22-Jul-2020
                                                                   Date: ______________________

Honorable Dr. Bwalya Ng’andu
Minister of Finance
Ministry of Finance
Lusaka
Republic of Zambia

                   Re: Republic of Zambia: Lusaka Sanitation Project
                       Credit Number 5646-ZM
                       Amendment to the Financing Agreement

Honorable Minister:

        We refer to the Financing Agreement entered into between the Republic of Zambia
(“Recipient”) and the International Development Association (“Association”) dated March 17, 2016
(“Agreement”) for the above-mentioned Project. We also refer to your letters dated May 22, 2019
and June 26, 2019, respectively, requesting a restructuring of the Project. We are pleased to inform
you that the Association concurs with your request and hereby amends the Financing Agreement
as follows:

1.      Schedule 1 to the Financing Agreement is amended as follows:

        (a)      Part A.1 of Schedule 1 is amended to read as follows:

                “Implementing a range of investments to upgrade and expand sewerage systems in
                the Ngwerere and Manchinchi sewersheds such investments to include
                construction and upgrading of sewers, sewer networks, collectors, pumping
                stations and interceptors, connecting customers to sewerage networks, and the
                carrying out of associated repairs.”

        (b)     Part B.3, Part B.4 and Part C.3 of Schedule 1 are deleted in their entirety.

2.      Schedule 2 to the Financing Agreement is amended to read as follows:

        (a)     Section I.A.3(b) of Schedule 2 is deleted in its entirety. Section I.A.3 shall
                therefore read as follows:

                “The Recipient shall maintain throughout the implementation of the Project, the
                Project Implementing Entity with institutional structure, staffing, functions and
                powers satisfactory to the Association and with resources adequate to carry out its
                responsibilities under the Project.”

        (b)     Section I.B.5 of Schedule 2 is amended to read as follows:

                “To facilitate the carrying out of a comprehensive monitoring of the Project
                activities under Part C.8 of the Project, the Recipient shall cause the Project
                Implementing Entity to, not later than September 30, 2020, enter into a
                memorandum of understanding with each of LCC and MoH, detailing mutual roles
                                                 -2-

                and responsibilities, resource commitments and staff allocations and other terms
                and conditions as may be approved by the Association (“Memorandum of
                Understanding”).”

        (c)     The table in Section IV.A.2 of Schedule 2 is deleted and replaced with the one set
                out in the Annex to this letter.

        (d)     Section IV.B.2 of Schedule 2 is amended to read as follows:

                “The Closing Date is October 31, 2022.”

3.      Section V of Schedule 2 is inserted to read as follows:

        “Section V.      Other Undertakings

        The Recipient shall promptly take all necessary measures (including, without limitation,
        financial restructuring, promotion of private sector participation, promotion of efficiency,
        adjustments of the structure or levels of tariffs, and provision of financial assistance) to
        enable the Project Implementing Entity to meet the requirements set forth in Section IV of
        the Schedule to the Project Agreement.”

4.      The Appendix (Annex) to the Financing Agreement is amended to read as follows:

        (a)     Definitions No. 6, 7, 15, 21 and 22 of the Appendix are deleted in their entirety.

        (b)     The following definition is inserted to the Appendix to read as follows:

                “Cash Compensation” means cash compensation and other assistance paid in cash
                for economic displacement related to the implementation of a Resettlement Action
                Plan or RAP under the Project.”

        All other provisions of the Agreements, except as herein amended, shall remain in full
force and effect.

         Please indicate your agreement with the foregoing amendment by signing and dating this
letter and returning it to us, while keeping one original for your records. This amendment will become
effective as of the date of this letter.

                                   Very truly yours,
                      INTERNATIONAL DEVELOPMENT ASSOCIATION




                                   ________________________
                                       Sahr John Kpundeh
                                   Country Manager for Zambia
                                          Africa Region
                                   -3-


AGREED:
REPUBLIC OF ZAMBIA




By: ____________________________


Name: Dr. Bwalya Ng’andu

Title: Minister of Finance

          10-Aug-2020
Date: ______________________
                                       -4-

                                                                           ANNEX


                                                                Percentage of
                                          Amount of the       Expenditures to be
                                       Financing Allocated        Financed
              Category                 (expressed in SDR)    (Exclusive of Taxes)

(1) Goods, works, non-consulting             31,740,882.46          100%
    services, consultants’ services,
    under Part A of the Project

(2) Goods, works, non-consulting                 8,542,258          100%
    services, consultants’ services,
    under Part B of the Project

(3) Goods, works, non-consulting                 5,480,257         100 %
    services, consultants’ services,
    Training and Operating Costs
    under Part C of the Project

(4) Refund of Preparation Advance             1,266,731.54    Amount payable
                                                             pursuant to Section
                                                             2.07 of the General
                                                                 Conditions

(5) Cash Compensation                           169,871.00          100%

TOTAL AMOUNT                                    47,200,000