds accruing to the cooperative society from its participation in the Project, including loan repayments made by its members and proceeds of cash sales of agric- ultural inputs; and (ii) to pay to ACDB a commission of 4% of each deposit made by the cooperative society in such account; and (z) to use any funds accruing to it from its participation in the Project to repay ACDB's investment in such society; provided, however, that, unless otherwise required by ACDB after the review referred to below, the cooperative society may retain earnings equal to 75% of its equity less any amounts to be distributed as dividends to its members, other than the ACDB, in accordance with the cooperative society's by-laws. 4. The Borrower shall require ACDB to review, not later than December 31, 1985, in consultation with the Association, the terms of repayment of ACDB's investment and adjust such terms to the extent that the financial condition of the cooperative societies concerned is not adversely affected. - 25 - 5. Interest rates and mark-up margins of agricultural inputs shall be reviewed annually with the Association and the Borrower and, if necessary, -evised to reflect the costs of loan administration and agricultural inputs. 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 198. FORSECRETARY