13FICIAL DOCIMETS ACGF GRANT NUMBER TF092098 Agreement providing for the Amendment find Restatement of the Africa Catalytic Growth Fund Gran[it Agreement (Fir ancial Services Project) between REPU ILIC OF MADAGASCAR and INTERNATIONA L DEVELOPMENT ASSOCIATION (acting as an adm inisti ator of the Africa Catalytic Growth Fund) Eatel b ,2013 ACGF GRANT NUMBER TF092098 AGREEMENT PROV [DING OR THE AMENDMENT AND RESTATEMENT OF THE AFRICA CAT ALI TIC GROWTH FUND GRANT AGREEMENT AGREEMENT, da:ed 1Q-Iaftx.uO.4L.6, 2013, entered into between REPUBLIC OF MXDAGASCAR ("Recipient") and INTERNATIONAL DEVELOPMENT ASSCCIiTICN ("World Bank") acting as an administrator of the Africa Catalytic Growth Fund. The Recipient and the World Bank hereby agree as follows: ARTICLE I -- A. VIENDMENT AND RESTATEMENT 1.01. The Africa Catalytic Grovth Fund Grant Agreement for ACGF Grant Number TF092098 ("Grant Agree nent") is hereby amended and restated so as to read as set forth in the Aine.: her(tto. ARTICLI II - - TRANSITIONAL PROVISIONS 2.01. Except Es provided )eloN(, the Current Guidelines (as defined in the Annex to this Agreement) ;hal I apr ly to all contracts for goods, works and services under the Projcct, whether entered into before or after the date of this Agreement. 2.02. Where, n the caise f c( ntracts for which the invitation to bid or request for proposals was is ued on < r before November 30, 2012, the relevant contracts do not provide for tie application of the Current Guidelines or otherwise allow for such applicatior, the a )plicable guidelines shall be those which applied immediately prior to the date of this Agreement. ARtTICLE III- ENTRY INTO FORCE 3.01. This Agreement shall nc t become effective until evidence satisfactory to the World Bank ha!; b:en I arnished to the World Bank that the conditions of effectiveness list(!d ii (a) o (e) below, have been satisfied: (a) 1he Disbirseneni Deadline set forth in Section 9.1 of Annex 2 to the Memoraiduiri o * Understanding between the Government of the Kingdorr of Spain and the International Development Association (IDA) for the Multi-Do tor Trust Fund for the Africa Catalytic Growth Fund ITrust Fi nd Num >er TF 070478) has been extended from April 30, 2014 1o Deceniber 31,: 017 in accordance with its terms. (b) The AGE. PA SEF Governing Documents have been revised in order to reflect tie instit itional arrangement described in Section I.A.1 of Schedule 2 to the Grant Agreement. -2- (c) The BCM [ St bsidi ary Agreement has been terminated. (d) The Sub:,idiary /greement has been amended in form and substance zcceptable to the World Bank. (e) An amendrent to the Project Agreement in form and substance E.cceptable to tf. World Bank has been signed by the Project Implementing Enl ty. 3.02. Except as the World Ban] shall otherwise agree, this Agreement shall enter into effect on the date upon w] ich the World Bank dispatches to the Recipient notice of its acceptance of :he evidence required pursuant to Section 3.01 ("Effective Date"). 3.03. This Agreement and all >bligations of the parties under this Agreement shall terminate if this Agreemei t has not entered into effect by the date ("Effectiveness Deadline") ninety (9'0) days after the date of this Agreement, unless the World Bank, after conide -atioi of the reasons for the delay, establishes a later Effectiveness De,:dli-le, fior the purpose of this Section. The World Bank shall promptly notify the R ecipi ent of such later Effectiveness Deadline. -3- AGREED at NOU c _n Q-f 0 , 0 C.RD , as of the day and year firs: above writt -n. REPUBLIC OF MADAGASCAR B: / horized Representative . RAJAONARIMAMPAN!NA Le Ministre Title: des Finanres Pt dui Prt I TERNATIONAL DEVELOPMENT ASSOCIATION a( ting as an administrator of the Africa Catalytic Growth Fiund B r: Aut L ized Representative Name: . IDI Ti Country Director T lumUiinsCornoros and Seychelles -4- ANNEX ACGF GRANT NUMBER TF092098 Africa ,Catalytic Growth Fund Grant Agreement (Financial Services Project) between RIPUI;LIC OF MADAGASCAR and INTERNATIONAL DEVELOPMENT ASSOCIATION (acting as an administr itor of the Africa Catalytic Growth Fund) )ated July 15, 2008 -5- ACGF GRANT NUMBER TF092098 AF RICA C ATALYTIC GROWTH FUND GIANT AGREEMENT AGREEMENT dated July 15, 2008, entered into between the REPUBLIC OF MADAGASCAR ('Recipieiit") and INTERNATIONAL DEVELOPMENT ASSOCIATION ("World Bank"), acting as an adminisi rator of the Africa Catalytic Growth Fund. The Recipient and th. World Bark hei eby agree as follows: Article I Stands rd Conditions; Definitions 1.01. The Standard Condit on. (as defined in the Appendix to this Agreement) constitute an integral part of this A:gremen.. t.02. Unless the context requii es ot ierwise, the capitalized terms used in this Agreement have the meaning ascribed to the n in the Standard Conditions or in the Appendix to this Agreement. 1.03. Italicized terms used in this kgreement to denote place names and locations shall be deemed to denote pla:.e names and locations in the Recipient's territory. Article II The Project 2.01. The Recipie it decla,es its c,)mmitment to the objectives of the project described in Schedule I to this Agieem nt ("Project"). To this end, the Recipient shall cause AGEPASEF to carry out the P roject, in accordance with the provisions of Article II of the Standard Conditions .nd the P.-oject Agreement. 2.02. Without limitation upon :he p -ovisions of Section 2.01 of this Agreement, and except as the Recipien: and the World 3ank shall otherwise agree, the Recipient shall ensure that the Project is carriei oat ir accordance with the provisions of Schedule 2 to this Agreement. -6- Article III The Grant 3.01. The World Bank agr:-es :o ex.end to the Recipient, on the terms and conditions set forth or referred to in this AEreerrent, a grant in an amount equal to fifteen million United States Dollais ($15,01)0,C 00) ('Grant") to assist in financing the Project. 3.02. The Recipient may w ithc raw :he proceeds of the Grant in accordance with Section IV of Schedule 2 to this Ag reei nent. Article IV dditional Remedies 4.01. The Additioial Evet its of SL spension referred to in Section 4.02 (k) of the Standard Conditions c:nsist of the follo wing: (a) the Project Implement ng Entity has failed to perform any of its obligations under the Froject Agree ment (b) IBRD, IDA :r aiy ot ier donor who has signed a cross debarment agreement with the World Bank has declared the Project Implementing Entity ineligible to be awarded a contrct f ianced by IBRD, IDA or such other donor; (c) as a result 0:* ev,-nts which have occurred after the date of this Agreement, an extraordinary situation has arisen which makes it improbable that the Project Implementing, Er tity will be able to perform its obligations under the Project Agreement; (d) any of the AGEPA1 EF Governing Documents, the PPCG Fund Governing Documents, 1he Func Manager Governing Documents, or legislation or legal instruments pertaining to any other entity involved in the implementation of the Proje ct, or ar y txt p rtaining to their operation, has been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of the Project Iniple nent ng Entity, the PPCG Fund, the Fund Manager, or any other entity involve d it i the implementation of the Project to implement the Project or perfcrm any of iis ob igations under this Agreement, the Project Agreement, the Subsidiary Agree-mert, the Fund Management Agreement, or any of the agree ments etitertd int) for the implementation of the Project; and (e) the World Ba ik I as dc termined after the Effective Date referred to in Section 5.03 of th s Agree rien thal prior to such date but after the date of this Agreement, an eveni has oc:urrod w lich would have entitled the World Bank to suspend the Recipient's right lo mi ke withdrawals from the Grant Account if this Agreement had been effei:tivc on t ie date such event occurred. -7- Article V Eff !ctiveness; Termination :.01. This Agreerrent shall no become effective until evidence satisfactory to the World Bank has been furnished to the V orld Bank that the conditions specified below have been satisfied: (a) the AGEPAS IEF 3ove -ning Documents have been updated in a manner satisfactory to th- World 3an ; (b) the Recipieni: his a lopted the Operational Manual in form and substance satislactory to the Woi Id Bank; (c) the execution and del very of this Agreement on behalf of the Recipient and the Project Agre(me:it on behalf of the Project Implementing Entity have been duly authorized or rati ied t y all necessary governmental and corporate actions; and (d) the Subsidiaiy Agree nent referred to in Section I.B. I of Schedule 2 to this Agreement hE,s been d ily executed and delivered on behalf of the Recipient and the Project Imple:nerting ntity. 5.02. As part of the evidence tc be f irnished pursuant to Sections 5.01 (c) and (d), there shall be furnished to the World flank an opinion or opinions satisfactory to the World Bank of counsel acceptable tc the Wc rld Bank or, if the World Bank so requests, a certificate satisfactory to the 'orld Bank of a competent official of the Recipient, showing the following matters: (a) on behalf of t te Recip ent, that this Agreement has been duly authorized or ratified by, and exec.ited and delivered on its behalf, and is legally binding upon it in accordance with i:s ter ns; (b) on behalf of thle Froject Implementing Entity, that the Project Agreement has been duly authorized b ' the Project Implementing Entity, and executed and delivered on its behalf, and is I gall binding upon it in accordance with its terms; and (c) on behalf of :acf of 1 -ie Recipient and the Project Implementing Entity, that the Subs diary Alree:nent has been duly authorized by, and executed and delivered on behalf of the :tecipieni and the Project Implementing Entity, and is legally binding upon each suc h p, rty ii accordance with its terms. 5.03. Except as the Recipient and tl e World Bank shall otherwise agree, this Agreement shall enter into effect on the da:e up n which the World Bank dispatches to the Recipient notice of its acceptance of tt eviden:e required pursuant to Section 5.01 ("Effective Date"). If, before the Elfective Date, any event has occurred which would have entitled the World Bank to suspend the r ght of th Recipient to make withdrawals from the Grant Account if this Agreeme -t had be en e ffect ve, the World Bank may postpone the dispatch of the notice referred to in this Sect on until ;uch event (or events) has (or have) ceased to exist. -8- 5.04. This Agreement and all oblij ations of the parties under it shall terminate if it has not entered into effect by tho dat, ninety (90) days after the date of this Agreement, unless the World Bank, after ccnsidrration of the reasons for the delay, establishes a later date for the purpose of this S ectio i. The World Bank shall promptly notify the Recipient of such later da:e. Article VI Recipieni's Representative; Addresses 6.01. The Recipient's Representatihe referred to in Section 7.02 of the Standard Conditions is the Minister it the tinie rcspor sible for finance. 6.02. The Recipient's Address refer ed to in Section 7.01 of the Standard Conditions is: Ministry of Finance and E udgc t Antananarivc 101 Madagascar BP 61 Cable address: Facsimile: MEFB (261) 20 22 345 30 Antananarivc 6.03. The World Bank's AdIdress re: erred to in Section 7.01 of the Standard Conditions is: International Develop mei it As ;ociation 1818 H Street, N.W. Washington, D.C. 20,133 United States of Ame:'ica Cable: Telex Facsimile: INDEVAS 24842 3 (MCI) or 1-202-477-6391 Washington, D.C. 64145 (MCI) -9- AGREED at Antanan'-ari,io, Republic of Madagascar, as of the day and year first above written. REPUBLIC OF MA)AGASCAR By: /s/ Robert R. Blake Authorized Representative INT ERNAT 1ON [AL [)EVELOPMENT ASSOCIATION acting as an idninis rator of the Africa Catalytic Growth Fund By: /s/ Haja Nirina Razafinjatovo Authorized Representative - 10- SCHEDULE 1 Project Description The objective o the Project is to assist the Recipient in increasing access to sustainable financial ser ices particularly by micro, small and medium enterprises and households, in the Rtcip ent'. territory. The Project cons ists c f the following parts: Part 1: Increasing M icrc, Sm ill and Medium Enterprise Access to Finance Pronoting the expai sion of micro, small and medium enterprises (each an "MSME") financing by con mercial banks and microfinance institutions through the establishment, mana :err ent and operation of an organic guarantee fund (the "PPCG Fund") for tie provi!:ion of p irtial portfolio credit guarantees (each a "PPCG") partially covering portfolios f credil, to micro, small and medium enterprises originated by Participating Financi:i1 Institt tions, including: (i) the financing of the Recipient's initial contribution to the P PCG Fu id for the purpose of enabling the PPCG Fund to provide PPCGs and to pay attendane fees to the members of the PPCG Fund's Board of Directors; (ii) the pr:)vision < f technical advisory services and training to Participating Financial Intitutions an I to the Fund Manager; (iii) the carrying out of audits of the Participating Financial Ir stitu ions, the Fund Manager and the Fund; (iv) the provision of legal assistance for tf e establi;hment of the PPCG Fund and the provision of PPCGs; and (v) the carrying out of a study on interest rates charged to MSMEs. Part 2: Impi oving tf e C apac tv of Microfinance Institutions for Greater Outreach and Sustainabilit Strengthening inJcrofi nance in the Recipient's territory through: (i) the provision of capacity building support and technical assistance to the Recipient's banking and financing supervisor i a ithoity to, inter alia, improve compliance by microfinance institutions with applicable h ws and regulations, including assistance to microfinance institutions t0 operato in acccrdance with such applicable laws and regulations; (ii) the strengthening of miciofirance institutions through training, modernizing the management information and cornumnica ions systems of microfinance institutions; and (iii) the provision of supporI tc mi(:rofinance institutions to operate in Targeted Regions, including thrDugh the pro visia i of Matching Grants. Part 3: Project Imleme[tatic n, Monitoring and Evaluation Support to Proj--ct i nplementation, coordination, procurement and financial management as well as monil oring and evaluation activities, all through the provision of technical advisory services and the financing of Operating Costs. -11- SCHEDULE 2 Project Execution Section I. Institutional anid Other Arrangements The Recipient shall maintai i tf e fo lowing institutional, contractual and other arrangements, further described in the Proje-t Ivanuz Is, throughout the implementation of the Project. A. Institutional Arrang.ein nt 1. AGEPASEF (a) The Recipient :hall take all actions necessary on its part to ensure that AGEPASEF (th - "P oject Implementing Entity") is maintained at all times during the impleme itation of the Project with organization, methods of operation, fuLctions, ,taffing and resources satisfactory to the World Bank. (b) Wittout limi:alicn to the generality of the foregoing provision of paragraph (a) imm diately iboie, tt e Project Implementing Entity shall ensure: (i) overall day- to-dzy managerr ent is well as overall coordination and implementation of activities; (ii) conso idation of the draft work plans and budgets; (iii) maintena nce of records and accounts for all transactions; (iv) timely preparation of q Jarte ly and annual financial statements, Project Reports and other reports: (v cast management and preparation of withdrawal applications; (vi) procurerm ent and (vii) monitoring and evaluation of activities. (c) Without limi atic n to the generality of the foregoing provision of paragraph (a) immiediately iboie, tI e Project Implementing Entity shall include the following staff (i) a Froj(ct coordinator; (ii) an accounting and financial management specialist; (i i) i procurement specialist; (iv) a monitoring and evaluation specialist; and (v two micro finance and banking specialists. (d) (i) Without limi ation to the generality of the foregoing provision of paragraph (a) immediately above, the Recipient shall take all actions neces sary on i ts part to ensure that the Steering Committee is maintained with :ornposil ion and terms of reference satisfactory to the World Bank. (ii) Without limi ation to the generality of the foregoing provision of parag rap i(i) immediately above, the Steering Committee shall include repre entitive; from the Recipient's treasury directorate (including its service respor sible for national coordination for microfinance) in MFB, the R1ecipieni's professional association for banks and professional association fo: microfinance institutions. (iii) Without limil ation to the generality of the foregoing provision of paragraph (i) immediately above, the Steering Committee shall ensure the o,,erall gu dance for the Project, including planning and supervision - 12 - of Project a:tivities, problem solving and general oversight of the Proje ct. The , teering Committee shall meet at least twice a year. (e) (i) Without limi;ation to the generality of the foregoing provision of parag:rap i (a, immediately above, the Recipient shall take all actions nece!;sari on its part to ensure that the General Assembly is maintained with conposi ion and terms of reference satisfactory to the World Bank. (ii) With:ut limi:ation to the generality of the foregoing provision of paral,rap i (i) immediately above, the General Assembly shall include represeniatives from BCM, MFB and the Recipient's Ministry respc nsible fc r economy. (iii) With:)ut limi ation to the generality of the foregoing provision of paral,rap i (i) immediately above, the General Assembly shall provide polic i di -ecti< ns and ensure the strategic guidance for the Project. 2. PPCG Fund (a) (i) Under P,.rt 1(.) of the Project, the Recipient shall, no later than January 1, 20 15, or s ich other date as shall have been agreed with the World Bank, h,.ve (stablished the PPCG Fund, with purpose, organization, method of o eration, staffing (if any), resources and monitoring and evaluation art ingements satisfactory to the World Bank, and the PPCG Fund shall be -eady to start its operations. (ii) The Recipieni shall take all actions necessary on its part to ensure that the PPC G F und is maintained in accordance with paragraph (i) imme dialely .bove, until such date (the "Category 7 Cut Off Date") when the full amount disbursed under Category (7)(a) to (d) shall have been iith -r: () .) allocated to reserves to support the issuance of PPCGs in a ma ine * sat sfactory to the World Bank; or (B) reimbursed to the Recipieni and (AA) transferred by the Recipient to the World Bank for reallc cati on t another Category in a manner acceptable to the World Bank or for cz ncellation, if before the Closing Date; or (BB) allocated by the Reci ient to the financing of activities ("Permitted Activities"): (AA.) which are for such developmental purpose as may have been agreeJ b,-twe n the Recipient and the World Bank; (BBB) which are accer table to :he World Bank; and (CCC) which are implemented in a manner a:cepi able to the World Bank, if on or after the Closing Date. (b) With ut limitatio i to he generality of the foregoing provisions of paragraph (a) immediately ::Lbove, fim the date of its establishment until the Category 7 Cut Off Date, the PPCG F ind shall be administered by a Board of Directors (or other form of coll-cti'ie administration body) composed of representatives of the Recipient, the Re:ipie it's bankers association as well as two members appointed for their own pe -sone I relevant technical expertise in banking and guarantees. Members of the Boar of Directors shall have been designated no later than the - 13 - date referred tc in paragraph (a)(i) immediately above. The PPCG Fund Governing D)cu nent; shall provide that members of the Board of Directors shall not receive a sahry, b it only a fee for their participation to the Board meetings. (c) Witfout limi:alic n to the generality of the foregoing provisions of paragraph (a) immediately ab.ve, the PPCG Fund shall have entered into the Fund Management Ag-eem -nt in accordance with Section I.B.2 of Schedule 2 to this Agrc ement. (d) Witl out limi atic n to the generality of the foregoing provisions of paragraph (a) imm,-diately ibo ie, tl e PPCG Fund shall be established for the purpose of, inter alia, issuing PFCG to Participating Financial Institutions on the basis of eligibility cr terii an I terms and conditions satisfactory to the World Bank further descr bed in 5 ection I.B.3 of this Agreement, all in accordance with the Recipient's aw. and regulations, the provisions of the PPCG Governing Documents, i he 3PCG Operational Manual, the Fund Management Agreement, the Anticorrpti n Gi idelines applicable to recipients of proceeds of the Grant other than thc Rc cipic nt, the Environmental and Social Management Framework and the PPCG Safegua Lrd Documents. (e) (i) With:>ut limi ation to the generality of the foregoing provisions of parag rap, (a) immediately above, the Recipient shall cause the PPCG Fund to: (A) io later than January 1, 2015, or such other date as shall have been ag -eed with the World Bank, adopt the PPCG Operational Mamial in f rm and substance acceptable to the World Bank; and thereafier (B I carry out its activities described in paragraph (d) immc dial ely ,bove in accordance with the PPCG Operational Manual; and (C) ixcel t as the World Bank shall otherwise agree, the Recipient shall iot perrr it the PPCG Fund to assign, amend, abrogate, or waive the PPCOi Operalional Manual or any provision thereof, or to permit the Fund Ma-age to do so. (ii) In the event of any conflict between the provision of the PPCG Operational N.anual and those of this Agreement, the provisions of this Agreome it sh ill prevail. (f) Without limitation to he generality of the foregoing provisions of paragraph (a) immediately :abo-e, th 2 Recipient shall cause Project Implementing Entity to, no later than Jan ilary 1, 2015, or such other date as shall have been agreed with the World Bank, ope i in 1 -e name of the PPCG Fund a separate account (the "PPCG Acccunt"), for the exc usive purpose of depositing the funds of Category (7). The PPCG Account siall 1e opened in a bank acceptable to the World Bank, under terms and corditi:)ns sitisfactory to the World Bank including, inter alia, (A) the waiver of the rig -.t sa d bank may have to set off any amount deposited in the PPCG Accou it w ith a iy other debt; and (B) adequate legal protection acceptable to th. World Baik a , ainst the right any third party may have to set off any amount deposited in tl e PPCG Account with any other debt. - 14 - (g) Witl out limi:aticn to the generality of the foregoing provisions of paragraph (a) immediately abo ve, th te Recipient shall take all necessary measures and provide all confirmations, aut iorizations and exemptions as may be required or needed under the lav's o 'the Recipient and cause all formalities or actions needed to be taken to ensure that n ) Taxes shall be levied on the capital reserve funded by the proceeds of the Grant allocated from time to time to Category 7 and established by tf e PPCG Fur d to ;upport its issuance of PPCGs. (h) Without limi:aticn to the generality of the foregoing provisions of paragraph (a) imm-diately above, 1he PPCG Fund Governing Documents shall provide for periodic finaincicl ani technical audits of the operations of the PPCG Fund. Financial audits )f th.- annual financial statements of the PPCG Funds shall be carrid out almuilly Lnd technical audits of the operations of the PPCG Fund shall be car led out every six months, each in accordance with consistently applied audi:ing stal dards acceptable to the World Bank, by independent auditors acceptale t) the World Bank, on the basis of terms of reference acceptable to the World Bank and further described in the PPCG Operational Man ial. Each such fi iancial audit of the PPCG Fund shall cover the period of one year, and each su,:h technical audit of the PPCG Fund shall cover the period of si K month;;, each starting from the date following the last day of the period cove ed by th i.e p revic us audit, except for the first such audit which shall cover the period be :weon th - date of first disbursement under Category (7)(a) until the next Decemt .r l fc r the first financial audit, and until the next June 30 or December 31 whichel er comes first for the first technical audit. The reports of the auditor a wll as the audited financial statements shall be fumished to the World Bank not later ihan three (3) months after the end of the period covered by such audit ur til t he C ategory 7 Cut Off Date, unless otherwise agreed between the Recipient and the World Bank. (i) Without limilation to he generality of the foregoing provisions of paragraph (a) immediately abo ie, t ie PPCG Fund Governing Documents shall provide that until the Cate:ory 7 C it Off Date, the PPCG Fund shall: (i) at thc request of the Recipient, the Project Implementing Entity or the World Bank, e Kchange views with the Recipient, the Project Implementing Entity ar d th,- World Bank with regard to its activities and overall finanial and technical performance and those of the Fund Manager including wit iout limitation, the assessment of the portfolio of eligible credits of eac i Participating Financial Institution (including compliance with the Env ronmental and Social Management Framework and the PPCC Safegua rd Documents), the issuance of PPCGs and the signing of PPCC Agreen ents, the payment of claims under PPCGs, the monitoring of: (A) the )ayment of PPCG fees by the Participating Financial Institutions, (I) the Participating Financial Institutions' efforts to recover outsto ndi ig ar tounts under their guaranteed credit portfolio, and (C) the paym ,-nt ecei /ed from Participating Financial Institutions as a result of their recovery efforts, as well as the investment by the PPCG Fund of its liquid ass,-ts at d the income derived therefrom; and - 15 - (ii) promptly info m the Recipient and the World Bank of any condition which interfere or I freatens to interfere with the ability of the PPCG Fund to carry out its a tivities in accordance with the provisions of this Agreement, incluJing the PPCG Governing Documents, the PPCG Operational Manal, the Anticorruption Guidelines applicable to recipients of procceds of t ie Grant other than the Recipient, the Environmental and Socikl Manag -ment Framework and the PPCG Safeguard Documents. (j) As part of the evidence of the satisfaction of the provisions of paragraph (a) imm,-diately abcve, is further elaborated in paragraph (b) to (i) above, the Recipient she 11 frnisl to the World Bank: (i) (A) the PPC0 Fund Governing Documents, (B) the Fund Management Agreement, (C) the PPCG Operational Manual, (D) evidence satisfactory to tf.e Vorlid Bank that the PPCG Account has been opened in accoi dan :e w th the provisions of paragraph (f) immediately above, each in fo: m Lnd s ibstance acceptable to the World Bank, and (E) any other docu:nent as t ie World Bank shall reasonably request; and (ii) an opini)n cr opinions satisfactory to the World Bank of counsel acceptab e to the World Bank or, if the World Bank so requests, a certif cat sat sfactory to the World Bank of a competent official of the Recilien:, demonstrating and confirming that: (A) the PPCG Fund has been dill: est, blished in accordance with the laws and regulations of the Recillien. and the provisions of this Agreement; (B) its internal bodies have been cr ated in accordance with the laws and regulations of the Recirierr. and the provisions of this Agreement and are ready to operate; (C) each cornuitment to the World Bank related to the establishment, opera tior and financing of the PPCG Fund is valid, binding upon the PPC(G' Fund and enforceable in accordance with its terms in the Recipien 's territory; (D) all authorizations, approvals, registrations or other act ons >r formalities required under the laws of the Recipient for the T PCI G FL nd to issue PPCGs in accordance with this Agreement, including the PPCG Governing Documents, the Fund Management Agre!me it, th, PPCG Operational Manual, the Anticorruption Guidelines applii::abl, to i -cipients of proceeds of the Grant other than the Recipient, the E nviionm .ntal and Social Management Framework and the PPCG Safeguard Documents, have been obtained or complied with; (E) adequate mec ianisms under the laws of the Recipient are in place to safely protect he funds deposited in the PPCG Account against any third party s claim; or right of set off or compensation; and (F) all confi ma ions. authorizations and exemptions required or needed under the l.ws of 1 ie Recipient have been obtained and all formalities or actiois n,.edec have been taken to ensure that no Taxes shall be levied on the c;i.pital res,-rve funded by the proceeds of the Grant and established by the PPCG Fund to support its issuance of PPCGs. All supporting documen:s sh, 11 be attached to the corresponding opinion or certificate. -16- B. Contractual Arrang einnts 1. Subsidiary Agreemcnt (a) To f icilitate :he carry ng out of the Project, the Recipient shall make the proceeds of the Grani av ilab e to the Project Implementing Entity under a subsidiary agre,-ment (t ie ' Subsidiary Agreement") between the Recipient and the Project Implementin,!g Entity, under terms and conditions approved by the World Bank, which shall ii iclude th. provisions described in paragraph (b) immediately below. (b) The Subsidiiry Agre.-ment shall include, inter alia, the following terms and conc itions: (i) The obligatioi of the Recipient to: (A) make the funds of the Grant available to the Project I mple menting Entity on a grant basis; and (B) tike Al actions necessary to permit the Project Implementing Entit3 to carry out the Project and ensure the achievement of the objec ives thereof, as well as refrain from taking or permitting to te tal:en any action which would prevent or interfere with the perfoi mance by the Project Implementing Entity of any of its obligE tions under the Project Agreement. (ii) The (iblit atior of the Project Implementing Entity to: (A) carry out the Project in accordance with this Agreement, the Frojet t Agreement, the Subsidiary Agreement, the Operational Manu fl, the Anti-Corruption Guidelines, the Procurement Guide lines, the Consultant Guidelines and the Annual Work Plans and B idgets; (B) rroml tly refund to the Recipient for further refund to the World f Bank any proceeds from the Grant not used for purposes of carryi ig out the Project or for achieving the objective thereof, or c then lise utilized in a manner inconsistent with the provisions of this A reement or the Project Agreement; (C) at the request of the Recipient or the World Bank, exchange views vrith t ie Recipient and the World Bank with regard to: (AA) the progress of the Project and the achievement of the objective there f, (BB) the Project Implementing Entity's performance of iis of ligations under the Project Agreement, the Subsidiary Agree nent, the Operational Manual, the Annual Work Plans and E udge ts, the Anti-Corruption Guidelines, the Procurement (uide ines and the Consultant Guidelines, and (CC) the PPCG F und' - and the Fund Manager's performance of their respective - 17- oblig tions under or referred to in this Agreement, including the -PC( Governing Documents, the Fund Management Agreement, 1 he I PCG Operational Manual, the Anticorruption Guidelines tppli, able to recipients of proceeds of the Grant other than the Recil ient, the Environmental and Social Management Fram -work and the PPCG Safeguard Documents; and (D) prom tly inform the Recipient of any condition which interferes or thI eatens to interfere with the implementation of the Project ind tl e achievement of the objective thereof. (iii) a provis ion ;tipulating that, in case of conflict between any of the provisior.s co itained in the Subsidiary Agreement and those set forth in this Agieeme nt and the Project Agreement, the provisions of this Agre;:me nt an I the Project Agreement shall at all times prevail. (c) The Recipient siall txercise its rights and carry out its obligations under the Subsidiary Agre(men in such manner as to protect the interests of the Recipient and 1:he World B ink , nd to accomplish the purposes of the Grant. Except as the Word Bank shill ctherwise agree, the Recipient shall not assign, amend, abro:yate or waive the Subsidiary Agreement or any of its provisions. 2. Fund Management Agr.em nt and accompanying measures (a) (i) For r urposes )f carrying out Part 1(i) of the Project, no later than January 1, 2C 15, or s ich other date as shall have been agreed with the World Bank.. tho Re(ipient shall cause the Project Implementing Entity to itself cause t e P 'CG Fund to enter into, an agreement (the "Fund Man,gerient Agreement") with a fund manager (the "Fund Manager") selec :ed n ac(:ordance with the provisions of Section III of Schedule 2 to this Agreeme it, on the basis of terms of reference, qualifications and expej ience sa isfactory to the World Bank, pursuant to which the Fund Man,ger shal be responsible for the management of the PPCG Fund, including, int r alia, the following: (A) reviewing the applications of finan::ial insti utions to become a Participating Financial Institution and verifPing the r eligibility; (B) reviewing the documentation of the portfolio of ci edits to be partially guaranteed and verify their eligibility for a PPCG; C) approving the granting of PPCGs; (D) signing PPCG Agrecme its i 1 the name of the PPCG Fund; (E) collecting fees from Participa ing -inancial Institutions; (F) verifying compliance with all covevant; inc uded or referred to in the PPCG Agreements, including timely payme at of all guarantee fees; (G) monitoring and evaluating Participal ing I inancial Institutions, and verifying that they maintain their eligit ilit) stat is over time as outlined in the PPCG Operational Manual, ensuring that the periodic technical and financial audits of the Partic ipaling I inancial Institutions are carried out in accordance with the provi,;ions of this Agreement and reviewing the corresponding audited finani:ial state nents and audit reports; (H) processing calls under PPCGs - 18- and making payments to Participating Financial Institutions; (I) moniiorinj, Participating Financial Institutions' recovery efforts and corre spoidinl; payments to the PPCG Fund; (J) investing the PPCG Fund 's 1 quid assets, but exclusively in compliance with the PPCG Fund financial inv stment guidelines acceptable to the World Bank and detailed in th: PPCG Operational Manuals; and (K) contributing to the prep,iration b ' the Project Implementing Entity of the Project Reports and linancial reports to the extent that they relate to the activities under Part I of the I roject. (ii) Without limilation to the provisions of paragraph (i) above, the Fund Manigerient kgreement shall contain the following provisions: (A) the ri ;ht of the PPCG Fund to terminate the Fund Management A gre ment, upon the Fund Manager's failure to perform any of its ob igations under the Fund Management Agreement; (B) t 6e o)ligation of the Fund Manager to carry out its obligations under the Fund Management Agreement with due diligence and efficiincy and in accordance with sound technical, economic, l inant ial, managerial, administrative, environmental and social stand; rds and practices satisfactory to the World Bank, including ii ac.ordance with the provisions of the PPCG Operational Manu al, the Anti-Corruption Guidelines applicable to recipients (f Gr int proceeds other than the Recipient, the Environmental end Social Management Framework and the PPCG Safeguard Docu: nents; (C) tie o)ligation of the Fund Manager to maintain a financial riana;;ement system and prepare financial statements in accortlance with consistently applied accounting standards accep able to the World Bank, both in a manner adequate to r -flec the operations, resources and expenditures related to its activi ies under the Fund Management Agreement and the activi ies of the PPCG Fund; (D) t ie o )ligation of the Fund Manager to have such financial saten ents audited annually and its activities under the Fund Mana,;ement Agreement audited every six (6) months, all in accordlance with consistently applied auditing standards accep able to the World Bank, by independent auditors accep able to the World Bank on the basis of terms of reference accep able to the World Bank and further described in the PPCG Opera :ional Manual. Each such financial audit of the Fund Mana,;er shall cover the period of one Fiscal Year and each such tochni -al audit of the operations of the Fund Manager shall cover the p riod of six months, in each case starting from the date flov ing the last day of the period covered by the previous - 19- fund Manager audit, except for the first such audit which shall cover the period between the date of first disbursement under Categ )ry (7)(a) until the next December 31 for the first financial audit )r until the next June 30 or December 31, whichever comes f rst, 'or the first operational audit. The report of the auditor concliding each financial audit as well as the audited financial staten ents shall be furnished to the World Bank not later than six (6 I months after the end of the period covered by such audit, and t ie report of the auditor concluding each technical audit s [hall )e furnished to the World Bank not later than three (3) r iontl s after the end of the period covered by such audit, until t ie cissolution, disestablishment of the PPCG Fund or saspe ision of its operations, or the Category 7 Cut Off Date, whiclh ever comes first, unless otherwise agreed between the Recip ent and the World Bank; and (E) tie ohligation of the Fund Manager to: (1) enable the PPCG F und, the Project Implementing Entity, the Recipient, the World F ank md their representatives to inspect its sites and operations under the Fund Management Agreement, and any relevant r ecorc s and documents; and (2) prepare and furnish to the PPCG Fund, the Project Implementing Entity, the Recipient, the World Eank ind their representatives all such information as the PPCG Fund, the Project Implementing Entity, the Recipient, the World Eank or their representatives shall reasonably request regarding the fo egoing. (iii) The Reci)ient shall cause the PPCG Fund to exercise its rights and carry out i:s cbligEtions under the Fund Management Agreement in such manner as tc protect the interests of the PPCG Fund, the Project Implcmenting Entity, the Recipient and the World Bank and to accor ipli ;h th. purposes of the Grant. Except as the World Bank shall othervist agr e, the Recipient shall not permit the PPCG Fund to assign, ament:1, ermi nate, abrogate, waive or fail to enforce the Fund Managen ent igreement or any of its provisions. (iv) In thc event re PPC 3s of the risk a Participating Financial Institution on its portfolio of c ligi le c edits for an aggregate amount approximately equivalent to US$3,000,001). 2. The Closing Date efe Ted to in Section 3.06 (c) of the Standard Conditions is December 3 , 2016. - 32 - APPENDIX I Definitions "ACGF" means the Africa Ca alytic Growth Fund. 2. "AGEPASEF" mean Associ tion pour la Gestion du Programme d'Appui aux Services Financiers (AGEPASEF), a 1ublic interest non-profit association established under the laws of the Recipient initial y under the name AGEPMF by the Recipient's Decree no. 99-245 dated April 7, 1 )99 and operating in accordance with the AGEPASEF Governing D ocumeni s. 3. "AGEPASEF Goverr,ing Doc iments" means, collectively, the Recipient's Decree no. 99- 245 dated April 7, 991 pui suant to which AGEPASEF was established as a public interest non-profit associatior and AGEPASEF's governing document (statuts) revised by its members and regi:;tere(I by the Recipient on February 22, 2011 and to be further revised in accordance with Section 3.01(b) to the Agreement providing for the Amendment and Res :ate nent of the Africa Catalytic Growth Fund Grant Agreement to which this AareemenI is ittach ed as an Annex. 4. "Annual Work Plans an I Bu lgets" means the annual work plans and budgets for the implementation of th:. Piojecl approved by the World Bank, referred to in Section I.E.2 of Schedule 2 to this Agr ,eme it. "Anti-Corruption GL idelines' means the "Guidelines on Preventing and Combating Fraud and Corruptior in .roje:ts Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 aid re vised in January 2011. "Bank Policies" means the B ank's operational policies and procedures set forth in the Bank's Operational Manaal under OP/BP 4.01, 4.04, 4.09, 4.10, 4.11, 4.12, 4.36, 4.37, 7.50 and 7.60 as said matual i; published under www.WorldBank.ore/opmanual. '17. "BCM" means the C(:ntrLl Ba lk of Madagascar established and operating pursuant to Law No. 94-004 of 1he Recil ient, dated June 10, 1994, as amended to the date of this Agreement. 8. "BCM Subsidiary A{ree nent ' means the subsidiary agreement entered into on October 21, 2008 be:ween the Recipint and BCM for the implementation of Part 2(i) of the Project, to be termimted in accordance with Section 3.01(c) to the Agreement providing for the Amndment an I Rc statement of the Africa Catalytic Growth Fund Grant Agreement to which I his kgre,-ment is attached as an Annex. 9. "Beneficiary" means a rr icrol inance institution which meets the eligibility requirements of Section I.B.4(a) of Sch(dule 2 to this Agreement and to which the Project Implementing Entity ias madt a Matching Grant for a Subproject. 0. "Category" means a cattgory set forth in the table in Section IV of Schedule 2 to this Agreement. -33- 11. "Category 7 Cut Off Dat :" m: ans the date referred to in Section I.A.2(a)(ii) of Schedule 2 to this Agreement. 2. "Consultant Guideli aes" mians the "Guidelines: Selection and Employment of Consultants under IB RD Loai s and IDA Credits and Grants by World Bank Borrowers" dated January 2011. - 3. "Current Gu delines" means, zollectively, the Anticorruption Guidelines, the Consultant Guidelines and the Pr ocu -eme it Guidelines. -4. "Environmental and Soc al 1N anagement Framework" means the Recipient's document entitled "Cadre de G:?stion Ei!vironnementale et Sociale du Projet d'Appui aux Services Financiers" and dated E ecen ber 2012, detailing: (a) measures to be taken during the implementation and operition of the activities financed from the credit portfolio referred to in Section I.B.3(a)(iii) of S:hedule 2 to this Agreement, to eliminate or offset adverse environmental and social imp, cts, or reduce them to acceptable levels; and (b) the actions needed to implement 1:heE e me asures, including monitoring and institution strengthening. 5. "Financial Managem :nt Proct dures Manual" means the Recipient's manual satisfactory to the World Bank, outl ning the administrative, financial management and accounting and auditing arrange nents fo- the implementation of the Project, to be adopted by the Recipient pursuant to Section 5.01 (b) of this Agreement, as the same may be amended in agreement with the Worl I Bai k from time to time, and such terms include any schedules to the Financial Margeient Irocedures Manual. 16. "Fiscal Year" means the fiscz l year commencing January I and ending December 31 of each year. [7. "Fund Management Agr.ement" means the agreement to be entered into between the PPCG Fund and the Fund Manager pursuant to Section I.B.2(a) of Schedule 2 to this Agreement. [8. "Fund Manager" meEns ihe fi nd manager referred to in Section I.B.2(a)(i) of Schedule 2 to this Agr,-ement, with w iom the PPCG Fund shall have entered into a Fund Managemeni Agreetien: in accordance with the provisions of Section I.B.2(a) of Schedule 2 to this Ag reei ment. 19. "Fund Manager Gc veriing Documents" means, collectively, the legal instrument pursuant to which the Find Aanager has been established, the legal instrument which governs its operations (if di Terent from the instrument pursuant to which the Fund Manager was establi!hec) an( all authorizations pursuant to which the Fund Manager is authorized to carry o,it its act vities as Fund Manager. If SOLIDIS is the Fund Manager, the Fund Manager Governing Documents are the SOLIDIS Governing Documents. 20. "General Assembly" means the general assembly of AGEPASEF's members established and operatin in accc rda: ice v ith the AGEPASEF Governing Documents, and referred to in Section I.A. 1(e) of Sc Ledul 2 to this Agreement. -34- 21. "Matching Grant" mc ans a gn nt made or to be made by the Project Implementing Entity to a Beneficiary out of the pro.eeds of the Grant for a Subproject. 22. "Matching Grant Agreerient' means the agreement between the Project Implementing Entity and a 3enefici;ary provi Jing for a Matching Grant. 23. "MFB" means the Recipient's Ministry responsible for finance. 24. "Minor Works" mear.s minor works, such as repairs or rehabilitation of existing facilities within existing footpi ints, whi:-h do not trigger Bank Policies. 25. "MSME" means micro-, ;mal and medium enterprises. 26. "Operating Costs" niears the reasonable operating costs incurred by AGEPASEF on account of tie implementaticn of the Project, including office supplies, operation and maintenance of vehicles ;nd e 4uipment, staff salaries, but excluding civil servant salaries, and travel and other c ost inct rred for supervising the Project. 27. "Operational Manual ' means, collectively, the Project Implementation Plan, the Financial Managemeni Proced,ires Mai tual and the Procurement Plan, as updated in accordance with Section 5.01(b) of this kgreement, and to be further updated in accordance with Section I.F I of Schec ule 2 to his Agreement. 28. "Participating Financial Instit ition" means, individually, a commercial bank, established and operating pursua:it to the laws of the Recipient, which has met the eligibility criteria specified in the PPCG 'Zper itional Manual and as a result has entered into a PPCG Agreement with the PPCG Fund; and "Participating Financial Institutions" means, collectively, more th,.n o ie P, rticipating Financial Institution. 29. "Permitted Activitie!" viean, activities satisfying the three criteria listed in Section I.A.2(a)(ii)(B)(BB) oI Schedu e 2 to this Agreement. 30. "PPCG" means a partial p)rtfolio credit guarantee issued by the PPCG Fund in accordance vith the provision of Section I.B.3 of this Agreement. 31. "PPCG Agreement" means z n agreement entered into between the PPCG Fund and a Participating Financial Ir stitu ion for the provision of a PPCG in accordance with Section I.B.3(a) of S-hedule :2 to this Agreement. 32. "PPCG Fund" meanE the orgz nic fund to be established in accordance with Section I.A.2 of Schedule 2 to this Agreemt nt. 33. "PPCG Fund Governing Doc.iments" means, collectively, the legal instrument pursuant to which the PPCG Fund ha; been established, the legal instrument which governs its operations (if differ,nt from the instrument pursuant to which the PPCG Fund was established, including any su-)plemental letters which may be entered into by the PPCG Fund in order to full,' rellect ts obligations under this Agreement) and the authorizations pursuant to which the PPCG I und is authorized to carry out its activities. -35- ^4. "PPCG Operational 4anual" means the manual to be adopted for the operation of the PPCG Fund including its r ianagement by the Fund Manager, in accordance with Section I.A.2(e) of Sc hedule 2 to this Agreement. 35. "PPCG Safeguard Eocumenis" means the set of assessments, guidelines, plans and timetables referred to in Secti( n I.D.3 of Schedule 2 to this Agreement. 36. "Procurement Plan" mems he Recipient's procurement plan for the Project, dated March 7, 2008, and referred to in paragraph 1.18 of the Procurement Guidelines and paragraph 1.25 of thc Consul ant Guidelines, as the same shall be updated from time to time in accoidance with the pt :visions of said paragraphs. 37. "Project Agreement"' n eans the Project Agreement dated the same date as this Agreement between the Wo -ld Bank and the Project Implementing Entity, as such agreement may be anienc ed fi am time to time. 38. "Project Implementir g E -tity' means AGEPASEF. 39. "Project Implementai-ion Pla " means the Recipient's plan satisfactory to the World Bank, outlining, inter a'ia, tie coordination, disbursement, monitoring and evaluation arrangement; for the impler entation of the Project, including performance indicators, and criteria and pro ced ires for Matching Grants and other provisions related to the institutional organizaitioi for the Project, to be adopted by the Recipient pursuant to Section 5.01 (b) of this Agrerment, as the same may be amended in agreement with the World Bank from time to ti ne, and such terms include any schedules to the Project Implementation Plan 40. "Project Manuals" mens, collectively, the Operational Manual and the PPCG Operational Manual. 41. "SOLIDIS" means SILDIS S.A., a company established in accordance with the laws of the Recipient with -.he purT ose of, inter alia, facilitating access to credit including through the issuanco of gua -antees, duly authorized to carry out its activities in the Recipient's territory :nd gove med by the SOLIDIS Governing Documents. 42. "SOLIDIS Govern ng Do uments" means, collectively, SOLIDIS' Articles of Incorporation ("Staiuts') d ted August 24, 2010, and the authorization from the Recipient's Banking anc Fin, ncial Monitoring Commission (Commission de Supervision Bancaire et Financih're) date 1 October 5, 2010, completed by its decisions dated March 24, 2011, January 3, 2012 an( June 18, 2012. 43. "Standard Conditions" mean; the "Standard Conditions for Grants Made by the World Bank Out of Various Funds" lated February 15, 2012. 44. "Steering Cammitte:" mean the steering committee established under the AGEPASEF Governing Documents, and referred to in Section I.A.1(4) of Schedule 2 to this Agreement. -36- L5. "Subproject" means ,. set of ativities to be carried out by a Beneficiary, partly financed or to be financed frc rn the p oceeds of a Matching Grant, in accordance with Section I.B.4 of Schedule 2 tc this Agi -ement. L6. "Subsidiary Agreement" meaj,s the subsidiary agreement referred to in Section I.B.1 of Schedule 2 to this Agreerment )ursuant to which the Recipient shall make the proceeds of the Grant avzilable to Project Implementing Entity. L7 "Targeted Regions" nea as A iosy, Melaky and Menabe, and such other Region which may be proposed by the Recif ient for the implementation of Project activities and which the World Bank has co Afim ed in writing is acceptable to the World Bank for the purpose. 8. "Training" means thc costs a ;sociated with the training and workshop participation of personnel involved ir Project supported activities, including travel and subsistence costs for training md wor shop p, rticipants, costs associated with securing the services of trainers and workshop speake rs, rental of training and workshop facilities, preparation and reproduction of training z nd workshop materials, and other costs directly related to training course and w:)rL hop )reparation and implementation.