Zambia - Legal Management Upgrading Project : Credit 2535 - Credit Agreement - Conformed

DOCUMENTS CREDIT NUMBER 2535 ZA Development Credit Agreement (Financial and Legal Management Upgrading Project) between REPUBLIC OF ZAMBIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated fe, 1993 LOAN NUMBER 2535 ZA DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated 30 , 1993, between the REPUBLIC OF ZAMBIA (the Borrower) and the INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS the Borrower, having satisfied itself as to the feasibility and priority of the Project described in Schedule 2 to this Agreement, has requested the Association to assist in the financing 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 set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Development Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. Section 1.02. 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) "MOLA" means the Borrower's Ministry of Legal Affairs; (b) "ZNTB" means the Zambia National Tender Board, a statutory body established pursuant to the Borrower's Zambia National Tender Board Act of 1982; (c) "ZICA" means the Zambia Institute of Certified Accountants, an institute established pursuant to the Accountants Act of 1982; (d) "CBU" means the Copperbelt University, a statutory body established pursuant to the Borrower's University Act of 1992; -2- (e) "ATC" means the Accountancy Training College of Chingola, a training institute owned and managed by the Zambia Consolidated Copper Mines Limited, a company established and operating under the laws of the Borrower; (f) "NSBM" means the NIEC School of Business Management, a trust managed by the Zambia Industrial and Mining Corporation Limited, a holding company established and operating under the laws of the Borrower; (g) "Special Account" means each of the accounts referred to in Section 2.02 (b) of this Agreement; (h) "Project Account" means the account to be opened by the Borrower pursuant to Section 3.05 (a) of this Agreement; (i) "Project Preparation Advance" means the project preparation advance granted by the Association to the Borrower pursuant to an exchange of letters dated April 27, 1993 and May 6, 1993 between the Borrower and the Association; and (j) "Kwacha" means 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 set forth or referred to in this Agreement, an amount in various currencies equivalent to twelve million eight hundred thousand Special Drawing Rights (SDR 12,800,000). 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 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 described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars two special deposit accounts, a Financial Component Special Account for the purposes of Part A of the Project and a Legal Component Special Account for purposes of -3- Part B of the Project, each in a commercial bank acceptable to the Association on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedule 4 to this Agreement. (c) 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 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. Section 2.03. The Closing Date shall be June 30, 1999 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the principal amount of the Credit not withdrawn from time to time at a rate to be set by the Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 of 1%) per annum. (b) The commitment charge shall accrue: (i) from the date sixty days after the date of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or cancelled; and (ii) at the rate set as of the June 30 immediately preceding the accrual date or at such other rates as may be set from time to time thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be applied from the next payment date in that year specified in Section 2.06 of this Agreement. (c) 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. -4- Section 2.05. The Borrower shall pay to the Association a service 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. Commitment charges and service charges shall be payable semiannually on February 1 and August 1 in each year. Section 2.07. (a) Subject to paragraphs (b) and (c) below, the Borrower shall repay the principal amount of the Credit in semi- annual installments payable on each February 1 and August 1 commencing August 1, 2003 and ending February 1, 2033. Each installment to and including the installment payable on February 1, 2013 shall be one percent (1%) of such principal amount, and each installment thereafter shall be two percent (2%) of such principal amount. (b) Whenever: (i) the Borrower's gross national product per capita, as determined by the Association, shall have exceeded $790 in constant 1985 dollars for five consecutive years; and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the Association may, subsequent to the review and approval thereof by the Executive Directors of the Association and after due consideration by them of the development of the Borrower's economy, modify the terms of repayment of installments under paragraph (a) above by requiring the Borrower to repay twice the amount of each such installment not yet due until the principal amount of the Credit shall have been repaid. If so requested by the Borrower, the Association may revise such modification to include, in lieu of some or all of the increase in the amounts of such installments, the payment of interest at an annual rate agreed with the Association on the principal amount of the Credit withdrawn and outstanding from time to time, provided that, in the judgment of the Association, such revision shall not change the grant element obtained under the above-mentioned repayment modification. (c) If, at any time after a modification of terms pursuant to paragraph (b) above, the Association determines that the Borrower's economic condition has deteriorated significantly, the Association may, if so requested by the Borrower, further modify the terms of repayment to conform to the schedule of installments as provided in paragraph (a) above. -5- Section 2.08. 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. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement and, to this end: (i) shall carry out Parts B.1, B.2 and B.3 of the Project through MOLA, Part B.4 of the Project through the Industrial Relations Court and Part B.5 of the Project through the Office of the Registrar of Companies, all with due diligence and efficiency and in conformity with appropriate financial, procurement and legal practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for such Parts of the Project; and (ii) without limitation or restriction upon any of its other obligations under this Agreement, shall cause ZICA to carry out Parts A.1 and A.5 of the Project, ZNTB to carry out Parts A.3 and A.4 of the Project, and CBU, ATC, and NSBM, to carry out Parts A.2 (a), A.2 (b) and A.2 (c) of the Project, respectively, all with due diligence and efficiency and in conformity with appropriate accounting practices, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable such entities to carry out their parts of the Project, and shall not take or permit to be taken any action which would prevent or interfere with the carrying out of the Project by such entities. (b) Without limitation upon the provisions of paragraph (a) of this Section and, except as the Borrower and the Association shall otherwise agree, the Borrower shall carry out Part B of the -6- Project and cause ZICA, CBU, ATC, ZNTB and NSBM to carry out their respective Parts of the Project, in accordance with the Implementation Program set forth in Schedule 5 to this Agreement. (c) The Borrower shall make the proceeds of the Credit for their respective parts of the Project available to ZICA, CBU, ATC, ZNTB and NSBM as grants. Section 3.02. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' servides required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. Section 3.03. The Borrower shall, by the date one year after the Effective Date, furnish to the Association the diagnostic report referred to under Part A.3 of the Project; the report shall be of such scope and in such detail as the Association shall specify. Section 3.04. (a) The Borrower shall, no later than December 31, 1996, or such other date as shall be agreed upon between the Borrower and the Association, carry out jointly with the Association a mid-term review of the Project. The review shall, inter alia, assess progress: (i) in achieving agreed monitorable targets established for the Project; (ii) in implementing the recommendations of the diagnostic report referred to in Section 3.03 of this Agreement; and (iii) by ZICA, in establishing a technician level certificate for accountancy training. (b) The Borrower shall implement the recommendations acceptable to the Association of the mid-term review. Section 3.05. The Borrower shall, for the purposes of the Project: (a) open and maintain in Kwacha in the name of the Project an account (the Project Account) in a commercial bank acceptable to the Association on terms and conditions acceptable to the Association; -7- (b) deposit into the Project Account an initial amount in Kwacha equivalent to fifty thousand dollars ($50,000); (c) thereafter deposit into the Project Account not later than March 31, June 30, September 30, and December 31 in each year during Project implementation, the amount necessary to replenish the Project Account to the initial amount referred to in the preceding sub-paragraph; and (d) ensure that amounts deposited into the Project Account pursuant to paragraphs (b) and (c) above shall be used only to make payments to meet expenditures made or to be made in respect of the reasonable cost of goods and services for the Project and not financed or to be financed by the Credit. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section, including those for 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 soon as available, but in any case not later than nine months after the end of each such year: (A) certified copies of said records and accounts for such year as so audited; and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and -8- (iii) furnish to the Association such other information concerning such records, accounts, financial statements and the audit thereof as the Association shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account or payment out of the Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Association's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their preparation, can be relied upon to support the related withdrawals. ARTICLE V Remedies of the Association Section 5.01. Pursuant to Section 6.02 (h) of the General Conditions, the following additional events are specified: (a) as a result of events which have occurred after the date of this Agreement, an extraordinary situation shall have arisen -9- which shall make it improbable that ZICA, ZNTB, CBU, ATC or NSBM will be able to perform their respective obligations under the Project; (b) the various laws referred to in Section 1.02 (b), (c) and (d) shall have bi=on amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of ZICA, CBU, or ZNTB to perform any of their respective obligations under the Project; and (c) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of ZICA, ZNTB, CBU, ATC or NSBM or for the suspension of their operations. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional event is specified, namely, that any event specified in paragraphs (b) or (c) of Section 5.01 of this Agreement shall occur. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of this Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) that the Borrower has appointed the two Coordinators referred to in paragraphs A.1 and B.1 of Schedule 5 to this Agreement and a procurement officer for the Project using the procedures in Section II of Schedule 3 to this Agreement; and (b) the Borrower has opened the Project Account in accordance with Section 3.05 (a) of this Agreement and has deposited therein the initial amount referred to in Section 3.05 (b) of this Agreement. Section 6.02. The date ninety (90) days after the date of this Agreement is hereby specified for the purposes of Section 12.04 of the General Conditions. - 10 - 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 P.O. Box 50062 Ridgeway Lusaka, Zambia Cable address: Telex: MINFIN 42221 Lusaka For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 248423 (RCA) Washington, D.C. 82987 (FTCC) 64145 (WUI) or 197688 (TRT) - 11 - IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, 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 ZAMBIA By /41 & Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION Regional ce7resident Africa - 12 - 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) Civil works 350,000 100% of foreign expenditures and 85% of local expenditures (2) Vehicles, 100% of foreign equipment expenditures and and furniture: 95% of local expenditures (a) under Part A.1 300,000 to A.3 and A.5 of the Project (b) under Part A.4 200,000 of the Project (c) under Part B 3,900,000 of the Project - 13 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (3) Training: 100% (a) under Part A.1 250,000 to A.3 and A.5 of the Project (b) under Part A.4 780,000 of the Project (c) under Part B 1,400,000 of the Project (4) Consultants' services 1,200,000 100% for Part A of the Project (5) Printing under 1,430,000 100% Part B.2 (d) of the Project (6) Library books and 100% journals: (a) under Part A 230,000 of the Project (b) under Part B 1,600,000 of the Project (7) Project Coordi- 100% nation and Management: (a) for Part A of 300,000 the Project (b) for Part B of 180,000 the Project - 14 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (8) Refunding of 180,000 Amount due Project Prepa- pursuant to ration Advance Section 2.02 (c) of this Agreement (9) Unallocated 500,000 TOTAL 12,800,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than that of the Borrower for goods or services supplied from the territory of any country other than that of the Borrower; (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; and (c) the term "project coordination and management" means the expenditures in respect of: (i) vehicles and equipment (including fuel and maintenance) for use in the coordination and management of the Project, and salaries, training and office expenses of the Financial Component Coordinator, the Legal Component Coordinator and the procurement officer; and (ii) the Project launch workshop, the independent audits of the Project accounts and salaries of the supervising architect and three secretaries. 3. Notwithstanding the provisions of paragraph I 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 Categories (2) (b) and (3) (b), until the Borrower has completed the diagnostic study described under Part A.3 of the Project under terms of reference agreed upon with the Association and has reached agreement with the Association on a plan of action based on the recommendations of the study; and (c) payments made in respect of Category (1) until the Borrower has - 15 - employed an architect acceptable to the Association under terms and conditions acceptable to the Association for the supervision of the civil works to be undertaken under the Project. - 16 - SCHEDULE 2 Description of the Project The objectives of the Project are to improve the flow of public and private business activity and the implementation of development programs, and to facilitate reform through capacity building and institutional development in the areas of accounting, auditing, public sector procurement and provision of legal services and of business information. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Association may agree upon from time to time to achieve such objectives: Part A: Financial Management 1. Strengthening of ZICA through training of its staff in order to improve national accounting and auditing standards and to introduce Zambian accountancy qualifications. 2. Strengthening of: (a) the Accountancy Department of the Business Faculty of CBU; (b) the ATC; and (c) the NSBM through provision of equipment and training of staff in order to increase the number of middle and technician level accountants in the territory of the Borrower. 3. C rrying out a diagnostic study of the Borrower's procurement procedures. 4. Improvement of the Borrower's procurement standards and practices, including strengthening the capacity of ZNTB through: (a) clarification of the respective roles of ZNTB and its committees; (b) harmonization of procurement procedures and practices of the Borrower and of the various donors involved in the territory of the Borrower to evolve best practices and a set of standard procurement documents and procedures acceptable to the majority of the parties involved and adoption by the Borrower of such practices and documents; and (c) training of public servants, including staff of parastatal organizations, involved in procurement. - 17 - 5. Carrying out studies of various aspects of the financial management as may be agreed upon between the Borrower and the Association during Project implementation. Part B: Legal Management 1. General Training Program (a) Carrying out a comprehensive training program for legal and paralegal staff of the judicial services, MOLA and other ministries of the Borrower involved in commercial law issues, including the Office of the Registrar of Companies; and (b) improving the capacity of the Law Practice Institute and the Institute of Legislative Drafting to provide quality training and education, through training of staff, rehabilitation of school buildings and acquisition of office equipment and materials (including computer hardware and software), and of reference books, journals and furniture. 2. Ministry of Legal Affairs Strengthening the capacity of MOLA to provide quality legal services through: (a) acquisition of office equipment and materials (including computer hardware and software), and of reference books and journals, furniture and vehicles; (b) training of relevant staff in the use of computer hardware and software acquired under the Project; (c) holding a workshop for key line ministries on correct procedures for submission of instructions to the Legislative Drafting Department; and (d) printing of the Laws of Zambia. - 18 - 3. Supreme Court and High Court Strengthening the capacity of the Supreme Court and the High Court to deal effectively with its case load through: (a) acquisition of office equipment and materials (including computer hardware and software), and of reference books, journals, furniture and vehicles; and (b) training of relevant staff in the use of computer hardware and software acquired under the Project. 4. Industrial Relations Court Strengthening the capacity of the Industrial Relations Court to dispose of disputes through: (a) establishment of a permanent Industrial Relations Court in Ndola and rehabilitation of its building in order to create premises for use of such court; (b) rehabilitation of the premises of the Industrial Relations Court in Lusaka, including creation of a second court room; (c) acquisition of office equipment and materials (including computer hardware and software), and of reference books and journals, furniture and vehicles; and (d) training of relevant staff in the use of computer hardware and software acquired under the Project. 5. Registrar of Companies Strengthening the capacity of the Office of the Registrar of Companies to effectively collect and manage business information and to make such information available to thS general public through: (a) acquisition of office equipment and materials (including computer hardware and software) and of reference books and furniture; and - 19 - (b) training of relevant staff in the use of computer hardware and software acquired under the Project. The Project is expected to be completed by December 31, 1998. - 20 - SCREDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part 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 Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1992 (the Guidelines). (a) For fixed-price contracts, the invitation to bid referred to in paragraph 2.13 of the Guidelines shall provide that, when contract award is delayed beyond the original bid validity period, the successful bidder's bid price will be increased for each week of delay by two predisclosed correction factors acceptable to the Association, one to be applied to all foreign currency components and the other to the local currency component of the bid price. Such an increase shall not be taken into account in the bid evaluation. (b) In the procurement of goods in accordance with Part A hereof, the Borrower shall use the relevant standard bidding documents issued by the Bank, with such modifications thereto as the Association shall have agreed to be necessary for the purposes of the Project. Where no relevant standard bidding documents have been issued by the Bank, the Borrower shall use bidding documents based on other internationally recognized standard forms agreed with the Association. 2. To the extent practicable, contracts shall be grouped into bid packages estimated to cost the equivalent of $250,000 or more. 3. For the purposes of the pre-shipment inspection of goods imported under the Project, no price verification shall be conducted in respect of those goods to which Part A of this Section applies. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A.1 hereof, goods manufactured in Zambia may be granted a margin of preference in accordance with, and subject to, - 21 - the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Items or groups of items for goods estimated to cost the equivalent of $250,000 or less per contract, up to an aggregate amount equivalent to $1,000,000, and all civil works may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association. 2. Items or groups of items for goods estimated to cost the equivalent of $30,000 or less per contract, up to an aggregate amount equivalent to $200,000, may be procured under contracts awarded on the basis of comparison of price quotations obtained from at least three suppliers eligible under the Guidelines, in accordance with procedures acceptable to the Association. Part D: Review by the Association of Procurement Decisions 1. Review of prequalification: With respect to the prequalification of bidders, the procedures set forth in paragraph 1 of Appendix 1 to the Guidelines shall apply.. 2. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract for goods and works estimated to cost the equivalent of $250,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the - 22 - contract, together with the other information required to be furnished to the Association pursuant to said paragraph 3, shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 5 to this Agreement. (c) The provisions of the preceding subparagraph (b) shall not apply to contracts on account of which withdrawals from the Credit Account are to be made on the basis of statements of expenditure. 3. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants 1. In order to assist the Borrower in carrying out the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures 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 (the Consultant Guidelines). For complex, time-based assignments, the Borrower shall employ such consultants under contracts using the standard form of contract for consultants' services issued by the Bank, with such modifications as shall have been agreed by the Association. Where no relevant standard contract documents have been issued by the Bank, the Borrower shall use other standard forms agreed with the Association. 2. Notwithstanding the provisions of paragraph 1 of this Section, the provisions of the Consultant Guidelines requiring prior Association review or approval of budgets, short lists, selection procedures, letters of invitation, proposals, evaluation reports and contracts shall not apply to contracts estimated to cost less than $100,000 equivalent each. However, this exception to prior Association review shall not apply to the terms of reference for such contracts nor to the employment of individuals, to single source selection of firms, to assignments of a critical nature as reasonably determined by the Association or to amendments of contracts raising the contract value to $100,000 equivalent or above. - 23 - SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means: (i) Categories (2) (a), (2) (b), (3) (a), (3) (b), (4), (6) (a) and (7) (a) set forth in the table in paragraph 1 of Schedule 1 to this Agreement in respect of the Financial Component Special Account; and (ii) Categories (1), (2) (c), (3) (c), (5), (6) (b) and (7) (b) set forth in the table in paragraph 1 of Schedule 1 to this Agreement in respect of the Legal Component Special Account. (b) the term "eligible expenditures" means expenditures 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 allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $500,000 for the Financial Component Special Account and an amount equivalent to $500,000 for the Legal Component Special Account to be withdrawn from the Credit Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Association has received evidence satisfactory to it that the Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish the Special Account shall be made as follows: (a) For withdrawals of the Authorized Allocation, the Borrower shall furnish to the Association a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Association shall, on behalf of the Borrower, withdraw from the - 24 - Credit Account and deposit into the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Association requests for deposits into the Special Account at such intervals as the Association shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Association the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into the Special Account such amount as the Borrower shall have requested and as shall have been shown by said documents and other evidence to have been paid out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Association shall reasonably request, furnish to the Association such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Association shall not be required to make further deposits into the Special Account: (a) if, at any time, the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or - 25 - (b) once the total unwithdrawn amount of the Credit allocated to the eligible Categories, less the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to the eligible Categories shall follow such procedures as the Association shall specify by notice to the Borrower. Such further.withdrawals shall be made only after and to the extent that the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Association shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the Association: (A) provide such additional evidence as the Association may request; or (B) deposit into the Special Account (or, if the Association shall so request, refund to the Association) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Association shall otherwise agree, no further deposit by the Association into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case may be. (b) If the Association shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promrtly upon notice from the Association, refund to the Association such outstanding amount. (c) The Borrower may, upon notice to the Association, refund to the Association all or any portion of the funds on deposit in the Special Account. (d) Refunds to the Association made pursuant to paragraph 6 (a), (b) and (c) of this Schedule shall be credited to the Credit Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. - 26 - SCHEDULE 5 Implementation Program A. Part A of the Project 1. Coordination. The Borrower shall appoint and maintain in ZICA, until Project completion, a Coordinator (the Financial Component Coordinator) having qualifications, experience and terms of reference acceptable to the Association to coordinate the implementation of Part A of the Project. 2. Documentation. The Financial Component Coordinator shall act as liaison with the Association with respect to all documentation for Part A of the Project. 3. Progress Reports. The Financial Component Coordinator shall prepare and furnish to the Association, by June 30 and December 31 in each year during Project Implementation, detailed bi-annual progress reports for Part A of the Project, including progress achieved on financial, physical, procurement, disbursement and training targets, all in a form acceptable to the Association. 4. Implementation. ZICA, CBU, ATC, ZNTB and NSBM shall each be responsible for implementing its respective Project component or components. B. Part B of the Project 1. Coordination. The Borrower shall appoint and maintain in MOLA until Project completion a Coordinator (the Legal Component Project Coordinator) having qualifications, experience and terms of reference acceptable to the Association to coordinate the implementation of Part B of the Project. 2. Documentation. The Legal Component Coordinator shall act as the liaison with the Association with respect to all documentation for Part B of the Project. 3. Progress Reports. The Legal Component Coordinator shall prepare and furnish to the Association, by June 30 and December 31 in each year during Project Implementation, detailed bi-annual progress reports for Part B of the Project, including progress achieved on financial, physical, procurement, disbursement and training targets, all in a form acceptable to the Association. - 27 - 4. Implementation. The Supreme and High Courts, the Law Practice Institute, the Industrial Relations Court and the Office of the Registrar of Companies shall each be responsible for implementing its respective Project component or components. C. Training The Borrower shall ensure that the Legal Component Coordinator and the Financial Component Coordinator attend procurement training at the Eastern and Southern Africa Management Institute (ESAMI) not later than twelve months after the Effective Date. D. General Matters 1. The Borrower shall furnish to the Association by October 31 in each year the consolidated budget and work program for the Project for the following year. 2. The Borrower shall appoint an independent auditor acceptable to the Association for the purposes of Section 4.01 (b) of this Agreement not later than thirty days after the Effective Date. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY