Page  1
CONFORMED COPY
CREDIT NUMBER 3440-KE
Development Credit Agreement
(Decentralized HIV/AIDS and Reproductive Health Project)
between
REPUBLIC OF KENYA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated   March 7, 2001
CREDIT NUMBER 3440-KE
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated March 7, 2001, between REPUBLIC OF KENYA (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 Association has received the following documents, namely, the 
Borrower’s Health Policy Framework of 1994, the National Reproductive Health Strategy 
of 1996 and the Sessional Paper on HIV/AIDS of 1997, part of which describes a program 
of actions, objectives and policies designed to implement activities under the 
Borrower’s National Health Sector Strategic Plan 1999-2004 (the said documents being 
hereinafter referred to as the Program) and declaring the Borrower’s commitment to the 
execution of the Program; 
(C)
the Borrower intends to obtain from the Department for International 
Development (DFID) of the United Kingdom a grant (the DFID Grant) in an amount 
equivalent to $39,490,000 to assist in financing the Project on the terms and 
conditions set forth in an agreement (the DFID Grant Agreement) to be entered into 
between the Borrower and DFID;
(D)
the Borrower intends to obtain from the Swedish International Development 
Page  2
Agency (SIDA) a grant (the SIDA Grant) in an amount equivalent to $8,400,000 to assist 
in financing the Project on the terms and conditions set forth in an agreement (the 
SIDA Grant Agreement) to be entered into between the Borrower and SIDA; and
WHEREAS the Association has agreed, on the basis, inter alia, of the foregoing, 
to extend the Credit to the Borrower upon the terms and conditions set forth in this 
Agreement;
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. The "General Conditions Applicable to Development Credit 
Agreements" of the Association, dated January 1, 1985 (as amended through October 6, 
1999), with the modifications set forth below (the General Conditions), constitute an 
integral part of this Agreement:
(a)
A new paragraph (12) is added to Section 2.01 to read as set forth below, 
and the existing paragraphs (12) through (14) of said Section are accordingly 
renumbered as paragraphs (13) through (15):
"12.
‘Participating Country’ means any country that the Association 
determines meets the requirements set forth in Section 11 of Resolution No. 
194 of the Board of Governors of the Association, adopted on April 8, 1999; 
and ‘Participating Countries’ means, collectively, all such countries."; and
(b)
The second sentence of Section 5.01 is modified to read:
"Except as the Borrower and the Association shall otherwise agree, no 
withdrawals shall be made: (a) on account of expenditures in the territories 
of any country which is not a Participating Country or for goods produced in, 
or services supplied from, such territories; or (b) for the purpose of any 
payment to persons or entities, or for any import of goods, if such payment or 
import, to the knowledge of the Association, is prohibited by a decision of 
the United Nations Security Council taken under Chapter VII of the Charter of 
the 
United Nations."
Section 1.02. Unless the context otherwise requires, the several terms defined 
in the General Conditions and in the Preamble to this Agreement have the respective 
meanings therein set forth and the following additional terms have the following 
meanings:
(a)
"AIDS" means the Acquired Immune Deficiency Syndrome;
(b)
"CBO" means community based organization;
(c)
"District Health Management Team" means the technical team headed by a 
District Medical Officer of Health with responsibility for the management and 
supervision of health services delivery in the whole district as provided for in the 
Public Health Act, Cap. 242 Laws of Kenyas  [To come from the Kenyan Delegation];;
(d)
"Districts" means the local government districts of the Borrower 
participating in Phase I of the Program and referred to in Part A of the Project;
(e)
"Eligible Categories" means categories (1) through (3) in the table in 
Part A.1 of Schedule 1 to this Agreement;
(f)
"Eligible Expenditures" means the expenditures for goods and services 
referred to in Section 2.02 (a) of this Agreement;
(g)
"Eligible Work Plan" means a provincial or district work plan to be 
carried out by Provinces (as hereinafter defined) or Districts (as hereinafter 
defined) which, having met the eligibility criteria set out in the Project 
Implementation Plan (as hereinafter defined) and the provisions of Schedule 4 to this 
Agreement, is a work plan that is eligible for financing, on a grant basis, in 
accordance with the provisions of the Project Implementation Plan;
(h)
"Grant" means each of the the grants to be provided under the Project to 
finance Eligible provincial or district Work Plans (as hereinafter defined) prepared 
Page  3
for purposes of the Project;
(i)
"Grant Agreement" means the agreement entered into between a District or 
a  Province and [MOH? TTL please confirm], referred to in paragraph 3 (b) of Schedule 
1.A  of this Agreement;
(j)
"Health Facility Team" means [To come from the Kenyan Delegation][Note: 
such term was not used again!];
(k)
"Health Sector Reform Secretariat" means the Health Sector Reform 
Secretariat of the Borrower’s Ministerial Reform Committee referred to in paragraph 2 
(b) of Schedule 4 to this Agreement;
(l)
"HIV" means the Human Immuno-Deficiency Virus;
(m)
"Hospital Management TeamBoard" means [To come from the Kenyan 
Delegation];the institutional management team headed by a Medical Superintendent or a 
Medical Officer in charge and with the responsibility for the day to day management 
and delivery of hospital based care;
(n)
"IAPSO" means the Inter-Agency Procurement Services of the United 
Nations; 
(o)
"IEC" means information, education and communication;
(p)
"IMCI" means the integrated management of childhood illnesses;
(q)
"Implementing Agencies" means the following agencies within  MOH; (i) the 
Health Sector Reform Secretariat; (ii) NASCOP; (iii) the District Health Management 
Teams; and (iv) the Health Facility Team [Note: This term is not used in the body of 
the Agreement. I propose to delete it];
(r)
"Initial Deposit" means the initial deposit referred to in Section 3.02 
(ii) of this Agreement;
(s)
"Kenya Medical Training College" means the parastatal under the[To come 
from the Kenyan Delegation]; Ministry of Health, set up under Cap. 446 Laws of Kenya 
with the mandate to train diploma and certificate health workers currently deployed in 
public and private hospitals, health centers, dispensaries and clinics;
(t)
"MOH" means the Borrower’s Ministry of Health;
(u)
"NASCOP" means the Borrower’s National AIDS and STD Control Program, 
including the AIDS Control Unit of MOH, established pursuant to the Borrower’s means 
[To come from the Kenyan Delegation] [Note: This term is not used again!];
(v)
"National AIDS Strategic Plan" means the National AIDS Strategic Plan of 
the Borrower dated [To come from the Kenyan Delegation]; [Note: This term is not used 
again!]
(w)
"NGO" means a non-governmental organization registered under the  laws of 
the Borrower, such term to include a religious organization;
(x)
"Project Account" means the account to be opened pursuant to Section 3.02 
of this Agreement;
(y)
"Project Implementation Plan" means the Project Implementation Plan 
referred to in paragraph 1 (a) of Schedule 4 to this Agreement;
(z)
"Project Management Report" means each report prepared in accordance with 
Section 4.02 of this Agreement;
(aa)
"Project Year" means the 12- month period beginning from the Effective 
Date and ending 12- months thereafter and each successive 12 month period following 
thereafter;
(ab)
"Provinces" means the provinces located in the territory of the Borrower 
participating in Phase I of the Program and referred to in Part A of the Project;
(ac)
"Rural Health Facility CommitteeTeam" means [To come from the Kenyan 
Delegation];the institutional management team headed by either a Clinical Officer or 
an Enrolled Community Nurse and with responsibility for the day-to-day management and 
Page  4
delivery of primary health services at a health center or a dispensary;
(ad)
"Special Account" means the account referred to in Part B of Schedule 1 
to this Agreement; and
(ae)
"STD" means sexually transmitted diseases.
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 thirty eight million three hundred thousand Special 
Drawing Rights (SDR 38,300,000).
Section 2.02. 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 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 the Borrower on account of withdrawals made to meet 
the reasonable cost of goods, works and services required for any Eligible Work Plan 
in respect of which the withdrawal from the Credit Account is requested.
Section 2.03. The Closing Date shall be June 30, 2005 or such later date as the 
Association shall establish. The Association shall promptly notify the Borrower of 
such later date.
Section 2.04. (a) The Borrower shall pay to the Association a commitment charge 
on the principal amount of the Credit not withdrawn from time to time at a rate to be 
set by the Association as of June 30 of 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 
semi-annually on January 1 and July 1 in each year.
Section 2.07. (a) Subject to paragraphs (b), (c) and (d) below, the Borrower 
shall repay the principal amount of the Credit in semiannual installments payable on 
each January 1 and July 1, commencing January 1, 2011 and ending July 1, 2040. Each 
installment to and including the installment payable on July 1, 2020 shall be one 
percent (1%) of such principal amount, and each installment thereafter shall be two 
percent (2%) of such principal amount.
(b)
Whenever: (i) the Borrower’s per capita gross national product (GNP), as 
determined by the Association, shall have exceeded for three consecutive years  the 
level established annually by the Association for determining eligibility to access 
the Association’s resources; and (ii) the Bank shall consider the Borrower 
creditworthy for Bank lending, the Association may, subsequent to the review and 
Page  5
approval thereof by the Executive Directors of the Association and after due 
consideration by them of the development of the Borrower’s economy, modify the 
repayment of installments under paragraph (a) above by: (A) requiring the Borrower to 
repay twice the amount of each such installment not yet due until the principal amount 
of the Credit shall have been repaid; and (B) requiring the Borrower to commence 
repayment of the principal amount of the Credit as of the first semiannual payment 
date referred to in paragraph (a) above falling six months or more after the date on 
which the Association notifies the Borrower that the events set out in this paragraph 
(b) have occurred, provided, however, that there shall be a grace period of a minimum 
of five years on such repayment of principal.
(c)
If so requested by the Borrower, the Association may revise the 
modification referred to in paragraph (b) above to include, in lieu of some or all of 
the increase in the amounts of such installments, the payment of interest at an annual 
rate agreed with the Association on the principal amount of the Credit withdrawn and 
outstanding from time to time, provided that, in the judgment of the Association, such 
revision shall not change the grant element obtained under the above-mentioned 
repayment modification.
(d)
If, at any time after a modification of terms pursuant to paragraph (b) 
above, the Association determines that the Borrower's economic condition has 
deteriorated significantly, the Association may, if so requested by the Borrower, 
further modify the terms of repayment to conform to the schedule of installments as 
provided in paragraph (a) above.
Section 2.08. The currency of the United States of America is hereby specified 
for the purposes of Section 4.02 of the General Conditions.
ARTICLE III
Execution of the Project
Section 3.01. (a) The Borrower declares its commitment to the objectives of the 
Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry 
out the Project through MOH with due diligence and efficiency and in conformity with 
appropriate administrative, financial and public health practices, and shall provide, 
or cause to be provided, promptly as needed, the funds, facilities, services and other 
resources required for the Project.
(b)
Without limitation upon the provisions of paragraph (a) of this Section 
and except as the Borrower and the Association shall otherwise agree, the Borrower 
shall carry out the Project in accordance with the Implementation Program set forth in 
Schedule 4 to this Agreement.
Section 3.02. The Borrower shall: (i) open and thereafter maintain, until 
completion of the Project, a Project Account in a commercial bank acceptable to the 
Association into which the Borrower shall deposit its counterpart contributions to the 
costs of the Project; (ii) deposit an initial amount equivalent to $[50,000] [To be 
confirmed by the Kenyan Delegation] (the Initial Deposit) into the Project Account; 
and (iii) thereafter during each following quarter deposit into the Project Account 
the amounts required to cover the Borrower’s counterpart contributions for each such 
quarter, as determined by the Borrower and the Association.
Section 3.03.  Except as the Association shall otherwise agree, procurement of 
the goods, works and consultants’ services required for the Project and to be financed 
out of the proceeds of the Credit shall be governed by the provisions of  Schedule 3 
to this Agreement.
Section 3.04.  For the purposes of Section 9.06 of the General Conditions and 
without limitation thereto, the Borrower shall:
(a)
prepare, on the basis of guidelines acceptable to the Association, and 
furnish to the Association not later than six (6) months after the Closing Date or 
such later date as may be agreed for this purpose between the Borrower and the 
Association, a plan designed to ensure the future achievement of the objectives of the 
Project; and
(b)
afford the Association a reasonable opportunity to exchange views with 
the Borrower on said plan.
Page  6
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Borrower shall maintain a financial management system, 
including records and accounts, and prepare financial statements, all in accordance 
with accounting standards acceptable to the Association, consistently applied, in a 
format acceptable to the Association adequate to reflect its the operations and 
financial condition and to register separately the operations, resources and 
expenditures related to the Project.
(b)
The Borrower shall:
(i)
have its the records, accounts and financial statements referred 
to in paragraph (a) of this Section (balance sheets, statements of 
income and expenses and related statements) and the records and 
accounts for the Special Account for each fiscal year audited, in 
accordance with auditing standards acceptable to the Association, 
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, (A) 
certified copies of the financial statements referred to in 
paragraph (a) of this Section, for such year as so audited, and 
(B) an opinion on such statements and 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 such 
records, accounts and financial statements, and the audit thereof, 
and concerning said auditors, as the Association may from time to 
time reasonably request.
(c)
For all expenditures with respect to which withdrawals from the Credit 
Account were made on the basis of Project Management Reports or statements of 
expenditure, the Borrower shall:
(i)
maintain or cause to be maintained, in accordance with paragraph 
(a) of this Section, records and separate accounts reflecting such 
expenditures;
(ii)
retain, until at least one year after the Association has received 
the audit report for the fiscal year in which the last withdrawal 
from the Credit Account was made, all records (contracts, orders, 
invoices, bills, receipts and other documents) evidencing such 
expenditures;
(iii)
enable the Association’s representatives to examine such records; 
and
(iv)
ensure that such records and accounts are included in the annual 
audit referred to in paragraph (b) of this Section and that the 
report of such audit contains a separate opinion by said auditors 
as to whether the Project Management Reports or statements of 
expenditure submitted during such fiscal year, together with the 
procedures and internal controls involved in their preparation, 
can be relied upon to support the related withdrawals.
Section 4.02. (a) Without limitation upon the provisions of Section 4.01 of this 
Agreement, the Borrower shall carry out a time-bound action plan acceptable to the 
Association for the strengthening of the financial management system referred to in 
paragraph (a) of said Section 4.01 in order to enable the Borrower, not later than 18 
months after the Effective Date, or such later date as the Association shall agree, to 
prepare quarterly Project management reports acceptable to the Association, each of 
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 applications of funds for the 
Project for the six-month period following the period covered by 
Page  7
said report, and (B) shows separately expenditures financed out of 
the proceeds of the Credit during the period covered by said 
report and expenditures proposed to be financed out of the 
proceeds of the Credit during the six-month period following the 
period covered by said report;
(ii)
(A) describes physical progress in Project implementation, both 
cumulatively and for the period covered by said report, and (B) 
explains variances between the actual and previously forecast 
implementation targets; and 
(iii)
sets forth the status of procurement under the Project and 
expenditures under contracts financed out of the proceeds of the 
Credit, as at the end of the period covered by said report.
(b)
Upon the completion of the action plan referred to in paragraph (a) of 
this Section, the Borrower shall prepare, in accordance with guidelines acceptable to 
the Association, and furnish to the Association not later than 45 days after the end 
of each calendar quarter, a Project Management Report for such period.
ARTICLE V
Remedies of the Association
Section 5.01. Pursuant to Section 6.02 (l) of the General Conditions, the 
following additional events are specified:
(a)
that a situation has arisen which shall make it improbable that the 
Program, or a significant part thereof, will be carried out; 
(b)
subject to paragraph (c) of this Section: 
(i)
the right of the Borrower to withdraw the proceeds of any grant or 
loan made to the Borrower for the financing of the Project shall 
have been suspended, canceled or terminated in whole or in part, 
pursuant to the terms of the agreement providing therefor; or
(ii)
any such loan shall have become due and payable prior to the 
agreed maturity thereof; and
(c)
paragraph (b) of this Section shall not apply if the Borrower establishes 
to the satisfaction of the Association that: (i) such suspension, cancellation, 
termination or prematuring is not caused by the failure of the Borrower to perform any 
of its obligations under such agreement; and (ii) adequate funds for the Project are 
available to the Borrower from other sources on terms and conditions consistent with 
the obligations of the Borrower under this Agreement.
Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the 
following additional event is specified, namely that the event specified in paragraph 
(b) (ii) of Section 5.01 of this Agreement shall occur, subject to the proviso of 
paragraph (c) of that Section.
ARTICLE VI
Effective Date; Termination
Section 6.01. The following events are specified as additional conditions to the 
effectiveness of the Development Credit Agreement within the meaning of Section 12.01 
(b) of the General Conditions:
(a)
the Borrower has adopted a Project Implementation Plan in form and 
substance satisfactory to the Association;
(b)
the Project Account has been opened and the Initial Deposit paid into the 
Project Account; 
(c)
the Borrower has established an accounting and a financial management 
system for the Project, satisfactory to the Association for the Project; and
(d)
the Borrower has approved the MOH’s decentralization implementation plan, 
including the rationalization of the MOH non-salary recurrent budgets for Districts 
Page  8
which are to include no more than nine budget line items; and for the Phase I 
decentralization Districts
(e)
the Borrower shall prepare and furnish to the Association a template for 
resource based and outcome oriented Eligible Work Plans as well as a performance 
appraisal system, in form and substance satisfactory to the Association.
Section 6.02. The date ninety (90) days after the date of this Agreement is 
hereby specified for the purposes of Section 12.04 of the General Conditions.
ARTICLE VII
Representative of the Borrower; Addresses
Section 7.01. The Minister of Finance of the Borrower is designated as 
representative of the Borrower for the purposes of Section 11.03 of the General 
Conditions.
Section 7.02. The following addresses are specified for the purposes of Section 
11.01 of the General Conditions:
For the Borrower:
Ministry of Finance and Planning
P.O. Box 30007
Nairobi
Kenya
Cable address:
Telex:
Facsimile:
FINANCE
22921
254 2 330426
Nairobi
MINIFIN-KE
For the Association:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
Facsimile:
INDEVAS
248423 (MCI) or
(202) 477-6391
Washington, D.C.
 64145 (MCI)
IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized 
representatives, have caused this Agreement to be signed in their respective names in 
Nairobi, Kenya as of the day and year first above written.
REPUBLIC OF KENYA
By /s/ Chrysanthus B. Okemo
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/  Harrold E. Wackman
Acting Regional Vice President
Page  9
Africa
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:
A.
General
Amount of the
Credit Allocated
   % of
(Expressed in Expenditures
Category
SDR Equivalent)
to be Financed
(1)
Goods (including
   [$940,000] 100% of foreign
equipment,
expenditures and
pharmaceuticals and
90% of local
medical supplies)
expenditures
(2)
Consultants’ services
[$68,600,000] 100%
and training
(3)
Eligible Work Plan     [$137,500,000]
100% of amounts
Grants disbursed
(4)
Unallocated
 [$3,960,000]
TOTAL
[$38,300,000]
2.
For the purposes of this Schedule:
(a)
the term "foreign expenditures" means expenditures in the currency of any 
country other than that of the Borrower for goods or services supplied from the 
territory of any country other than that of the Borrower; and
(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.
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)
expenditures for Grants unless the Grant in question has been made in 
accordance with the procedures, guidelines and other provisions set out or referred to 
in the Project Implementation Plan and this Agreement; and (ii) the Grant in question 
has been made in accordance with a Grant Agreement, in form and substance satisfactory 
to the Association;
(c)
payments for expenditures for goods and services supplied under a 
contract which any national or international financing institution or agency, other 
than the Association, shall have financed or agreed to finance under any other credit 
or grant.
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 
costing less than $20,000 equivalent each; (ii) goods under contracts costing less 
than $100,000 equivalent each; (iii) consulting services costing less than: (A) 
$100,000 equivalent each for consulting firms; and (B) $530,000 equivalent for 
individual consultants; and (iiiv) all training workshops and study tours, under such 
terms and conditions as the Association shall specify by notice to the Borrower.
B.
Special Account
1.
The Borrower shall open and maintain in dollars a separate special deposit 
Page  10
account in a commercial bank, 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 a Special 
Account has been opened, withdrawals from the Credit Account of amounts to be 
deposited into the Special Account shall be made as follows:
(a)
until the Association shall have received: (i) the first Project 
Management Report referred to in Section 4.02 (b) of this Agreement; and (ii) a 
request from the Borrower for withdrawal on the basis of Project Management 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 Project Management Report pursuant 
to Section 4.02 (b) of this Agreement, accompanied by a request from the Borrower for 
withdrawal on the basis of Project Management Reports, all further withdrawals shall 
be made in accordance with the provisions of Annex B to this Schedule. 1.
3.
Payments out of the Special Account shall be made exclusively for Eligible 
Expenditures. For each payment made by the Borrower out of the Special Account, the 
Borrower shall, at such time as the Association shall reasonably request, furnish to 
the Association such documents and other evidence showing that such payment was made 
exclusively for Eligible Expenditures.
4.
Notwithstanding the provisions of Part B.2 of this Schedule, the Association 
shall not be required to make further deposits into the Special Account:
(a)
if the Association determines at any time that any Project Management 
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 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 the Special Account; or (B) 
the records and accounts reflecting expenditures with respect to which withdrawals 
were made on the basis of Project Management Reports.
5.
The Association shall not be required to make further deposits into the 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 Account 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 the 
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 the 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 the Special Account shall be made until the Borrower has provided 
such evidence or made such deposit or refund, as the case may be.
(b)
If the Association determines at any time that any amount outstanding in 
the 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 the 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 
Page  11
Agreement.
Annex A to SCHEDULE 1
Operation of Special Account  When Withdrawals Are 
Not Made On the Basis of Project Management Reports
1.
For the purposes of this Annex, the term "Authorized Allocation" means an amount 
equivalent to $3,000,000 to be withdrawn from the Credit Account and deposited into 
the Special Account pursuant to paragraph 2 of this Annex; provided, however, that, 
unless the Association shall otherwise agree, the Authorized Allocation shall be 
limited to an amount equivalent to $2,000,000 until the aggregate amount of 
withdrawals from the Credit Account, plus the total amount of all outstanding special 
commitments entered into by the Association pursuant to Section 5.02 of the General 
Conditions shall equal or exceed the equivalent of SDR 4,000,000.
2.
Withdrawals of the Authorized Allocation and subsequent withdrawals to replenish 
the Special Account shall be made as follows:
(a)
For withdrawals of the Authorized Allocation, the Borrower shall furnish 
to the Association a request or requests for deposit into the Special Account of an 
amount or amounts which in the aggregate do not exceed the 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 the Special Account such amount as 
the Borrower shall have requested.
(b)
For replenishment of the Special Account, the Borrower shall furnish to 
the Association requests for deposit into the 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 
the Special Account such amount as the Borrower shall have requested and as shall have 
been shown by said documents and other evidence to have been paid out of the Special 
Account for Eligible Expenditures. 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.
3.
The Association shall not be required to make further deposits into the Special 
Account, once the total unwithdrawn amount of the Credit allocated to the Eligible 
Categories minus the total amount of all outstanding special commitments entered into 
by the Association pursuant to Section 5.02 of the General Conditions 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 the 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 the Special Account as of 
the date of such notice will be utilized in making payments for Eligible Expenditures.
Annex B to SCHEDULE 1
Operation of Special Account When Withdrawals Are 
Made On the Basis of Project Management 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 Eligible Categories.
2.
Each application for withdrawal from the Credit Account for deposit into the 
Special Account shall be supported by a Project Management 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 
Project Management Report accompanying said application, is required to be deposited 
in order to finance Eligible Expenditures during the six-month period following the 
Page  12
date of such report; provided, however, that the amount so deposited, when added to 
the amount indicated by said Project Management Report to be remaining in the Special 
Account, shall not exceed the equivalent of $6,000,000__________.
SCHEDULE 2
Description of the Project
The objectives of the Project are to: (i) slow the increase in HIV prevalence 
rates in the Borrower’s territory; (ii) improve mother and child health through more 
integrated delivery of HIV/AIDS, child survival and reproductive health services; and 
(iii) create an enabling environment for decentralized managed delivery of HIV/AIDS, 
child survival and reproductive health services to and within Districts.
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:
Decentralization
1.
The carrying out in 14 Districts of the Borrower’s territory of an intensified 
and expanded MOH decentralization program through the improvement of the mechanisms 
for fiscal decentralization, capacity building at provincial, district and 
sub-district levels, organizational restructuring and systems development, while 
promoting transparency and accountability for both resource use and performance, 
including:
(a)
the adoption and application of a new set of resource allocation criteria 
for the distribution of MOH’s budgetary resources to the Districts;
(b)
the rationalization of the support provided by the Ministry of Finance 
and Planning to Districts to allow increased discretionary control by the Districts in 
the allocation and use of resources;
(c)
the reform of the Borrower’s drug supply system;
(d)
the carrying out of capacity building activities at the District and 
sub-District levels through training of staff of the District Health Management Teams 
, Hospital Management Boards/Teams and Rural Health Facility TeamsCommittees utilizing 
services to be provided by the Kenya Medical Training College, including training in: 
(A) financial management; (B) providing the poor with access to health care; (C) drug 
management; (D) the promotion of community involvement; (E) transparency and 
results-oriented health delivery management; and (F) improving the appropriateness and 
transparency of public service delivery including the involvement of, and feedback to, 
local communities in the management of health services; and
(e)
providing policy guidance to the Districts and advising them on technical 
and managerial issues; and the carrying out of health service reviews.
2.
The provision Grants to Districts and Provinces to finance Eligible Work Plans 
for the promotion of the increased decentralization of planning and management of 
resources.
Part B:
HIV/AIDS
The carrying out of an expanded and intensified program of interventions to 
prevent and control the HIV/AIDS epidemic, through:
(a)
the development and carrying out of HIV/AIDS awareness programs aimed at 
inducing safe sexual behavior in people, including policies and activities directed at 
the gender aspects of HIV/AIDS and the specific vulnerability of women, adolescents 
and the poor;
(b)
the prevention of new infections and the mitigation of the impact of 
HIV/AIDS, including the provision of support for persons infected or affected by 
HIV/AIDS;
(c)
the acquisition of condoms, drugs for opportunistic infections and HIV 
Page  13
test material; and 
(d)
assisting the Districts, through the provision of Grants, in the 
preparation and carrying out of District Eligible Work Plans to accommodate, and 
provide effective responses to, changes in the operational, social and/or 
epidemiological situation relating to the HIV/AIDS epidemic.
Part C:
Reproductive Health
Improving reproductive health, through:
(a)
the carrying out of activities, measures and/or programs relating to or 
concerning family planning, safe motherhood, women’s status, child survival and the 
prevention and control of sexually transmitted infections;
(b)
provision of Grants to the Districts to carry out District Eligible Work 
Plans to ensure improved reproductive health, including training of staff, the conduct 
of maternal death audits, the conduct of IEC, acquisition of family planning 
commodities, drugs, equipment and other essential inputs; 
(c)
the provision of reproductive health services for the particular needs of 
youth; and
(d)
assisting the Borrower in the phased introduction of its IMCI strategy, 
including improved management of malaria and micro-nutrient related conditions.
* * *
The Project is expected to be completed by December 31, 2004.
SCHEDULE 3
Procurement and Consultants’ Services
Section I.
Procurement of Good and Works
Part A:
General
1.
Goods and works shall be procured in accordance with: (a) the provisions of 
Section I of the "Guidelines for Procurement under IBRD Loans and IDA Credits" 
published by the Bank in January 1995 and revised in January and August 1996, 
September 1997 and January 1999 (the Guidelines); and (b) the provisions of the 
following Parts of this Section I.
2.
In paragraphs 1.6 and 1.8 of the Guidelines, the references to "Bank member 
countries" and "member country" shall be deemed to be references, respectively, to 
"Participating Countries" and "Participating Country".
Part B:
International Competitive Bidding
1.
Except as otherwise provided in Part C of this Section, goods shall be procured 
under contracts awarded in accordance with the provisions of Section II of the 
Guidelines and paragraph 5 of Appendix 1 thereto.
2.
The following provisions shall apply to goods to be procured under contracts 
awarded in accordance with the provisions of paragraph 1 of this Part B:
(a)
Grouping of contracts
To the extent practicable, contracts for goods shall be grouped in bid packages 
estimated to cost $100,000 equivalent or more each.
(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
Page  14
1.
National Competitive Bidding
Goods estimated to cost less than $100,000 equivalent per contract, up to an 
aggregate amount not to exceed $2,500,000 equivalent, 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
(a)
Goods estimated to cost less than $30,000 equivalent per contract, up to 
an aggregate amount not to exceed $1,000,000 equivalent, may be procured under 
contracts awarded on the basis of national shopping procedures in accordance with the 
provisions of paragraphs 3.5 and 3.6 of the Guidelines.
(b)
Where any goods are not available in the local market for procurement 
under national shopping procedures, such goods in an amount estimated to cost less 
than $30,000 equivalent per contract, up to an aggregate amount not to exceed 
$1,000,000 equivalent, may be procured under contracts awarded on the basis of 
international shopping procedures in accordance with the provisions of paragraphs 3.5 
and 3.6 of the Guidelines.
3.
Procurement from UN Agencies
Where any goods are not available in the local market for procurement under 
national shopping procedures, such goods in an amount estimated to cost less than 
$30,000 equivalent per contract, up to an aggregate amount not to exceed $200,000 
equivalent, may be procured from IAPSO in accordance with the provisions of paragraph 
3.9 of the Guidelines.
4.
District Grants
Goods and works required under Part A.2 of the Project shall be procured in 
accordance with procedures acceptable to the Association, in accordance with the 
provisions of paragraph 3.15 of the Guidelines.
5.
Procurement of Small Works
Works estimated to cost less than $20,000 equivalent per contract, up to an 
aggregate amount not to exceed $500,000 equivalent, may be procured under lump-sum, 
fixed-price contracts awarded on the basis of quotations obtained from three (3) 
qualified domestic contractors in response to a written invitation. The invitation 
shall include a detailed description of the works, including basic specifications, the 
required completion date, a basic form of agreement acceptable to the Association, and 
relevant drawings, where applicable. The award shall be made to the contractor who 
offers the lowest price quotation for the required work, and who has the experience 
and resources to complete the contract successfully.
Part D:
Review by the Association of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to bid for contracts, the proposed 
procurement plan for the Project shall be furnished to the Association for its review 
and approval, in accordance with the provisions of paragraph 1 of Appendix 1 to the 
Guidelines. Procurement of all goods and works shall be undertaken in accordance with 
such procurement plan as shall have been approved by the Association, and with the 
provisions of said paragraph 1.
2.
Prior Review
With respect to (i) each contract estimated to cost the equivalent of $100,000 
or more; and (ii) the first five contracts for goods and works procured under National 
Competitive Bidding procedures, the procedures set forth in paragraphs 2 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.
Page  15
Section II.
Employment of Consultants
Part A:
General
1.
Consultants’ services shall be procured in accordance with (a) 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, subject to the modifications thereto set 
forth in paragraph 2 of this Part A (the Consultant Guidelines), and (b) the 
provisions of the following Parts of this Section II.
2.
In paragraph 1.10 of the Consultant Guidelines, the references to "Bank member 
countries" and "member country" shall be deemed to be references, respectively, to 
"Participating Countries" and "Participating Country".
Part B:
Quality- and Cost-Based Selection
1.
Except as otherwise provided in Part C of this Section, consultants’ services 
shall be procured under contracts awarded in accordance with the provisions of Section 
II of the Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 
thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to 
quality- and cost-based selection of consultants.
2.
The following provisions shall apply to consultants’ services to be procured 
under contracts awarded in accordance with the provisions of the preceding paragraph. 
The short list of consultants for services estimated to cost less than $100,000 
equivalent per contract, may comprise entirely of 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 for financial audits and other repetitive services estimated to cost 
less than $50,000 equivalent per contract, up to an aggregate amount not to exceed 
$200,000 equivalent, may be procured under contracts awarded in accordance with the 
provisions of paragraphs 3.1 and 3.6 of the Consultant Guidelines.
2.
Single Source Selection
Services procured from NGOs and CBOs at the District level under Eligible Work 
Plans satisfactory to the Association, which are estimated to cost less than $5,000 
equivalent per contract, up to an aggregate amount not to exceed $1,000,000 
equivalent, may be procured in accordance with the provisions of paragraphs 3.8 
through 3.11 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.
2.
Prior Review
(a)
With respect to each contract for the employment of consulting firms 
estimated to cost the equivalent of $100,000 or more, the procedures set forth in 
paragraphs 1, 2 (other than the third subparagraph of paragraph 2 (a)) and 5 of 
Appendix 1 to the Consultant Guidelines shall apply.
(b)
With respect to each contract for the employment of consulting firms 
Page  16
estimated to cost the equivalent of $50,000 or more, but less than the equivalent of 
$100,000, the procedures set forth in paragraphs 1, 2 (other than the second 
subparagraph of paragraph 2 (a)) and 5 of Appendix 1 to the Consultant  Guidelines 
shall apply.
(c)
With respect to each contract for the employment of individual 
consultants estimated to cost the equivalent of $30,000 or more, the qualifications, 
experience, terms of reference and terms of employment of the consultants shall be 
furnished to the Association for its prior review and approval.  The contract shall be 
awarded only after the said approval shall have been given.
(d)
Services procured from NGOs and CBOs at the District level under Eligible 
Work Plans, satisfactory to the Association, which are estimated to cost less than 
$5,000 equivalent per contract, up to an aggregate amount not to exceed $1,000,000 
equivalent, to be procured in accordance with the provisions of paragraphs 3.8 through 
3.11 of the Consultant Guidelines (Single Source Selection) shall not require the 
prior review and approval of the Association.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this Part, the 
procedures set forth in paragraph 4 of Appendix 1 to the Consultant Guidelines shall 
apply.
SCHEDULE 4
Implementation Program
1.
Project Implementation Plan
(a)
The Borrower shall prepare and furnish to the Association a Project 
Implementation Plan in form and substance satisfactory to the Association setting out 
details of all procedures, guidelines, processes, timetables and criteria for the 
Project, including criteria for budgetary allocations by MOH to the Districts.
(b)
The Borrower shall carry out the Project in accordance with said Project 
Implementation Plan and, except as the Association shall otherwise agree, shall not 
amend or waive any provision of the Project Implementation Plan if, in the opinion of 
the Association, such amendment or waiver may materially and adversely affect the 
carrying out of the Project or the achievement of the objectives thereof.
2.
Decentralization Program
(a)
The decentralization program included in Part A of the Project shall 
include: (i) the strengthening and/or establishment of stakeholder forums at the 
District level; (ii) intensive monitoring of health expenditures through District 
health expenditure reviews; (iii) delegation of responsibility for drug procurement; 
(iv) improved human resource management; (v) the strengthening of referral systems; 
and (vi) increased autonomy for District hospitals.
(b)
To facilitate the monitoring and evaluation of performance under Part A 
of the Project, the Borrower shall no later than [To be provided by the Kenyan 
Delegation] prepare and furnish to the Association a template for resource based and 
outcome oriented Work Plans as well as a performance appraisal system, in form and 
substance satisfactory to the Association.
(c)
The Borrower shall maintain the Health Sector Reform Secretariat of the 
Borrower’s Ministerial Reform Committee in a form, and with functions, staffing and 
resources satisfactory to the Association.
(d)
The Borrower shall open, in a bank acceptable to the Association for each 
Health Management Team and the Nairobi area Health Facilities Committees participating 
in the Project, an account to be used exclusively for purposes of the Project.
(e)
District Medical Officers of Health shall be responsible for the carrying 
out of District Eligible Work Plans under the Project.
(f)
The District Health Management Teams and the Health Facility Committees 
shall be responsible for the oversight of Project implementation at the District and 
Page  17
sub-District levels.
(g)
MOH shall, with the assistance of its division of Primary Health Care, 
the Health Sector Reform Secretariat and the AIDS Control Unit (MOH) be generally 
responsible for the carrying out of central level Project activities (including 
Project coordination activities, reforms and central procurement).
(h)
The Health Sector Reform Secretariat shall in particular be responsible 
for the coordination of Project activities.
3.
Health Reforms
(a)
The Borrower shall ensure that the allocations made in MOH’s recurrent 
budget for the Kenya National Hospital shall not exceed: (i) 12% of MOH’s recurrent 
budget by the end of the second Project Year; and (ii) 10% of the said budget by the 
end of the fourth Project Year.
(b)
The Borrower shall, with effect from Fiscal Year 2001-2002, begin to 
phase in the application of criteria for budgetary allocations to Districts.
4.
Reviews
The Borrower shall:
(a)
maintain policies and procedures adequate to enable it to monitor and 
evaluate on an ongoing basis, in accordance with the indicators set forth in Schedule 
5 to this Agreement, 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 March 31 and September 30, 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; 
(c)
review with the Association, by April 30 and October 31, 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; and
(d)
no later than eighteen (18) months after the Effective Date, the Borrower 
shall carry out, jointly with the Association a mid-term review (the Mid-term Review) 
of the progress made in carrying out the Project. The Mid-term Review shall cover, 
among other things, an assessment of: (i) Eligible Work Plans prepared as of the date 
of the Mid-term Review and the progress made in carrying out the said plans; (ii) 
training provided under the Project; (iii) procurement under the Project; (iv) the 
extent to which actions described in the indicators set out in Schedule 5 to this 
Agreement have been carried out; and (v) plans made or proposed for updating said 
indicators.
5.
Eligibility Criteria for Grants
Without limitation on the provisions of paragraph 1 (b) above, no Grant shall be 
eligible for financing out of the proceeds of the Credit unless it satisfies the 
eligibility criteria specified in more detail in the Project Implementation Plan, 
which shall include the following:
(a) 
the Grant shall be for: (i) the promotion of the increased 
decentralization of HIV/AIDS epidemic planning and management of resources; (ii) the 
carrying out of District Work Plans to accommodate, and provide effective responses 
to, changes in the operational, social and/or epidemiological situation relating to 
the HIV/AIDS epidemic; and (iii) improved reproductive health, including training of 
staff, the conduct of maternal death audits, the conduct of IEC, acquisition of family 
planning commodities, drugs, equipment and other essential inputs;
(b) the Grant shall be initiated by a duly represented District or Province; 
Page  18
(bc) 
the activities to be financed by the Grants shall be economically, financially, 
and technically viable in accordance with the standards specified in the Project 
Implementation Plan; and
(ce) 
the activities to be financed by the Grants shall be in compliance with 
the standards set forth in the applicable laws of the Borrower relating to health, 
safety, and environmental protection. 
6.
Terms and Conditions of the Grants 
The Grants shall be made pursuant to the  Agreements shall, inter alia, include 
the following terms: 
(a)
 financing to be on a grant basis, allocated in accordance with resource 
allocation criteria contained in the Project Implementation Plan; and, unless 
otherwise agreed with the Association, not to exceed the equivalent of $[25,000]  [TTL 
to provide] per Grant; 
(b) 
the obligation to carry out any activities in accordance with the Project 
Implementation Plan, with due diligence and efficiency and in accordance with sound 
technical, financial, environmental, and managerial standards and to maintain adequate 
records to reflect, in accordance with sound accounting practices, the operations, 
resources, and expenditures in respect of the activities financed by the Grant; 
(c) 
the requirement that: (i) the goods, works, and services to be financed 
from the proceeds of the Credit shall be procured in accordance with the procedures 
set forth in Schedule 3 to this Agreement; and (ii) such goods, works, and services 
shall be used exclusively in the carrying out of the activities financed by the Grant; 
(d) the right of [MOH?] to inspect by itself, or jointly with the Association if 
the Association shall so request, the goods, works, sites, plants, and construction 
included in the activities financed by the Grants, the operations thereof, and any 
relevant records and documents; 
(e) 
the right of [MOH?]  to obtain all information as [the MOH?]  or the 
Association shall reasonably request regarding the administration, operation, and 
financial conditions of the activities financed by the Grants; and 
(f) 
the right of [MOH?]  to suspend or terminate the right of the Districts 
or the Provinces to use the proceeds of the Credit for the Grants upon the failure by 
the Districts or the Provinces to perform any of its obligations related to under the 
Grants Agreement. 
SCHEDULE 5
Performance Indicators
The performance indicators for the Project shall include the following:
A.
Project Implementation Indicators
1.
The percentage of the proceeds of the Credit disbursed to finance Eligible Work 
Plans, compared to the allocations per District.
2.
The number of District Eligible Work Plans with substantive input from District 
Health Management Teams, Rural Health Facility Committees Teams and stakeholder 
forums.
3.
The number of stock-outs of condoms and HIV tests for blood safety, during the 
Project period.
4.
The percentage of health facilities with trained staff in IMCI in the three 
initial Districts.
5.
The percentage of health facilities that are equipped to provide obstetric and 
family planning services.
B.
Process Indicators
Page  19
1.
The percentage of District audits which are qualified.
2.
The proportion of patients satisfied with the kind of health services provided, 
especially related to HIV/AIDS and reproductive health.
3.
The percentage of user charges that is retained at the level of selected Nairobi 
area health facilities.
4.
The percentage of all blood units that have been screened for HIV before 
transfusion.
5.
Condom use by age, marital status, and type of partner (regular or other).
6.
Vaccination coverage statistics, per District.
7.
Antenatal coverage statistics, per District.
8.
The percentage of deliveries that take place in a health facility.
C.
Impact Indicators
1.
Prevalence rates of HIV infection, by age group and gender.
2.
Median age at first sexual intercourse.
3.
The percentage of births attended to by qualified health workers.
4.
Contraceptive prevalence rates.
5.
Tuberculosis treatment success rates.
6.
The under-five mortality rate.