Conformed Copy - C1996 - Private Small and Medium Enterprise Development Project - Project Agreement

Page 1 CONFORMED COPY CREDIT NUMBER 1996 GH (Private Small and Medium Enterprise Development Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and BANK OF GHANA Dated May 1, 1989 CREDIT NUMBER 1996 GH PROJECT AGREEMENT AGREEMENT, dated May 1, 1989 between the INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association) and BANK OF GHANA (BOG). WHEREAS (A) by the Development Credit Agreement of even date herewith between the Republic of Ghana (the Borrower) and the Association, the Association has agreed to lend to the Borrower an amount in various currencies equivalent to twenty-two million three hundred thousand Special Drawing Rights (SDR 22,300,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that BOG agrees to undertake such obligations toward the Association as are set forth in this Agreement; and (B) by a subsidiary administration agreement to be entered into between the Borrower and BOG (the Subsidiary Administration Agreement), the proceeds of the credit provided for under the Development Credit Agreement will be made available to BOG on Page 2 terms and conditions set forth in the Subsidiary Administration Agreement; and WHEREAS BOG, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations set forth in this Agreement; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Unless the context otherwise requires, the several terms defined in the Development Credit Agreement, the Preamble to this Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. BOG declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement and, to this end, shall, through the Fund for Small and Medium Enterprise Development (FUSMED), carry out or cause to be carried out the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, technical, management and environmental practices, and shall provide, or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for the Project. Section 2.02. For the purpose of carrying out Parts A through D of the Project, BOG shall provide to PFIs the equivalent of the Credit allocated to Parts A through D of the Project under participation agreements (the Participation Agreements) to be entered into between BOG and each PFI, under terms and conditions which shall have been approved by the Association, and which shall include those set forth in Schedules 1 and 2 to this Agreement. Section 2.03. (a) BOG undertakes that Sub-loans, Investments and loans made under Part D of the Project will be made in accor- dance with the procedures and on the terms and conditions set forth or referred to in Schedules 1 and 2 of this Agreement. (b) BOG shall exercise its rights in relation to each Investment Project in such manner as to: (i) protect the interests of the Association and of BOG; (ii) comply with its obligations under this Agreement and the Subsidiary Administration Agreement; and (iii) achieve the purposes of the Project. Section 2.04. Except as the Association shall otherwise agree, procurement of the goods and consultants' services required for Parts E and F of 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 2.05. BOG shall carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition) in respect of the Project Agreement. Section 2.06. BOG shall duly perform all its obligations under the Subsidiary Administration Agreement. Except as the Association shall otherwise agree, BOG shall not take or concur in any action which would have the effect of assigning, amending, abrogating or waiving the Subsidiary Administration Agreement or any provision thereof. Section 2.07. (a) BOG shall, together with the Borrower, Page 3 review with the Association, at least once every year, progress in carrying out the Project, with a view to determining and effecting such changes as may be required to ensure the successful implemen- tation of the Project, including any adjustment required in the onlending terms and conditions. To that end, BOG shall furnish to the Borrower and the Association a report on the progress achieved in carrying out the Project, in such detail and at such times as the Borrower or the Association shall reasonably request. (b) BOG shall promptly inform the Borrower and the Associa- tion of any condition which interferes or threatens to interfere with the progress of the Project, the accomplishment of the pur- poses of the Credit, or the performance by BOG of its obligations under this Agreement and under the Subsidiary Administration Agreement. Section 2.08. For the purpose of carrying out Parts A through D of the Project, BOG shall: (a) establish, and maintain at least until the completion of the Project, FUSMED which shall be staffed with qualified and experienced persons in adequate numbers satisfactory to the Association; and (b) coordinate and monitor the overall execution of Parts A through D of the Project and supervise the carrying out by the PFIs of the provisions of their respective Participation Agree- ments in accordance with procedures satisfactory to the Association. Section 2.09. BOG shall, under terms of reference and within a timetable acceptable to the Association, carry out the following training programs for staff of BOG and the PFIs: (a) an orienta- tion program in term lending procedures; and (b) project apprai- sal, procurement, supervision and monitoring and basic environ- mental awareness. Section 2.10. BOG shall: (a) not later than December 31, 1989, carry out and complete a study under terms of reference satisfactory to the Association, to formulate policies and imple- mentation procedures for the Pilot Mutualist Credit Guarantee Scheme included in Part C (1) of the Project and to identify pros- pective non-governmental organizations to participate in said scheme; and (b) take appropriate measures soon thereafter to establish the Pilot Mutualist Credit Guarantee Scheme, taking into account the views of the Association. Section 2.11. BOG shall: (a) not later than December 31, 1989, carry out and complete a study, under terms of reference satisfactory to the Association, to develop an appropriate regula- tory and policy framework for equipment leasing; and (b) implement the findings of said study after obtaining the views of the Borrower and the Association. Section 2.12. BOG shall, in cooperation with the Secretariat referred to in Section 3.04 of the Development Credit Agreement: (a) cause the studies included in Part F of the Project to be carried out under terms of reference and in accordance with a timetable acceptable to the Association; (b) exchange views with the Borrower and the Association on the conclusions and recommendations of the studies; and (c) taking into account the views expressed by the Associa- tion, implement such recommendations within a timetable acceptable to the Association. Section 2.13. BOG shall: (a) not later than September 30, 1989, establish the Pilot Studies Fund included in Part D of the Project in a form satis- Page 4 factory to the Association; and (b) through PFIs, extend, out of said fund, financial assis- tance to SSEs and Micro-enterprises under arrangements satis- factory to the Association for the purposes of Part D of the Project. Section 2.14. BOG shall: (a) carry out, under terms of reference acceptable to the Association, an annual review of the social and economic impact of Investment Projects; and (b) submit to the Association the findings of every such review; provided, however, that the findings of the first such review shall be sub- mitted to the Association not later than June 30, 1991. Article III Financial Covenants Section 3.01. (a) BOG shall ensure that FUSMED maintains procedures and records adequate to monitor and record the progress of the Project and of each Investment Project (including its cost and the benefits to be derived from it) and to reflect, in accordance with consistently maintained sound accounting practices, the operations and financial condition of FUSMED. (b) BOG shall ensure that FUSMED: (i) has its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) relating to the Project for each fiscal year audited, in accordance with appro- priate auditing principles consistently applied by independent auditors acceptable to the Association; (ii) furnishes to the Association, as soon as available but in any case not later than six months after the end of each such year: (A) certified copies re- lating to the Project of its financial statements for such year as so audited; and (B) the report of such audit by said auditors, of such scope and in such detail as the Association shall have reason- ably requested; and (iii) furnishes to the Association such other information concerning said records, accounts and financial statements as well as 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, BOG shall ensure that FUSMED: (i) maintains or causes to be maintained in accordance with sound accounting practices, records and accounts reflecting such expenditures; (ii) ensures that all records (contracts, orders, in- voices, bills, receipts and other documents) evi- dencing such expenditures are retained 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 was made; and (iii) enables the Association's representatives to examine such records. ARTICLE IV Effective Date; Termination Cancellation and Suspension Page 5 Section 4.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 4.02. (a) This Agreement and all obligations of the Association and of BOG thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate; or (ii) a date 20 years after the date of this Agreement. (b) If the Development Credit Agreement terminates before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify BOG of this event. Section 4.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancellation or suspension under the General Conditions. ARTICLE V Miscellaneous Provisions Section 5.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other addresses as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: 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) For BOG: Bank of Ghana P.O. Box 2674 Accra Ghana Cable address Telex: GHANA BANK 2541 GHANABANK GH Accra 2052 Section 5.02. Any action required, or permitted to be taken, and any documents required or permitted to be executed, under this Agreement on behalf of BOG or by BOG on behalf of the Borrower under the Development Credit Agreement, may be taken or executed by the Governor of BOG or by such other person or persons as BOG shall designate in writing, and BOG shall furnish to the Associa- tion sufficient evidence of the authority and the authenticated specimen signature of each such person. Page 6 Section 5.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collec- tively but one instrument. 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. INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Edward V.K. Jaycox Regional Vice President Africa BANK OF GHANA By /s/ Eric K. Otoo Authorized Representative SCHEDULE 1 Principal Terms and Conditions of Sub-loans, Investments and Participation Agreements Except as the Association shall otherwise agree, the prin- cipal terms and conditions set forth in this Schedule shall apply for the purposes of Section 2.02 of this Agreement with respect to Participation Agreements. A. Terms 1. Currency All Sub-loans and Investments and loans made under Part D of the Project shall be denominated in Cedis. The aggregate amount (the PFI Subsidiary Loan) to be made available by BOG to a PFI under its respective Participation Agreement shall be the equivalent in Cedis (determined as of the respective date or dates of withdrawal from the Credit Account using the market determined rate of the most recent foreign exchange auction system or any other lawful rates acceptable to the Association) of the value of the currency or currencies so withdrawn or paid out on account of the cost of the goods and services to be incurred with respect to the carrying out of an Investment Project. 2. Interest Rates (a) Interest on a PFI Subsidiary Loan shall be charged on the principal amount thereof outstanding from time to time at a reference interest rate which shall be based on the average cost of 180-day deposits mobilized by PFIs (the Reference Interest Rate), except that the interest to be charged on a PFI Subsidiary Loan for Micro-enterprises shall be two percentage points below the prevailing Reference Interest Rate. (b) Interest on Sub-loans to Beneficiaries and loans made under Part D of the Project shall be determined by PFIs and shall be variable and be adjusted by PFIs in accordance with changes in the Reference Interest Rate; provided, however, that the maximum annual increase in interest rates shall be limited to 10%. Page 7 (c) Interest on Sub-loans made by PFIs to Micro-enterprises under Part C (2) of the Project shall be determined by PFIs and shall be variable in accordance with the changes in the Reference Interest Rate; provided, however, that the sharing of the spread among the PFIs, the MGAs and the funds established by the MGAs under the Pilot Mutualist Credit Guarantee Scheme shall be deter- mined on the basis of recommendations of the study referred to in Section 2.10 of this Agreement and be satisfactory to the Association. 3. Maturities (a) Sub-loans under Part A of the Project for fixed assets and free-standing working capital shall have maturities of up to ten years and three years, respectively, including grace periods of up to three years and one year, respectively. (b) Sub-loans for equipment leasing under Part B of the Project shall have maturities of up to ten years, including grace periods of up to two years. (c) Sub-loans for fixed assets and free-standing working capital under Part C (2) of the Project shall have maturities of up to five years and two years, respectively, including grace periods of up to 12 months and six months, respectively. (d) For PFIs making equity investments under Part A of the Project, the PFIs shall adopt a flexible divestment policy satis- factory to BOG and the Association. The divestment policy shall include a buy-back option for the enterprise owner to purchase the PFIs' equity at its estimated market or pre-determined value. 4. Repayments PFI Subsidiary Loans and loans made under Part D of the Project shall be repaid by a PFI to BOG in accordance with fixed amortization schedules. 5. Pre-payment (a) If a Sub-loan or a loan made under Part D of the Project or any part of any such Sub-loan or loan shall be repaid to a PFI in advance of maturity or if a Sub-loan or a loan made under Part D of the Project or any part of any such Sub-loan or loan shall be sold, transferred, assigned or otherwise disposed of for value by a PFI, the PFI shall promptly notify BOG and shall repay to BOG on the next following interest payment date the amount withdrawn in respect of any such Sub-loan or loan made under Part D of the Project or part thereof. (b) If a PFI divests its Investment or sells, transfers, assigns or otherwise disposes of its Investment, the PFI shall promptly notify BOG and shall repay to BOG on the next following interest payment date for the Investment, the amount withdrawn in respect of such Investment or part thereof. (c) Any amount so repaid by the PFI shall be applied by BOG to the maturity or maturities of the PFI Subsidiary Loan or the loan made under Part D of the Project (as the case may be) in amounts corresponding to the outstanding amounts of the maturity or maturities of the Sub-loan or the loan made under Part D of the Project so repaid or disposed of. B. Conditions 1. Each Participation Agreement shall contain provisions pur- suant to which each PFI shall continue to: (a) be duly established and operating under the laws of the Borrower; (b) maintain a sound financial structure, a healthy port- Page 8 folio, and the organization, management, staff and other resources required for the efficient carrying out of its activities; (c) conduct its operations and affairs including interest rate policies in accordance with sound financial principles and practices; (d) maintain a lending and investment policy acceptable to the Association and BOG, and suitable procedures and an adequate number of suitably qualified staff to enable it effectively to: (i) appraise the financial, technical, environmental and economic feasibility of Investment Projects and to make Sub-loans and loans under Part D of the Project and Investments to Beneficiaries in accordance with said lending and investment policy and on the basis of the criteria, procedures and principal terms and conditions set forth in Schedule 2 to this Agreement; and (ii) supervise, monitor and report on the carrying out by Beneficiaries of Investment Projects or studies under Part D of the Project, including the procurement of goods and services, costs and benefits therefor. 2. Each Participation Agreement shall also contain provisions requiring each PFI to: (a) exercise its rights in respect of Sub-loans and Invest- ments and loans made under Part D of the Project, in such a manner as to protect the interests of the Borrower, the Association and BOG and to comply with its obligations under its Participation Agreement in order to achieve the purposes of Parts A through D of the Project; (b) undertake not to assign, amend, abrogate or waive any of its agreements providing for Sub-loans or loans made under Part D of the Project or Investments or any provision thereof without the approval of BOG; (c) (i) maintain records and accounts adequate to monitor and record the operations, resources, expenditures and progress of each Investment Project and the studies to be carried out under Part D of the Project and withdrawals from the Sub-accounts and to reflect in accordance with consistently main- tained sound accounting practices its operations and financial conditions relating thereto; (ii) have its records, accounts and financial statements (balance sheets, statements of income and expenses and related statements) including Sub-accounts for each fiscal year audited, in accordance with appropriate auditing principles consistently applied by independent auditors acceptable to the Association; (iii) furnish to BOG as soon as available, but in any case not later than six months after the end of each such year: (A) certified copies of its statutory financial statements and accounts for such year as so audited; and (B) with respect to the Project, supplementary audited statements by said auditors of such scope and in such detail, including the status of Sub-accounts and compliance by PFIs with eligibility criteria of Investment Projects, as BOG or the Association shall have reasonably requested; (iv) within six weeks of the end of the first and the second six months of the calendar year, furnish to Page 9 BOG Semi-Annual Progress Reports outlining the progress of each Investment Project and studies under Part D of the Project; and (v) furnish to BOG monthly reports on the operation of the Sub-accounts. 3. Procurement (a) With respect to the procurement of goods and services to be financed under Sub-loans, Investments and loans made under Part D of the Project, each Participation Agreement shall contain provisions requiring each PFI to comply with the following procedures: (i) Goods and services shall be purchased at a reason- able price, account being taken also of other re- levant factors such as time of delivery and effi- ciency and reliability of the goods and avail- ability of maintenance facilities and spare parts therefor and, in the case of services, of their quality and the competence of the parties rendering them. (ii) Goods estimated to cost more than the equivalent of $75,000 per contract: (A) may be procured under contracts awarded on the basis of comparison of price quotations solicited from a list of at least three qualified suppliers from at least two countries eligible under the Guidelines in accor- dance with procedures acceptable to the Associa- tion; and (B) all contracts for such goods shall be reviewed by the PFIs prior to award. (iii) Consultants shall have qualifications, experience, and be employed on terms and conditions satis- factory to the Association. Such consultants shall be selected in accordance with principles and pro- cedures 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 Association in August 1981. (b) Each PFI shall undertake that such goods and services shall be used exclusively in the carrying out of the Investment Project or, as the case may be, Part D of the Project. SCHEDULE 2 Procedures for Terms and Conditions of Sub-loans and Investments A. Terms and conditions 1. No expenditures for goods or services required for an Invest- ment Project shall be eligible for financing out of the proceeds of the Credit unless: (a) the Sub-loan or Investment for such Investment Project shall have been approved by the Association and such expenditures shall have been made not earlier than 180 days prior to the date on which the Association shall have received the application and information required under paragraph 2 (a) of this Part in respect of such Sub-loan or Investment; or (b) the Sub-loan for such Investment Project shall have been a free-limit Sub-loan for which the Association has authorized withdrawals from the Credit Account and such expenditures shall have been made not earlier than 180 days prior to the date on which the Association shall have received the request and informa- tion required under paragraph 2 (b) of this Part in respect of Page 10 such free-limit Sub-loan or Investment. For the purposes of the Development Credit Agreement and this Agreement, a free-limit Sub- loan shall be a Sub-loan for an Investment Project in an amount to be financed out of the proceeds of the Credit which shall not exceed the sum of $100,000 equivalent, the foregoing amount being subject to change from time to time as determined by the Association. 2. (a) When presenting a Sub-loan or Investment (other than a free-limit Sub-loan) to the Association for approval, BOG shall furnish to the Association an application, in form satisfactory to the Association, together with: (i) a description of the Bene- ficiary and an appraisal of the Investment Project, including procurement procedures and a description of the expenditures pro- posed to be financed out of the proceeds of the Credit; (ii) the proposed terms and conditions of the Sub-loan or Investment, in- cluding the schedule of amortization of the Sub-loan or schedule of payments of the Investment; and (iii) such other information as the Association shall reasonably request. (b) Each request by BOG for authorization to make with- drawals from the Credit Account in respect of a free-limit Sub- loan or Investment shall contain: (i) a summary description of the Beneficiary and the Investment Project, including procurement procedures and a description of the expenditures proposed to be financed out of the proceeds of the Credit; and (ii) the terms and conditions of the Sub-loan or Investment, including the schedule of amortization of the Sub-loan or the schedule of payments of the Investment. (c) Applications and requests made pursuant to the provi- sions of sub-paragraphs (a) and (b) of this paragraph shall be presented to the Association on or before April 30, 1993. 3. Sub-loans and Investments shall be made on terms whereby BOG shall cause each PFI to obtain, by written contract with the Beneficiary or by other appropriate legal means, rights adequate to protect the interests of the Borrower, the Association and BOG, including the right to: (a) require the Beneficiary to carry out and operate the Investment Project with due diligence and efficiency and in accor- dance with sound technical, financial, environmental and mana- gerial standards and to maintain adequate records and accounts; (b) inspect, by itself or jointly, with representatives of the Association if the Association shall so request, such goods and the sites, works, plants and construction included in the Investment Project, the operation thereof, and any relevant re- cords and documents; (c) require that: (i) the Beneficiary shall take out and maintain with responsible insurers such insurance, against such risks and in such amounts, as shall be consistent with sound business practice; and (ii) without any limitation upon the fore- going, such insurance shall cover hazards incident to the acquisi- tion, transportation and delivery of goods financed out of the proceeds of the Credit to the place of use or installation, any indemnity thereunder to be made payable in a currency freely usable by the Beneficiary to replace or repair such goods; (d) obtain all such information as the Association or BOG shall reasonably request relating to the foregoing and to the administration, operations and financial condition of the Bene- ficiary and to the benefits to be derived from the Investment Projects; and (e) suspend or terminate the right of the Beneficiary to the use of the proceeds of the Credit upon failure by such Beneficiary to perform its obligations under its contract with the PFIs. B. Eligibility Criteria for Beneficiaries and Investment Page 11 Projects - General Procedures 1. With the exception of agriculture, real estate and trading, all SMEs, SSEs and Micro-enterprises engaged in other economic sectors (including manufacturing, agro-related industries, mining, quarrying, industrial support services, equipment leasing, and other service activities ancillary thereto) are eligible to re- ceive Sub-loans and Investments from PFIs to carry out Investment Projects. 2. Sub-loans and Investments shall be used by Beneficiaries to finance rehabilitation and expansion of existing enterprises as well as for establishing new enterprises. In particular, Sub-loans and Investments shall be used to finance: (a) fixed assets (including machinery, equipment, factory buildings and related civil works), technical know-how, consultancy services and training; (b) permanent working capital (including initial stocks or increases in stocks of raw materials, spare parts and components); (c) free-standing working capital (including raw materials, spare parts and components) to expand capacity utilization of existing firms; and (d) leasing of industrial and business equipment. C. Specific Procedures 1. For Part A of the Project BOG shall ensure that PFIs adopt the following procedures when processing Investment Projects: (a) Beneficiaries shall contribute at least 25% of the Investment Project cost in equity or from internally-generated resources. (b) The equity participation of a PFI shall be such as to maintain at all times a minority equity holding in a Beneficiary. (c) During implementation and for five years after start up of operations, Beneficiaries shall be required to maintain a total debt to equity ratio of not more than 3:1; a current ratio of at least 1.2; and a debt service coverage of at least 1.4. (d) Appraisal of Investment Projects PFIs shall carry out the appraisal of Investment Projects in accordance with procedures acceptable to the Associa- tion which shall include the following: (i) to calculate the financial rate of return (FRR) for all Investment Projects with costs over Cedis 6.25 million in constant 1988 prices; (ii) to calculate the economic rate of return (ERR) and FRR for all Investment Projects with costs over Cedis 75 million in constant 1988 prices; (iii) FRR (after tax) under paragraph (d) (i) and (ii) above and ERR under paragraph (d) (ii) above shall each be at least 12% in constant prices for each Investment Project; and (iv) to carry out a cash-flow analysis for Investment Projects with costs below Cedis 5 million in constant 1988 prices and for Investment Projects under Part C of the Project. (e) Sub-loan Limits Page 12 (i) The maximum size of a Sub-loan under Part A of the Project shall be $500,000 equivalent; (ii) the maximum size of a Sub-loan under Part B of the Project shall be $350,000 equivalent; (iii) the maximum size of a Sub-loan under Part C of the Project shall be $10,000 equivalent; and (iv) the maximum financing from the proceeds of the Credit would be 70% of the cost of an Investment Project made under Part A of the Project. 2. For Part B of the Project. BOG shall ensure that PFIs adopt the following procedures in processing Sub-loans under Part B of the Project: (a) The maximum pay-back period for leased equipment shall be seven years, calculated on the basis of the installed cost of the equipment and the estimated annual net cash flow generated from the equipment. (b) The maximum lease amount financed from the proceeds of the Credit shall be 85% of the cost of leased equipment. (c) The overall maximum book value of leased equipment financed from proceeds of the Credit and outstanding with respect to a Beneficiary or a group of related beneficiary enterprises shall be Cedis 87.5 million in constant 1988 prices. 3. For Part C of the Project BOG shall ensure that PFIs adopt the following procedures and criteria in processing Sub-loans under Part C of the Project: (a) The PFI shall carry out a simplified form of appraisal of the Investment Project; and (b) MGAs should agree to fully guarantee the Sub-loan to the Beneficiary and to maintain the funds established by the MGAs under the Pilot Mutualist Credit Guarantee Scheme in accordance with procedures and on terms and conditions satisfactory to the Association. SCHEDULE 3 Procurement and Consultants' Services under Parts E and F of the Project Section I: Procurement of Goods Part A: Procedures Goods may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with pro- cedures satisfactory to the Association. Part B: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $50,000 or more, the procedures set forth in para- graphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Accounts, 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 Page 13 the Special Accounts 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 contract are to be made out of the Special Accounts, such procedures shall be modified to ensure that the two conformed copies of the contract together with the other information re- quired to be furnished to the Association pursuant to said para- graph 3 shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 to the Development Credit Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Associa- tion has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be re- tained in accordance with Section 4.01 (a) (ii) of the Development Credit 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 1. In order to assist BOG in carrying out Part E of the Project, BOG 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 Association in August 1981. 2. For the purpose of Part F of the Project, BOG shall, in cooperation with the Secretariat referred to in Section 3.04 of the Development Credit Agreement, cause the executing institutions to employ consultants in accordance with the procedures set forth in Section II.1 above.