Page  1
CONFORMED COPY
CREDIT NUMBER  3624 UG
Development Credit Agreement
(Decentralized Service Delivery: 
A Makerere University Training Pilot Project)
between
THE REPUBLIC OF UGANDA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated April 10, 2002
CREDIT NUMBER 3624 UG
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated April 10, 2002, between THE REPUBLIC OF UGANDA (the 
Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association).
Page  2
WHEREAS (A) the Borrower, having satisfied itself as to the feasibility and priority of 
the project described in Schedule 2 to this Agreement (the Project), has requested the 
Association to assist in the financing of the Project;
(B)
the Project will be carried out by Makerere University with the Borrower's 
assistance and, as part of such assistance, the Borrower will make the proceeds of the Credit 
provided for in Article II of this Agreement (the Credit) available to Makerere University, as set 
forth in this Agreement; 
(C)
the Borrower will obtain from Rockefeller Foundation a contribution (the 
Rockefeller Grant),  in an amount equivalent to US $5,000,000 to assist in the financing of the 
Project on terms and conditions agreed to between the Borrower and Rockefeller Foundation; 
and
WHEREAS the Association has agreed, on the basis, 
inter alia
,
of
the foregoing, to 
extend the Credit to the Borrower upon the terms and conditions set forth in this Agreement and 
in the agreement of even date herewith between the Association and Makerere University (the 
Project Agreement);
NOW THEREFORE the parties hereto hereby agree as follows:
ARTICLE I
General Conditions; Definitions
Section 1.01. The “General Conditions Applicable to Development Credit Agreements” 
of the Association, dated January 1, 1985 (as amended through October 6, 1999) (the General 
Conditions), constitute an integral part of this Agreement. 
Paragraph (c) of Section 9.06 of the General Conditions is modified to read as follows:
"(c) 
Not later than six months before the Closing Date or such later date as may be 
agreed for this purpose between the Borrower and the Association, the Borrower shall 
prepare and furnish to the Association a report, of such scope and in such detail as the 
Association shall reasonably request, on the execution and initial operation of the 
Project, its cost and the benefits derived and to be derived from it, the performance by 
the Borrower and the Association of their respective obligations under the Development 
Credit Agreement and the accomplishment of the purposes of the Credit."
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)
“Academic Excellence Grant” means an annual grant made or proposed to be 
made to a selected Makerere University Unit and/or a Partner Institution Unit (as hereinafter 
defined), for distinguished innovative work related to decentralization, for the year preceding the 
Page  3
grant, under the Fund for Innovative Excellence (as hereinafter defined);
(b)
“District” means a district established under the Borrower's Constitution and its 
Local Government Act of 1997;
(c)
“Eligible Categories” means categories (1) through (5) set forth in the table in 
Paragraph A.1 of Schedule 1 to this Agreement;
(d)
“Eligible Expenditures” means the expenditures for goods, services and Grants 
referred to in Section 2.02 of this Agreement; 
(e)
“Fiscal Year” means the fiscal year of the Borrower commencing July 1 in any 
one year and ending June 30 the following year;
(f)
“Financial Monitoring Report” means each report prepared in accordance with 
Section 4.02 of the Project Agreement;
(g)
“Fund for Innovative Excellence” means a fund set up within Makerere 
University for the awarding of Academic Excellence Grants and Local Government Excellence 
Grants (as hereinafter defined);
(h)
“Grant” means either an Academic Excellence Grant or a Local Government 
Excellence Grant (as hereinafter defined);
(i)
“Grant Recipient” means a selected Makerere University Unit and/or a Partner 
Institution Unit, and a Local Government (as all hereinafter defined), which has received or is 
entitled to receive a Grant;
(j)
“IAPSO” means the Inter-Agency Procurement Services of the United Nations;
(k)
“
I@mak.com
”
means Innovations at Makerere Committee located within 
Makerere University and established for the purpose of supporting policy formulation, 
coordination, restructuring and reorganization of Makerere University’s training services, in line 
with the Borrower’s decentralization activities and policies; 
(l)
“Local Government” means the governing body of a district, or a unit of such a 
district including, a district council, sub county council, city council, city division council, 
municipal council, municipal division council and town council, established pursuant to the 
Local Governments Act of 1997;
(m)
“Local Government Excellence Grant” means a grant made, or proposed to be 
made to a Local Government within a Pilot District (as hereinafter defined), for the carrying out 
of innovative research, studies and service delivery on decentralization, under the Fund for 
Page  4
Innovative Excellence;
(n)
“Makerere University” means the Makerere University, operating under the 
Borrower’s Universities and Other Tertiary Institutions Act of 2001;
(o)
“Makerere University Unit” means a college, faculty, department, school or 
institute within Makerere University, involved in the implementation of the Project;
(p)
“MoES” means the Borrower’s Ministry of Education and Sports;
(q)
“MoFPED” means the Borrower’s Ministry of Finance, Planning and Economic 
Development;
(r)
“MoLG” means the Borrower’s Ministry of Local Government;
(s)
“Partnership Agreement” means an agreement entered, or to be entered  into 
between Makerere University and a Partner Institution (as hereinafter defined), in accordance 
with paragraph 4 (b) of Section II of Schedule 2 to the Project Agreement;
(t)
“Partner Institution” means any tertiary institution, college or research center 
with which Makerere University has signed or will sign a Partnership Agreement for the purpose 
of this Project;
(u)
“Partner Institution Unit” means a college, faculty, department, school or 
institute within a Partner Institution, involved in the implementation of the Project;
(v)
“Pilot Districts” means the Borrower’s districts of Arua, Mbarara, Mbale, Rakai 
and Kampala, identified in the Demand Assessment Study carried out by MISR and dated 
October 2000, and the Local Government units within the Pilot Districts;
(w)
“PIP” means the Project Implementation Plan referred to in Section 6.01 (C) of 
this Agreement; 
(x)
“Post Graduate Students” means Masters and PhD students of Makerere 
University;
(y)
“Project Account” means the account to be opened pursuant to Section 3.03 (a) 
of this Agreement;
(z)
“Project Agreement” means the agreement between the Association and 
Makerere University 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 Project Agreement;
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(aa)
“Project Implementation Support Allowance” means any payment made or to be 
made to any member of 
I@mak.com
,
over and above their salary, for implementation of the 
Project, and referred to in paragraph A.2 (c) of Schedule 1 to this Agreement;
(bb)
“Secretariat” means the 
I@mak.com
Secretariat of Makerere University referred 
to in paragraph 2 Section II of Schedule 2 to the Project Agreement;
(cc)
“Special Account” means the account referred to in Schedule 1. B of this 
Agreement;
(dd)
“Subsidiary Grant Agreement” means the agreement to be entered into between 
the Borrower and Makerere University pursuant to Section 3.01 (b) of this Agreement, as the 
same may be amended from time to time, and such term includes all schedules to the Subsidiary 
Grant Agreement; and
(ee)
“Ug. Shilling” means Uganda Shilling, the currency of the Borrower. 
ARTICLE II
The Credit
Section 2.01. The Association agrees to lend to the Borrower, on the terms and 
conditions set forth or referred to in this Agreement, an amount in various currencies equivalent 
to four million Special Drawing Rights (SDR 4,000,000).
Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in 
accordance with the provisions of Schedule 1 to this Agreement for expenditures made (or, if the 
Association shall so agree, to be made) in respect of the reasonable cost of goods, services and 
Grants required for the Project and to be financed out of the proceeds of the Credit.
Section 2.03. The Closing Date shall be December 31, 2005 or such later date as the 
Association shall establish. The Association shall promptly notify the Borrower of such later 
date.
Section 2.04. (a) The Borrower shall pay to the Association a commitment charge on the 
principal amount of the Credit not withdrawn from time to time at a rate to be set by the 
Association as of June 30 of each year, but not to exceed the rate of one-half of one percent (1/2 
of 1%) per annum.
(b)
The commitment charge shall accrue: (i) from the date sixty days after the date 
of this Agreement (the accrual date) to the respective dates on which amounts shall be withdrawn 
by the Borrower from the Credit Account or canceled; and (ii) at the rate set as of the June 30 
immediately preceding the accrual date and at such other rates as may be set from time to time 
thereafter pursuant to paragraph (a) above. The rate set as of June 30 in each year shall be 
Page  6
applied from the next date in that year specified in Section 2.06 of this Agreement.
(c)
The commitment charge shall be paid: (i) at such places as the Association shall 
reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the 
Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 
of the General Conditions or in such other eligible currency or currencies as may from time to 
time be designated or selected pursuant to the provisions of that Section.
Section 2.05. The Borrower shall pay to the Association a service charge at the rate of 
three-fourths of one percent (3/4 of 1%) per annum on the principal amount of the Credit 
withdrawn and outstanding from time to time.
Section 2.06. Commitment charges and service charges shall be payable semiannually on 
April 1 and October 1 in each year.
Section 2.07. (a)  Subject to paragraphs (b), (c) and (d) below, the Borrower shall repay 
the principal amount of the Credit in semiannual installments payable on each April 1 and 
October 1 commencing April 1, 2012 and ending October 1, 2041. Each installment to and 
including the installment payable on October 1, 2021 shall be one percent (1%) of such principal 
amount, and each installment thereafter shall be two percent (2%) of such principal amount.
(b)
Whenever: (i) the Borrower's per capita gross national product (GNP), as 
determined by the Association, shall have exceeded for three consecutive years  the level 
established annually by the Association for determining eligibility to access the Association's 
resources; and (ii) the Bank shall consider the Borrower creditworthy for Bank lending, the 
Association may, subsequent to the review and approval thereof by the Executive Directors of 
the Association and after due consideration by them of the development of the Borrower's 
economy, modify the repayment of installments under paragraph (a) above by:
(A)
requiring the Borrower to repay twice the amount of each such 
installment not yet due until the principal amount of the Credit shall 
have been repaid; and
(B)
requiring the Borrower to commence repayment of the principal amount 
of the Credit as of the first semiannual payment date referred to in 
paragraph (a) above falling six months or more after the date on which 
the Association notifies the Borrower that the events set out in this 
paragraph (b) have occurred, provided, however, that there shall be a 
grace period of a minimum of five years on such repayment of principal.
(c)
If so requested by the Borrower, the Association may revise the modification 
referred to in paragraph (b) above to include, in lieu of some or all of          the increase in the 
amounts of such installments, the payment of interest at an annual rate agreed with the 
Association on the principal amount of the Credit withdrawn and outstanding from time to time, 
provided that, in the judgment of the Association, such revision shall not change the grant 
Page  7
element obtained under the above-mentioned      repayment modification.
(d)
If, at any time after a modification of terms pursuant to paragraph (b) above, the 
Association determines that the Borrower's economic condition has deteriorated significantly, the 
Association may, if so requested by the Borrower, further modify the terms of repayment to 
conform to the schedule of installments as provided in paragraph (a) above.
Section 2.08. The currency of the United States of America is hereby specified for the 
purposes of Section 4.02 of the General Conditions.
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, without any limitation or restriction 
upon any of its other obligations under the Development Credit Agreement, shall cause Makerere 
University to perform in accordance with the provisions of the Project Agreement all the 
obligations of Makerere University therein set forth, shall take and cause to be taken all action, 
including the provision of funds, facilities, services and other resources, necessary or appropriate 
to enable Makerere University to perform such obligations, and shall not take or permit to be 
taken any action which would prevent or interfere with such performance.
(b)
The Borrower shall make the proceeds of the Credit available to Makerere 
University under a Subsidiary Grant Agreement to be entered into between the Borrower and 
Makerere University, under terms and conditions which shall have been approved by the 
Association.
(c)
The Borrower shall exercise its rights under the Subsidiary Grant Agreement in 
such manner as to protect the interests of the Borrower and the Association and to accomplish 
the purposes of the Credit, and, except as the Association shall otherwise agree, the Borrower 
shall not assign, amend, abrogate or waive the Subsidiary Grant Agreement or any provision 
thereof.
Section 3.02. Except as the Association shall otherwise agree, procurement of the goods 
and consultants’ services required for the Project shall be governed by the provisions of Schedule 
1 to the Project Agreement.
Section 3.03. Without limitation to its obligations under Section 3.01 of this Agreement, 
the Borrower, for the purposes of making available its counterpart contribution to the financing 
of the Project, shall:
(a)
open and maintain, for the duration of the Project, an account (the Project 
Account) in Ug. Shillings in a commercial bank on terms and conditions satisfactory to the 
Page  8
Association;
(b)
deposit into the Project Account an initial advance equivalent to $50,000, and 
thereafter replenish the Project Account on a quarterly basis, or whenever the balance thereof 
equals not more than $15,000 equivalent, whichever occurs first; and
(c)
ensure that funds deposited into the Project Account shall be used only for the 
purposes of defraying the cost of expenditures incurred in the execution of the Project which are 
not financed out of the proceeds of the Credit.
Section 3.04. For purposes of Part B.2 of the Project, the Borrower shall apply the 
proceeds of the Credit allocated to Category (4) of the table in paragraph A.1 of Schedule 1 to 
this Agreement to finance Grants under terms and conditions which shall have been approved by 
the Association, and which shall include the terms and conditions set forth in Section IV of  
Schedule 2 to the Project Agreement.
Section 3.05. The Borrower and the Association hereby agree that the obligations set 
forth in Sections 9.03, 9.04, 9.05, 9.06, 9.07 and 9.08 of the General Conditions (relating to 
insurance, use of goods and services, plans and schedules, records and reports, maintenance and 
land acquisition, respectively) shall be carried out by Makerere University pursuant to Section 
2.03 of the Project Agreement.
ARTICLE IV
Financial Covenants
Section 4.01. (a) For all expenditures with respect to which withdrawals from the Credit 
Account were made on the basis of Financial Monitoring Reports, the Borrower shall:
(i)
maintain or cause to be maintained in accordance with sound accounting 
practices, records and separate accounts reflecting such expenditures;
(ii)
ensure that all records (contracts, orders, invoices, bills, receipts and 
other documents) evidencing such expenditures are retained until at least 
one year after the Association has received the audit report for the fiscal 
year in which the last withdrawal from the Credit Account was made; 
and
(iii)
enable the Association's representatives to examine such records.
(b)
The Borrower shall:
(i)
have the records and accounts referred to in paragraph (a) (i) of this 
Section and those for the Special Account for each fiscal year audited, in 
Page  9
accordance with appropriate auditing principles consistently applied, by 
independent auditors acceptable to the Association;
(ii)
furnish to the Association 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 Association shall 
have reasonably requested, including a separate opinion by said auditors 
as to whether the Financial Monitoring Reports 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; and
(iii)
furnish to the Association such other information concerning said 
records and accounts and the audit thereof as the Association shall from 
time to time reasonably request.
Section 4.02.
The Borrower shall have the independent auditors referred to in 
paragraph (b) of Section 4.01, appointed no later than September 30, 2002, or such later date as 
may be agreed to with the Association.
ARTICLE V
Remedies of the Association
Section 5.01. Pursuant to Section 6.02 (l) of the General Conditions, the following 
additional events are specified:
(a)
Makerere University shall have failed to perform any of its obligations under the 
Project Agreement.
(b)
As a result of events which have occurred after the date of this Agreement, an 
extraordinary situation shall have arisen which shall make it improbable that Makerere 
University will be able to perform its obligations under the Project Agreement.
(c)
(i)
Subject to subparagraph (ii) of this paragraph the right of the Borrower 
to withdraw the proceeds of the Rockefeller Grant made to the Borrower 
for the financing of the Project shall have been suspended, canceled or 
terminated in whole or in part; and
(ii)
Subparagraph (i) of this paragraph shall not apply if the Borrower 
establishes to the satisfaction of the Association that: (A) such 
suspension, cancellation or termination is not caused by the failure of the 
Borrower to perform any of its obligations in relation to the Rockefeller 
Grant; and (B) adequate funds for the Project are available to the 
Borrower from other sources on terms and conditions consistent with the 
Page  10
obligations of the Borrower under this Agreement.
Section 5.02. Pursuant to Section 7.01 (h) of the General Conditions, the following 
additional event is specified, namely that any event specified in paragraph (a) through (c) of 
Section 5.01 of this Agreement shall occur and shall continue for a period of ninety (90) days 
after notice thereof shall have been given by the Association to the Borrower.
ARTICLE VI
Effective Date; Termination
Section 6.01. The following events are specified as additional conditions to the 
effectiveness of this Agreement within the meaning of Section 12.01 (b) of the General 
Conditions:
(a)
the Subsidiary Grant Agreement has been executed on behalf of the Borrower 
and Makerere University; 
(b)
the Borrower has opened the Project Account pursuant to Section 3.03 (a) of this 
Agreement and has deposited therein the initial deposit referred to in Section 3.03 (b) of this 
Agreement; 
(c) 
a Project Implementation Plan satisfactory to the Association has been adopted 
for the Project; and 
(d) 
a management information system satisfactory to the Association has been 
adopted for the Project.
Section 6.02. The following are specified as additional matters, within the meaning of 
Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be 
furnished to the Association: (a)
that the Project Agreement has been duly authorized or ratified 
by the Borrower, and is legally binding upon Makerere University in accordance with its terms; 
and (b)that the Subsidiary Grant Agreement has been duly authorized or ratified by the 
Borrower and Makerere University and is legally binding upon the Borrower and Makerere 
University in accordance with its 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
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Section 7.01. The Borrower’s minister responsible for finance 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:
Ministry of Finance, Planning and
Economic Development
P.O. Box 8147
Kampala
Uganda
Cable address: 
Facsimile: 
FINSEC
230163
KAMPALA
For the Association:
International Development Association
1818 H Street, N.W.
Washington, D.C. 20433
United States of America
Cable address:
Telex:
Facsimile:
INDEVAS
248423 (MCI) or
(202) 477-6391
Washington, D.C.
 64145 (MCI)
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.
THE REPUBLIC OF UGANDA
By
/s/
Edith Grace Ssempala
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
Page  12
By
/s/
Callisto Madavo
Regional Vice President
Africa
SCHEDULE 1
Withdrawal of the Proceeds of the Credit
A. General
1.
The table below sets forth the Categories of items to be financed out of the proceeds of 
the Credit, the allocation of the amounts of the Credit to each Category and the percentage of 
expenditures for items so to be financed in each Category:
Amount of the
Credit Allocated
% of
(Expressed in
Expenditures
Category
SDR Equivalent)
to be Financed
(1)
Goods
124,400
50% of foreign
expenditures and
45% of local
expenditures
(2)
Consultants’
188,700
50% of foreign
services including
expenditures and
audit fees
45% of local
expenditures
(3) 
Training and workshops
3,451,600
50%
(other than 
I@mak.com
 allowances)
(4) Grants
50% 
(a)
Academic Excellence Grant
30,200
(b)
Local Government Excellence 
Grant
36,300
(5) Operating 
Costs
139,400
45%
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(6)
Unallocated
29,400
___________
TOTAL
4,000,000 
==========
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; 
(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; and
(c)
the term “operating costs” means the incremental expenses under the Project on 
account of supervision costs, office supplies, administrative support, communication, insurance 
and utility services, travel, vehicle operation and maintenance costs, and bank charges, but 
excluding salaries of officials of the Borrower’s civil service and Project Implementation 
Support Allowances. 
B.
Special Account
1.
The Borrower shall open and maintain in Dollars a special deposit account in a 
commercial bank, on terms and conditions satisfactory to the Association, including appropriate 
protection against set-off, seizure and attachment.  Except as the Association may otherwise 
specify by notice to the Borrower, all withdrawals from the Credit Account shall be deposited by 
the Association into the Special Account in accordance with the provisions of this Schedule.  
Payments out of the Special Account shall be made exclusively for Eligible Expenditures.  For 
each payment made by the Borrower out of the Special Account, the Borrower shall, at such time 
as the Association shall reasonably request, furnish to the Association such documents and other 
evidence showing that such payment was made exclusively for Eligible Expenditures.
2.
Except as the Association shall otherwise agree, after the Association has received 
evidence satisfactory to it that the Special Account has been duly opened, withdrawals from the 
Credit Account of amounts to be deposited into the Special Account shall be made as follows:
(a)
Each application for withdrawal from the Credit Account shall be supported by a 
Financial Monitoring Report.
(b)
Upon receipt of each application for withdrawal of an amount of the Credit, the 
Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit into 
the Special Account an amount equal to the lesser of: (i) the amount so requested; and (ii) the 
amount which the Association has determined, based on the Financial Monitoring Report 
accompanying said application, is required to be deposited in order to finance Eligible 
Expenditures during the six-month period following the date of such report; provided, however, 
that the amount so deposited, when added to the amount indicated by said report to be remaining 
in the Special Account, shall not exceed the equivalent of $1,000,000.  Each such deposit into the 
Page  14
that the amount so deposited, when added to the amount indicated by said report to be remaining 
in the Special Account, shall not exceed the equivalent of $1,000,000.  Each such deposit into the 
Special Account shall be withdrawn by the Association from the Credit Account under one or 
more of the Special Account’s Eligible Categories.
3.
Notwithstanding the provisions of Paragraph B.2 of this Schedule, the Association shall 
not be required to make further deposits into the Special Account:
(a)
if the Association determines at any time that any Financial Monitoring Report 
does not adequately provide the information required pursuant to Section 4.02 of the Project 
Agreement;
(b)
if the Association determines at any time that all further withdrawals should be 
made by the Borrower directly from the Credit Account; or
(c)
if the Borrower shall have failed to furnish to the Association, within the period 
of time specified in Section 4.01(b) (ii) of this Agreement and Section 4.01(b) (ii) of the Project 
Agreement, any of the audit reports required to be furnished to the Association pursuant to said 
Section in respect of the audit of: (i) the records and accounts for the Special Account; or (ii) the 
records and accounts reflecting expenditures with respect to which withdrawals were made on 
the basis of Financial Monitoring Reports.
4.
The Association shall not be required to make further deposits into the Special Account 
in accordance with the provisions of Paragraph B.2 of this Schedule if, at any time, the 
Association shall have notified the Borrower of its intention to suspend in whole or in part the 
right of the Borrower to make withdrawals from the Credit Account pursuant to Section 6.02 of 
the General Conditions.  Upon such notification, the Association shall determine, in its sole 
discretion, whether further deposits into the Special Account may be made and what procedures 
should be followed for making such deposits, and shall notify the Borrower of its determination.
5.
(a)
If the Association determines at any time that any payment out of the Special 
Account was made for an expenditure which is not an Eligible Expenditure, or was not justified 
by the evidence furnished to the Association, the Borrower shall, promptly upon notice from the 
Association, provide such additional evidence as the Association may request, or deposit into the 
Special Account (or, if the Association shall so request, refund to the Association) an amount 
equal to the amount of such payment.
(b)
If the Association determines at any time that any amount outstanding in the 
Special Account will not be required to cover payments for Eligible Expenditures during the 
six-month period following such determination, the Borrower shall, promptly upon notice from 
the Association, refund to the Association such outstanding amount.
(c)
The Borrower may, upon notice to the Association, refund to the Association all 
or any portion of the funds on deposit in the Special Account.
(d)
Refunds to the Association made pursuant to sub-paragraph (a), (b) or (c) of this 
paragraph 5 shall be credited to the Credit Account for subsequent withdrawal or for cancellation 
Page  15
(d)
Refunds to the Association made pursuant to sub-paragraph (a), (b) or (c) of this 
paragraph 5 shall be credited to the Credit Account for subsequent withdrawal or for cancellation 
in accordance with the provisions of this Agreement.
SCHEDULE 2
Description of the Project
The objective of the Project is to develop an effective and replicable mechanism  for the 
improvement of public service delivery at local government levels, through the improvement and 
restructuring, of educational and other training services offered by Makerere University and 
Partner Institutions.
The Project consists of the following parts, subject to such modifications thereof as the 
Borrower and the Association may agree upon from time to time to achieve such objectives:
Part A
: 
Enhancement of Academic Institutional Capacity
1.
Organization of workshops and provision of advisory services and training on the issues 
and concepts of decentralization, for the benefit of professional staff of Makerere University and 
Partner Institutions, and development of a decentralization resource center at Makerere 
University.
2.
Provision of training and organization of workshops for the benefit of 
I@mak.com
staff, 
to support the continued operation and activities of 
I@mak.com
.
3.
Provision of training to Makerere University undergraduate students on the concepts and 
issues of decentralization, through the establishment of an internship program in accordance with 
PIP.
Part B
:
Support to Local Government Capacity Building
1.
Provision of advisory services, organization of workshops and carrying out of research 
and training, for the benefit of selected staff of Makerere University and Partner Institutions, for 
the reorganization of existing courses and the development of new courses in the areas of: (a) 
basic health and medicine; (b) agricultural services;               (c) planning and management 
including budgeting, accounting and financial management; and (d) governance.
2.
Supporting the Fund for Innovative Excellence, for the provision of Academic 
Excellence Grants and Local Government Excellence Grants in accordance with PIP.
3.
Provision of advisory services and training, and organization of workshops for the 
benefit of Local Government staff of Pilot Districts, by selected Makerere University Units and 
Partner Institution Units.
4.
 Provision of technical advisory services and material support for the training of staff of 
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4.
 Provision of technical advisory services and material support for the training of staff of 
planning units within the Pilot Districts.
Part C
: 
Enhancement of Policy Research and Formulation Capacity
1.
Provision of advisory services, material support and training for the benefit of selected 
Makerere University and Partner Institutions staff, and the staff of selected ministries involved in 
the Project, to support the establishment and enhancement of linkages with foreign universities 
and other institutions of learning involved in decentralization research and training.
2.
Provision of fellowships to selected Post Graduate Students to support the carrying out 
of research on decentralization, in accordance with PIP.
3.
Provision of advisory services, material support and training to selected Makerere 
University and Partner Institutions’ staff, for the strengthening of collaboration between 
Makerere University Units and Partner Institution Units, for the building of policy formulation 
and research capacity.
Part D
:
Strengthening Project Coordination, Management, Monitoring and Evaluation
Provision of technical advisory services, equipment and training to selected staff of 
Makerere University and the Secretariat involved in the implementation, supervision and 
monitoring and evaluation of the Project.
**
*
The Project is expected to be completed by June 30, 2005.
SCHEDULE 3
Performance Indicators
By the completion date of the Project:
1.
Not less than nine (9) new courses relevant to decentralization offered by Makerere 
University and Partner Institutions;
2.
Qualitative improvement in breadth, academic value, substance and practical utility of 
course content;
3.
Internship Programs developed in not less than 10 disciplines relevant to the Project; 
4.
Number of Local Governments involved in activities related to the Project in addition to 
the five (5) pilot districts;
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5.
Not less than 800 Makerere University and Partner Institutions staff trained in areas 
relevant to the Project;
6.
Establishment of an operational decentralization resource center at Makerere University;
7.
Not less than 300 Makerere University students undertaking or have completed 
internships supported by the Project;
8.
Not less than 60 Local Government staff trained by Makerere University and Partner 
Institutions at undergraduate level;
9.
Not less than 20 Local Government staff trained by Makerere University and Partner 
Institutions at Masters level;
10.
Airing of educational and informational radio programs in the five (5) pilot districts and 
beyond;
11.
Not less than 10 faculty based research activities on decentralization undertaken; 
12.
Not less than 15 masters level research activities on decentralization undertaken;
13.
Not less than 10 PhD research activities undertaken; and
14.
Not less than three (3) successfully operating partnerships between Makerere University 
and Partner Institutions.