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CONFORMED COPY
CREDIT NUMBER 3403-ER
Development Credit Agreement
(Integrated Early Childhood Development Project)
between
THE STATE OF ERITREA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated July 31, 2000
CREDIT NUMBER 3403-ER
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated July 31, 2000, between THE STATE OF ERITREA (the 
Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association).
WHEREAS (A) the Association has received a letter, dated May 10, 
2000, from the Borrower describing a program of actions, objectives and 
policies designed to implement the Borrower’s policies on early childhood 
development in an integrated manner (the Program) and declaring the 
Borrower’s commitment to the execution of the Program.
WHEREAS (B) The Borrower intends to obtain from the Republic of 
Italy, through the Board of Italian Cooperation (Italy) a grant in an 
amount approximately five million US Dollars ($5,000,000) to assist in 
financing part of the Project (the Italian Grant).
WHEREAS (C) 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 
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the Project; and
WHEREAS (D) the Association has agreed on the basis, inter alia, of 
the foregoing, to extend the Credit to the Borrower upon the terms and 
conditions set forth in this Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01.
The “General Conditions Applicable to Development 
Credit Agreements” of the Association, dated January 1, 1985 (as amended 
through December 2, 1997), with the modifications set forth below (the 
General Conditions), constitute an integral part of this Agreement: 
(a)
A new paragraph (c) is added to Section 3.04 to read:
“If the Association shall at any time receive less than the 
full amount then due and 
payable to it under the Development Credit 
Agreement, the Association shall have the right 
to allocate and 
apply the amount so received in any manner and for such purposes under 
the 
Development Credit Agreement as the Association shall in its sole 
discretion determine.”; 
and
(b)
Section 11.01 is modified by replacing, in the second 
sentence, the word “radiogram” with the word “facsimile” and adding a new 
sentence at the end of the said Section to read:
“Deliveries made by facsimile transmission shall also be 
confirmed by mail.” 
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)
“Action Plan” means the action plan referred to in paragraph 
1 (d) of Schedule 4 to this Agreement; 
(b)
“Financial Management System” means the financial management 
system referred to in paragraph 4 (b) of Schedule 4 to this Agreement; 
(c)
“IAPSO” means the Inter-Agency Procurement Services of the 
United Nations; 
(d)
“IMCI Program” means an integrated management of childhood 
illness program referred to in Part A.1 (a) of the Project; 
(e)
“Initial Deposit” means the initial deposit referred to in 
Section 3.03 of this Agreement;
(f)
“MF” means the Borrower’s Ministry of Fisheries; 
(g)
“Mid-Term Review” means the mid-term review referred to in 
paragraph 3 (a) of Schedule 4 to this Agreement;
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(h)
“MOA” means the Borrower’s Ministry of Agriculture; 
(i)
“MOE” means the Borrower’s Ministry of Education; 
(j)
“MOH” means the Borrower’s Ministry of Health;
(k)
“MOLG” means the Borrower’s Ministry of Local Government; 
(l)
“MOLHW” means the Borrower’s Ministry of Labor and Human 
Welfare;
(m)
“Nakfa” means currency of the Borrower; 
(n)
“Project Account” means the account referred to in Section 
3.03 of this Agreement;
(o)
“Project Implementation Manual” means the Project 
Implementation Manual referred to in paragraph 1 (b) of Schedule 4 to 
this Agreement;
(p)
“Project Management Report” means each report prepared in 
accordance with Section 4.02 of this Agreement;
(q)
“Project Management Team” means the Project Management Team 
referred to in paragraph 4 (a) of Schedule 4 to this Agreement; and
(r)
“Special Account” means the account referred to in Section 
2.02 (b) of this Agreement.
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 
twenty-nine million Special Drawing Rights (SDR 29,000,000).
Section 2.02. (a) The amount of the Credit may be withdrawn from 
the Credit Account in accordance with the provisions of Schedule 1 to 
this Agreement for expenditures made (or, if the Association shall so 
agree, to be made) in respect of the reasonable cost of goods and 
services required for the Project and to be financed out of the proceeds 
of the Credit.
(b)
The Borrower may, for the purposes of the Project, open and 
maintain in dollars a special deposit account in a bank on terms and 
conditions satisfactory to the Association , including appropriate 
protection against set-off, seizure or attachment. Deposits into, and 
payments out of, the Special Account shall be made in accordance with the 
provisions of Schedule 5 to this Agreement.
Section 2.03. The Closing Date shall be December 31, 2005 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 
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each year, but not to exceed the rate of one-half of one percent (1/2 of 
1%) per annum.
(b)
The commitment charge shall accrue: (i) from the date sixty 
days after the date of this Agreement (the accrual date) to the 
respective dates on which amounts shall be withdrawn by the Borrower from 
the Credit Account or canceled; and (ii) at the rate set as of the June 
30 immediately preceding the accrual date and at such other rates as may 
be set from time to time thereafter pursuant to paragraph (a) above. The 
rate set as of June 30 in each year shall be applied from the next date 
in that year specified in Section 2.06 of this Agreement.
(c)
The commitment charge shall be paid: (i) at such places as 
the Association shall reasonably request; (ii) without restrictions of 
any kind imposed by, or in the territory of, the Borrower; and (iii) in 
the currency specified in this Agreement for the purposes of Section 4.02 
of the General Conditions or in such other eligible currency or 
currencies as may from time to time be designated or selected pursuant to 
the provisions of that Section.
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 May 1 and November 1 in each year.
Section 2.07. (a)  Subject to paragraphs (b), (c) and (d) below, 
the Borrower shall repay the principal amount of the Credit in semiannual 
installments payable on each May 1 and November 1 commencing November 1, 
2010 and ending May 1, 2040. Each installment to and including the 
installment payable on May 1, 2020 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 per capita gross national 
product (GNP), as determined by the Association, shall have exceeded for 
three consecutive years the level established annually by the Association 
for determining eligibility to access the Association's resources; 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 repayment 
of installments under paragraph (a) above by: (A) 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; and (B) requiring 
the Borrower to commence repayment of the principal amount of the Credit 
as of the first semiannual payment date referred to in paragraph (a) 
above falling six months or more after the date on which the Association 
notifies the Borrower that the events set out in this paragraph (b) have 
occurred, provided, however, that there shall be a grace period of a 
minimum of five years on such repayment of principal.
(c)
If so requested by the Borrower, the Association may revise 
the modification referred to in paragraph (b) above 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.
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(d)
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 United States of America is 
hereby specified for the purposes of Section 4.02 of the General 
Conditions.
ARTICLE III
Execution of the Project
Section 3.01. (a) The Borrower declares its commitment to the 
objectives of the Project as set forth in Schedule 2 to this Agreement, 
and, to this end, shall carry out the Project with due diligence and 
efficiency and in conformity with appropriate administration, financial, 
health and education 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.
Section 3.02. Except as the Association shall otherwise agree, 
procurement of the goods, works and consultants’ services required for 
the Project and to be financed out of the proceeds of the Credit shall be 
governed by the provisions of Schedule 3 to this Agreement/Schedule 1 to 
the Project Agreement.
Section 3.03 The Borrower shall: (i) open and thereafter maintain, 
until completion of the Project, an account in a bank  to be used 
exclusively to meet the costs of the Project not financed out of the 
proceeds of the Credit; (ii) deposit into the Project Account for each 
calendar quarter, no later than the first day of the calendar quarter, 
the amount of the Borrower’s quarterly counterpart contribution to 
Project costs for such quarter, as determined by agreement between the 
Borrower and the Association; and (iii) deposit into the Project Account 
an initial amount of Nakfa  2,000,000.
Section 3.04. For the purposes of Section 9.07 of the General 
Conditions and without limitation thereto, the Borrower shall:
(a)
prepare, on the basis of guidelines acceptable to the 
Association, and furnish to the Association not later than six (6) months 
after the Closing Date or such later date as may be agreed for this 
purpose between the Borrower and the Association, a plan for the future 
operation of the Project; and
(b)
afford the Association a reasonable opportunity to exchange 
views with the Borrower on said plan.
ARTICLE IV
Financial Covenants
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Section 4.01. (a) The Borrower shall maintain or cause to be 
maintained records and accounts adequate to reflect in accordance with 
sound accounting practices the operations, resources and expenditures in 
respect of the Project of the departments or agencies of the Borrower 
responsible for carrying out the Project or any part thereof.
(b)
The Borrower shall:
(i)
have the records and accounts referred to in 
paragraph (a) of this Section 
including those for 
the Special Account for each fiscal year audited, in 
accordance with appropriate auditing principles consistently 
applied, by 
independent auditors acceptable to the 
Association;
(ii)
furnish to the Association as soon as available, but 
in any case not later 
than six (6) months after 
the end of each such year, the report of such audit 
by said auditors, of such scope and in such detail as the 
Association shall 
have reasonably requested; and
(iii)
furnish to the Association such other information 
concerning said records and 
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 were made on the basis of Project Management Reports 
or 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 Association 
has received the audit 
report for the fiscal year in 
which the last withdrawal from the Credit 
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 
Project 
Management Reports or statements of 
expenditure submitted during such fiscal 
year, 
together with the procedures and internal controls involved in their 
preparation, can be relied upon to support the 
related withdrawals.
Section 4.02. (a) Without limitation upon the provisions of Section 
4.01 of this Agreement, the Borrower shall carry out a time-bound action 
plan acceptable to the Association for the strengthening of its financial 
management system for the Project in order to enable the Borrower, not 
later than September 30, 2001, or such later date as the Association 
shall agree, to prepare quarterly Project Management Reports, acceptable 
to the Association, each of which:
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(i) 
(A) sets forth actual sources and applications of 
funds for the Project, both 
cumulatively and for the 
period covered by said report, and projected sources 
and applications of funds for the Project for the six-month period 
following 
the period covered by said report, and (B) 
shows separately expenditures 
financed out of the 
proceeds of the Credit during the period covered by said 
report and expenditures proposed to be financed out of the 
proceeds of the 
Credit during the six-month 
period following the period covered by said 
report;
(ii)
(A) describes physical progress in Project 
implementation, both cumulatively 
and for the period 
covered by said report, and (B) explains variances between 
the actual and previously forecast implementation targets; 
and
(iii)  sets forth the status of procurement under the 
Project and expenditures under 
contracts financed out of 
the proceeds of the Credit, as at the end of the 
period covered by said report.
(b)
Upon the completion of the action plan referred to in 
paragraph (a) of this Section, the Borrower shall prepare, in accordance 
with guidelines acceptable to the Association, and furnish to the 
Association not later than 45 days after the end of each calendar quarter 
a Project Management Report for such period.
ARTICLE V
Effective Date; Termination
Section 5.01. 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)
the Borrower has put in place the Financial Management 
System for the Project in form and substance satisfactory to the 
Association;
(b)
the Borrower has furnished to the Association the Project 
Implementation Manual in form and substance satisfactory to the 
Association; 
(c)
the Borrower has furnished to the Association the Action 
Plan for the first year of the Project in form and substance satisfactory 
to the Association; and
(d)
the Borrower has paid into the Project Account the Initial 
Deposit.
Section 5.02. The date ninety days (90) days after the date of this 
Agreement is hereby specified for the purposes of Section 12.04 of the 
General Conditions.
ARTICLE VI
Representative of the Borrower; Addresses
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Section 6.01. The Minister of the Borrower for the time being 
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 
purposes of Section 11.01 of the General Conditions:
For the Borrower:
Ministry of Finance 
P. O. Box 895
Asmara
Eritrea
Telex:
Facsimile:
583492421150
291 1 
127947
For the Association:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
Facsimile:
INDEVAS
248423 (MCI) or
(202) 
477-6391
Washington, D.C.
 64145 (MCI)
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.
THE STATE OF ERITREA
By /s/ Semere Russom
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Oey Astra Meesook
Acting Regional Vice President
Africa
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 
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Credit to each Category and the percentage of expenditures for items so 
to be financed in each Category:
Amount of the
Credit Allocated
   % of
(Expressed in
Expenditures
Category
SDR Equivalent)
to be Financed
(1)
Civil works
   5,180,000
90%
(2)
Goods and vehicles
   8,090,000
100% of foreign
expenditures and
80% of local
expenditures
(3)
Consultants’
   6,410,000
100% 
services, studies,
and training/workshops
(4)
Grants under Part D.2
   5,560,000
100%
of the Project
(5)
Operating costs
   2,740,000
70%
(6)
Unallocated
   1,020,000
TOTAL
  29,000,000
2.
For the purposes of this Schedule:
(a)
the term “foreign expenditures” means expenditures in the 
currency of any country other than that of the Borrower for goods or 
services supplied from the territory of any country other than that of 
the Borrower; 
(b)
the term “local expenditures” means expenditures in the 
currency of the Borrower or for goods or services supplied from the 
territory of the Borrower; and 
(c)
the term “operating costs” means incremental expenditures 
incurred on account of Project implementation, management and monitoring 
including office consumables (including communication expenses), staff 
travel and associated subsistence allowances, office rental, office 
supplies and maintenance, fuel and vehicle maintenance, but excluding 
salaries of the Borrower’s public service.
3.
Not withstanding the provision of paragraph 1 above, no withdrawals 
shall be made for: (a) expenditures prior to the date of this Agreement; 
and (b) expenditures under Category (4) unless the Association has 
approved the procedures and terms and conditions for Grants.
4.
The Association may require withdrawals from the Credit Account to 
be made on the basis of statements of expenditure for expenditures for: 
(a) works and goods under contract not exceeding $200,000 equivalent, (b) 
consultants’ services (firms) under contracts not exceeding $50,000, 
consultants’ services (individuals) under contracts not exceeding $25,000 
equivalent, and (c) materials and other assets for the income generating 
activities, training and operating costs, all under such terms and 
conditions as the Association shall specify by notice to the Borrower; 
and (d) the terms “Grant” means a grant made or proposed to be made to a 
host family taking care of children in need of special protection under 
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Part D.2 of the Project..
SCHEDULE 2
Description of the Project
The objectives of the Project are to: (i) promote in the Borrower’s 
territory the healthy growth and development of children under six years 
of age; (ii) expand access to, and improve the quality of, services that 
address the basic needs of the young; and (iii) develop and carry out 
programs that can: (A) provide the support required by orphans and 
children facing especially difficult circumstances, and (B) help to 
improve the health of children in the primary schools.
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:
Improving Child Health
Reduction of childhood morbidity and mortality in the Borrower’s 
territory by improving case management and preventive skills of health 
staff, assisting communities and caregivers to improve family child 
health care practices through:
1.
The integrated management of childhood illnesses programs (IMCI 
Programs) provided at health facility and community levels.
2.
Enhancement of child and maternal health through: (i) the 
acquisition of necessary drugs, medical equipment and supplies for the 
Borrower’s health system; and (ii) the strengthening of the Borrower’s 
capacity in procurement, storage and distribution mechanisms of the 
health system through training and acquisition of equipment.
3.
The carrying out of environmental health measures to control 
childhood illnesses, including: (i) the promotion, maintenance and use of 
safe latrines; (ii) improved food safety and hygiene; (iii) construction, 
protection and handling of water points; (iv) prevention of ARI through 
indoor air pollution reduction measures; and (v) improved collaboration 
in the prevention of malaria and other vector borne diseases.
4.
The carrying out of school health measures by the Borrower’s 
Ministry of Health (MOH) in collaboration with its Ministry of Education 
(MOE), including: (i) the incorporation of key health concepts and 
messages into teacher training and school curricula as part of teacher 
training and life skills training; and (ii) the provision of primary eye 
care, oral health, ENT examinations, skin examinations and mental health 
care to be undertaken by trained health workers and technicians in nearby 
health facilities.
5.
Improvement of IEC/communications for behavioral change focussed 
mainly on parents/caregivers, including: (i) carrying out a national and 
regional level advocacy campaign on child health and nutrition; (ii) 
development of relevant messages as a package together with other 
messages that deal with maternal health and nutrition including 
adolescent health, environmental health and HIV/AIDS; and (iii) capacity 
building for effective communication skills to be carried out at 
national, regional and sub-regional levels to improve interpersonal 
communication skills of both health workers and other partners involved 
in message dissemination, all through training, provision of technical 
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advisory services and acquisition of equipment.
6.
The carrying out by the regional health offices under the regional 
Zoba administration of supervision, support, monitoring and evaluation 
and research under this Part A of the Project.
Part B:
Improving Child and Maternal Nutrition
Improving the nutritional status of children under six years of 
age, and pregnant and nursing women through:
1.
Strengthening the capacities of families and communities to improve 
the nutritional status of children, including the institutionalization of 
a community-based growth-monitoring system and parent/care provider 
education; and provision of therapeutic feeding for growth-faltering 
children.
2.
Carrying out of measures to improve household food security in 
targeted households, including: (i) training for income generating 
activities to be supported by credit provided through MOA’s credit 
window; (ii) improving food security and nutrition through the efforts of 
the Borrower’s Ministry of Fisheries (MF) to promote increased 
consumption of fish; and (iii) designing of appropriate elements of a 
comprehensive strategy to address institutional and policy constraints as 
well as programmatic interventions.
3.
Improving the capacity of the Borrower’s Ministries to carry out 
this Part B of the Project, including strengthening the said Ministries’ 
capacity for implementation and development of new approaches, all 
through the provision of technical advisory services and acquisition of 
equipment.
Part C:
Improving Early Childhood Education and Care
Improving access to and the quality of early childhood education, 
primary school health environment; strengthening institutional capacity 
to undertake child care and early childhood education, and to supervise 
and monitor early childhood education at all administrative levels, 
especially of communities, including:
1.
The provision of learning facilities, adequately trained teachers 
and staff; and development of non-formal early childhood programs, 
including: (i) the establishment of about 105 kindergartens in rural 
areas; (ii) training and provision of about 315 preschool teachers, about 
735 teacher assistants, about 105 directors and about 250 community 
caregivers; and (iii) acquisition of learning materials and supplies.
2.
The development of enhanced learning materials and teaching aids 
and provision of support to teachers to assist them in: (i) the 
adaptation of the early childhood education program to their own local 
situation; (ii) the introduction of innovations; and (iii) the 
development of their own supplementary learning materials and aids.
3.
The carrying out of a school health and sanitation program, 
including: (i) the construction of deep pit latrines and garbage disposal 
areas in schools and centers; and (ii) the establishment in schools of a 
health and sanitation club to be used as effective tools for influencing 
the children in kindergarten centers and community.
4.
Strengthening institutional capacity for the management and 
supervision of early childhood care and education, including: (i) the 
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establishment of mechanisms for the collection and analysis of data, and 
for a well-functioning MIS; (ii) the carrying out of a program to engage 
the participation of parents and communities in the management, control 
and financing of the early childhood education programs; and (iii) the 
strengthening of the relationship between parents, teachers, assistants, 
daycare providers and other early childhood development providers.
Part D:
Support for Children in Need of Special Protection
Strengthening the traditional safety nets of child care and 
protection through community-based reintegration and psychosocial support 
for orphans and other seriously disadvantaged children, including:
1.
Provision of psychosocial support for and the reintegration of 
about 32,000 orphans, including: (i) disabled, displaced and expelled 
orphans as well as abandoned and street children; (ii) establishment of 
about 10 community group homes for children who cannot be reunified with 
relatives; and (iii) the development of a program for the adoption of 
about 500 orphans.
2.
Provision of Grants to support income-generating schemes for the 
benefit of about 12,000 host families.
3.
Assisting communities to carry out community-based initiatives to 
support orphans, including the creation of awareness on the part of such 
communities about the need for the communities to develop and carry out 
community-based interventions to help the orphans.
4.
Strengthening the capacity of personnel at the national, regional 
and community level involved in providing services to orphans, through 
training and acquisition of equipment.
5.
Improving the Borrower’s capacity in supervision, monitoring and 
evaluation of activities under this Part D of the Project, including the 
establishment of a computer base information system for use in: (i) 
monitoring the condition of the orphans and their families, (ii) 
documenting the progress of their reintegration, (iii) assessing the 
efficacy of the psychosocial interventions, (iv) carrying out of 
long-term follow-up studies to evaluate the program of assistance to the 
orphans, and (v) the carrying out of research into matters related to the 
orphans program.
Part E:
Project Management, Evaluation and Strategic Communication
Assisting the Borrower in the carrying out of the overall 
management of the Project, including: (i) the advocacy for and creation 
of awareness in early childhood development issues in partnership with 
local authorities, women’s groups, youth groups, workers’ unions, 
employers’ groups, schools, the health authorities, the agricultural 
extension personnel, the mass media (including radio and TV); and (ii) 
the integration of the early childhood development program 
evaluation/survey and research, all through the provision of technical 
advisory services, training and the acquisition of equipment.
* * *
The Project is expected to be completed by June 30, 2005.
SCHEDULE 3
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Procurement and Consultants’ Services
Section I.
Procurement of Good and Works
Part A:
General
Goods shall be procured in accordance with the provisions of 
Section I of the “Guidelines for Procurement under IBRD Loans and IDA 
Credits” published by the Bank in January 1995 and revised in January and 
August 1996, September 1997 and January 1999 (the Guidelines) and the 
provisions of the following Parts of this Section I.
Part B:
International Competitive Bidding
1.
Except as otherwise provided in Part C of this Section, goods shall 
be procured under contracts awarded in accordance with the provisions of 
Section II of the Guidelines and paragraph 5 of Appendix 1 thereto.
2.
The following provisions shall apply to goods to be procured under 
contracts awarded in accordance with the provisions of paragraph 1 of 
this Part B.
(a)
Grouping of contracts
To the extent practicable, contracts for goods shall be grouped in 
bid packages estimated to cost $100,000 equivalent or more each.
Part C:
Other Procurement Procedures 
1.
National Competitive Bidding
(a)
Goods (other than furniture acquired locally) estimated to 
cost less than $100,000 equivalent per contract, up to an aggregate 
amount not to exceed $1,000,000 equivalent, may be procured under 
contracts awarded in accordance with the provisions of paragraphs 3.3 and 
3.4 of the Guidelines.
(b)
Furniture acquired locally estimated to cost less than 
$150,000 equivalent per contract, up to an aggregate amount not to exceed 
$500,000 equivalent, may be procured under contracts awarded in 
accordance with the provisions of paragraphs 3.3 and 3.4 of the 
Guidelines.
(c)
Works estimated to cost more than $30,000 equivalent per 
contract, up to an aggregate amount not to exceed $10,000,000 equivalent, 
may be procured under contracts awarded in accordance with the provisions 
of paragraphs 3.3 and 3.4 of the Guidelines.
2.
National Shopping
Goods estimated to cost the equivalent of $30,000 or less per 
contract, up to an aggregate amount not to exceed $900,000 equivalent, 
may be procured under contracts awarded on the basis of national shopping 
procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of 
the Guidelines.
3.
Direct contracting
Therapeutic feeding materials costing up to an aggregate amount not 
Page  14
exceeding the equivalent of $2,000,000 and the materials and equipment 
for income generating schemes may, with the Association’s prior 
agreement, be procured in accordance with the provisions of paragraph 3.7 
of the Guidelines.
4.
Procurement from UN Agencies
A limited number of vehicles and office and school equipment, up to 
an aggregate amount not to exceed $1,000,000 equivalent, may be procured 
from IAPSO under contracts awarded in accordance with the provisions of 
paragraph 3.9 of the Guidelines.
5.
Community Participation
Works estimated to cost the equivalent of $50,000 or less per 
contract shall be procured in accordance with procedures acceptable to 
the Association.
6.
Procurement of Small Works
Works estimated to cost less than $75,000 equivalent per contract, 
up to an aggregate amount not to exceed $2,000,000 equivalent, may be 
procured under lump-sum, fixed-price contracts awarded on the basis of 
quotations obtained from three (3) qualified domestic contractors in 
response to a written invitation.  The invitation shall include a 
detailed description of the works, including basic specifications, the 
required completion date, a basic form of agreement acceptable to the 
Association, and relevant drawings, where applicable.  The award shall be 
made to the contractor who offers the lowest price quotation for the 
required work, and who has the experience and resources to complete the 
contract successfully.
Part D:
Review by the Association of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to bid for contracts, the 
proposed procurement plan for the Project shall be furnished to the 
Association for its review and approval, in accordance with the 
provisions of paragraph 1 of Appendix 1 to the Guidelines.  Procurement 
of all goods and works shall be undertaken in accordance with such 
procurement plan as shall have been approved by the Association, and with 
the provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for civil works estimated to 
cost the equivalent of $200,000 or more and each contract for goods 
estimated to cost the equivalent of $100,000 or more, the procedures set 
forth in paragraphs 2 and 3 of Appendix 1 to the Guidelines shall apply.
(b)
With respect to each contract for goods estimated to cost 
the equivalent of $30,000 or more, the following procedures shall apply:
(i)
prior to the selection of any supplier under shopping 
procedures, the Borrower 
shall provide to the Association 
a report on the comparison and evaluation of 
quotations received;
(ii)
prior to the execution of any contract procured under 
Page  15
shopping procedures, the 
Borrower shall provide to the 
Association a copy of the specifications and the 
draft contract; and
(iii)
the procedures set forth in paragraphs 2 (f), 2 (g) 
and 3 of Appendix 1 to the 
Guidelines shall apply.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this 
Part, the procedures set forth in paragraph 4 of Appendix 1 to the 
Guidelines shall apply.
Section II.
Employment of Consultants
Part A:
General
1.
Consultants’ services shall be procured in accordance with the 
provisions of the Introduction and Section IV of the “Guidelines: 
Selection and Employment of Consultants by World Bank Borrowers” 
published by the Bank in January 1997 and revised in September 1997 and 
January 1999 (the Consultant Guidelines) and the following provisions of 
Section II of this Schedule.
Part B:
Quality- and Cost-based Selection
1.
Except as otherwise provided in Part C of this Section, 
consultants’ services shall be procured under contracts awarded in 
accordance with the provisions of Section II of the Consultant 
Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 thereto, and 
the provisions of paragraphs 3.13 through 3.18 thereof applicable to 
quality- and cost-based selection of consultants.
2.
The following provisions shall apply to consultants’ services to be 
procured under contracts awarded in accordance with the provisions of the 
preceding paragraph.  The short list of consultants estimated to cost 
less than $100,000 equivalent per contract, may comprise entirely 
national consultants in accordance with the provisions of paragraph 2.7 
of the Consultant Guidelines.
Part C:
Other Procedures for the Selection of Consultants
1.
Selection Under a Fixed Budget
Services of consultants to provide technical assistance services or 
training or capacity building services under the Project may be procured 
under contracts awarded in accordance with the provisions of paragraphs 
3.1 and 3.5 of the Consultant Guidelines.
2.
Selection Based on Consultants’ Qualifications
The following services may be procured under contracts awarded in 
accordance with the provisions of paragraphs 3.1 and 3.7 of the 
Consultant Guidelines, namely: (i) services to be provided under the 
Project by consultants at community level estimated to cost less than 
$100,000 equivalent per contract; and (ii) services of all individual 
consultants.
Page  16
3.
Individual Consultants
Services for tasks that meet the requirements set forth in 
paragraph 5.1 of the Consultant Guidelines shall be procured under 
contracts awarded to individual consultants in accordance with the 
provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines.
Part D:
Review by the Association of the Selection of Consultants
1.
Selection Planning
Prior to the issuance to consultants of any requests for proposals, 
the proposed plan for the selection of consultants under the Project 
shall be furnished to the Association for its review and approval, in 
accordance with the provisions of paragraph 1 of Appendix 1 to the 
Consultant Guidelines. Selection of all consultants’ services shall be 
undertaken in accordance with such selection plan as shall have been 
approved by the Association, and with the provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for the employment of 
consulting firms estimated to cost the equivalent of $50,000 or more, the 
procedures set forth in paragraphs 1, 2 (other than the third 
subparagraph of paragraph 2 (a)) and 5 of Appendix 1 to the Consultant 
Guidelines shall apply.
(b)
With respect to each contract for: (i) the employment of 
individual consultants estimated to cost the equivalent of $25,000 or 
more, the qualifications, experience; (ii) the employment of all other 
consultants (including consulting firms), the terms of reference and 
terms of employment of the consultants shall be furnished to the 
Association for its prior review and approval.  The contract shall be 
awarded only after the said approval shall have been given.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this 
Part, the procedures set forth in paragraph 4 of Appendix 1 to the 
Consultant Guidelines shall apply.
SCHEDULE 4
Implementation Program
1.
(a)
The Borrower shall prepare and furnish to the Association a 
Project Implementation Manual in form and substance satisfactory to the 
Association setting out details of all procedures, guidelines, timetables 
and criteria required for the Project.
(b)
The Borrower shall carry out the Project in accordance with 
the Project Implementation Manual and, except as the Association shall 
otherwise agree, the Borrower shall not amend or waive any provision of 
the Project Implementation Manual if, in the opinion of the Association, 
such amendment or waiver may materially and adversely affect the carrying 
out of the Project or the achievement of the objectives thereof.
2.
The Borrower shall:
(a)
maintain policies and procedures adequate to enable it to 
Page  17
monitor and evaluate on an ongoing basis, in accordance with the 
indicators set forth in Schedule 6 to this Agreement: (i) the carrying 
out by the Borrower of the Project; and (ii) the achievement of the 
objectives thereof;
(b)
prepare, under terms of reference satisfactory to the 
Association, and furnish to the Association, on or about March 31 and 
September 30 of each year, a report integrating the results of the 
monitoring and evaluation activities performed pursuant to paragraph (a) 
of this Section, on: (i) the progress achieved in the carrying out of the 
Project, during the period preceding the date of said report and setting 
out the measures recommended to ensure the efficient carrying out of the 
Project; and (ii) the achievement of the objectives thereof during the 
period following such date;
(c)
review with the Association by May 31 and November 30 of 
each year, or such later date as the Association shall request, the 
report referred to in subparagraph (b) of this paragraph, and, 
thereafter, take all measures required to ensure the efficient completion 
of the Project and the achievement of the objectives thereof, based on 
the conclusions and recommendations of the said report and the 
Association’s views on the matter; and
(d)
The Borrower shall prepare and furnish to the Association no 
later than January 30th in each year of the Project an action plan (the 
Action Plan) including an annual work plan and budget and procurement 
plan in form and substance satisfactory to the Association.
3.
(a)
The Borrower shall, no later than December 31, 2002, carry 
out jointly with the Association, a mid-term review of the progress made 
in carrying out their respective Parts of the Project. The Mid-Term 
Review shall cover, among other things, the progress made in meeting the 
objectives of the Project; and (ii) the overall performance of the 
Borrower of the Project.
(b)
The Borrower shall carry out, no later than one month after 
the completion of the Mid-Term Review the recommendations of the Mid-Term 
Review as agreed with the Association and set out in an action plan for 
the respective Parts of the Project satisfactory to the Association.
4.
(a)
The Borrower shall establish in the Ministry of Local 
Government a Project Management Team in form and with functions, staffing 
and resources satisfactory to the Association. The Project Management 
Team shall have responsibility for the overall coordination of Project 
activities and shall, to that end, be assisted and supported by MOE, MOH, 
MOLHW, MOA, Ministry of Information and the Ministry of Fisheries.
(b)
The Project Management Team shall be responsible for the 
coordination and management at Headquarters of procurement under the 
Project, and its membership shall include: (i) a Project Manager, (ii) a 
Procurement Specialist, and (iii) a Project Financial Officer, all with 
qualifications and experience satisfactory to the Association. The 
Project Financial Officer shall assist in the development of a financial 
management system, in form and substance satisfactory to the Association, 
and in providing guidance and direction for the financial management 
operations of the Project.
(c)
The Project Management Team shall be responsible for the 
development, with the assistance of consultants, of the following 
documents satisfactory to the Association, namely: (i) comprehensive 
manuals of procedures and adequate internal control mechanisms to be used 
to guide staff and minimize risks of errors and omissions; including 
statements and explanations of the Project’s budgetary policies and 
Page  18
procedures; (ii) a dedicated account system to be used for the Project ; 
and (iii) a chart of accounts that will provide the availability of 
timely and reliable information required for the Project and consistency 
in account classification.
5.
The Borrower shall establish local project management teams in form 
and with functions, resources and staffing satisfactory to the 
Association. The local project management shall be responsible for the 
coordination and management at regional levels of procurement under the 
Project.
6.
In providing support to host families taking care of orphans and 
Part D.2 of the Project, the Borrower shall ensure that eligibility 
criteria for grants and income generating schemes are in accordance with 
the procedures laid down in the Project Implementation Manual.
SCHEDULE 5
Special Account
1.
For the purposes of this Schedule:
(a)
the term “eligible Categories” means Categories 1 through 5 
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 allocated 
from time to time to the eligible Categories in accordance with the 
provisions of Schedule 1 to this Agreement; and
(c)
the term “Authorized Allocation” means an amount equivalent 
to $2,000,000 to be withdrawn from the Credit Account and deposited into 
the Special Account pursuant to paragraph 3 (a) of this Schedule, 
provided, however, that unless the Association shall otherwise agree, the 
Authorized Allocation shall be limited to an amount equivalent to 
$1,000,000 until the aggregate amount of withdrawals from the Credit 
Account plus the total amount of all outstanding special commitments 
entered into by the Association pursuant to Section 5.02 of the General 
Conditions shall be equal to or exceed the equivalent of SDR 4,500,000.
2.
Payments out of the Special Account shall be made exclusively for 
eligible expenditures in accordance with the provisions of this Schedule.
3.
After the Association has received evidence satisfactory to it that 
the Special Account has been duly opened, withdrawals of the Authorized 
Allocation and subsequent withdrawals to replenish the Special Account 
shall be made as follows:
(a)
For withdrawals of the Authorized Allocation, the Borrower 
shall furnish to the Association a request or requests for deposit into 
the Special Account of an amount or amounts which do not exceed the 
aggregate amount of the Authorized Allocation. On the basis of such 
request or requests, the Association shall, on behalf of the Borrower, 
withdraw from the Credit Account and deposit into the Special Account 
such amount or amounts as the Borrower shall have requested.
(b)
(i)
For replenishment of the Special Account, the 
Borrower shall furnish to the 
Association requests for 
deposits into the Special Account at such intervals 
Page  19
as the Association shall specify;
(ii)
Prior to, or at the time of each such request, the 
Borrower shall furnish to 
the Association the documents and 
other evidence required pursuant to 
paragraph 4 of this Schedule for the payment or payments in respect of 
which 
replenishment is requested. On the basis of each such 
request, the Association 
shall, on behalf of the Borrower, 
withdraw from the Credit Account and deposit 
into 
the Special Account such amount as the Borrower shall have requested and 
as shall have been shown by said documents and other 
evidence to have been 
paid out of the Special 
Account for eligible expenditures. All such deposits 
shall be withdrawn by the Association from the Credit Account under 
the 
respective eligible Categories, and in the 
respective equivalent amounts, as 
shall have been 
justified by said documents and other evidence.
4.
For each payment made by the Borrower out of the Special Account, 
the Borrower shall, at such time as the Association shall reasonably 
request, furnish to the Association such documents and other evidence 
showing that such payment was made exclusively for eligible expenditures.
5.
Notwithstanding the provisions of paragraph 3 of this Schedule, the 
Association shall not be required to make further deposits into the 
Special Account:
(a)
if, at any time, the Association shall have determined that 
all further withdrawals should be made by the Borrower directly from the 
Credit Account in accordance with the provisions of Article V of the 
General Conditions and paragraph (a) of Section 2.02 of this Agreement;
(b)
if the Borrower shall have failed to furnish to the 
Association, within the period of time specified in Section 4.01 (b)(ii) 
of this Agreement, any of the audit reports required to be furnished to 
the Association pursuant to said Section in respect of the audit of the 
records and accounts for the Special Account;
(c)
if, at any time, the Association shall have notified the 
Borrower of its intention to suspend in whole or in part the right of the 
Borrower to make withdrawals from the Credit Account pursuant to the 
provisions of Section 6.02 of the General Conditions; or
(d)
once the total unwithdrawn amount of the Credit allocated to 
the eligible Categories, minus the total amount of all outstanding 
special commitments entered into by the Association pursuant to Section 
5.02 of the General Conditions with respect to the Project, shall equal 
the equivalent of twice the amount of the Authorized Allocation.
Thereafter, withdrawal from the Credit Account of the remaining 
unwithdrawn amount of the Credit allocated to the eligible Categories 
shall follow such procedures as the Association shall specify by notice 
to the Borrower. Such further withdrawals shall be made only after and to 
the extent that the Association shall have been satisfied that all such 
amounts remaining on deposit in the Special Account as of the date of 
such notice will be utilized in making payments for eligible 
expenditures.
6.
(a)
If the Association shall have determined at any time that 
any payment out of the Special Account: (i) was made for an expenditure 
or in an amount not eligible pursuant to paragraph 2 of this Schedule; or 
(ii) was not justified by the evidence furnished to the Association, the 
Borrower shall, promptly upon notice from the Association: (A) provide 
Page  20
such additional evidence as the Association may request; or (B) deposit 
into the Special Account (or, if the Association shall so request, refund 
to the Association) an amount equal to the amount of such payment or the 
portion thereof not so eligible or justified. Unless the Association 
shall otherwise agree, no further deposit by the Association into the 
Special Account shall be made until the Borrower has provided such 
evidence or made such deposit or refund, as the case may be.
(b)
If the Association shall have determined at any time that 
any amount outstanding in the Special Account will not be required to 
cover further payments for eligible expenditures, the Borrower shall, 
promptly upon notice from the Association, refund to the Association such 
outstanding amount.
(c)
The Borrower may, upon notice to the Association, refund to 
the Association all or any portion of the funds on deposit in the Special 
Account.
(d)
Refunds to the Association made pursuant to paragraph 6 (a), 
(b) and (c) of this Schedule shall be credited to the Credit Account for 
subsequent withdrawal or for cancellation in accordance with the relevant 
provisions of this Agreement, including the General Conditions.
SCHEDULE 6
Performance Indicators
The Borrower shall carry out the Project with the objective of 
achieving indicators set forth below:
A.
Outcome/Impact Indicators
1.
By June 2005, decline by 20% in case fatality in children from 
combined five major causes: malaria, ARI, diarrhea, measles and 
malnutrition in the project areas.
2.
By June 2005, decrease by 20% in malnutrition (measured by 
prevalence of underweight children below six years of age, in the project 
areas.
3.
By June 2005, decrease by 20% in repetition and drop-out rates 
between grade 1 and 2, in the project areas.
4.
By June 2005, reunification of 32,000 orphans with their nearest 
relative.
B.
Implementation Progress (monitored in July and December of each 
year)
1. 
Percentage of actual vs. projected disbursement by component. 
2.
Number of health workers trained in IMCI.
3. 
Number of health facilities stocked with essential IMCI drugs.
4.
Numbers of mothers who received special training in food security 
and nutrition.
5.
Number of kindergarten schools established, and the number of 
Page  21
children enrolled in the kindergarten schools.
6.
Number of kindergarten teachers, assistants, directors and 
community care givers trained and inducted into the program.
7.
Number of social workers trained.
8.
Number of group homes established and the number enrolled in such 
homes.
9.
Number of villages reached by the Project.
10.
Number and percent of supervision and evaluation reports completed 
and submitted as planned.