Page  1
CONFORMED COPY 
 
CREDIT NUMBER 3654 UNI 
 
Development Credit Agreement 
 
(Community Based Urban Development Project) 
 
between 
 
FEDERAL REPUBLIC OF NIGERIA 
 
and 
 
INTERNATIONAL DEVELOPMENT ASSOCIATION 
 
Dated February 25, 2003
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CONFORMED COPY 
 
CREDIT NUMBER 3654 UNI 
DEVELOPMENT CREDIT AGREEMENT 
AGREEMENT, dated February 25, 2003, between FEDERAL REPUBLIC OF NIGERIA 
(the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). 
WHEREAS: (A) the Borrower, having satisfied itself as to the feasibility and priority of 
the Project described in Schedule 2 to this Agreement, has requested the Association to assist in 
the financing of the Project;  
(B) 
the Project will be carried out at State and local levels by Participating States (as 
h
ereinafter defined), with the Borrower’s assistance and, as part of such assistance, the Borrower 
will make the proceeds of the credit provided for in Article II of this Agreement (the Credit) 
available to the Participating States, as set forth in this Agreement; and 
(C)  
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 October 6, 1999) (the General 
Conditions), constitute an integral part of this Agreement. 
Section 1.02. Unless the context otherwise requires, the several terms defined in the 
General Conditions and in the Preamble to this Agreement have the respective meanings therein 
set forth and the following additional terms have the following meanings: 
i. 
“AIDS” means the Acquired Immune Deficiency Syndrome;  
ii. 
“CTC” means a Community Technical Committee to be established 
in each Participating State (hereinafter defined) as a representative group to disseminate 
information relating to the Project to the local communities; 
iii. 
“Eligible Categories” means, in respect of the Federal Special 
Account, Categories 1 (a), 2 (a), 3 (a) 4 (a) and 5 (a) set forth in the table in Part A.1 of Schedule 
1
to this Agreement; in respect of the Akwa Ibom Special Account, Categories 1 (b), 2 (b), 3 (b) 
and 5 (b) set forth in said table; in respect of the Bauchi Special Account, Categories 1 (c), 2 (c), 
3
(c) and 5 (c) set forth in said table; in respect of the Ebonyi Special Account, Categories 1 (d), 2 
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(d), 3 (d) and 5 (d) set forth in said table; in respect of the  do Special Account, Categories 1 (e), 2 
(e), 3 (e) and 5 (e), set  forth in said table; in respect of the Jigawa Special Account,  Categories 1 
(f), 2 (f), 3 (f) and 5 (f) set forth in said  table;  in  respect of the  Nassarawa  Special  Account, 
Categories 1 (g), 2 (g), 3 (g) and 5 (g) set forth in said table; and in respect of the Ogun Special 
Account, Categories 1 (h), 2 (h), 3 (h) and 5 (h); 
iv. 
“Eligible Expenditures” means, in respect of a Special Account, the 
expenditures for works, goods and services referred to in Section 2.02 (a) of this Agreement and 
to be financed out of the proceeds of the Credit allocated from time to time to said Special 
Account’s respective Eligible Categories;  
v. 
“Environmental Management Plans” means the set of mitigation, 
enhancement, monitoring, and institutional measures that have been identified in the 
environmental impact assessments dated January 14, 2002 to be taken during implementation of 
the Project to eliminate any adverse environmental and social impacts, offset them, or reduce 
them to acceptable levels, or to enhance positive impacts; 
vi. 
“FMWH” means the Borrower’s Federal Ministry of Works and 
Housing; 
vii. 
“FPCU” means the Federal Project Coordination Unit referred to in 
paragraph 1 of Schedule 4 to this Agreement; 
viii. 
“Federal Special Account” means the Special Account to be 
established pursuant to paragraph B.1 of Schedule 1 to this Agreement 
ix. 
“Financial Monitoring Report” or “FMR” means each report 
prepared in accordance with Section 4.02 of this Agreement; 
x. 
“Financial Management Manual” means the manual adopted by the 
Borrower, containing  accounting, financial and auditing procedures for maintaining proper 
financial controls in the implementation of the Project; 
xi. 
“HIV” means the Human Immuno-deficiency Virus; 
xii. 
“LG" means the Local Government Administration or Area 
established and operating pursuant to the Borrower’s Constitution dated May 29, 1999, in which 
the Project is to be carried out; 
xiii. 
"Participating State” means any of  the Borrower's States which has 
entered into a Subsidiary Agreement with the Borrower in accordance with the provisions set 
forth in Schedule 5 to this Agreement; 
xiv. 
“Project Account” means the account referred to in Section 3.03 (a) 
of this Agreement;  
xv. 
“Project Implementation Manual” or “PIM” means the manual to be 
adopted pursuant to Section 5.01 (b) of this Agreement for implementation of the Project, giving 
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details of procurement and disbursement arrangements, performance indicators, terms of 
reference of staff and other administrative, financial and organizational arrangements and setting 
forth the criteria for the subprojects (as hereinafter defined), as such manual may be amended 
from time to time with the prior agreement of the Association; 
xvi. 
“PIU” means the Project Implementation Unit to be established and 
maintained by each Participating State with responsibility for oversight of project implementation 
in accordance with paragraph 2 (b) of Schedule 4 to this Agreement; 
xvii. 
“Project Preparation Advance” means the project preparation 
advance granted by the Association to the Borrower pursuant to the letter agreements signed on 
behalf of the Association on May 23, 2000
 
and on behalf of the Borrower on July 20, 2000 and 
on behalf of the Association on May 30, 2002
 
and on behalf of the Borrower on June 10, 2002; 
xviii. 
“PSC” means a Project Steering Committee established by a 
Participating State, to catalyze, facilitate and coordinate the activities of the Project at the State 
level; 
xix. 
“Special Accounts” means the accounts referred to in Part B of 
Schedule 1 to this Agreement; 
xx. 
“Subproject”  means a subproject to be carried  out in a  Participating  
State under Part C of the Project, which satisfies the eligibility criteria set out in paragraph 6 (b) 
of Schedule 4 to this Agreement, and in more detail in the provisions of the Project 
Implementation Manual; and 
xxi. 
“Subsidiary Agreements” means the agreements to be entered into 
between the Borrower and  each of the Participating States pursuant to Section 3.01 (c) and 
Schedule 5 of this Agreement, as the same may be amended from time to time, and such term 
includes all schedules to each of the Subsidiary Agreements.  
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  eighty-eight  million  one  hundred  thousand  Special   Drawing   Rights        
(SDR 88,100,000)
 
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: (i) expenditures made (or, if 
the Association shall so agree, to be made) in respect of the reasonable cost of works, goods and 
services required for the Project and to be financed out of the proceeds of the Credit; and (ii) 
amounts paid (or, if the Association shall so agree, amounts to be paid) by a Participating State 
under Part B of the Project to meet the reasonable cost of works, goods and services required for 
a
Subproject in respect of which the withdrawal from the Credit Account is requested. 
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(b) 
Promptly after the Effective Date, the Association shall, on behalf of the 
Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the 
principal amount of the Project Preparation Advance withdrawn and outstanding as of such date 
and to pay all unpaid charges thereon. The unwithdrawn balance of the authorized amount of the 
Project Preparation Advance shall thereupon be canceled. 
Section 2.03. The Closing Date shall be June 30, 2009 or such later date as the 
Association shall establish. The Association shall promptly notify the Borrower of such later date. 
Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the 
principal amount of the Credit not withdrawn from time to time at a rate to be set by the 
Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 
of 1%) per annum. 
(b) 
The commitment charge shall accrue: (i) from 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 15 and November 15 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 15 and 
November 15 commencing November 15, 2012 and ending May 15, 2037.  Each installment to 
and  including  the  installment   payable  on May 15, 2022 shall be one and one-fourth percent 
(1-1/4%) of such principal amount, and each installment thereafter shall be two and one-half 
percent (2-1/2%) 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: 
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(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. 
(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: (i) coordinate the Project at 
national level through the FPCU; and (ii) cause the Participating States to carry out the Project at 
State and local levels through their respective PIUs, all with due diligence and efficiency and in 
conformity with appropriate administrative, financial, engineering, technical  and environmental 
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. 
 
(c) 
The Borrower shall relend the proceeds of the Credit to the Participating States 
under Subsidiary Agreements to be entered into between the Borrower and Participating States, 
under terms and conditions which shall have been approved by the Association, and which shall 
include the terms and conditions set forth in Schedule 5 to this Agreement.   
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(d) 
The Borrower shall exercise its rights under each Subsidiary Agreement in such a 
manner as to protect the interests of the Borrower and the Association and to accomplish the 
purposes of the Credit, and, except as the Association shall otherwise agree, the Borrower shall 
not assign, amend, abrogate or waive any of the Subsidiary Agreements or  any provision thereof. 
Section 3.02. Except as the Association shall otherwise agree, procurement of the works, 
goods 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. 
 
Section 3.03. Without limitation to its obligations under Section 3.01 of this Agreement, 
the Borrower shall cause each of the Participating States to:  
 
(a) 
open and maintain accounts in Naira in a commercial bank acceptable to the 
Borrower and the Association on terms and conditions satisfactory to the Association (the 
“Project Accounts”);  
 
(b) 
promptly thereafter, cause each Participating State to make an initial deposit 
equivalent to $100,000 into said Participating State's Project Account, to finance the Participating 
State's contribution to the costs of the Project; 
 
(c) 
thereafter deposit into each such Project Account, on a quarterly basis, the 
amount required to replenish said Project Account up to the Participating State’s contribution to 
the costs of the Project; and 
 
(d) 
use the funds in said Project Account exclusively to finance expenditures under 
the Project and not otherwise financed out of the proceeds of the Credit. 
Section 3.04.  For the purposes of Section 9.07 of the General Conditions and without 
limitation thereto, the Borrower shall cause each Participating State to: 
(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. 
3.05. 
The Borrower shall cause the Participating States to carry out the Environmental 
Management Plans in accordance with the implementation arrangements contained therein, and 
prior to commencing work on a Subproject under Part B of the Project, establish environmental 
impact assessment procedures satisfactory to the Association for the design, procurement and 
implementation of Subprojects.                                                
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ARTICLE IV 
Financial Covenants 
Section 4.01. (a) The Borrower shall maintain or cause to be maintained a financial 
management system, including records and accounts, and prepare financial statements in a format 
acceptable to the Association, 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, and shall cause the Participating States to: 
(i) 
have the records and accounts referred to in paragraph (a) of this Section 
including those for the Federal Special Account and the Special 
Accounts for Participating States 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 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 Financial Monitoring 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 or cause to be retained, until at least one year after the Association 
has received the audit report for the fiscal year in which the last 
withdrawal from the Credit Account was made, 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 
Financial Monitoring Reports or statements of expenditure submitted 
during such fiscal year, together with the procedures and internal 
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controls involved in their preparation, can be relied upon to support the 
related withdrawals. 
Section 4.02.
 (a) Without limitation upon the Borrower’s progress reporting obligations 
set out in paragraph 6 of Schedule 4, the Borrower, shall prepare or cause the Participating States 
to prepare and furnish to the Association a Financial Monitoring Report, in form and substance 
satisfactory to the Association, which: 
1. 
sets forth sources and uses of funds for the Project, 
both cumulatively and for the period covered by said report, showing 
separately funds provided under the Credit, and explains variances 
between the actual and planned uses of such funds; 
2. 
describes physical progress in Project 
implementation, both cumulatively and for the period covered by said 
report, and explains variances between the actual and planned Project 
implementation; and  
3. 
sets forth the status of procurement under the 
Project, as at the end of the period covered by said report. 
(b) 
The first FMR shall be furnished to the Association not later than 60 days after 
the end of the first calendar quarter after the Effective Date, and shall cover the 
period from the incurrence of the first expenditure under the Project through the 
end of such first calendar quarter; thereafter, except as provided for in paragraphs 
(c) and (d) below, each FMR shall be furnished to the Association not later than 
60 days after each subsequent calendar quarter, and shall cover such calendar 
quarter. 
(c) 
The Borrower may, at any time during Project implementation, submit a request 
to the Association on behalf of itself or a Participating State for withdrawals from 
the Credit Account to be made on the basis of amplified FMRs in accordance 
with the provisions of paragraph 2 (b) of Schedule 1 to this Credit Agreement, 
together with an amplified financial monitoring report for the preceding calendar 
quarter, in form and substance satisfactory to the Association, which: 
(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 uses 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 
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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. 
(d) 
if the Bank agrees to the Borrower’s request referred to in paragraph (c) above, 
the Borrower shall thereafter prepare and furnish to the Bank within 45 days after 
the end of each calendar quarter an Amplified FMR in respect of such quarter. 
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) 
Subsidiary Agreements have been executed between the Borrower and at least 
three Participating States; 
(c) 
the Borrower has adopted the Project Implementation Manual in form and 
substance satisfactory to the Association, including a procurement plan for the 
first year of the Project;  
 
(c) 
the Borrower has caused the FPCU and the Participating States referred to in 
subparagraph (a) above to open Special Accounts with a commercial bank acceptable to the 
Borrower and the Association on terms and conditions satisfactory to the Association; 
(d) 
the Borrower has adopted the Financial Management Manual and established a 
computerized management information system integrated with a financial management system in 
form and substance satisfactory to the Association; 
(e) 
the Borrower has caused the Participating States referred to in subparagraph (a) 
above to appoint independent auditors on terms and conditions, including terms of reference, 
satisfactory to the Association in accordance with the provisions of Section II of Schedule 3 to 
this Agreement; 
(f) 
LG’s that have prepared revenue improvement action plans, in consultation with 
the relevant PIU and Participating State referred to in subparagraph (a) above, have appointed 
teams to implement such plans; and 
(g) 
the Borrower has established the FPCU in accordance with Paragraph 1 of 
Schedule 4 to this Agreement. 
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Section 5.02. The following is specified as an additional matter, within the meaning of 
Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be 
furnished to the Association, namely, that the Subsidiary Agreements with the three Participating 
States referred to in subparagraph (a) of Section 5.01 have been duly authorized or ratified by the 
Borrower and such Participating States and that they are legally binding upon the Borrower and 
such Participating State in accordance with their terms. 
Section 5.03. The date ninety (90) days after the date of this Agreement is hereby 
specified for the purposes of Section 12.04 of the General Conditions. 
ARTICLE VI 
Representative of the Borrower; Addresses
 
Section 6.01. The Minister of the Borrower responsible for finance is designated as 
representative of the Borrower for the purposes of Section 11.03 of the General Conditions. 
Section 6.02. The following addresses are specified for the purposes of Section 11.01 of 
the General Conditions: 
 
For the Borrower: 
 
The Honorable Minister 
 
Federal Ministry of Finance 
 
Ahmadu Bello Way 
 
Abuja, Nigeria 
 
Cable 
address: 
      
 
FEDMINFIN 
 
Abuja 
 
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) 
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IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names in 
Washington, District of Columbia, United States of America, as of the day and year first above 
written. 
 
FEDERAL REPUBLIC OF NIGERIA 
 
By /s/ Mallam Adamu Ciroma 
Authorized Representative 
 
INTERNATIONAL DEVELOPMENT ASSOCIATION 
 
By /s/ Mark D. Tomlinson 
Acting Regional Vice President 
Africa 
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SCHEDULE 1 
Withdrawal of the Proceeds of the Credit 
A. General
1. 
The table below sets forth the Categories of items to be financed out of the proceeds of 
the Credit, the allocation of the amounts of the Credit to each Category and the percentage of 
expenditures for items so to be financed in each Category: 
 
Amount of the 
 
Credit Allocated 
% of 
 
(Expressed in 
Expenditures 
 Category
SDR Equivalent)
to be Financed
(1) 
Civil works: 
 
100% of foreign expenditures 
 
(a) Federal 
0 
and 80% of local expenditures 
 
(b) Akwa Ibom 
3,320,000 
 
 (c) 
Bauchi 
3,510,000 
 
 (d) 
Ebonyi 
3,520,000 
 (e) 
Edo 
3,060,000 
 (f) 
Jigawa 
1,960,000 
 (g) 
Nassarawa 
2,730,000 
 (h) 
Ogun 
2,850,000 
 
(2) 
Goods: 
 
100% of foreign expenditures 
(a)  Federal 
50,000 
90% of local expenditures 
 
(b) Akwa Ibom 
30,000 
  
 (c) 
Bauchi 
30,000 
 
 
(d) Ebonyi 
30,000 
  
 (e) 
Edo 
 
150,000 
 
 (f) 
Jigawa 
160,000 
 (g) 
Nassarawa 
750,000 
 (h) 
Ogun 
330,000 
 
(i)  Other Participating States 
2,440,000 
 
(3) 
Training and  
 
90%  
 Consultant 
Services: 
 
 
 (a) 
Federal 
320,000 
 
(b) Akwa Ibom 
690,000 
 (c) 
Bauchi 
690,000 
 (d) 
Ebonyi 
690,000 
 (e) 
Edo 
640,000 
 (f) 
Jigawa 
610,000 
 (g) 
Nassarawa 
710,000 
 (h) 
Ogun 
680,000 
 
(i)  Other Participating States 
7,810,000 
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Amount of the 
 
Credit Allocated 
% of 
 
(Expressed in 
Expenditures 
 Category
SDR Equivalent)
to be Financed
(4) 
Subprojects 
40,600,000 
100% of foreign expenditures 
 
and 80% of local expenditures 
(5) Incremental 
Operating 
 
90% 
 Costs 
 (a) 
Federal 
0 
 
(b) Akwa Ibom 
130,000 
 (c) 
Bauchi 
130,000 
 (d) 
Ebonyi 
130,000 
 (e) 
Edo 
130,000 
 (f) 
Jigawa 
130,000 
 (g) 
Nassarawa 
130,000 
 (h) 
Ogun 
130,000 
 
(i)  Other Participating States 
940,000 
 
(6) 
Refunding of 
1,600,000 
Amount due pursuant 
 
Project Preparation 
 
to Section 2.02 (b) of 
 Advance 
 
this 
Agreement 
 
(7) Unallocated 
6,300,000 
 
_________
TOTAL 88,100,000 
 
========  
 
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 works, 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 “Incremental Operating Costs” means the incremental operating costs 
arising under the Project on account of maintenance of vehicles, fuel, equipment, office supplies, 
utilities, consumables, travel per diem and allowances, travel and accommodation, excluding 
salaries of civil servants. 
3. 
Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in 
respect of: (a) payments made for expenditures prior to the date of this Agreement; (b) payments 
under Categories (1) (b) through (h); (2) (b) through (h); (3) (b) through (h); and (4) (b) through 
(h), with respect to any Participating State until: (i) a Subsidiary Agreement between the 
Borrower and such Participating State has been executed, is binding and has become effective; 
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(ii) the Association has received an opinion pursuant to Section 12.02 (b) of the General 
Conditions that the Subsidiary Agreement has been duly authorized or ratified by the Borrower 
and such Participating State and is legally binding upon the Borrower and such Participating State 
in accordance with its terms; (iii) LG’s that have prepared revenue improvement action plans, in 
consultation with the relevant Participating State and PIU, have appointed teams to implement 
such plans; (iv) such Participating State has deposited into its Project Account an initial 
contribution equivalent to $100,000; and (v) the respective PSC, PIU and CTC’s for such 
Participating State have been established in accordance with Paragraph 2 of Schedule 4 to this 
Agreement.     
4. 
The Association may require withdrawals from the Credit Account to be made on the 
basis of statements of expenditure for expenditures for: (i) works under contracts not exceeding 
$150,000 equivalent; (ii) goods under contracts not exceeding $100,000 equivalent; (iii) services 
of consulting firms under contracts not exceeding $100,000
 
equivalent; (iv) services of individual 
consultants under contracts not exceeding $50,000 equivalent; (v) training and study tours; and 
(vi) Incremental Operating Costs; all under such terms and conditions as the Association shall 
specify by notice to the Borrower. 
B. Special 
Accounts
1. 
The Borrower shall open or shall cause to be opened and maintain in dollars eight 
separate special deposit accounts (the Federal Special Account, and a Special Account for each 
Participating State) in commercial banks, on terms and conditions satisfactory to the Association, 
including appropriate protection against set-off, seizure and attachment. 
2. 
After the Association has received evidence satisfactory to it that the Special Accounts 
have been opened, withdrawals from the Credit Account of amounts to be deposited into said 
Special Accounts shall be made as follows: 
 
(a) 
until the Association shall have received: (i) the first Financial Monitoring 
Report referred to in Section 4.02 (b) of this Agreement; and (ii) a request from the Borrower for 
withdrawal on the basis of Financial Monitoring Reports, withdrawals shall be made in 
accordance with the provisions of Annex A to this Schedule 1; and 
 
(b) 
upon receipt by the Association of a Financial Monitoring Report pursuant to 
Section 4.02 (b) of this Agreement, accompanied by a request from the Borrower for  withdrawal  
on  the  basis  of  Financial   Management    Reports,  all    further withdrawals shall be made in 
accordance with the provisions of Annex B to this Schedule 1. 
3. 
Payments out of each Special Account shall be made exclusively for Eligible 
Expenditures.  For each payment made by the Borrower out of a 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. 
4. 
Notwithstanding the provisions of Part B.2 of this Schedule, the Association shall not be 
required to make further deposits into any Special Account: 
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(a) 
if the Association determines at any time that any Financial Monitoring Report 
does not adequately provide the information required pursuant to Section 4.02 of this Agreement; 
(b) 
if the Association determines at any time that all further withdrawals should be 
made by the Borrower or the Participating States directly from the Credit Account; or 
 
(c) 
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: (A) the records 
and accounts for any Special Account; or (B) the records and accounts reflecting expenditures 
with respect to which withdrawals were made on the basis of Financial Monitoring Reports. 
5. 
The Association shall not be required to make further deposits into any Special Account 
in accordance with the provisions of Part B.2 of this Schedule 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 Section 6.02 of the General 
Conditions. Upon such notification, the Association shall determine, in its sole discretion, 
whether further deposits into the Special Accounts may be made and what procedures should be 
followed for making such deposits, and shall notify the Borrower of its determination. 
6. 
(a) 
If the Association determines at any time that any payment out of any Special 
Account was made for an expenditure which is not an Eligible Expenditure, or was not justified 
by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the 
Association, provide such additional evidence as the Association may request, or deposit into said 
Special Account (or, if the Association shall so request, refund to the Association) an amount 
equal to the amount of such payment.  Unless the Association shall otherwise agree, no further 
deposit by the Association into any 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 determines at any time that any amount outstanding in any 
Special Account will not be required to cover payments for Eligible Expenditures during the six-
month period following such determination, 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 a Special Account. 
 
(d) 
Refunds to the Association made pursuant to sub-paragraph (a), (b) or (c) of this 
paragraph 6 shall be credited to the Credit Account for subsequent withdrawal or for cancellation 
in accordance with the provisions of the Development Credit Agreement. 
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Annex A 
to 
SCHEDULE 1 
Operation of Special Accounts 
 
When Withdrawals Are Not Made 
On the Basis of Financial Monitoring Reports 
1. 
For the purposes of this Annex: 
(a) 
the term “Authorized Allocation” means:   
 
(i) 
in respect of the Federal Special Account, an amount equivalent to 
$20,000, to be withdrawn from the Credit Account and deposited into 
said Special Account pursuant to paragraph 2 of this Annex.  
 
(ii) 
in respect of a Participating State Special Account, an amount equivalent 
to $500,000, to be withdrawn from the Credit Account and deposited into 
said Special Account pursuant to paragraph 2 of this Annex.  
2. 
Withdrawals of a Special Account’s Authorized Allocation and subsequent withdrawals 
to replenish said Special Account shall be made as follows: 
(a) 
For withdrawals of said Special Account’s Authorized Allocation, the Borrower 
shall furnish to the Association a request or requests for deposit into said Special Account of an 
amount or amounts which in the aggregate do not exceed said Authorized Allocation.  On the 
basis of each such request, the Association shall, on behalf of the Borrower, withdraw from the 
Credit Account and deposit into said Special Account such amount as the Borrower shall have 
requested. 
(b) 
For replenishment of said Special Account, the Borrower shall furnish to the 
Association requests for deposit into said Special Account at such intervals as the Association 
shall specify.  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 Part B.3 of Schedule 1 to this 
Agreement 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 said 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 said Special Account for Eligible Expenditures. 
Each such deposit into said Special Account shall be withdrawn by the Association from 
the Credit Account under one or more of said Special Account’s Eligible Categories. 
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3. 
The Association shall not be required to make further deposits into a Special Account, 
once the total unwithdrawn amount
 of the Credit allocated to said Special Account’s 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 in respect of expenditures to be 
financed out of the proceeds of the Credit allocated to said Categories, shall equal the equivalent 
of twice the amount of said Special Account’s Authorized Allocation. Thereafter, withdrawal 
from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to said 
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 said Special 
Account as of the date of such notice will be utilized in making payments for Eligible 
Expenditures. 
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Annex B 
to 
SCHEDULE 1 
 
Operation of Special Account 
When Withdrawals Are Made 
On the Basis of Financial Monitoring Reports 
1. 
Except as the Association may otherwise specify by notice to the Borrower, all 
withdrawals from the Credit Account shall be deposited by the Association into the Special 
Account in accordance with the provisions of Schedule 1 to this Agreement.  Each such deposit 
into the Special Account shall be withdrawn by the Association from the Credit Account under 
one or more of the Special Account’s Eligible Categories. 
2. 
Each application for withdrawal from the Credit Account for deposit into the Special 
Account shall be supported by a Financial Monitoring Report. 
3. 
Upon receipt of each application for withdrawal of an amount of the Credit, the 
Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into 
the Special Account an amount equal to the lesser of: (a) the amount so requested; and (b) the 
amount which the Association has determined, based on the Financial Monitoring Report 
accompanying said application, is required to be deposited in order to finance Eligible 
Expenditures during the six-month period following the date of such report; provided, however, 
that the amount so deposited, when added to the amount indicated by said Financial Monitoring 
Report to be remaining in each Participating State Special Account, shall not exceed the 
equivalent of $1,000,000. 
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SCHEDULE 2 
Description of the Project 
 
The objectives of the Project are to assist the Borrower to: (i) deliver  basic urban 
services in poor dense urban settlements; (ii) establish an effective partnership between 
Participating States, LGs and local communities; and (iii) demonstrate viable approaches for 
sustainable delivery of basic municipal services.  
 
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:
Upgrading and Delivery of Basic Municipal Infrastructure
Construction of basic municipal infrastructure based on consultations among LGs and 
communities, including: (a) water supply and access roads for Uyo Capital City in Akwa Ibom 
State; (b) access roads, footpaths, trunk drains, clinics, schools and security lighting for Bauchi 
City in Bauchi State; (c) water supply, access roads, footpaths, solid waste management facilities, 
trunk drains, public toilets, clinics, schools, bus stops, recreation facilities, markets and security 
lighting for Abakaliki City in Ebonyi State; (d) water supply, access roads, footpaths, solid waste 
management facilities, public toilets, clinics, schools and security lighting for Benin City in Edo 
State; (e) water supply, reclamation of ponds, flood control, footpaths, solid waste management 
facilities, public toilets, clinics, market, abattoir, schools and security lighting for Hadejia City in 
Jigawa State; (f) water supply, access roads, solid waste management facilities, public toilets, and 
abattoir, and land fill for Karu LG in Nassarawa State; and (g) water supply, access roads, trunk 
drains, footpaths, solid waste management facilities, public toilets, clinics, schools and security 
lighting for Abeokuta City in Ogun State. 
Part B:
Subprojects 
1. 
Carrying out an information communication campaign to inform communities in which 
the Project is to be carried out of the eligibility criteria for infrastructure improvements. 
2. 
Implementation of priority subprojects for infrastructure improvement in Participating 
States that meet the technical and eligibility criteria set forth in the Project Implementation 
Manual, including water supply, roads, footpaths, drainage, power reticulation, sanitation 
facilities, solid waste management, street lighting, slaughterhouses, markets, recreational 
facilities, schools and clinics. 
Part C:
Training and Capacity Building
1. 
Provision of training to the staff of LGs, Participating States, PIU and CTC members, and 
selected members of the community in procurement, financial management, administration, 
contract management, organizational management, technical capacity and participatory and 
community based development, and monitoring and evaluation. 
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2. 
Carrying out quantitative and qualitative analytic work and stakeholder consultations for 
preparation of a city development strategy for Karu in Nassarawa State. 
 
3. 
Establishment and maintenance of a knowledge-sharing network for Participating States 
to: (i) exchange and disseminate learning and experiences with urban upgrading and city 
development strategies; and (ii) share progress among Participating States in designing and 
implementing Subprojects. 
Part D:
Implementation Support, Monitoring and Evaluation
Provision of assistance to: (i) the Participating States for the establishment of PIUs; and 
(ii)  the Federal Ministry of Finance and  the FMWH for coordination and monitoring of the 
Project, consolidating reports of Participating States and facilitating an external impact evaluation 
under the Project. 
Part E:
HIV/AIDS Awareness Campaign
Development and execution of appropriate HIV/AIDS education, information and 
communication campaigns in the Participating States. 
*
*
*
The Project is expected to be completed by December 31, 2008. 
 
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SCHEDULE 3 
Procurement and Consultants’ Services 
Section I
.
Procurement of Good and Works
Part A
:
General
Goods and works 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). 
Part B
:
International Competitive Bidding
1. 
Except as otherwise provided in Part C of this Section, goods and works 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 and works 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 works shall be grouped in bid packages estimated 
to cost $500,000 equivalent or more each, and contracts for goods and equipment shall be 
grouped in bid packages estimated to cost $100,000
 
equivalent or more each. 
(b) 
Preference for domestically manufactured goods
The provisions of paragraphs 2.54 and 2.55 of the Guidelines and Appendix 2 thereto 
shall apply to goods manufactured in the territory of the Borrower. 
Part C:
Other Procurement Procedures
1. 
National Competitive Bidding
Goods estimated to cost less than $100,000 equivalent per contract, up to an aggregate 
amount not to exceed $2,000,000 equivalent, and works estimated to cost less than $500,000 per 
contract, up to an aggregate amount not to exceed $69,300,000 may be procured under contracts 
awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines. 
2. 
International or National Shopping
Goods and equipment estimated to cost less than $30,000 equivalent per contract, up to 
an aggregate amount not to exceed $5,700,000 equivalent, may be procured under contracts 
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awarded on the basis of international or national shopping procedures in accordance with the 
provisions of paragraphs 3.5 and 3.6 of the Guidelines. 
Part D
:
Review by the Association of Procurement Decisions
1. Procurement 
Planning
Prior to the issuance of any invitation 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: (i) the first two contracts of the Federal Government and each 
Participating State and each contract for civil works estimated to cost the equivalent of $150,000
 
or more; and (ii) the first two contracts of the Federal Government and each Participating State 
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 the first contract of the Federal Government and each Participating 
State to be procured following shopping procedures, the following procedures shall apply: 
(i) 
prior to the selection of any supplier under shopping procedures, the Borrower or 
the Participating State 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 shopping procedures, the 
Borrower or the Participating State 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
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 Association in January 1997 and revised in September 
1997 and January 1999(the Consultant Guidelines). 
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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 shortlist of 
consultants for services 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. Least-cost 
Selection
Services of a routine nature, including audits and engineering design of simple works, 
estimated to cost less than $200,000 equivalent per contract may be procured under contracts 
awarded in accordance with the provisions of paragraphs 3.1 and 3.6 of the Consultant 
Guidelines. 
2. 
Selection Based on Consultants’ Qualifications
Services estimated to cost less than $100,000 equivalent per contract may be procured 
under contracts awarded in accordance with the provisions of paragraphs 3.1 and 3.7 of the 
Consultant Guidelines. 
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. 
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2. Prior 
Review
With respect to: (i) each contract for the employment of consulting firms estimated to 
cost the equivalent of $100,000 or more; (ii) single-source selection of consultants; (iii) terms of 
reference for consulting services; and (iv) any training outside the territory of the Borrower,  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. 
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. 
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SCHEDULE 4 
Implementation Program 
1. 
The Borrower shall maintain the FPCU in FMWH, consisting of four core representatives 
from the FMWH and two core representatives from the Federal Ministry of Finance.  The 
representatives shall be assigned to the Project Coordination Unit for the duration of Project 
implement
ation and shall not be reassigned without the Association’s prior notice.  Additional 
staff may be assigned to the FPCU as the need may arise. 
2. 
For the purpose of ensuring the proper execution of the Project, the Borrower shall cause 
each Participating State to establish prior to disbursements with respect to such Participating State 
in accordance with paragraph A.3 (b) of Schedule 1 and thereafter to maintain:  
(a) 
a PSC, with composition and terms of reference satisfactory to the Association, 
comprising the Participating State’s Commissioner of Works or the Governor’s designate as 
Chairman, Head of the PIU, representatives from the Participating State’s Ministry of Finance, 
Planning/Budget/Statistics, Attorney General, Department of Local Government, relevant sectoral 
and line ministries, representatives of civil society, participating LGs and the head of the CTC;  
(b) 
a PIU to serve as technical secretariat of the PSC, headed by a Project 
coordinator with qualifications and experience satisfactory to the Association, assisted by a 
project accountant, an internal auditor, an engineer, a procurement officer, a community 
development officer from the participating LG, and a human resources development officer, all 
with qualifications and terms of reference satisfactory to the Association.  Additional staff may be 
assigned to the PIU from time to time as the need may arise. 
(c) 
for each city or settlement in which an infrastructure upgrading is located, a CTC 
consisting of not less than three members, at least one of whom shall be a woman, to help identify 
investments, disseminate information relating to the Project to the local community, and monitor 
progress.  
3. 
The Borrower shall implement the Project or cause the Project to be implemented in 
accordance with the Project Implementation Manual and the Financial Management Manual, and, 
except as the Association shall otherwise agree, the Borrower shall not amend, abrogate or waive 
any provision thereof which, in the opinion of the Association, may materially and adversely 
affect the implementation of the Project or the achievement of the objectives of the Project. 
4. The 
Borrower 
shall: 
(a) 
not later than October 31 in each year, furnish to the Association for review and 
comments a draft annual work program and training program and supporting budget for the 
succeeding calendar year for the Federal Government and each Participating State; 
(b) 
not later than November 30  in each year: (i) review with the Association the 
documents referred to in paragraph (a) above; (ii) identify implementation issues and propose 
appropriate solutions; and (iii) update Project timetables and performance indicators; 
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(c) 
not later than December 31 in each year, furnish to the Association for its 
comments and final approval the work program and budgets referred to in paragraph (a) hereof, 
as such programs and budgets shall have been revised to the satisfaction of the Association in the 
course of the review referred to in paragraph (b) hereof ; 
(d) 
not later than June 30 in each year, deposit into each Project Account the 
amounts required for the Borrower’s and Participating States’ annual contribution to the costs of 
the Project; and 
(e) 
except as the Association shall otherwise agree, carry out the Project in the year 
in question on the basis of the said work program and budget as so revised. 
5. 
(a) 
Subprojects shall be selected in accordance with the procedures, guidelines, 
eligibility criteria and other provisions set forth in detail in the Project Implementation Manual 
and outlined hereunder.  The Borrower shall submit all proposed Subprojects to the Association 
for its approval; no Subproject shall be approved for financing under the Credit if it would 
involve involuntary resettlement or land acquisition issues.  Subprojects shall be implemented in 
accordance with due diligence and efficiency and in accordance with sound administrative, 
financial, technical and environmental standards;  
 
(b) 
Subprojects shall be carried out in accordance with the following: 
1. 
in accordance with the provisions of Schedule 3 to this 
Agreement; adequate records for the Subproject concerned shall be 
maintained; 
2. 
all goods, works and services required for a Subproject shall 
be procured 
3. 
the goods, works and services so procured shall be used 
exclusively in the carrying out of the Subproject;  
4. 
the PIU shall inspect, by itself or jointly with representatives 
of the Association, if the Association shall so request, any goods, works, 
plants and construction included in the Subproject, the operation thereof, 
and any relevant records and documents; and 
5. 
the PIU shall prepare a maintenance program for the works 
to be carried out under the Subproject in accordance with terms 
acceptable to the Association, which shall include assignment of 
maintenance responsibilities in a Participating State, the preparation of 
training programs to strengthen the maintenance capabilities of the 
Participating State, and the identification of available sources of 
financing to carry out such programs.  
6. The 
Borrower 
shall: 
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(a) 
maintain policies and procedures adequate to enable it to monitor and evaluate on 
an ongoing basis, in accordance with indicators satisfactory to the Association, the carrying out of 
the Project and the achievement of the objectives thereof; 
(b) 
prepare, under terms of reference satisfactory to the Association, and furnish to 
the Association, on or about August 31, 2005, a report integrating the results of the monitoring 
and evaluation activities performed pursuant to paragraph (a) of this Section, on 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 the 
achievement of the objectives thereof during the period following such date; and 
(c) 
review with the Association, by September 30, 2005, or such later date as the 
Association shall request, the report referred to in paragraph (b) of this Section, 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. 
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Schedule 5 
Terms and Conditions of Subsidiary Agreements With Participating States Required 
Pursuant to Section 3.01 (c) of this Agreement 
1. 
The terms and conditions of each Subsidiary Agreement shall include the following 
obligations of each Participating State to: 
(a) 
carry out the Project with due diligence and efficiency, in conformity with 
appropriate administrative, financial, engineering, technical and environmental practices and in 
accordance with the Project Implementation Manual, the Financial Management Manual and the 
Implementation Program in Schedule 4 of this Agreement; and provide, or cause to be provided, 
promptly as needed, the facilities, services and other resources required for the Project; 
(b) 
comply with the procedures for procurement of goods, works and consultant 
services set forth in Schedule 3 to this Agreement; 
(c) 
comply with record keeping, auditing and report requirements set forth in Section 
4.01 of this Agreement with respect to the Project, including the annual auditing of its records and 
accounts in respect of the Project (operations, resources and expenditures in respect of the 
Project); 
(d) 
carry out the obligations set forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 
of the General Conditions (relating to insurance, use of goods and services, plans and schedules, 
records and reports, maintenance and land acquisition, respectively) in respect of the Project;  
(e) 
at the request of the Borrower or the Association, exchange views with the 
Borrower and the Association with regard to the progress of the Project and the performance of 
its obligations under the Subsidiary Agreement; 
(f) 
promptly inform the Borrower and the Association of any condition which 
interferes or threatens to interfere with the progress of the Project, or the performance by said 
Participating State of its obligations under the Subsidiary Agreement; and 
(g) 
except as the Borrower and the Association shall otherwise agree, neither take 
nor concur in any action which would have the effect of amending, abrogating, assigning or 
waiving the Subsidiary Agreement or any provision thereof. 
2. 
The Subsidiary Agreements shall include a provision stipulating that in case of conflict 
between a Subsidiary Agreement and this Agreement, the latter shall apply. 
3. 
A Subsidiary Agreement shall not become effective until evidence satisfactory to the 
Association shall have been furnished to the Association establishing that:  
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(i) 
a Subsidiary Agreement has been executed on behalf of the Borrower 
and said Participating State;  
 
(ii) 
a PSC has been established in said Participating State;  
(iii) 
a PIU has been established in said Participating State with a duly 
qualified and experienced Project coordinator, a project accountant, an 
internal auditor, an engineer, a procurement officer, a community 
development officer from the participating LG, and a human resources 
development officer, with qualifications and experience and employed 
on terms and conditions (including terms of reference) satisfactory to the 
Association;  
(iv) 
said Participating State has appointed, in accordance with the provisions 
of Section II of Schedule 3 to this Agreement, an independent auditor; 
and 
(v) 
said Participating State has established a financial management system 
acceptable to the Association and has adopted an action plan to enhance 
the effectiveness of such financial management system. 
 
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