Senegal - Investment Promotion Project : Credit 1136 - Credit Agreement - Conformed

p ll A CREDIT NUMBER 1136 SE Development Credit Agreement (Investment Promotion Project) between REPUBLIC OF SENEGAL and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated ; , 1981 CREDIT NUMBER 1136 SE DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated / 7 , 1981, between REPUBLIC OF SENEGAL (he ina ter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSO IATION (hereinafter called the Association). WHEREAS (A) by an agreement (hereinafter called the Loan Agreement) of even date herewith between the International Bank for Reconstruction and Development (hereinafter called the Bank) and Societe Financiere Sen6galaise pour le Developpement de l'Industrie et du Tourisme (hereinafter called SOFISEDIT), the Bank has agreed to assist in the financing of Part A of the Project described in Schedule 2 to this Agreement (hereinafter called the Project) in an amount in various currencies equivalent to six million five hundred thousand dollars ($6,500,000) (herein- after called the Loan); (B) the Borrower has requested the Association to assist in financing Parts B through E of the Project by extending the Credit as hereinafter provided; (C) Parts B and C of the Project will be carried out by SOFISEDIT with the Borrower's assistance and, as part of such assistance, the Borrower will make available to SOFISEDIT part of the proceeds of the Credit as hereinafter provided; (D) Part D of the Project will be carried out by Societe Nationale d'Etudes et de Promotion Industrielle (hereinafter called SONEPI) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to SONEPI part of the proceeds of the Credit as hereinafter provided; 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 and in the Joint Project Agreement of even date herewith between the Association and SOFISEDIT and SONEPI; 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 -2- Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein, subject, however, to the following modifications thereof (said General Conditions Applicable to Development Credit Agreements of the Association, as so modified, being hereinafter called the General Conditions): (a) Paragraph (i) of Section 9.01 is deleted and the following paragraph is substituted therefor: "(i) exchange views through their representatives with regard to the progress of the Project, the benefits derived therefrom, the performance of their respective obligations under the Development Credit Agreement, the performance by SOFISEDIT and SONEPI of their respective obligations under the Joint Project Agreement, the performance of the Borrower and SOFISEDIT of their respective obligations under the SOFISEDIT Financing Agreement, the performance by the Bor- rower and SONEPI of their respective obligations under the SONEPI Financing Agreement and other matters relating to the purposes of the Credit; and" (b) Paragraph (b) of Section 9.01 is deleted and the following paragraph is substituted therefor: "The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threat- ens to interfere with, the progress of the Project, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by any one of them of its obligations under the Development Credit Agreement, the performance by SOFISEDIT and SONEPI of their respective obligations under the Joint Project Agreement, the perfor- mance by the Borrower and SOFISEDIT of their respective obligations under the SOFISEDIT Financing Agreement, and the performance by the Borrower and SONEPI of their respective obligations under the SONEPI Financing Agreement." (c) The following new paragraph (d) is added to Section 9.01: "The several terms used in this Section shall have the respective meanings set forth in these General Conditions or in the Development Credit Agreement." -3- 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) "Joint Project Agreement" means the agreement between the Association and SOFISEDIT and SONEPI of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Joint Project Agreement and all agreements supplemental to the Joint Project Agreement; (b) "SOFISEDIT Financing Agreement" means the agreement to be entered into between the Borrower and SOFISEDIT pursuant to Section 3.01 (b) of this Agreement, as such agreement may be amended from time to time, and such term includes all schedules to the SOFISEDIT Financing Agreement; (c) "SONEPI Financing Agreement" means the agreement to be entered into between the Borrower and SONEPI pursuant to Section 3.01 (c) of this Agreement, as such agreement may be amended from time to time, and such term includes all schedules to the SONEPI Financing Agreement; (d) "SOFISEDIT's Statutes" means the Statuts of SOFISEDIT dated March 19, 1974 as amended to the date of this Agreement and as further amended from time to time with the prior approval of the Association; (e) "SONEPI's Statutes" means the Statuts of SONEPI dated July 23, 1968 as amended to the date of this Agreement and as further amended from time to time with the prior approval of the Association; (f) "CFA Franc" and "CFAF" mean the currency of the Borrower; (g) "investment" means an investment made or proposed to be made by SOFISEDIT out of the proceeds of the Credit under Part B of the Project in an Investment Enterprise for an Investment Project; (h) "sub-loan" means a loan or credit made or proposed to be made by SOFISEDIT out of the proceeds of the Loan to an Investment Enterprise for an Investment Project; -4- (i) "Investment Enterprise" means an enterprise in which SOFISEDIT proposes to make or has made an investment or a sub- loan; and (j) "Investment Project" means a specific development project to be carried out by an Investment Enterprise utilizing the proceeds of an investment or a sub-loan. 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 equiva- lent to two million one hundred thousand Special Drawing Rights (SDR 2,100,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of investments, goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association may otherwise agree, procurement of the goods required for Part D of the Project and to be financed out of the proceeds of the Credit, shall be governed by the provisions referred to in Section 3.04 of the Joint Project Agreement. Section 2.04. The Closing Date shall be June 30, 1985 or such later date as the Association shall establish. The Association shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a 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 2.06. Service charges shall be payable semiannually on May 15 and November 15 in each year. - 5- Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing May 15, 1991, and ending November 15, 2030, each installment to and including the installment payable on November 15, 2000, 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 2.08. The currency of the French Republic is hereby specified for the purposes of Section 4.02 of the General Condi- tions. Section 2.09. For the purpose of taking any action required or permitted to be taken under the provisions of Section 2.02 of this Agreement and Article V of the General Conditions, the Minister of the Borrower responsible for finance and any other person authorized in writing by him is designated as representa- tive of the Borrower in respect of actions involving Category (2) (e) of the table set forth in paragraph 1 of Schedule 1 to this Agreement, the President Directeur Gen6ral of SOFISEDIT and any other person authorized in writing by him is designated as representative of the Borrower in respect of actions involving Categories (1), (2) (a) and (2) (b) of such table, and the President Directeur General of SONEPI and any other person authorized in writing by him is designated as representative of the Borrower in respect of actions involving Categories (2) (c), (2) (d) and (3) of such table. ARTICLE III Execution of Parts B through E of the Project Section 3.01. (a) The Borrower shall carry out or cause to be carried out Part E of the Project, cause SOFISEDIT to carry out Parts B and C of the Project, and cause SONEPI to carry out Part D of the Project, all with due diligence and efficiency and in con- formity with appropriate financial and administrative practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Under a financing agreement to be entered into between the Borrower and SOFISEDIT under terms and conditions which shall have been agreed to by the Association, the Borrower shall make available to SOFISEDIT the portion of the proceeds of the Credit allocated to expenditures required for the carrying out of Parts B -6- and C of the Project, including the amounts allocated from time to time to Categories (1), (2) (a) and (2) (b) of the table set forth in paragraph 1 of Schedule 1 to the Development Credit Agreement. (c) Under a financing agreement to be entered into between the Borrower and SONEPI under terms and conditions which shall have been agreed to by the Association, the Borrower shall make available to SONEPI the portion of the proceeds of the Credit allocated to expenditures required for the carrying out of Part D of the Project, including the amounts allocated from time to time to Categories (2) (c), (2) (d) and (3) of the table set forth in paragraph 1 of Schedule 1 to the Development Credit Agreement. (d) Without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause SOFISEDIT and SONEPI to perform in accordance with the provisions of the Joint Project Agreement, the SOFISEDIT Financing Agreement and the SONEPI Financing Agreement all of their respective obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable SOFISEDIT and SONEPI to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (e) The Borrower shall exercise its rights under the SOFISEDIT Financing Agreement and the SONEPI Financing Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association may otherwise agree, the Borrower shall not assign, amend, abrogate or waive the SOFISEDIT Financing Agreement or the SONEPI Financing Agreement or any provision of either of such Agreements. Section 3.02. In order to assist the Borrower in carrying out Part E of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 3.03. (a) The Borrower shall, through its Ministry responsible for industry, furnish to the Association, promptly upon their preparation, the reports and contract documents for Part E of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reason- ably request. -7- (b) The Borrower shall: (i) through its Ministry responsible for industry, maintain records and procedures adequate to record, monitor and evaluate the progress of Part E of the Project (including its costs and the benefits to be derived from it), to identify the services financed out of the proceeds of the Credit under Part E of the Project, and to disclose their use in the Project; and (ii) furnish to the Association within sixty calendar days after each calendar semester a report of such scope and in such detail as the Association shall reasonably reque3t concerning Part E of the Project, its cost and, where appropriate, the benefits to be derived from it, the expenditure of the proceeds of the Credit under Part E of the Project and the services financed out of such proceeds. (c) Upon the award by the Borrower of any contract for 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. Section 3.04. The Borrower shall review with the Association the conclusions and recommendations of the studies under Part E of the Project and shall implement agreed recommendations in consultation with the Association. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) (i) SOFISEDIT's Statutes or SONEPI's Statutes shall, without the prior approval of the Association, have been amended, suspended, abrogated, repealed, waived, or shall cease to be enforced, so as to affect materially and adversely the carrying out by SOFISEDIT or SONEPI, as the case may be, of its respective covenants, agreements and obligations set forth in the Joint Project Agreement; (ii) SOFISEDIT or SONEPI, as the case may be, shall have failed to perform any of its respective covenants, -8- agreements or obligations set forth in the Joint Project Agreement; (iii) the Borrower or SOFISEDIT shall have failed to perform any of its respective covenants, agreements or obligations set forth in the SOFISEDIT Financing Agreement; (iv) the Borrower or SONEPI shall have failed to perform any of its respective covenants, agreements or obligations set forth in the SONEPI Financing Agreement; (v) an extraordinary situation shall have arisen which shall make it improbable that SOFISEDIT or SONEPI, as the case may be, will be able to perform its obligations set forth in the Joint Project Agree- ment; (vi) the Borrower or any other authority having juris- diction shall have dissolved, disestablished or suspended the operations of SOFISEDIT or SONEPI, as the case may be; and (vii) a subsidiary or any other entity shall have been created or acquired or taken over by SOFISEDIT, if such creation, acquisition or taking over would adversely affect the conduct of SOFISEDIT's busi- ness or SOFISEDIT's financial condition or the efficiency of SOFISEDIT's management and personnel or the carrying out of Part A of the Project; provided, however, that the suspension of the right to make withdrawals from the Credit Account shall be limited to the undisbursed portion of the Credit which has been allocated to the Part of the Project affected by any of the above-mentioned events; and (b) a default shall have occurred under the Loan Agreement other than in respect of any payment required thereunder provided, however, that the suspension of the right to make withdrawals from the Credit Account shall be limited to the undisbursed portion of the Credit which has been allocated to Parts B and C of the Project. -9- Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraph (a) (ii), (a) (iii), (a) (iv), (a) (vii) or (b) of Section 4.01 of this Agreement shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower, SOFISEDIT and SONEPI, as the case may be; and (b) any event specified in paragraph (a) (i) or (a) (vi) of Section 4.01 of this Agreement shall occur. ARTICLE V Effective Date; Termination Section 5.01. 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 Joint Project Agreement has been duly authorized or ratified by SOFISEDIT and SONEPI, and is legally binding upon SOFISEDIT and SONEPI in accordance with its terms. Section 5.02. The date 4r / p/, is hereby speci- fied for the purposes of Section 12.04 of the General Conditions. Section 5.03. The provisions of paragraph (a) of Section 4.01 and of paragraph (b) of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Except as provided in Section 2.09 of this Agreement, the Minister of the Borrower responsible for finance Is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: - 10 - For the Borrower: 1finistere de l'Economie et des Finances Rxe Charles Latne Botte Postale 4017 Dakar, Senegal Cable address: Telex: MINIFINANCES 512 Dakar TRESOR SG 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 Agree- ment 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 SENEGAL Authorized lpresentative INTERNATIONAL DEVELOPMENT ASSOCIATION Regional Vice President Western Africa - 11 - 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) Investments 830,000 100% of SOFISEDIT's under Part B of the disbursements Project (up to 25% of the equity of the Investment Enter- prise) (2) Experts and consul- tants' services: (a) under Parts C 330,000 100% of foreign (i) and (ii) of expenditures the Project (b) under Part C 250,000 100% of foreign (iii) and (iv) expenditures of the Project (c) under Part D (1) 90,000 100%. of the Project (d) under Part D (ii) 210,000 100% of the Project (e) under Part E 170,000 100% of the Project (3) Goods under Part D 130,000 100% of the Project - 12 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (4) Unallocated 90,000 TOTAL 2,100,000 2. For the purposes of this Schedule the term "foreign expen- ditures" 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; 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 com- pliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; 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. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) payments made for expenditures prior to April 21, 1981, except that: (i) withdrawals, in an aggregate amount not exceeding the equivalent of $130,000, may be made in respect of Category (2) (a) on account of payments made for such expendi- tures before that date but after August 31, 1980; and (ii) with- drawals, in an aggregate amount not exceeding the equivalent of $50,000, may be made in respect of Category (2) (c) on account of payments made for such expenditures before that date but after February 28, 1981; - 13 - (b) Categories (1), (2) (a) and (2) (b) unless: (i) the SOFISEDIT Financing Agreement has been executed on behalf of the Borrower and SOFISEDIT; and (ii) the Association has been furnished an opinion or opinions satisfactory to it of counsel acceptable to it that the SOFISEDIT Financing Agreement has been duly authorized or ratified by the Borrower and SOFISEDIT and is legally binding upon the Borrower and SOFISEDIT in accordance with its terms; (c) an investment under Part B of the Project unless the investment shall have been approved by the Association; (d) Categories (2) (c), (2) (d) and (3) unless: (i) the SONEPI Financing Agreement has been executed on behalf of the Borrower and SONEPI; and (ii) the Association has been furnished an opinion or opinions satisfactory to it of counsel acceptable to it that the SONEPI Financing Agreement has been duly authorized or ratified by the Borrower and SONEPI and is legally binding upon the Borrower and SONEPI in accordance with its terms; and (e) Categories (2) (d) and (3) unless the results of SONEPI's performance audit have been approved by the Association pursuant to Section 3.03 of the Joint Project Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, following consultation with 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 with- drawals 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 - 14 - 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. - 15 - SCHEDULE 2 Description of the Project The Project consists of the following Parts: Part A: A program of financing productive facilities and resources in the Republic of Senegal as will contribute to the economic and social development of the country by means of loans to private and mixed enterprises in the Republic of Senegal for specific development projects in the industrial, fisheries and tourism sectors in fur- therance of SOFISEDIT's corporate purposes. Part B: A program of investments by SOFISEDIT in Senegalese majority owned enterprises in the industrial, fisheries and tourism sectors which are eligible for credit from SOFISEDIT. Part C: Institutional strengthening of SOFISEDIT, including: (i) a program of improvements in its organization, financial management and corporate strategy; (ii) a review of the demand for credit by the fisheries sector in Senegal; the establishment of an appro- priate fisheries credit department, satisfactory to the Association; and the organization and imple- mentation of a training program for the pro- fessional staff of such department; (iii) strengthening of its project supervision capa- bilities and monitoring its equity investment portfolio; and (iv) a staff training. program with emphasis on: (a) financial and accounting techniques; (b) appraisal and supervision of industrial, fisheries and tourism Investment Projects; and (c) measure- ment and monitoring of the results of Investment Projects. Part D: (i) A performance audit of SONEPI's operations and organization; and - 16 - (ii) a program of improvements in SONEPI's operations and organization to strengthen project identifica- tion capabilities and assistance to enterprises. Part E: (i) a study of the procedures to approve industrial investments; (ii) a study of the coherence between the Borrower's industrial development objectives and various policy instruments used by the Borrower to carry out its economic policies; and (iii) a training program for the staff of the Borrower's Ministry responsible for industry as agreed with the Association. The Project is expected to be completed by December 31, 1984. 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 L. FOR SECRETARY