OFFICIAL DOCUMENTS CREDIT NUMBER 5962-RW Financing Agreement (Additional Financing for the Transformation of Agriculture Sector Program Phase 3) between REPUBLIC OF RWANDA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated Yf A 5 ,2017 CREDIT NUMBER 5962-RW FINANCING AGREEMENT AGREEMENT dated \f WL - I , 2017, entered into between REPUBLIC OF RWANDA ("Recipient") and INTERNATIONAL DEVELOPMENT ASSOCIATION ("Association") for the purpose of providing additional financing for activities related to the Original Program (as defined in the Appendix to this Agreement). The Recipient and the Association hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) constitute an integral 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 General Conditions or in the Appendix to this Agreement. ARTICLE II - FINANCING 2.01. The Association agrees to extend to the Recipient, on the terms and conditions set forth or referred to in this Agreement, a credit in an amount equivalent to thirty four million three hundred thousand Special Drawing Rights (SDR 34,300,000) (variously, "Credit" and "Financing"), to assist in financing the program described in Schedule 1 to this Agreement ("Program"). 2.02. The Recipient may withdraw the proceeds of the Financing in accordance with Section IV of Schedule 2 to this Agreement. All withdrawals from the Financing Account shall be deposited by the Association into an account specified by the Recipient and acceptable to the Association. 2.03. The Maximum Commitment Charge Rate payable by the Recipient on the Unwithdrawn Financing Balance shall be one-half of one percent (1/2 of 1%) per annum. 2.04. The Service Charge payable by the Recipient on the Withdrawn Credit Balance shall be equal to three-fourths of one percent (3/4 of 1%) per annum. 2.05. The Payment Dates are February 15 and August 15 in each year. 2.06. The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 3 to this Agreement. 2.07. The Payment Currency is Dollar. -2- ARTICLE III - PROGRAM 3.01. The Recipient declares its commitment to the objective of the Program. To this end, the Recipient shall carry out the Program through the Ministry of Agriculture and Animal resources (MINAGRI) in accordance with the provisions of Article IV of the General Conditions. 3.02. Without limitation upon the provisions of Section 3.01 of this Agreement, and except as the Recipient and the Association shall otherwise agree, the Recipient shall ensure that the Program is carried out in accordance with the provisions of Schedule 2 to this Agreement. ARTICLE IV - REMEDIES OF THE ASSOCIATION 4.01. The Additional Event of Suspension consists of the following, namely that, the amendment letter to the MDTF Grant Agreement providing for the Additional MDTF Grant from the Rwanda Agriculture Program-For-Results Multi-Donor Trust Fund has failed to enter into effect by March 31, 2018. ARTICLE V - EFFECTIVENESS; TERMINATION 5.01. The Effectiveness Deadline is the date ninety (90) days after the date of this Agreement. 5.02. For purposes of Section 8.05 (b) of the General Conditions, the date on which the obligations of the Recipient under this Agreement (other than those providing for payment obligations) shall terminate is twenty (20) years after the date of this Agreement. ARTICLE VI - REPRESENTATIVE; ADDRESSES 6.01. The Recipient's Representative is its minister responsible for finance. 6.02. The Recipient's Address is: Ministry of Finance and Economic Planning P. 0. Box 158 Kigali Rwanda Facsimile: 250-25257-75-81 -3- 6.03. The Association's Address is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable: Telex: Facsimile: INDEVAS 248423 (MCI) 1-202-477-6391 Washington, D.C. AGREED at Kigali, Rwanda, as of the day and year first above written. REPUBLIC OF RWANDA, By ~orIla INTERNATIONAL DEVELOPMENT ASSOCIATION . 7 n/ By Authorized Representativ Name: ( rf Title: :_ _ _ _ -4- SCHEDULE 1 Program Description The objective of the Program is to increase and intensify the productivity of the Rwandan agricultural and livestock sectors and expand the development of value chains. The Program consists of the following, namely, the carrying out by the Recipient of a program of activities to implement the Transformation of Agriculture Sector Program 2013-2018 Phase 3 (PSTA 3) from July 1, 2013 to June 30, 2018. -5- SCHEDULE 2 Program Execution Section I. Implementation Arrangements A. Program Fiduciary, Environmental and Social Systems Without limitation upon the provisions of Article IV of the General Conditions, the Recipient shall carry out the Program, or cause the Program to be carried out, in accordance with financial management, procurement and environmental and social management systems acceptable to the Association ("Program Fiduciary, Environmental and Social Systems") which are designed to ensure that: 1. the Financing proceeds are used for their intended purposes, with due attention to the principles of economy, efficiency, effectiveness, transparency, and accountability; and 2. the actual and potential adverse environmental and social impacts of the Program are identified, avoided, minimized, or mitigated, as the case may be, all through an informed decision-making process. B. Anti-Corruption Without limitation upon the provisions of Part A of this Section, the Recipient shall carry out the Program, or cause the Program to be carried out, in accordance with the provisions of the Anti-Corruption Guidelines. C. Other Program Institutional and Implementation Arrangements 1. Program Institutions Without limitation on the generality of Part A of this Section I, the Recipient shall, maintain, throughout the implementation of the Program, the offices, units and departments within MINAGRI, RAB, NAEB, Districts and other relevant ministries, agencies and departments, and ensure that they are assigned with technical, social and environmental safeguards, fiduciary and other responsibilities for implementing the Program, all with powers, functions, institutional capacity and staffing acceptable to the Association and with resources adequate to fulfill their respective functions under the Program. -6- 2. Proram Action Plan (a) The Recipient shall carry out the Program in accordance with the Program Action Plan, and shall not amend, abrogate or suspend, or permit to be amended, abrogated or suspended any provision of the Program Action Plan without the prior written agreement of the Association. (b) Notwithstanding the foregoing, if any provision of any of said action plan is inconsistent with the provisions of this Agreement, the provisions of this Agreement shall prevail. 3. Annual Work Program The Recipient shall, for each Fiscal Year, develop an Annual Work Program detailing the Program activities to be carried in the said FY and furnish said plan to the Association not later than May 30 of each FY. 4. Environmental and Social Implementation Manual (a) The Recipient shall: (i) carry out the Program in accordance with the Environmental and Social Implementation Manual; and (ii) not amend, abrogate or suspend, or permit to be amended, abrogated or suspended any provision of the Environmental and Social Implementation Manual, without the prior written agreement of the Association. (b) Notwithstanding the foregoing, if any provision of said manuals is inconsistent with the provisions of this Agreement, the provisions of this Agreement shall prevail. Section H. Excluded Activities The Recipient shall ensure that the Program shall include no activities which: A. in the opinion of the Association, are likely to have significant adverse impacts that are sensitive, diverse, or unprecedented on the environment and/or affected people; or B. involve procurement of: (1) works, estimated to cost $50 million equivalent or more per contract; (2) goods, estimated to cost $30 million equivalent or more per contract; (3) information technology system and non-consulting services, estimated to cost $20 million equivalent or more per contract; or (4) consultants' services, estimated to cost $15 million equivalent or more per contract. -7- Section III. Pro2ram Monitoring, Reportin2 and Evaluation; Audits A. Program Reports The Recipient shall monitor and evaluate the progress of the Program and prepare Program Reports in accordance with the provisions of Section 4.08 of the General Conditions. Each Program Report shall cover the period of six (6) months, and shall be furnished to the Association not later than thirty (30) days after the end of the period covered by such report. B. Program Financial Audits Without limitation on the generality of Section I.A of this Schedule 2 and Section 4.09 of the General Conditions, the Recipient shall have the Financial Statements audited in accordance with the provisions of Section 4.09(b) of the General Conditions. Unless otherwise agreed by the Association, each audit of the Financial Statements shall cover the period of one fiscal year of the Recipient. The audited Financial Statements for each such period shall be furnished to the Association not later than nine (9) months after the end of such period. C. Verification of Program Results Without limitation on the provisions of Part A of this Section III, the Recipient shall, prior to each payment under the Program: 1. carry out in accordance with the Verification Protocol, an assessment to determine the extent to which the Disbursement Linked Results ("DLR") in respect of which payment is requested has been achieved; and 2. furnish said assessment to the Association for review. Section IV. Withdrawal of Financin2 Proceeds A. General 1. The Recipient may withdraw the proceeds of the Financing in accordance with the provisions of Article II of the General Conditions, this Section, and such additional instructions as the Association may specify from time to time by notice to the Recipient to finance the results ("Disbursement Linked Results" or "DLRs") achieved by the Recipient, as measured against specific indicators ("Disbursement Linked Indicators" or "DLIs"); all as set forth in the table in paragraph 2 of this Part A. 2. The following table specifies each category of withdrawal of the proceeds of the Financing (including the Disbursement Linked Indicators as applicable) -8- ("Category"), the Disbursement Linked Results for each Category (as applicable), and the allocation of the amounts of the Financing to each Category: Amount of Category (including Dsuemn t n isbursement DDisbursement Calculation Linked Indicator as Linked Result (as Allocated Formula applicable) applicable) (expressed in SDR) (1) DLI #1: Extent to DLR#1.l: The area 6,850,000 DLR#1.l: SDR3,430,000 of which land is of land protected which an amount of SDR 100.06 protected against soil against soil erosion is allocated for each additional erosion according to using radical terracing Ha. of land protected against soil agreed technical techniques has erosion using radical terracing standards (baseline is increased to 103,918 techniques. 69,640 Hectares Ha. ("Ha") for radical DLR #1.2: An amount of SDR standards and DLR #1.2: The area 3,430,000 of which an amount of 903,240 Ha for of land protected SDR 210.16 for each additional progressive against soil erosion Ha. of land protected against soil standards) using progressive erosion using progressive terracing techniques terracing techniques. has increased to 919,561 Ha. (2) DLI #2: Extent to DLR#2.1: The area of 3,430,000 DLR#2.1: SDR 1,720,000 of which land on land in hillsides which an amount of SDR 709.28 hillsides and irrigated according to is allocated for each additional marshlands is agreed technical Ha. of land on hillsides irrigated irrigated according to standards has using agreed techniques. agreed technical increased to 8,500 Ha. standards (baseline is DLR#2.2: SDR 1,720,000 of 6,075 Ha for hillsides DLR#2.2: The area of which an amount of SDR 292.57 and 30,121 Ha for land in marshlands is allocated for each additional marshlands). irrigated according to Ha. of land on marshands agreed technical irrigated using agreed techniques. standards has increased to 36,000 ___________Ha. (3) DLI #3: Extent to DLR#3. 1: The 5,140,000 DLR#3.: SDR 1,720,000 for which the average average crop yield per which an amount of SDR crop yield for cassava Ha. for cassava is 1,720,000 is allocated for each and coffee, and the increased to 19 MT. additional average MT of cassava average daily yields per Ha. of milk per cow DLR#3.2: The improves (baseline is average yield of DLR#3.2: SDR 1,720,000 for avg. 18 MT/Ha for coffee per tree per which an amount of SDR 8,600 is -9- cassava, avg. 2700 year has increased to allocated for each additional gram grams/tree/year for 2900 grams. of average yield of coffee per tree coffee and avg. 5.5 per year. liters/day/cow for DLR#3.3: The milk). average daily yields DLR#3.3: SDR 1,720,000 for of milk per day per which an amount of SDR cow has increased to 2,457,142.86 is allocated for each 6.2 liters. additional average liter of milk _______________perday er ow. (4) DLI #4: Extent to DLR#4.1: The 5,140,000 DLR#4. 1: SDR 2,570,000 for which the number of number of enhanced which an amount of SDR enhanced agricultural agricultural 233,636.36 is allocated for each innovation innovation additional agricultural innovation technologies are technologies technology developed and developed and developed and released to farmers. released to farmers, released to farmers and the number of has increased to 26. DLR#4.2: SDR 2,570,000 for farmers adopting which an amount of SDR 128,500 enhanced agricultural DLR#4.2: The is allocated for each additional innovation percentage of farmers percentage of farmers adopting technologies who have adopted enhanced agricultural innovation increases. (Baseline is enhanced agricultural technologies. 15 technologies innovation developed and 50% technologies has of technologies increased to 70%. adopted). (5) DLI #5: Extent to DLR#5: The 0 0 which the lending for percentage of lending agricultural sector for agricultural sector increases (baseline has increased. 7% of total lending) (6) DLI #6: Extent to DLI #6.4: The 3,430,000 DLR #6.4: SDR 3,430,000 for which the updated Recipient has rolled which an amount of SDR gender sensitive out the management 114,333.33 is for each District to management information system to which the management information system 30 Districts and the information system has been for the agricultural management rolled out and is producing sector that was information system is regular reports. developed and producing regular implemented is reports. functional in respective Districts. (7) DLI #7: Extent to DLR #7.4: The 6,850,000 DLR #7.4: SDR 6,850,000 which agricultural Recipient has aligned the approved -10- policy reforms are (a) seeds; implemented. (b) fertilizer; and (c) agriculture finance policies to the updated National Agricultural Policy and revised its implementation plans and all three policies are implemented. (8) DLI #8: Extent to DLR #8: The 3,460,000 DLR #8: SDR 3,460,000 which an updated Recipient has National Agricultural approved an updated Policy has been National Agricultural approved. Policy. Total 34,300,000 B. Withdrawal Conditions; Withdrawal Period 1. Notwithstanding the provisions of Part A of this Section, no withdrawal shall be made: (a) for purposes of Section 2.03 of the General Conditions (renumbered as such pursuant to paragraph 6 of Section II of the Appendix to this Agreement and relating to Program Expenditures), for any DLRs achieved prior to the date of this Agreement, except that withdrawals up to an aggregate amount not to exceed SDR 8,600,000 may be made for such DLRs achieved prior to this date but on or after September 23, 2016. (b) for any DLR until and unless the Recipient has furnished evidence satisfactory to the Association that said DLR has been achieved, including verification reports from the Verification Agent in accordance with procedures and arrangements and verification protocols satisfactory to the Association. 2. Notwithstanding the provisions of Part B.1(b) of this Section, the Recipient may withdraw an amount not to exceed SDR 8,600,000 as an advance; provided, however, that if the DLRs in the opinion of the Association, are not achieved (or only partially achieved) by the Closing Date, the Recipient shall refund such advance (or portion of such advance as determined by the Association in accordance with the Disbursement Calculation Formula for said Categories) to the Association promptly upon notice thereof by the Association. Except as otherwise agreed with the Recipient, the Association shall cancel the amount so refunded. Any further withdrawals requested as an advance under any Category shall be -11- permitted only on such terms and conditions as the Association shall specify by notice to the Recipient. 3. Notwithstanding the provisions of Part B. 1(b) of this Section, if any of the DLRs under any of the Categories has not been achieved by the date by which the said DLR is set to be achieved, the Association may, by notice to the Recipient: (a) authorize the withdrawal of such lesser amount of the unwithdrawn proceeds of the Financing then allocated to said Category which, in the opinion of the Association, corresponds to the extent of achievement of said DLR, said lesser amount to be calculated in accordance with the Disbursement Calculation Formula set out in column 3 of the table above; (b) reallocate all or a portion of the proceeds of the Financing then allocated to said DLR to any other DLR; and/or (c) cancel all or a portion of the proceeds of the Financing then allocated to said DLR. 4. The Closing Date is September 30, 2018. 5. Notwithstanding the foregoing provisions of this Section IV, if at any time after the Closing Date the Recipient has failed to provide evidence satisfactory to the Association that the Withdrawn Financing Balance does not exceed the total amount of Program Expenditures, the Recipient shall, promptly upon notice from the Association, refund to the Association such excess amount of the Withdrawn Financing Balance. The Association shall cancel the refunded amount of the Withdrawn Financing Balance. -12- SCHEDULE 3 Repayment Schedule Date Payment Due Principal Amount of the Credit repayable (expressed as a percentage)* On each February 15 and August 15, commencing August 15, 2023 to and including February 15, 2055 1.5625% * The percentages represent the percentage of the principal amount of the Credit to be repaid, except as the Association may otherwise specify pursuant to Section 3.03 (b) of the General Conditions. -13- APPENDIX Section I. Definitions 1. "Additional MDTF Grant" means, the funds to be provided by the Association, acting as administrator funds provided under the Rwanda agriculture program-for- results multi-donor trust fund, to assist in financing the Program. 2. "Annual Work Program" means the Recipient's plan of Program activities to be implemented in the Fiscal Year and budget and referenced to in Section I.C.3 of Schedule 2 to this Agreement, as the same may be revised from time to time. 3. "Anti-Corruption Guidelines" means the Association's "Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing," dated February 1, 2012, and revised July 10, 2015. 4. "Category" means a category set forth in the table in Section IV.A.2 of Schedule 2 to this Agreement. 5. "Disbursement Linked Indicator" or "DLI" means in respect of a given Category, the indicator related to said Category as set forth in the table in Section IV.A.2 of Schedule 2 to this Agreement. 6. "Disbursement Linked Result" or "DLR" means in respect of a given Category, the result under said Category as set forth in the table in Section IV.A.2 of Schedule 2 to this Agreement, on the basis of the achievement of which, the amount of the Financing allocated to said result may be withdrawn in accordance with the provisions of said Section IV. 7. "District" means an administrative area of the Recipient, established pursuant to the Recipient's Law No.29/2005 of December 31, 2005, representing a designated area and population within the territory of the Recipient. 8. "Environmental and Social Implementation Manual" means the environmental and social implementation manual acceptable to the Association dated June 2016, as the same may be amended in accordance with the provisions of said Section. 9. "Fiscal Year" or "FY" means the financial year of the Recipient commencing Julyl of every calendar year and ending June 30 of the subsequent year. 10. "General Conditions" means the "International Development Association General Conditions for Credits and Grants", dated July 31, 2010, with the modifications set forth in Section II of this Appendix. 11. "Hectare" or "Ha." means an area of land equivalent to 10,000 sq. meters. -14- 12. "MDTF Grant Agreement" means the agreement dated March 6, 2015, entered into between the Recipient and the Association, acting as administrator of the Rwanda agriculture program-for-results multi-donor trust fund, to be amended, pursuant to Section 4.01 of this Agreement, to provide for the Additional MDTF Grant. 13. "Metric Ton" or "MT" means 1,000 kilograms. 14. "MINAGRI" or "Ministry of Agriculture and Animal Resources" means the Recipient's ministry at the time responsible for agriculture and animal resources, or any successor thereto. 15. "National Agricultural Exports Development Board" or "NAEB" means the Recipient's agency established and operating under the Recipient's Law No 39/2010 of 25/11/210 and charged with the responsibility of developing and promoting exports in agricultural and livestock products, or its legal successor thereto. 16. "National Agricultural Policy" means the Recipient's updated national agriculture policy that responds to the changes facing agriculture and the food system nationally, regionally and globally. 17. "Original Financing Agreement" means the financing agreement for a Transformation of Agriculture Sector Program Phase 3 between the Recipient and the Association, dated November 11, 2014, as amended to the date of this Agreement (Credit No.5548-RW). 18. "Original Program" means the Program described in Schedule 1 to the Original Financing Agreement. 19. "Program Action Plan" means the Recipient's plan dated September 11, 2014, updated on December 21, 2016, and referred to in Section I.B.2 of Schedule 2 to this Agreement, as may be amended from time to time with the agreement of the Association. 20. "Program Fiduciary, Environmental and Social Systems" means the Recipient's systems for the Program referred to in Section L.A of Schedule 2 to this Agreement. 21. "Rwanda Agricultural Board" or "RAB" means the Recipient's agency established under the Recipient's Law No. 38/2010 of 25/11/2010 with the mandate of developing agriculture and animal husbandry through their reform, and using modem methods in crop and animal production, research, agricultural extension, education and training of farmers in new technologies, or its legal successor thereto. -15- 22. "Transformation of Agriculture Sector Program 2013-2018 Phase 3" means the national agricultural investment plan that supports transformation of the agriculture sector. 23. "Verification Agent" means the Recipient's Office of the Prime Minister or any of the independent/credible entities to be engaged by the Recipient for the purposes of certifying the achievement of the DLRs as referred to in Section IV.B.1 of Schedule II to this Agreement. 24. "Verification Protocol" means the Recipient's protocol entitled 'DLI Verification Protocol Table' dated September 11, 2014 and updated December 21, 2016 detailing the means by which the fulfillment of the Disbursement Linked Results will be verified under the Program. Section II. Modifications to the General Conditions The General Conditions are hereby modified as follows: 1. Wherever used throughout the General Conditions, the term "the Project" is modified to read "the Program", the term "the Project Agreement" is modified to read "the Program Agreement", the term "Project Implementing Entity" is modified to read "the Program Implementing Entity", the term "Project Report" is modified to read "Program Report"; and the term "Eligible Expenditures" is modified to read "Program Expenditures". 2. In the Table of Contents, the references to Sections, Section names and Section numbers are modified to reflect the modifications set forth in the paragraphs below. 3. Section 2.02, Special Commitment by the Association, is deleted in its entirety, and the subsequent Sections in Article II are renumbered accordingly. 4. In Section 2.02 (originally numbered as Section 2.03), the heading "Applications for Withdrawal or for Special Commitment" is replaced with "Applications for Withdrawal", and the phrase "or to request the Association to enter into a Special Commitment" is deleted. 5. The section originally numbered as Section 2.04, Designated Accounts, is deleted in its entirety, and the subsequent Sections in Article II are renumbered accordingly. 6. Paragraph (a) of Section 2.03 (originally numbered as Section 2.05), Eligible Expenditures (renamed "Program Expenditures" in accordance with paragraph I of this Section II), is modified to read: "(a) the payment is for the financing of the reasonable cost of expenditures required for the Program and to be financed out of -16- the proceeds of the Financing in accordance with the provisions of the Legal Agreements;". 7. The last sentence of Section 2.04 (originally numbered as Section 2.06), Financing Taxes, is modified to read: "To that end, if the Association at any time determines that the amount of any such Tax is excessive, or that such Tax is discriminatory or otherwise unreasonable, the Association may, by notice to the Recipient, exclude such amount or such Tax from the Program Expenditures to be financed out of the proceeds of the Financing, as required to ensure consistency with such policy of the Association." 8. Section 2.06 (originally numbered as Section 2.08), Reallocation, is modified to read: "Notwithstanding any allocation of an amount of the Financing to a withdrawal category under the Financing Agreement, the Association may, by notice to the Recipient, reallocate any other amount of the Financing to such category if the Association reasonably determines at any time that such reallocation is appropriate for the purposes of the Program." 9. Section 6.01, Cancellation by the Recipient, is modified to read: "The Recipient may, by notice to the Association, cancel any amount of the Unwithdrawn Financing Balance." 10. Paragraph (d) of Section 6.03, Cancellation by the Association, entitled "Misprocurement", is deleted, and subsequent paragraphs are relettered accordingly. 11. Section 6.04, Amounts Subject to Special Commitment not Affected by Cancellation or Suspension by the Association, is deleted in its entirety, and subsequent Sections in Article VI and references to such Sections are renumbered accordingly. 12. In the Appendix, Definitions, the definition of the term "Special Commitment" set forth in paragraph 50 is deleted in its entirety, and all subsequent paragraphs are renumbered accordingly.