Page 1 CONFORMED COPY LOAN NUMBER 3063 ZIM Loan Agreement (Agricultural Credit and Export Promotion Project) between ZIMBABWE and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated January 31, 1990 LOAN NUMBER 3063 ZIM LOAN AGREEMENT AGREEMENT, dated January 31, 1990, between ZIMBABWE (the Borrower) and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (the Bank). 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 Bank to assist in the financing of the Project; (B) the Borrower intends to obtain from the International Fund for Agricultural Development (IFAD) a loan (the IFAD Loan) in an amount equivalent to fifteen million dollars ($15,000,000) to assist in financing part of the Project on the terms and conditions set forth in an agreement (the IFAD Loan Agreement) to be entered into between the Borrower and IFAD; (C) the Borrower intends to obtain from the Arab Bank for Economic Development in Africa (BADEA) a loan (the BADEA Loan) in an amount equivalent to nine million seven hundred fifty thousand dollars ($9,750,000) to assist in financing part of the Project on the terms and conditions set forth in an agreement (the BADEA Loan Agreement) to be entered into between the Borrower and Page 2 BADEA; (D) Part of the Project will be carried out by the Agricultural Finance Corporation (AFC) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to AFC part of the proceeds of the Loan as provided in this Agreement; and WHEREAS the Bank has agreed on the basis, inter alia, of the foregoing to extend the Loan to the Borrower upon the terms and conditions set forth in this Agreement and in the Project Agreement of even date herewith between the Bank and AFC; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The "General Conditions Applicable to Loan and Guarantee Agreements" of the Bank, dated January 1, 1985, with the last sentence of Section 3.02 deleted (the General Conditions) constitute an integral part of this Agreement. 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) "AFC Project Agreement" means the agreement between the Bank and AFC of even date herewith, as the same may be amended from time to time, and such term includes all schedules and agreements supplemental to the AFC Project Agreement; (b) "AFC Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and AFC pursuant to Section 3.01 (c) of this Agreement, as the same may be amended from time to time, and such term includes all schedules to the AFC Subsidiary Loan Agreement; (c) "CMB" means the Borrower's Cotton Marketing Board; (d) "CMB Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and CMB pursuant to Section 3.01 (c) of this Agreement, as such agreement may be amended from time to time; and such term includes all schedules to the CMB Subsidiary Loan Agreement; (e) "Sub-Loan" means a credit made or proposed to be made by AFC to a Sub-borrower (as such term is hereinafter defined) to finance any of the items specified or referred to in Part A or C of the Project out of the proceeds of the Loan; (f) "Sub-borrower" means a farmer or a group of farmers or a farming cooperative to whom or to which AFC has made or proposes to make a Sub-Loan; (g) "Special Accounts" means the accounts referred to in Section 2.02 (b) of this Agreement; (h) "MLARR" means the Borrower's Ministry of Lands, Agriculture and Rural Resettlement; Page 3 (i) "R & SS" means the Borrower's Research and Specialized Services under MLARR; (j) "Smallholder Farmer" means a farmer operating in the Borrower's Communal Areas and Resettlement Schemes; and (k) "AFC Act" means the Agricultural Finance Corporation Act, Chapter 101 of the Laws of the Borrower, as amended to the date of this Agreement. ARTICLE II The Loan Section 2.01. The Bank agrees to lend to the Borrower, on the terms and conditions set forth or referred to in the Loan Agreement, various currencies that shall have an aggregate value equivalent to the amount of thirty-six million three hundred thousand dollars ($36,300,000), being the sum of withdrawals of the proceeds of the Loan, with each withdrawal valued by the Bank as of the date of such withdrawal. Section 2.02. (a) The amount of the Loan may be withdrawn from the Loan Account in accordance with the provisions of Schedule I to this Agreement for expenditures made (or, if the Bank shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Loan. (b) The Borrower shall, for the purposes of the Project, open and maintain in dollars three special accounts (Special Accounts A, B and C respectively) in the Reserve Bank of Zimbabwe on terms and conditions satisfactory to the Bank. Deposits into, and payments out of, the Special Accounts shall be made in accordance with the provisions of Schedules 4, 5 and 6 respectively to this Agreement. Section 2.03. The Closing Date shall be December 31, 1995 or such later date as the Bank shall establish. The Bank shall promptly notify the Borrower of such later date. Section 2.04. The Borrower shall pay to the Bank a commitment charge at the rate of three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Loan not withdrawn from time to time. Section 2.05. (a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Interest Period equal to the Cost of Qualified Borrowings determined in respect of the preceding Semester, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rate applicable during such Interest Period. (b) As soon as practicable after the end of each Semester, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Semester. (c) For the purposes of this Section: (i) "Interest Period" means a six-month Page 4 period ending on the date immediately preceding each date specified in Section 2.06 of this Agreement, beginning with the Interest Period in which this Agreement is signed. (ii) "Cost of Qualified Borrowings" means the cost, as reasonably determined by the Bank and expressed as a percentage per annum, of the outstanding borrowings of the Bank drawn down after June 30, 1982, excluding such borrowings or portions thereof as the Bank has allocated to fund: (A) the Bank's investments; and (B) loans which may be made by the Bank after July 1, 1989 bearing interest rates determined otherwise than as provided in paragraph (a) of this Section. (iii) "Semester" means the first six months or the second six months of a calendar year. (d) On such date as the Bank may specify by no less than six months' notice to the Borrower, paragraphs (a), (b) and (c) (iii) of this Section shall be amended to read as follows: "(a) The Borrower shall pay interest on the principal amount of the Loan withdrawn and outstanding from time to time, at a rate for each Quarter equal to the Cost of Qualified Borrowings determined in respect of the preceding Quarter, plus one-half of one percent (1/2 of 1%). On each of the dates specified in Section 2.06 of this Agreement, the Borrower shall pay interest accrued on the principal amount outstanding during the preceding Interest Period, calculated at the rates applicable during such Interest Period." "(b) As soon as practicable after the end of each Quarter, the Bank shall notify the Borrower of the Cost of Qualified Borrowings determined in respect of such Quarter." "(c) (iii) 'Quarter' means a three-month period commencing on January 1, April 1, July 1 or October 1 in a calendar year." Section 2.06. Interest and other charges shall be payable semiannually on January 15 and July 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Loan in accordance with the amortization schedule set forth in Schedule 3 to this Agreement. 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 Parts D, E and F of the Project through CMB and R & SS under the supervision of MLARR, with due diligence and efficiency and in conformity with appropriate administrative, financial, engineering and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. Page 5 (b) Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall cause AFC to perform in accordance with the provisions of the AFC Project Agreement all the obligations of AFC therein set forth, shall take or cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable AFC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) Without any limitation or restriction upon any of its other obligations under the Loan Agreement, the Borrower shall: (i) relend part of the proceeds of the Loan to AFC and CMB, for the respective parts for which they are responsible for executing, under subsidiary loan agreements to be entered into between the Borrower and AFC and CMB respectively and, under terms and conditions which shall have been approved by the Bank which shall include, inter alia, interest at a rate of 9.75% per annum, repayment of principal in 15 years including 3 years of grace and the foreign exchange risk to be borne by the Borrower; (ii) exercise its rights under each Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan and, except as the Bank shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive each such Subsidiary Loan Agreement or any provision thereof; and (iii) adopt appropriate procedures to ensure the allocation of foreign exchange required to finance imported items under Sub-loans made by AFC to Sub-borrowers. Section 3.02. Except as the Bank shall otherwise agree, procurement of the goods, works and consultants' services required for Parts D, E and F of the Project and to be financed out of the proceeds of the Loan shall be governed by the provisions of Schedule 7 to this Agreement, and procurement of goods, works and consultants' services for Parts A, B and C of the Project shall be governed by the provisions set forth in Schedule 3 to the AFC Project Agreement. Section 3.03. The Bank and the Borrower hereby agree that the obligations set forth in Sections 9.04, 9.05, 9.06, 9.07, 9.08 and 9.09 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports, maintenance and land acquisition, respectively) in respect of Parts A, B and C of the Project shall be carried out by AFC pursuant to Section 2.04 of the AFC Project Agreement. Section 3.04. (a) The Borrower shall take all necessary measures to complete the studies referred to in Parts F.1 and F.2 respectively of the Project by no later than December 31, 1990 and June 30, 1990 respectively and shall furnish to the Bank the reports of such studies for its review and comments. (b) Following review and comment by the Bank, the Page 6 Borrower shall implement appropriate recommendations of the studies paying due regard to any comments which shall have been made by the Bank. Section 3.05. Without any limitation or restriction upon its obligations under Section 3.01 of this Agreement, the Borrower shall furnish to the Bank for its review and comment by no later than March 31, 1992, a detailed assessment of overall Project implementation on the basis of terms of reference satisfactory to the Bank. After review of such assessment by the Borrower and the Bank, the Borrower shall, after consultation with the Bank, implement such changes in Project execution which are considered necessary to ensure the achievement of the objectives of the Project as set forth in the introductory paragraph of Schedule 2 to this Agreement. Section 3.06. The Borrower shall ensure that producer prices will continue to be maintained at levels adequate to provide producers with appropriate incentives. ARTICLE IV Financial Covenants Section 4.01. (a) The Borrower shall maintain or cause to be maintained records and account adequate to reflect, in accordance with sound accounting practices the operations, resources and expenditures, in respect of Parts D, E and F of the Project, of the departments or agencies of the Borrower responsible for carrying out Parts D, E and F of the Project or any part thereof. (b) The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section including those for Special Accounts B and C for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records and accounts and the audit thereof as the Bank shall from time to time reasonably request. (c) For all expenditures with respect to which withdrawals from the Loan Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Bank has received the audit report for the fiscal year in which the last withdrawal from the Loan Account was made, all records (contracts, orders, Page 7 invoices, bills, receipts and other documents) evidencing such expenditures; (iii) enable the Bank'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 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 any limitation or restriction upon any of its other obligations under this Agreement, the Borrower shall take all action which may be required on its part so that AFC shall charge interest rates on its Sub-loans which shall be at least equal to the minimum rate charged on overdrafts by commercial banks to their most favorable commercial customers, as long as AFC's spread shall at all times be sufficient to cover AFC's fixed and recurrent costs. (b) To that end, the Borrower and AFC shall review periodically but at least once annually the interest rates and lending terms applicable to AFC's Sub-loans. ARTICLE V Remedies of the Bank Section 5.01. Pursuant to Section 6.02 (k) of the General Conditions, the following additional events are specified: (a) AFC have failed to perform any of its obligations under the AFC Project Agreement. (b) As a result of events which have occurred after the date of the Loan Agreement, an extraordinary situation shall have arisen which shall make it improbable that AFC will be able to perform its obligations under the Project Agreement. (c) the AFC Act shall have been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of AFC to perform any of its obligations under the AFC Project Agreement. (d) The Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablishment of AFC or for the suspension of its operations. (e) (i) Subject to subparagraph (ii) of this paragraph: (A) 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, cancelled or termi- nated in whole or in part, pursuant to the terms of the agreement providing therefor, or (B) any such loan shall have become due Page 8 and payable prior to the agreed maturity thereof. (ii) Subparagraph (i) of this paragraph shall not apply if the Borrower establishes to the satisfaction of the Bank that: (A) 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 (B) 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 events are specified: (a) the event specified in paragraph (a) of Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Bank to the Borrower; (b) the events specified in paragraphs (c) and (d) of Section 5.01 of this Agreement shall occur; and (c) the event specified in paragraph (e) (i) (B) of Section 5.01 of this Agreement shall occur, subject to the proviso of paragraph (d) (ii) of that Section. ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the Loan Agreement within the meaning of Section 12.01 (c) of the General Conditions: (a) the IFAD Loan Agreement and the BADEA Loan Agreement have been duly executed on behalf of the Borrower and IFAD, and the Borrower and BADEA, respectively, and all conditions (if any) precedent to the effectiveness or initial disbursement of funds, other than fulfillment of the conditions precedent to the effectiveness of this Agreement have been satisfied; (b) the AFC Subsidiary Loan Agreement and the CMB Subsidiary Loan Agreement have each been duly executed on behalf of the Borrower and AFC and CMB, respectively; and (c) the position of Deputy General Manager (Finance) of AFC shall have been filled by a person whose qualifications and experience shall be satisfactory to the Bank. Section 6.02. The following are specified as additional matters, within the meaning of Section 12.02 (c) of the General Conditions, to be included in the opinion or opinions to be furnished to the Bank: (a) that the AFC Project Agreement has been duly authorized or ratified by AFC, and is legally binding upon AFC in accordance with its terms; and Page 9 (b) that the AFC Subsidiary Loan Agreement and the CMB Subsidiary Loan Agreement have each been duly authorized or ratified by the Borrower and AFC and CMB respectively and is legally binding upon the Borrower and AFC and CMB respectively in accordance with their respective terms. Section 6.03. 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 the Borrower at the time responsible for Finance, Economic Planning and Development 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: Secretary to the Treasury Ministry of Finance, Economic Planning and Development Private Bag 7705 Causeway Harare, Zimbabwe Cable address: Telex: MINFIN MINFIN 22141 ZM Harare Zimbabwe For the Bank: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INTBAFRAD 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. ZIMBABWE By /s/ S. G. Chigwedere Authorized Representative INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Page 10 By /s/ Paul Isenman Acting Regional Vice President Africa SCHEDULE 1 Withdrawal of the Proceeds of the Loan 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Loan, the allocation of the amounts of the Loan to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Loan Allocated % of (Expressed in Expenditures Category Dollar Equivalent)to be Financed (1) Sub-loans under Parts A and C of the Project for: (a) Smallholder 7,735,000 100% of amount Farmers disbursed by AFC (b) Commercial 15,100,000 75% of amount Area Farmers disbursed by AFC (2) Works under: 30% (a) Part B of 1,738,000 the Project (b) Part D of 1,525,000 the Project (c) Part E of 152,000 the Project (3) Machinery and 100% of foreign equipment under: expenditures and 75% of local expenditures (a) Part B of 1,772,000 the Project (b) Part D of 3,383,000 the Project (c) Part E of 199,000 the Project (4) Vehicles under: 100% of foreign expenditures and 75% of local expenditures (a) Parts B and 514,000 C of the Project (b) Part D, of 144,000 the Project Page 11 (c) Part E of 119,000 the Project (5) Unallocated 3,919,000 TOTAL 36,300,000 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; and (b) payments made for expenditures under Categories 2 (b) , 3 (b) and 4 (b) until the Borrower shall have adopted appropriate measures that would enable CMB to generate increased revenues from its operations so as to eliminate the deficit on its trading accounts effective from CMB's financial year 1990-1991 and thereafter. SCHEDULE 2 Description of the Project The objectives of the Project are to: (i) increase credit to smallholder and commercial farmers; (ii) strengthen the operational capacities of AFC including expansion of its field facilities; (iii) promote the use of farmer groups for credit, produce procurement and input supply purposes; (iv) expand and improve cotton processing and post-harvest facilities; and (v) strengthen horticultural post-harvest research as well as export marketing. The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objectives: Part A: 1. Making of Sub-loans by AFC to Smallholder Farmers to finance seasonal inputs and services, on-farm capital developments, farm machinery and equipment, including work-ox and related implements and motorized or ox-drawn farm transport with capacities under 10 tons. 2. Making of Sub-loans by AFC to commercial farmers to finance seasonal inputs and services and on-farm capital developments, farm machinery and equipment for export and import substitution. Part B: Strengthening the operational capabilities of AFC through: (i) the construction of about 16 district offices and related staff accommodation, and acquisition of about 30 four-wheel drive pick-ups and about 40 motorcycles; (ii) updating and expansion of the main computer facility and associated spares, tapes, disks, Page 12 supplies and software; (iii) the provision of about 38 man-months of technical advisory services to man the computer system, assist in installation of the new computer system and training in data processing. Part C: 1. Carrying out of a Group Lending Pilot Scheme by AFC involving Loans to selected cooperatives and informal farmer groups in about 6 districts with at least 3 wards in each district. 2. As part of the Scheme referred to in Part C.1 above, carrying out a training program for, inter alia, credit administration, loan assessment and supervision; commodity assembling, grading and marketing, group organization and management and financial record keeping and provision of technical advisory services, support staff, vehicles and office supplies. Part D: Expansion and improvement of cotton processing and post-harvest facilities through: (i) construction of a new cotton ginnery including roller gin processing facilities in the North Eastern production area with an annual minimum capacity of about 25,000 tons of long staple seed cotton, including, inter alia, a machinery building, ancillary storage facilities and service roads, office blocks and about ten staff houses; (ii) acquisition of about 2 tractors, 3 trailers, 75 trolleys, 4 forklift trucks, 16 lint-cleaner machines and 1 transport truck; and (iii) provision of spare parts for existing ginneries and tools and equipment for workshops and training for CMB technicians in electrical, hydraulic and mechanical engineering. Part E: Strengthening of horticultural post-harvest research at Marondera Research Station, including expansion of the research buildings and provision of cold storage facilities and equipment and acquisition of vehicles, laboratory apparatus, about 3 pick-up trucks and a four- wheel drive vehicle and tractor. Part F: Carrying out of: (i) a study for the improvement of the marketing of horticultural exports; and (ii) a cotton sub-sector study and provision of technical advisory services to install new research facilities. * * * * The Project is expected to be completed by June 30, 1995. ANNEX TO SCHEDULE 2 Incremental Staff under Part B of the Project Page 13 1989 1990 1991 1992 1993 1994 Total Branch- Inspectors 8 1 2 2 3 3 19 District- Inspectors 16 5 6 5 9 9 50 Assistant- Inspectors 28 10 12 10 18 18 96 Total 52 16 20 17 30 30 165 SCHEDULE 3 Amortization Schedule Payment of Principal Date Payment Due (Expressed in dollars)* January 15, 1995 665,000.00 July 15, 1995 690,000.00 January 15, 1996 720,000.00 July 15, 1996 745,000.00 January 15, 1997 775,000.00 July 15, 1997 805,000.00 January 15, 1998 835,000.00 July 15, 1998 865,000.00 January 15, 1999 900,000.00 July 15, 1999 935,000.00 January 15, 2000 970,000.00 July 15, 2000 1,005,000.00 January 15, 2001 1,045,000.00 July 15, 2001 1,085,000.00 January 15, 2002 1,125,000.00 July 15, 2002 1,170,000.00 January 15, 2003 1,215,000.00 July 15, 2003 1,260,000.00 January 15, 2004 1,310,000.00 July 15, 2004 1,360,000.00 January 15, 2005 1,410,000.00 July 15, 2005 1,465,000.00 January 15, 2006 1,520,000.00 July 15, 2006 1,580,000.00 January 15, 2007 1,640,000.00 July 15, 2007 1,705,000.00 January 15, 2008 1,770,000.00 July 15, 2008 1,835,000.00 January 15, 2009 1,905,000.00 July 15, 2009 1,990,000.00 Total 36,300,000.00 * The figures in this column represent dollar equivalents determined as of the respective dates of withdrawal. See General Conditions, Sections 3.04 and 4.03. Premiums on Prepayment Pursuant to Section 3.04 (b) of the General Conditions, the premium payable on the principal amount of any maturity of the Loan to be prepaid shall be the percentage specified for the applicable time of prepayment below: Time of Prepayment Premium The interest rate (expressed as a percentage per annum) Page 14 applicable to the Loan on the day of prepayment, multiplied by: Not more than three years 0.15 before maturity More than three years but 0.30 not more than six years before maturity More than six years but 0.55 not more than 11 years before maturity More than 11 years but not 0.80 more than 16 years before maturity More than 16 years but not 0.90 more than 18 years before maturity More than 18 years before 1.00 maturity SCHEDULE 4 Special Account A 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories 1, 2(a), 3(a) and 4(a) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Parts A, B and C of the Project and to be financed out of the proceeds of the Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule I to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $1,000,000 to be withdrawn from the Loan Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened, 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 Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank Page 15 shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan 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 made out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Loan allocated to the eligible Categories for Parts A, B and C of the Project, less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to Parts A, B and C of the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories for Parts A, B and C of the Project shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank 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. 6. (a) If the Bank shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank into the Special Account shall be made until the Borrower has provided such evidence or made such deposit or refund, as the case Page 16 may be. (b) If the Bank shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit into the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. SCHEDULE 5 Special Account B 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories 2(b), 3(b) and 4(b) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Part D of the Project and to be financed out of the proceeds of the Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $600,000 to be withdrawn from the Loan Account and deposited into the Special Account pursuant to paragraph 3 (a) of t his Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened, 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 Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is Page 17 requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan 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 made out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Loan allocated to the eligible Categories for Part D of the Project, less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to Part D of the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, with- drawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories for Part D of the Project shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit into the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B) deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank 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 Bank shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount. Page 18 (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit into the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions of this Agreement, including the General Conditions. SCHEDULE 6 Special Account C 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories 2(c) 3(c) and 4(c) set forth in the table in paragraph 1 of Schedule 1 to this Agreement; (b) the term "eligible expenditures" means expenditures in respect of the reasonable cost of goods and services required for Parts E and F of the Project and to be financed out of the proceeds of the Loan allocated from time to time to the eligible Categories in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "Authorized Allocation" means an amount equivalent to $100,000 to be withdrawn from the Loan Account and deposited into the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Payments out of the Special Account shall be made exclusively for eligible expenditures in accordance with the provisions of this Schedule. 3. After the Bank has received evidence satisfactory to it that the Special Account has been duly opened, 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 Bank a request or requests for a deposit or deposits which do not exceed the aggregate amount of the Authorized Allocation. On the basis of such request or requests, the Bank shall, on behalf of the Borrower, withdraw from the Loan Account and deposit into the Special Account such amount or amounts as the Borrower shall have requested. (b) (i) For replenishment of the Special Account, the Borrower shall furnish to the Bank requests for deposits into the Special Account at such intervals as the Bank shall specify. (ii) Prior to or at the time of each such request, the Borrower shall furnish to the Bank the documents and other evidence required pursuant to paragraph 4 of this Schedule for the payment or payments in respect of which replenishment is requested. On the basis of each such request, the Bank shall, on behalf of the Borrower, withdraw from the Loan 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 made out of the Special Account for Page 19 eligible expenditures. All such deposits shall be withdrawn by the Bank from the Loan Account under the respective eligible Categories, and in the respective equivalent amounts, as shall have been justified by said documents and other evidence. 4. For each payment made by the Borrower out of the Special Account, the Borrower shall, at such time as the Bank shall reasonably request, furnish to the Bank such documents and other evidence showing that such payment was made exclusively for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Schedule, the Bank shall not be required to make further deposits into the Special Account: (a) if, at any time, the Bank shall have determined that all further withdrawals should be made by the Borrower directly from the Loan Account in accordance with the provisions of Article V of the General Conditions and paragraph (a) of Section 2.02 of this Agreement; or (b) once the total unwithdrawn amount of the Loan allocated to the eligible Categories for Parts E and F of the Project, less the amount of any outstanding special commitment entered into by the Bank pursuant to Section 5.02 of the General Conditions with respect to Parts E and F of the Project, shall equal the equivalent of twice the amount of the Authorized Allocation. Thereafter, withdrawal from the Loan Account of the remaining unwithdrawn amount of the Loan allocated to the eligible Categories for Parts E and F of the Project shall follow such procedures as the Bank shall specify by notice to the Borrower. Such further withdrawals shall be made only after and to the extent that the Bank shall have been satisfied that all such amounts remaining on deposit into the Special Account as of the date of such notice will be utilized in making payments for eligible expenditures. 6. (a) If the Bank shall have determined at any time that any payment out of the Special Account: (i) was made for an expenditure or in an amount not eligible pursuant to paragraph 2 of this Schedule; or (ii) was not justified by the evidence furnished to the Bank, the Borrower shall, promptly upon notice from the Bank: (A) provide such additional evidence as the Bank may request; or (B)deposit into the Special Account (or, if the Bank shall so request, refund to the Bank) an amount equal to the amount of such payment or the portion thereof not so eligible or justified. Unless the Bank shall otherwise agree, no further deposit by the Bank 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 Bank shall have determined at any time that any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Bank, refund to the Bank such outstanding amount. (c) The Borrower may, upon notice to the Bank, refund to the Bank all or any portion of the funds on deposit into the Special Account. (d) Refunds to the Bank made pursuant to paragraphs 6 (a), (b) and (c) of this Schedule shall be credited to the Loan Account for subsequent withdrawal or for cancellation in accordance with the relevant provisions Page 20 of this Agreement, including the General Conditions. SCHEDULE 7 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding 1. Except as provided in Part C hereof, goods (machinery, equipment and vehicles) under Parts D, E and F of the Project shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines). 2. To the extent practicable, contracts for machinery and equipment and for vehicles shall be grouped in bid packages estimated to cost the equivalent of $100,000 or more each. Part B: Preference for Domestic Manufacturers In the procurement of goods in accordance with the procedures described in Part A.1 hereof, goods manufactured in Zimbabwe may be granted a margin of preference in accordance with, and subject to the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraphs 1 through 4 of Appendix 2 thereto. Part C: Other Procurement Procedures 1. Civil works contracts may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. 2. (a) Machinery and equipment and (b) vehicles which cannot be bulked in bidding packages estimated to cost more than $100,000 equivalent, may be procured under contracts awarded on the basis of local competitive bidding, advertised locally, in accordance with procedures satisfactory to the Bank. Part D: Review by the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $500,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of Special Account B or C, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Bank pursuant to said paragraph 2 (d) shall be furnished to the Bank prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of Special Account B or C, said procedures shall be modified to ensure that the two conformed copies of the contract together with the other information required to be furnished to the Bank pursuant to said paragraph 3 shall be furnished to the Bank as part of the evidence to Page 21 be furnished pursuant to paragraph 4 of Schedules 5 and 6 to this Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Bank has authorized withdrawals from the Loan Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (c)(ii) of this Agreement. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants In order to assist the Borrower in carrying out Parts D and F of the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Bank on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981.