OFFICIAL @9:~~~J1;1~ July 12, 2018 Honourable Kenneth Ofori-Atta Minister Ministry of Finance Accra Honourable Minister: Republic of Ghana: Advance Agreement for Preparation of Proposed Financial Sector Development Project Preparation Advance No. V2190-GH In response to the request for financial assistance made on behalf of Republic of Ghana ("Recipient"), I am pleased to inform you that the International Development Association ("World Bank") proposes to extend to the Recipient an advance out of the World Bank's Project Preparation Facility in an amount not to exceed two million Dollars ($2,000,000) ("Advance") on the terms and conditions set forth or referred to in this letter agreement ("Agreement"), which includes the attached Annex, to assist in financing the activities described in the Annex ("Activities"). The objective of the Activities is to facilitate the preparation of a proposed project designed to strengthen the financial sector and to facilitate access to finance for individuals, in support of which the Recipient has requested the World Bank's financial assistance. The Recipient represents, by confirming its agreement below, that: (a) it understands that the provision of the Advance does not constitute or imply any commitment on the part ofIBRD or IDA to assist in financing the Project; and (b) it is authorized to enter into this Agreement and to carry out the Activities, repay the Advance and perform its other obligations under this Agreement, all in accordance with the provisions of this Agreement. Please confirm the Recipient's agreement to the foregoing by having an authorized official of the Recipient sign and date the enclosed copy of this Agreement, and returning it to the World Bank. Upon receipt by the World Bank of this countersigned copy, this Agreement shall become effective as of the date of the countersignature. Very truly yours, INTERNATIONAL DEVELOPMENT ASSOCIATION Byl~ Henryera1i Country Director for Ghana Africa Region -2- July 12, 2018 ~L.- .Abt{ Q,O~t+E N Title D \:: P L,f -, j ./Y\ IJ-4 1 ..S \c!. I< Date: July 17, 2018 Enclosures: (I) "Standard Conditions for Advances Made by the World Bank under its Project Preparation Facility", dated July 31, 2010; and (2) Disbursement Letter for the Advance of the same date as this Agreement, together with "World Bank Disbursement Guidelines for Investment Project Financing", dated February 2017. Honourable Kenneth Ofori-Atta -3- July 12, 2018 PPA No.Vitqo ANNEX Article I Standard Conditions; Definitions 1.01. Standard Conditions. The "Standard Conditions for Advances Made by the World Bank under its Project Preparation Facility" dated July 31, 2010 ("Standard Conditions"), constitute an integral part of this Agreement. 1.02. Definitions. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Standard Conditions or in this Agreement. Article II Execution of the Activities 2.01. Description of the Activities. The Activities for which the Advance is provided consist of the following parts: (a) designing technical specifications and preparing terms of reference (ToR) and requests for proposals (RFP) for the acquisition of a management information system for the Credit Union Association's core and associated Information Technology (IT) infrastructure, and supervisory application; (b) designing a Financial Data Center; (c) carrying out preparatory activities for the establishment of a domestic credit rating agency, including the development of a detailed business plan, and preparing specification for applicable IT systems.; (d) designing technical specifications and developing ToRs and an RFP for upgrading of the ARB Apex Bank's core banking system, e-banking platform, and associated IT infrastructure; (e) designing banking business model including identification and specification of a suitable back-end ICT system for delivering services via agents, and mapping of potential agent locations throughout the country; (t) Recruitment of Agent Banking Consultant (g) carrying out a financial inclusion demand side survey; (h) carrying out a geospatial mapping of access points, to inform the identification of prospective agents; (i) recruitment of a Project Coordinator and a Procurement Specialist; G) designing a monitoring and evaluation system for the project; and (k) financing of Operating Costs. 2.02. Execution of the Activities Generally. The Recipient declares its commitment to the objectives of the Activities. To this end, the Recipient shall carry out the Activities through the Ministry of Finance in accordance with the provisions of: (a) Article II of the Standard Conditions; (b) this Article II; and (c) the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006, and revised in January 2011 and as of July 1, 2016. 2.03. Institutional and Other Arrangements. The Recipient shall: (a) not later than October 30, 2018, recruit and thereafter maintain throughout the implementation of the Project, a Procurement Honourable Kenneth Ofori-Atta -4- July 12, 2018 Specialist and a Project Coordinator with experience and under terms of reference satisfactory to the Association; and (b) ensure that all consultancies related to technical assistance, design and capacity building under the Project, the application of whose results could have environmental, social and health and safety implications, shall only be undertaken pursuant to terms of reference reviewed and found satisfactory by the Association; and such terms of reference shall require the technical assistance, design and capacity building activities to take into account the requirements of the applicable Association Safeguards Policies and EHS Guidelines. 2.04. Monitoring, Reporting and Evaluation of the Activities. The Recipient shall monitor and evaluate the progress of the Activities in accordance with the provisions of Section 2.08 of the Standard Conditions. 2.05. Financial Management. (a) The Recipient shall ensure that a financial management system is maintained in accordance with the provisions of Section 2.09 of the Standard Conditions. (b) The Recipient shall ensure that interim un-audited financial reports for the Activities are prepared and furnished to the World Bank not later than one month after the end of each calendar quarter, covering the quarter, in form and substance satisfactory to the World Bank. (c) The Recipient shall have its Financial Statements audited in accordance with the provisions of Sections 2.09 (b) of the Standard Conditions. (i) If, on or before the Refinancing Date, a Refinancing Agreement has been executed by all of its parties, the Recipient shall have the Financial Statements included in the first audit of financial statements required under the Refinancing Agreement. (ii) If, by the Refinancing Date, no Refinancing Agreement has been executed by all of its parties, such audit of the Financial Statements shall cover the period of the Advance, commencing with the fiscal year in which the first withdrawal under the Advance was made. The audited Financial Statements for such period shall be furnished to the World Bank not later than six months after the end of the Recipient's fiscal year in which the Refinancing Date occurs. (iii) Notwithstanding the provisions of paragraphs (i) and (ii) of this Section, the World Bank may request an audit of the Financial Statements prior to the Refinancing Date, covering such period as is indicated in its request. The audited Financial Statements for such period shall be furnished to the World Bank not later than six months after the end of such period. 2.06. Procurement All goods non-consulting services and consulting services required for the Activities and to be financed out of the proceeds of the Advance shall be procured in accordance with the requirements set forth or referred to in the "World Bank Procurement Regulations for IPF Borrowers" dated July 2016, revised November 2017 ("Procurement Regulations") and the provisions of the Recipient's procurement plan for the Activities dated May 24, 2018 ("Procurement Plan") provided for under Section IV of the Procurement Regulations, as the same may be updated from time to time in agreement with the World Bank. Honourable Kenneth Ofori-Atta -5- July 12, 2018 Article III Withdrawal of the Advance 3.01. Eligible Expenditures. The Recipient may withdraw the proceeds of the Advance in accordance with the provisions of: (a) Article III of the Standard Conditions; (b) this Section; and (c) such additional instructions as the World Bank may specify by notice to the Recipient (including the "Disbursement Guidelines for Investment Project Financing" dated February 2017, as revised from time to time by the World Bank and as made applicable to this Agreement pursuant to such instructions), to finance I 00% of Eligible Expenditures consisting of goods, services, training and operating costs inclusive of Taxes. Category Amount of the Advance Percentage of Allocated Expenditures to (expressed in Dollars) be Financed Inclusive of Taxes ( 1) Goods, non-consulting services, 2,000,000 consulting services, Training and Operating Costs under the Activities 100% TOTAL AMOUNT 2,000,000 3.02. Withdrawal Conditions. Notwithstanding the prov1s10ns of Section 3.01 of this Agreement, no withdrawal shall be made prior to the date of countersignature of this Agreement by the Recipient. 3.03. Refinancing Date. The Refinancing Date is January 31, 2019. Article IV Terms of the Advance 4.01. Service Charge. The Recipient shall pay a service charge on the Withdrawn Advance Balance at the rate of three-fourths of one percent (3/4 of 1%) per annum. The service charge shall accrue from the respective dates on which amounts of the Advance are withdrawn and shall be paid in arrears in accordance with the provisions of Section 4.02 of this Agreement. Service charges shall be computed on the basis of a 360-day year of twelve 30-day months. 4.02. Repayment. The Withdrawn Advance Balance shall be repaid by the Recipient to the World Bank (together with any service charges accrued thereon) in accordance with the provisions of Article IV of the Standard Conditions and the following provisions: (a) Refinancing under the Refinancing Agreement: If, on or before the Refinancing Date, a Refinancing Agreement has been executed by all of its parties, then the full amount of the Withdrawn Advance Balance shall be repaid to the World Bank (together with any service charges accrued on the Advance to the date ofrepayment) as soon as the Refinancing Agreement becomes effective, by means of a withdrawal by the World Bank ofan amount of the Refinancing Proceeds Honourable Kenneth Ofori-Atta -6- July 12, 2018 equivalent to the Withdrawn Advance Balance plus such service charges, in accordance with the provisions of the Refinancing Agreement. (b) Repayment in the absence of a Refinancing Agreement: If, on or before the Refinancing Date, no Refinancing Agreement has been executed by all of its parties, or if, by such date or at any time thereafter, it has been so executed but terminates without becoming effective, then: (i) if the amount of the Withdrawn Advance Balance does not exceed $50,000, it shall be repaid by the Recipient to the World Bank (together with service charges accrued on the Withdrawn Advance Balance to the date of repayment) on such date as the World Bank shall specify in a notice to the Recipient, which shall in no event be earlier than 60 days following the date of dispatch of such notice; and (ii) if the amount of the Withdrawn Advance Balance exceeds $50,000, it (together with service charges accrued on the Withdrawn Advance Balance to the Notice Date) (the "Aggregate Balance") shall be paid by the Recipient to the World Bank in ten approximately equal semiannual installments, in the amounts and on the dates ("Payment Dates") which the World Bank shall specify in a notice to the Recipient. In no event shall the first Payment Date be set earlier than 60 days following the date ("Notice Date") of dispatch of such notice. The Recipient shall pay a service charge on the Aggregate Balance at the rate of three-fourths of one percent (3/4 of I%) per annum, payable in arrears on each Payment Date. The service charge shall be computed on the basis of a 360-day year of twelve 30-day months. Article V Recipient's Representative; Addresses 6.01. Recipient's Representative. The Recipient's Representative referred to in Section 9.02 of the Standard Conditions is the Minister for Finance. 6.02. Recipient's Address. The Recipient's Address referred to in Section 9.01 of the Standard Conditions is: Ministry of Finance P.O. Box MB40 Accra, Republic of Ghana Telephone: 233-30-2665310 . ' Honourable Kenneth Ofori-Atta -7- July 12, 2018 6.03. World Bank's Address. The World Bank's Address referred to in Section 9.01 of the Standard Conditions is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Telex: Facsimile: 248423 (MCI) or (1 )-202-477-6391 64145 (MCI) Honourable Kenneth Ofori-Atta -8- July 12, 2018 APPENDIX Section I. Definitions 1. "Anti-Corruption Guidelines" means the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011 and as of July 1, 2016. 2. "ARB Apex Bank" means an entity responsible for overseeing activities of all rural banks established and operating pursuant to the Companies Act 1963 (Act 179) or its successor. 3. "Association Safeguards Policies" means the Association's operational policies and procedures, set forth in the Association's operational manual and identified as OP/BP 4.01, 4.04, 4.09, 4.10, 4.11, 4.12, 4.36, 4.37, 7.50 and 7.60, as said manual is published under www.WorldBank.org/opmanual. 4. "Credit Union Association" means the recipient's co-operative body that regulates and supervises credit unions on behalf of the Bank of Ghana. 5. "EHS Guidelines" means the World Bank Group Environmental, Health and Safety Guidelines published on www.ifc.org/ehsguidelines, as said guidelines are updated from time to time. 6. "Financial Data Centre" means the Recipient's data repository consisting of data of all sectors of the financial and non-financial industry. 7. "IT" means Information Technology. 8. "MIS" means Management Information System. 9. "Operating Costs" means the incremental operating expenditures incurred by the Recipient on account of the project preparation, management, monitoring and evaluation, including salaries of contractual staff, office maintenance and office repairs, as well as expenditures for materials and supplies, communication costs, support for information systems, translation costs, bank charges and travel and other reasonable expenditures directly associated with implementation of the Project activities, all based on an annual budget acceptable to the Association, but excluding salaries of officials of the Recipient's civil service and such other expenditures as may be agreed upon by the Association. 10. "Procurement Plan" means the Recipient's procurement plan for the Project, and provided for under Section IV of the Procurement Regulations, as the same may be updated from time to time in agreement with the Association. 11. "Procurement Regulations" means the "World Bank Procurement Regulations for Borrowers under Investment Project Financing", dated July 1, 2016. 12. "Training" means all expenditures related to training under the Activities such as training workshops, seminars, study tours and local training and including fees, travel costs and per-diem allowances for the trainers and trainees, cost of training materials, space and equipment rental, and other related expenditures approved by the Association.