OFFIC!AL DOCUMENTS 一ーー―ー■■国園□――ー園■■■■■■■■■■■■■■■■■■国―ー園国ー園■―■―ー ―■■―日田―■ー―□国■■■―■■■国――ー LOAN NUMBER 8958-KE Project Agreement (Afferdable Housing Finance Project) between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT and KENYA MORTAGE REFINANCE COMPANY ■■■■■国■■■■■■■■ ■国国国国国国国国国■国日■■国日日国国国国国国■■日国日日日日日日国日日日日日国日日国日日日国国日国国日日日国国日国国日日日国園日国国国国国園国国国日日日日日国日日日日日日日日日日国日日日日日園国国田国国日園国国日日日国日園ー LOAN NUMBER 8958-KE PROJECT AGREEMENT AGREEMENT between INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("Bank") and KENYA MORTGAGE REFINANCE COMPANY ("Project Implementing Entity" or "KMRC") ("Project Agreement") in connection with the Loan Agreement ("Loan Agreement") of the Signature Date between the Republic of Kenya ("Borrower") and the Bank, concerning Loan No. 8958-KE. The Bank and the Project Implementing Entity hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to the Loan Agreement) apply to and form part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Loan Agreement or the General Conditions. ARTICLE 11 - PROJECT 2.01. The Project Implementing Entity declares its commitment to the objectives of the Project. To this end, the Project Implementing Entity shall carry out Part l(b) the Project in accordance with the provisions of Article V of the General Conditions and the Schedule to this Agreement, and shall provide, promptly as needed, the funds, facilities, services and other resources required for its Respective Part of the Project. 2.02. The Project Implementing Entity shall at all times maintain valid licenses for its operation and be compliant with any conditions issued under each relevant license. ARTICLE III - TERMINATION 3.01. For purposes of Section 9.05 (c) of the General Conditions, the date on which the provisions of this Agreement shall terminate is 20 years after the Signature Date. ARTICLE IV - REPRESENTATIVE; ADDRESSES 4.01. The Project Implementing Entity's Representative is its Chief Executive Officer. -2- 4.02. For purposes of Section 10.01 of the General Conditions: (a) the Bank's address is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America; and (b) the Bank's Electronic Address is: Telex: Facsimile: 248423(MCI) or 1-202-477-6391 64145(MCI) 4.03. For purposes of Section 10.01 of the General Conditions: (a) the Project Implementing Entity's address is: Kenya Mortgage Refinance Company Treasury Building P.0 Box 30007-00100 Nairobi, Kenya; and (b) the Project Implementing Entity's Electronic Address is: Facsimile: 254 20 330426; 254 20 218475 -3- AGREED as of the later of the two dates written below. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Authoritd F presentative Name: Q ~' Title: Lc)k1 Date:__ KENYA MORTGAGE REFINANCE COMPANY By Auth ized R presentative Name: ____________ Title: 7LO Date: Z t Ct, 2.-01 -4- SCHEDULE Execution of KMRC's Respective Part of the Project Section I. Implementation Arran2ements A. Institutional Arrangements 1. KMRC shall ensure that a team within KMRC shall be maintained, throughout the period of implementation of the Project, with Project Implementation functions and resources satisfactory to the Bank, and with staff in adequate numbers and with qualifications, experience and terms of reference satisfactory to the Bank. 2. No later than three (3) months after the Effective Date, the KMRC shall appoint and, thereafter, maintain, throughout Project implementation, a risk manager and an internal auditor, with qualifications, experience and under terms of reference acceptable to the Bank. B. Operations Manuals 1. KMRC shall carry out its Respective Part of the Project in accordance with the Project Operations Manuals. 2. KMRC shall not assign, amend, suspend, repeal, abrogate, waive the Project Operations Manuals without the prior written approval of the Bank. 3. In the event of any conflict between the provisions of the Project Operations Manuals and this Agreement, the provisions of this Agreement shall prevail. C. Subsidiary Agreement 1. To facilitate the carrying out of Part 1(b) of the Project, the Borrower shall make the proceeds Loan of the allocated from time to time to Category I of the table set forth in Section III.A of Schedule 2 of the Loan Agreement, available to the Project Implementing Entity, under the Subsidiary Agreement between the Borrower and KMRC under terms and conditions satisfactory to the Bank, which shall include, inter alia, the following: (a) the principal amount of the Loan made available under the Subsidiary Agreement ("Subsidiary Loan") shall be: (i) denominated and repayable in Kenya Shillings; (ii) (b) charged interest on the principal amount withdrawn and outstanding from time to time at a rate not less than the rate determined under section 2.05 of the Loan Agreement; and (iii) under financial terms and conditions, including repayment and grace periods, acceptable to the Bank; -5- (b) the obligation of the Project Implementing Entity to carry out Part 1(b) of the Project with due diligence and efficiency, in conformity with appropriate administrative, financial and technical practices and in accordance with the Project Operations Manuals, and provide, or cause to be provided, promptly as needed, the facilities, services and other resources required for the Project; (c) the obligation of the Project Implementing Entity to comply with record keeping, auditing and reporting requirements set forth in the Loan Agreement (operations, resources and expenditure) for Part 1(b) of the Project; (e) the obligation of the Project Implementing Entity, at the request of the Borrower or the Bank, to exchange views with the Borrower and the Bank with regard to the progress of the Project and the performance of its obligations under the Subsidiary Agreement; (f) the obligation of the Project Implementing Entity to promptly inform the Borrower and the Bank of any condition which interferes or threatens to interfere with the progress of Part 1(b) of the Project, or the performance of its obligations under the Subsidiary Agreement; and (g) the Project Implementing Entity shall protect its interests and those of the Borrower and the Bank, including Borrower's right to suspend or terminate the right of the Project Implementing Entity to use the proceeds of the Subsidiary Loan, or obtain a refund of all or any part of the amount of the Subsidiary Loan then withdrawn, upon the Project Implementing Entity's material failure to perform any of its obligations under the Subsidiary Agreement. 2. The Project Implementing Entity shall exercise its rights under the Subsidiary Agreement in such manner as to protect its own interests and the interests of the Borrower and the Bank in order to accomplish the purposes of the Loan. The Project Implementing Entity shall not assign, amend, abrogate or waive the Subsidiary Agreement without the prior written approval of the Bank. 3. In the event of any conflict between the provisions of the Subsidiary Agreement and the provisions of this Agreement, the provisions of this Agreement shall prevail. -6- C. Environmental and Social Risk Management for Part 1(b) of the Project 1. The Project Implementing Entity shall carry out the Project in accordance with the relevant aspects of the World Bank Performance Standard 2 on Labor and Working Conditions. 2. For purposes of managing the environmental and social risks and impacts associated with the implementation of Part 1(b) of the Project, the Project Implementing Entity shall ensure that: (a) Loan proceeds are provided only to Eligible Participating Financial Institutions for carrying out Mortgage Refinancing that meet the criteria detailed in the KMRC Operations Manual and that are not utilized for refinancing Eligible Mortgage Loans that support Excluded Activities as set out in Schedule 5 of the Loan Agreement; (b) all Eligible Mortgage Loans refinanced under Part 1(b) of the Project by Eligible Participating Financial Institutions meet the Applicable Environmental and Social Requirements through adequate implementation of the ESMS; (c) all Eligible Participating Financial Institutions fulfill their respective obligations with regard to carrying out environmental and social due diligence and monitoring of Eligible Mortgage Loans, in accordance with the ESMS; and (d) all Eligible Participating Financial Institutions manage the working conditions of their workforce in accordance with relevant aspects of the World Bank Performance Standard 2 on Labor and Working Conditions. 3. For purposes of carrying out Part 1(b) of the Project, the Project Implementing Entity shall ensure that Eligible Participating Financial Institutions notify it (which in turn shall promptly notify the Bank), of any social, labor, health and safety, security or environmental incident, accident or circumstance which may have any material impact on the compliance of the Applicable Environmental and Social Requirements. 4. The Project Implementing Entity shall regularly collect and compile, and submit to the Bank, as part of the Project Reports, information on the status of compliance with environmental and social risk management requirements set forth in this Agreement, providing details on measures taken, conditions, if any, which interfere or threaten to interfere with the implementation of the Applicable Environmental and Social Requirements and the ESMS; and remedial measures taken or required to be taken to address such conditions. The Project Implementing -7- Entity shall furnish to the Bank a consolidated annual environmental and social performance report within forty-five (45) days after the end of each calendar year. 5. Prior to the carrying out of any activities under Part 1(b) of the Project, the Project Implementing Entity shall: (i) adopt and publish an Environmental and Social Policy Risk Management Policy acceptable to the Bank; and (ii) establish, and thereafter maintain through the period of implementation of the Project, an easily accessible grievance redress mechanism acceptable to the Bank, to address feedback and grievances relating to the Project. 6. Prior to the carrying out of any activities under Part 1(b) of the Project, the Project Implementing Entity shall submit an acceptable capacity building plan on Applicable Environmental and Social Requirements for its staff and Participating Financial Institutions, and to designate an environmental and social coordinator. D. Participating Agreements 1. In order to implement Part 1(b) of the Project, the Project Implementing Entity shall: (a) enter into Participating Agreements with Eligible Participating Financial Institutions ("Participating Agreements"), as the case may be, on terms and conditions acceptable to the Bank, which shall include terms and conditions set forth in Schedule 4 to the Loan Agreement to make the proceeds of the Subsidiary Loan available to said Participating Banks or Non-Bank Financial Institution, as the case may be; and (b) except as the Bank shall otherwise agree, not assign, amend, abrogate or waive any such Participating Agreements. 2. The Project Implementing Entity shall exercise its rights under the Participating Agreements in such manner as to protect its interests and the interests of the Borrower and the Bank in order to accomplish the purposes of the Loan. The Project Implementing Entity shall not assign, amend, abrogate or waive the Participating Agreements without the prior written approval of the Bank. Section II. Project Monitoring, Reporting and Evaluation 1. The Project Implementing Entity shall monitor and evaluate the progress of its Respective Part of the Project and prepare Project Reports for its Respective Part of the Project in accordance with the provisions of Section 5.08 (b) of the General Conditions and on the basis of indicators acceptable to the Bank. Each such Project Report shall cover the period of one calendar semester, and shall be furnished to the Borrower not later than one (1) month after the end of the period covered by such report for incorporation and forwarding by the Borrower to the Bank of the overall Project Report. 2. The Project Implementing Entity shall provide to the Borrower not later than four (4) months, for incorporation in the Report referred to in Section 5.08 (c) of the -8- General Conditions all such information as the Borrower or the Bank shall reasonably request for the purposes of that Section.