Conformed Copy - C1890 - Small Rural Operations Project - Development Credit Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 1890 NIR (Small Rural Operations Project) between REPUBLIC OF NIGER and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated September 14, 1988 CREDIT NUMBER 1890 NIR DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated September 14, 1988, between REPUBLIC OF NIGER (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS (A) 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; (B) the Borrower intends to obtain from the Government of the Swiss Confederation (Switzerland) a non-reimbursable contri- bution (the Swiss Contribution) in an amount of twelve million five hundred thousand Swiss francs (SwF 12,500,000) to assist in financing part of the Project on the terms and conditions set forth in an agreement (the Swiss Contribution Agreement) to be entered into between the Borrower and Switzerland; (C) Switzerland has appointed the Association to administer the Swiss Contribution in accordance with the provisions of a Page 2 Procedural Arrangement, dated April 9, 1987 (the Arrangement), between Switzerland and the Association, and the Association has accepted such appointment; 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 Develop- ment 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) "BDRN" means Banque de Developpement de la Republique du Niger; (b) "Capital Replacement Account" means the account opened or to be opened by a Group of Producers for the purposes referred to in Section 3.04 of this Agreement; (c) "CFAF" and "CFA franc" mean the currency of the Borrower; (d) "DDRM" means the Direction du Developpement Regional et des Micro-realisations within the Ministry of Planning; (e) "DDRM Unit" means the unit within DDRM responsible for SRO (as hereinafter defined); (f) "Fiscal Year" means the Borrower's fiscal year which runs from October 1 to September 30; (g) "Group of Producers" means a group of rural producers with membership and responsibilities appropriate to operate the facilities under an SRO (as hereinafter defined) and empowered, through its authorized representatives, to carry out the obligations specified in Section 3.04 of this Agreement, all in accordance with the Borrower's relevant procedures and applicable laws; (h) "Project Area" means the districts selected or to be selected by the Borrower in the Niamey, Dosso and Tahoua Departments; (i) "Project Preparation Advance" means the project pre- paration advance granted by the Association to the Borrower pursuant to exchanges of letters, dated September 19, 1981/ October 16, 1981, and May 28, 1987/July 17, 1987, between the Borrower and the Association; (j) "SRO" means a small rural operation identified or to be identified by the Borrower, under Part C of the Project; (k) "Special Accounts" means the accounts referred to in Section 2.02 (c) of this Agreement; (l) "Sub-Account" means any sub-account to be opened under a Special Account for the financing out of the proceeds of the Credit or the Swiss Contribution of SROs under Part C of the Project, as set forth in Section 2.02 (c) of this Agreement; and Page 3 (m) "Swiss Contribution Account" means the account established by Switzerland for the purpose of the Swiss Contribution. 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 the Development Credit Agreement, an amount in various currencies equivalent to seven million one hundred thousand Special Drawing Rights (SDR 7,100,000). Section 2.02. (a) The amount of the Credit and the amount of the Swiss Contribution may be withdrawn from the Credit Account and the Swiss Contribution 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 and the Swiss Contribution. (b) Except as Switzerland and the Association shall otherwise agree, the allocation and withdrawal of the Swiss Contribution shall be governed, mutatis mutandis, by the provision of the General Conditions. (c) The Borrower shall, for the purposes of the Project, open and maintain in CFAF two Special Accounts in a Niamey branch of BDRN on terms and conditions satisfactory to the Association. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedule 5 to this Agreement. The Borrower may, for the purposes of carrying out an SRO under Part C of the Project, open and maintain in CFAF, one Sub-Account of a Special Account per district in local branches of BDRN or at the nearest post office, on terms and conditions satisfactory to the Association. (d) 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 out- standing as of such date, and 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, 1996, 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 a 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 as of the next payment date in that year, specified in Section 2.06 of this Agreement, except that the rate set as of June 30, 1988 shall be applied as of July 1, 1988. (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 Page 4 Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.05. 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 January 1 and July 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 semiannual installments payable on each January 1 and July 1 commencing July 1, 1998 and ending January 1, 2028. Each installment to and including the installment payable on January 1, 2008, 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. Section 2.08. The currency of the French Republic 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, shall carry out the Project, through DDRM, with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agricul- tural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (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 the Project in accordance with the Implementation Program set forth in Schedule 4 to this Agreement. Page 5 Section 3.02. Except as the Association and Switzerland shall otherwise agree, procurement of goods, works and consultants' services, required for the Project and to be financed out of the proceeds of the Credit and the Swiss Contribution, shall be governed by the provisions of Schedule 3 to this Agreement. Section 3.03. In order to carry out Part C of the Project, the Borrower shall, through DDRM, annually enter into a frame- work agreement, on terms and conditions satisfactory to the Association, with each of the relevant provincial and district development councils, pursuant to which: (a) the overall annual program of SROs shall be defined for each province; (b) the respective responsibilities for, inter alia, technical assistance, logistical support, supervision and training shall be assigned between the relevant provinces and districts; and (c) the provincial development councils shall be entrusted with the final approval of SROs which are part of their respective annual program of SROs. Section 3.04. Pursuant to the framework agreement referred to in Section 3.03 of this Agreement, each district development council responsible for carrying out an annual program of SROs under Part C of the Project shall enter into a development contract or other contractual arrangements, on terms and conditions satisfactory to the Association, with a Group of Producers responsible for the execution of a specific SRO, pursuant to which: (a) each specific SRO shall be detailed; (b) the respective responsibilities for the execution of said SRO shall be assigned to the relevant districts and villages; (c) the relevant Group of Producers shall be required: (i) to provide all unskilled labor required for construction; (ii) to reimburse, except for the SRO referred to under Part C (3) and (4) of the Project, the cost of materials used for well construction; (iii) to bear all operating and maintenance costs after the initial 12 months of operation; (iv) to collect the cash amount required to be deposited into a Capital Replacement Account opened at the the nearest branch of BDRN or at the nearest post office, prior to initial installation of medium- term assets including animals, said cash amount representing at least five percent (5%) of the delivered cost including installation charges of the assets; (v) to collect and pay into the Capital Replacement Account cash annuities calculated at replacement cost on dates to be specified in the development contract; (vi) to allocate land, within each perimeter to be developed as part of such SRO, to the respective members of the Group of Producers; and (vii) to set up appropriate operating procedures for access of its members to common goods and services; and (d) such district development council shall have the right to inspect, by itself or jointly with representatives of the Association, the goods, sites, works, construction, facilities operated by the Group of Producers, the operation thereof, and any relevant records and documents. Page 6 Section 3.05. The Borrower shall select, through provincial development councils, proposed SROs under Part C of the Project in accordance with the following criteria: (a) SRO shall be a directly productive farming activity in conformity with the national and provincial development strategy; (b) SRO shall be financially self-supporting; (c) SRO shall be within the Project Area; (d) SRO shall have been requested by, and be manifestly in the interest of, a Group or Groups of Producers having shown willingness to accept the provisions of the development contract referred to in Section 3.04 of this Agreement; (e) SRO shall be easily maintainable by beneficiaries; and (f) SRO shall be environmentally sound. Section 3.06. The Borrower shall cause the DDRM Unit to: (i) examine at least twice a year the status of each Capital Replacement Account referred to under Section 3.04 (c) (vi) of this Agreement, and, in case of deliquency, issue necessary instructions so that all appropriate measures are taken to ensure that all arrears are paid promptly thereafter; and (ii) annually submit to the Association the status of each Capital Replacement Account. Section 3.07. The Borrower shall, not later than August 31 of each year, submit to the Association, for information, the annual provincial programs of all SROs under Part C of the Project. Section 3.08. In order to improve coordination and programm- ing of all SROs under Part C of the Project, the Borrower shall organize, at least once a year, meetings with local repre- sentatives of the donors involved in the same type of operations to exchange views on their respective investment programs, harmonize rules and procedures and evaluate past and ongoing operations. Section 3.09. The Borrower shall: (a) maintain during the execution of the Project within the DDRM Unit a Financial Director whose qualifications and experience shall be satisfactory to the Association; and (b) recruit, not later than October 1, 1988, one financial controller in each province of the Project Area and a bookkeeper in each district where any SRO is executed to, inter alia, monitor the operation of any Sub-account opened and maintained in accordance with Section 2.02 (c) of this Agreement. Section 3.10. Upon completion of the organizational study referred to under Part D.2 of the Project, the Borrower and the Association shall review the recommendations of said study and, not later than December 31, 1990, the Borrower shall carry out those recommendations of said study that shall have been approved by the Association. 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. Page 7 (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section, including those for the Special Accounts and any Sub-account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent internationally renowned auditors acceptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested on the basis of Guide- lines for financial reporting and auditing of projects financed by the World Bank, published in 1982 and (iii) furnish to the Association such other information concerning said records, accounts 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 or the Swiss Contribution Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Associa- tion has received the audit for the fiscal year in which the last withdrawal from the Credit Account or the Swiss Contribution 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 proce- dures 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 event is specified, namely, that: (i) Subject to subparagraph (ii) of this section, the right of the Borrower to withdraw the proceeds of the Swiss Contribution 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 Swiss Contribution Agreement providing therefor. Page 8 (ii) Subparagraph (i) of this section shall not apply if the Borrower establishes to the satisfaction of the Association that: (A) such suspension, cancellation or termination is not caused by the failure of the Borrower to perform any of its obligations under such agreement; and (B) adequate funds for the Project are available to the Borrower from other sources on terms and conditions consistent with the obligations of the Borrower under this Agreement. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) a Project accounting system and procedures, satisfactory to the Association, have been established for the DDRM Unit and the Financial Director referred to under Section 3.09 of this Agreement has been recruited with qualifications and experience satisfactory to the Association; and (b) the first annual program of SROs has been submitted and is satisfactory to the Association. 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. Section 6.03. In the event that Switzerland or the Association decides to terminate the functions of the Association as Administrator pursuant to paragraph 5 of the Arrangement, the Association shall notify the Borrower promptly of the date on which Switzerland shall assume the rights and obligations of the Association as Administrator under this Agreement. ARTICLE VII Representative of the Borrower; Addresses Section 7.01. The Minister of the Borrower responsible for planning 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: Ministere du Plan B.P. 862 Niamey Republic of Niger Cable address: Telex: MINIPLAN 5463 NI Niamey 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) Page 9 Washington, D.C. 248423 (RCA) or 64145 (WUI) 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 NIGER By /s/ Moumouni A. Djermakoye Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Callisto E. Madavo Acting Regional Vice President Africa SCHEDULE 1 Withdrawal of the Proceeds of the Credit and the Swiss Contribution 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit and the Swiss Contri- bution, the allocation of the amounts of the Credit and the Swiss Contribution to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Amount of Swiss Contri- the Credit bution Allocated Allocated (Expressed in % of (Expressed in Swiss franc Expenditures Category SDR Equivalent) Equivalent) to be Financed (1) Civil works 1,370,000 2,900,000 100% and supplies (2) Vehicles, 460,000 1,000,000 100% equipment and furniture (3) Agricultural 350,000 700,000 100% inputs (4) Consultants' 880,000 1,800,000 100% services, studies and audits (5) Operating 800,000 1,700,000 100% costs (6) Training 310,000 600,000 100% (7) Goods and 650,000 1,400,000 100% services for unidentified SROs Page 10 Amount of the Amount of Swiss Contri- the Credit bution Allocated Allocated (Expressed in % of (Expressed in Swiss franc Expenditures Category SDR Equivalent) Equivalent) to be Financed (8) Refunding 1,140,000 - Amount due pur- of Project suant to Section Prepara- 2.02 (d) of this tion Ad- Agreement vance (9) Unallocated 1,140,000 2,400,000 __________ _________ TOTAL 7,100,000 12,500,000 2. For the purposes of this Schedule, the term "operating costs" means expenditures for salaries of incremental contractual local staff and vehicle operating and maintenance costs. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made: (a) for expenditures prior to the date of this Agreement; (b) for expenditures in respect of Categories (1) and (3) for SROs under Part C of the Project, unless: (i) the draft of the framework agreement referred to under Section 3.03 of this Agreement for the first year is satisfactory to the Association; and (ii) the draft of the development contract referred to under Section 3.04 of this Agreement for the first year is satisfactory to the Association; and (c) for expenditures in respect of Category (7) for unidentified SROs unless the Association has approved the model for said SROs in accordance with the provisions of Schedule 4 to this Agreement. SCHEDULE 2 Description of the Project The objectives of the Project are to improve the Borrower's institutional capability to prepare, appraise, execute and eval- uate small rural operations and to provide effective extension services thereafter. 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: Support to Field Technical Services 1. Strengthening of provincial and district services of the Borrower in the identification, preparation, execution and evalua- tion of SROs through the acquisition of office equipment and one four-wheel-drive vehicle at each province and district level and the provision of a development volunteer from the United Nations in each province to assist the Direction Departementale du Plan in the coordination of development programs. 2. Training in technical and communication skills of extension agents at the village level and the canton level, district chiefs of agricultural services and provincial chiefs in charge of Page 11 extension services and acquisition of motorcycles. 3. Training in project analysis of local staff at the district and provincial level to develop said staff's capacity in the preparation, organization, monitoring and control of SROs. 4. Training in literacy and management of beneficiaries of the Project. Part B: DDRM Unit Strengthening of the DDRM Unit in its roles of coordination, support and supervision of the Project's operations with technical and administrative staff, and acquisition of two four-wheel-drive vehicles, two station wagons and office equipment. Part C: Implementation of SROs in accordance with the following models: 1. Development of Bottomlands/Swamps Construction of about 45 irrigation perimeters of about 15-20 hectares each in bottomlands for crop cultivation to be operated by groups of about 60 farmers per perimeter, and acquisition of construction materials, agricultural tools and inputs, and services of skilled labor. 2. Small-Scale Irrigation Perimeters Construction of about 15 small irrigation perimeters of about 18 hectares each for crop cultivation to be operated by groups of about 72 farmers per perimeter, and acquisition of construction materials, portable water pumps, agricultural tools and inputs, and services of skilled labor. 3. Soil Conservation Operations Construction of rock bunds and small anti-erosion works on perimeters of about 150 hectares each for rainfed cultivation. 4. Village Nurseries Establishment of about 20 nurseries on perimeters of about 2,500 square meters each equipped with a cement-lined well. 5. Unidentified SROs Additional models of SROs to be identified by the Borrower during the execution of the Project and approved by the Association. Part D: Studies 1. Studies to improve knowledge of physical environment and socio-economic conditions in the rural sector, including mono- graphs of selected areas, a land tenure study in the framework of the preparation of a Rural Code, and support missions in hydrogeology. 2. Organizational study to analyze the existing structure of DDRM and the possibility to harmonize procedures of SRO financing by different donors. * * * The Project is expected to be completed by December 31, 1995. SCHEDULE 3 Page 12 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 and works 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 1985 (the Guidelines). 2. To the extent practicable, contracts for vehicles and equip- ment shall be procured in bid packages estimated to cost the equivalent of $100,000 or more each. 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 Niger may be granted a margin of preference in accordance with, and subject to, 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. Civil works, vehicles and equipment estimated to cost less than the equivalent of $100,000 per contract 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 estimated to cost less than the equivalent of $20,000 per contract, up to an aggregate amount not to exceed the equivalent of $1,500,000, may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of 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 invitations to bid, proposed awards and final contracts: (a) With respect to each contract for civil works, vehicles and equipment estimated to cost the equivalent of $100,000 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 a Special Account, such procedures shall be modified to ensure that the two conformed copies of each contract required to be furnished to the Association, pursuant to paragraph 2 (d) of Appendix 1 to the Guidelines, shall be furnished to the Association prior to the making of the first payment out of a Special Account in respect of such contract. (b) With respect to each contract not governed by the pre- ceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contracts are to be made out of a Special Account, such procedures shall be modified to ensure that the two conformed copies of each contract, together with the other information required to be furnished to the Association pursuant to said paragraph 3 of Appendix 1 to the Guidelines, 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 subparagraphs (a) and (b) shall not apply to contracts on account of which the Association has authorized withdrawals from the Credit Account or the Swiss Contribution Account on the basis of statements of Page 13 expenditure. Such contracts shall be retained in accordance with Section 4.01 (c) (ii) of this Agreement. 2. The figure of 15% is hereby specified for purposes of para- graph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in carrying out the Project, the Borrower shall employ experts and consultants whose qualifications, experience, 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. SCHEDULE 4 Implementation Program Preparation of Annual Programs of SROs 1. The annual programs of SROs shall be prepared by the services of the Ministry of Planning on the basis of identification sheets of SROs, prepared by potential beneficiaries and technical services at the provincial and district levels. Said identification sheets shall reach DDRM, not later than June 30 of each year, in order for DDRM to prepare the annual program of SROs, and the framework agreement, before August 31 of each year, and make the corresponding budgetary allocations. 2. The framework agreement shall be signed by DDRM and the provincial and district development councils of the Project Area where the SROs, included in the annual program, will be executed. 3. When an identification sheet proposes an SRO which does not fall under one of the four models under Part C of the Project, DDRM shall submit the new model to the Comite Technique de Pilotage des Micro-realisations which shall invite local representatives of Switzerland and the Association, and shall check if the new model complies with the criteria referred to under Section 3.05 of this Agreement. Preparation of SROs 4. Upon transmittal of identification sheets of SROs to DDRM, the potential beneficiaries shall accomplish all necessary formalities to constitute a Group of Producers under a legal structure such as a mutual benefit company, with an assembly or a management committee, internal control mechanisms and basic accounting. Other forms of association at the village level are possible as long as they allow the Group of Producers to have the necessary legal requirements for the opening of a bank or post- office account. Once it is established, the Group of Producers shall prepare in detail the SRO for which it was established and which is part of the annual program, with the assistance of the technical services at the provincial or district level. The last step shall be the signature of a development contract between the district development council, where the SRO shall be carried out, and the Group of Producers responsible for the execution of said SRO, in accordance with the provisions of Section 3.04 of this Agreement. SCHEDULE 5 Special Accounts Page 14 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories (1) through (7) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (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 and the Swiss Contribution 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: (i) an amount of CFAF 220,000,000 to be withdrawn from the Credit Account and deposited into the Special Account used exclusively for the Credit; and (ii) an amount of CFAF 220,000,000 to be withdrawn from the Swiss Contribution Account and deposited into the Special Account used exclusively for the Swiss Contribution, pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, payments out of a 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 a Special Account has been duly opened, withdrawals of the Authorized Allocation and subsequent withdrawals to replenish a Special Account may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and the Swiss Contribution Account and deposit into the appropriate Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of a Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and the Swiss Contribution Account and deposit into the appropriate Special Account such amounts as shall be required to replenish the said Special Account with amounts not exceeding the amount of payments made out of the said Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account and the Swiss Contribution Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. Any Special Account will not be replenished on account of deposits made into any Sub-Account unless the proceeds of such deposits have been used to make payments for eligible expenditures. 4. For each payment made by the Borrower out of a Special Account, or out of a Sub-Account of such Special Account, for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Associa- tion, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, show- ing that such payment was made for eligible expenditures. In addition to such documents, when the Borrower requests replenish- ment of a Special Account for funds deposited into any Sub-Account which have already been disbursed, the Borrower shall also furnish to the Association, prior to or at the time of such request, the bank statements of said Special Account. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into a Special Account shall be made Page 15 by the Association when either of the following situations first arises: (i) the Association shall have determined that all further withdrawals should be made by the Borrower directly from the Credit Account or the Swiss Contribution Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (ii) the total unwithdrawn amount of the Credit or the Swiss Contribution allocated to the eligible Categories, minus 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 be equal to the equivalent of twice the amount of the Authorized Allocation. (b) Thereafter, withdrawal from the Credit Account or the Swiss Contribution Account of the remaining unwithdrawn amount of the Credit or the Swiss Contribution 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 a 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 a Special Account: (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association deposit into the said 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. No further deposit by the Association into the said Special Account shall be made until the Borrower has made such deposit or refund. (b) If the Association shall have determined at any time that any amount outstanding in a Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, refund to the Association such outstanding amount for crediting to the Credit Account or the Swiss Contribution Account.