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CONFORMED COPY
CREDIT NUMBER 3409 TA
Development Credit Agreement
(Social Action Fund Project)
between
UNITED REPUBLIC OF TANZANIA
and
INTERNATIONAL DEVELOPMENT ASSOCIATION
Dated August 30, 2000
CREDIT NUMBER 3409 TA
DEVELOPMENT CREDIT AGREEMENT
AGREEMENT, dated August 30, 2000, between UNITED REPUBLIC OF 
TANZANIA (the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (the 
Association).
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 Association to assist in the financing of 
the Project; 
(B)
the Association has received the Borrower’s Letter of Sector 
Policy dated June 21, 2000 (hereinafter called the Program) declaring, 
inter alia, the Borrower’s commitment to the execution of the Program; 
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;
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 
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through October 6, 1999), with the modifications set forth below (the 
General Conditions), constitute an integral part of this Agreement: 
(a)
A new paragraph (12) is added to Section 2.01 to read as set 
forth below, and the existing paragraphs (12) through (14) of said 
Section are accordingly renumbered as paragraphs (13) through (15):
“12.
‘Participating Country’ means any country that the 
Association determines 
meets the requirements set forth in 
Section 11 of Resolution No. 194 of the Board of 
Governors of the Association, adopted on April 8, 1999; and 
‘Participating Countries’ means,  collectively, all such countries”; and
(b)
The second sentence of Section 5.01 is modified to read:
“Except as the Borrower and the Association shall otherwise 
agree, no withdrawals 
shall be made (a) on account of 
expenditures in the territories of any country which is not 
a 
Participating Country or for goods produced in, or services supplied 
from, such 
territories; or (b) for the purpose of any payment to 
persons or entities, or for any import 
of goods, if such payment or 
import, to the knowledge of the Association, is prohibited by a 
decision of the United Nations Security Council taken under Chapter VII 
of the Charter of 
the United Nations.”
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)
“Beneficiary” means a community, including a village, group 
of villages, or a group of peri-urban dwellers, duly represented by a 
Community Project Committee (as hereinafter defined), which is the 
recipient of a Community Subproject Grant or a Public Works Subproject 
Grant (as hereinafter defined);
(b)
“Community Project Committee ” means a committee established 
by a community to represent that community’s interests, as specified in 
the Project Manuals (as hereinafter defined) during the identification, 
preparation, appraisal, and implementation of a Community Subproject (as 
hereinafter defined) and comprising a chairperson, a secretary, a 
treasurer, a deputy treasurer, and from three to five members, all duly 
elected by the members of the community;
(c)
“Community Subproject” means a specific development project 
financed or to be financed through a Community Subproject Grant extended 
under Part A.1 of Project;
(d)
“Community Subproject Agreement” means an agreement to be 
entered into between TASAF MU (as hereinafter defined) and a Beneficiary 
for the purpose of carrying out a Community Subproject; 
(e)
“Community Subproject Grant” means a grant made or proposed 
to be made by TASAF MU (as hereinafter defined) to finance a Community 
Subproject;
(f)
“District” means a district as defined in the local 
government (district authorities) Act No. 7 of 1982;
(g)
“District Steering Committee” means each district steering 
committee referred to in paragraph 3 of Schedule 4 to this Agreement; 
(h)
“Fiscal Year” or “FY” mean the Borrower’s fiscal year 
commencing on July 1 and ending on the following June 30;
(i)
"IAPSO" means the Inter-Agency Procurement Services Office 
established by the United Nations Development Programme;
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(j)
“IEC” means information, education, and communication;
(k)
“Memoranda of Understanding” means the memoranda of 
understanding referred to in paragraph 4 of Schedule 4 to this Agreement;
(l)
“MIS” means management information system;
(m)
“NGO” means a nongovernmental organization duly authorized 
to operate in the Borrower’s territory;
(n)
“NSC” means the National Steering Committee established 
under the Borrower’s Office of the President on February 15, 2000 to 
provide policy oversight over TASAF MU (as hereinafter defined) and 
referred to in paragraph 1 (b) of Schedule 4 to this Agreement; 
(o)
“Project Management Report” means each report prepared in 
accordance with Section 4.02 of this Agreement;
(p)
“Project Manuals” means the operational manual and 
supporting handbooks, as well as the implementation, administration, and 
accounting manuals for the implementation of all the components of the 
Project, in form and substance satisfactory to the Association, referred 
to in paragraph 1 (b) of Schedule 4 to this Agreement and containing, 
inter alia, disbursement and procurement arrangements, work plans, 
training plans, the monitoring and performance indicators set forth in 
Schedule 6 to this Agreement, and procedures to be used for the purposes 
of implementation of the Project, as they may be amended from time to 
time, in consultation with the Association, and such term includes any 
schedules to the Project Manuals;
(q)
“Project Preparation Advance” means the Project preparation 
advance granted by the Association to the Borrower pursuant to the letter 
agreements signed  on behalf of the Association on April 13, 1999 and on 
behalf of the Borrower on April 23, 1999;
(r)
“Public Works Subproject” means a specific development 
project financed or to be financed through a Community Subproject Grant 
extended under Part B.1 of Project; 
(s)
“Public Works Subproject Agreement” means an agreement to be 
entered into between TASAF MU (as hereinafter defined) and the District 
Steering Committee for the purpose of carrying out a Public Works 
Subproject (as hereinafter defined);
(t)
“Public Works Subproject Grant” means a grant made or 
proposed to be made by TASAF MU (as hereinafter defined) to finance a 
Public Works Subproject;
(u)
“Special Account” means the account referred to in Section 
2.02 (b) of this Agreement; 
(v)
“Subprojects” means Community Subproject and Public Works 
Subprojects; 
(w)
“TASAF” means the Tanzania Social Action Fund; and
(x)
“TASAF MU” means the Tanzania Social Action Fund Management 
Unit within the Borrower's Office of the President, to be established to 
carry out the Project pursuant to Section 6.01 (e) and referred to in 
paragraph 1 of Schedule 4 to this Agreement.
ARTICLE II
The Credit
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Section 2.01. The Association agrees to lend to the Borrower, on 
the terms and conditions set forth or referred to in the Development 
Credit Agreement, an amount in various currencies equivalent to 
forty-five million, five hundred thousand Special Drawing Rights (SDR 
45,500,000).
Section 2.02. (a) The amount of the Credit may be withdrawn from 
the Credit Account in accordance with the provisions of Schedule 1 to 
this Agreement for (i) expenditures made (or, if the Association shall so 
agree, to be made) in respect of the reasonable cost of works, goods, and 
services required for the Project described in Schedule 2 to this 
Agreement and to be financed out of the proceeds of the Credit; and (ii) 
amounts paid (or if the Association shall so agree, amounts to be paid) 
by the Borrower on account of withdrawals made for the benefit of a 
Beneficiary under a Community Subproject Grant to meet the reasonable 
cost of goods, works, or services required for such Community Subproject 
and in respect of which withdrawal from the Credit Account is requested. 
(b)
The Borrower may, for the purposes of the Project, 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 or attachment. Deposits 
into, and payments out of, the Special Account shall be made in 
accordance with the provisions of Schedule 5 to this Agreement.
(c)
Promptly after the Effective Date, the Association shall, on 
behalf of the Borrower, withdraw from the Credit Account and pay to 
itself the amount required to repay the principal amount of the Project 
Preparation Advance withdrawn and outstanding as of such date and to pay 
all unpaid charges thereon. The unwithdrawn balance of the authorized 
amount of the Project Preparation Advance shall thereupon be canceled.
Section 2.03. The Closing Date shall be June 30, 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 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.
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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 October 1, 
2010 and ending April 1, 2040. Each installment to, and including the 
installment payable on, April 1, 2020 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 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, shall carry out the Project through TASAF MU with due 
diligence and efficiency and in conformity with appropriate financial, 
administrative, environmental, and economic practices and shall provide, 
promptly as needed, the funds, facilities, services, and other resources 
required for the Project.
(b)
Without limitation upon the provisions of paragraph (a) of 
this Section, and except as the Borrower and the Association shall 
otherwise agree, the Borrower shall carry out the Project in accordance 
with the Implementation Program set forth in Schedule 4 to this 
Agreement.
Section 3.02. Except as the Association shall otherwise agree, 
procurement of the goods, works, and consultants’ services required for 
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the Project and to be financed out of the proceeds of the Credit shall be 
governed by the provisions of Schedule 3 to this Agreement.
Section 3.03. For the purposes of Section 9.07 of the General 
Conditions and without limitation thereto, the Borrower shall:
(a)
prepare, on the basis of guidelines acceptable to the 
Association, and furnish to the Association not later than six (6) months 
after the Closing Date or such later date as may be agreed for this 
purpose between the Borrower and the Association, a plan designed to 
ensure the sustainability of the Project; and 
(b)
afford the Association a reasonable opportunity to exchange 
views with the Borrower on said plan.
ARTICLE IV
Financial Covenants
Section 4.01. (a) The Borrower shall maintain or cause to be 
maintained records and accounts adequate to reflect, in accordance with 
sound accounting practices, the operations, resources, and expenditures 
in respect of the Project of the departments or agencies of the Borrower 
responsible for carrying out 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 the 
Special Account, for each Fiscal Year audited, in 
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; 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.
(c)
For all expenditures with respect to which withdrawals from 
the Credit Account were made on the basis of Project Management Reports 
or statements of expenditure, the Borrower shall:
(i)
maintain or cause to be maintained, in accordance 
with paragraph (a) of this 
Section, records and 
separate accounts reflecting such expenditures;
(ii)
retain, 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, all records (contracts, orders, invoices, bills, 
receipts, 
and other documents) evidencing such 
expenditures;
(iii)
enable the Association’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 
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Project 
Management Reports or 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 limitation upon the provisions of Section 
4.01 of this Agreement, the Borrower shall carry out a time-bound action 
plan acceptable to the Association for the strengthening of its financial 
management system for the Project in order to enable the Borrower, not 
later than March 31, 2002, or such later date as the Association shall 
agree, to prepare quarterly Project Management Reports acceptable to the 
Association, each of which:
(i) 
(A) sets forth actual sources and applications of 
funds for the Project, both 
cumulatively and for the 
period covered by said Report, and projected sources 
and applications of funds for the Project for the six-month period 
following 
the period covered by said Report, and (B) 
shows separately expenditures 
financed out of the 
proceeds of the Credit during the period covered by said 
Report and expenditures proposed to be financed out of the 
proceeds of the 
Credit during the six-month 
period following the period covered by said 
Report;
(ii)
(A) describes physical progress in Project 
implementation, both cumulatively 
and for the period 
covered by said Report, and (B) explains variances between 
the actual and previously forecast implementation targets; 
and
(iii)  sets forth the status of procurement under the 
Project and expenditures under 
contracts financed out of 
the proceeds of the Credit, as at the end of the 
period covered by said Report.
(b)
Upon the completion of the action plan referred to in 
paragraph (a) of this Section, the Borrower shall prepare, in accordance 
with guidelines acceptable to the Association, and furnish to the 
Association not later than 45 days after the end of each calendar 
quarter, a Project Management Report for such period.
ARTICLE V
Remedies of the Association
Section 5.01. Pursuant to Section 6.02 (h) of the General 
Conditions, the following additional event is specified, namely, that a 
situation has arisen which shall make it improbable that the Program, or 
a significant part thereof, will be carried out. 
ARTICLE VI
Effective Date; Termination
Section 6.01. The following events are specified as additional 
conditions to the effectiveness of the Development Credit Agreement 
within the meaning of Section 12.01 (b) of the General Conditions:
(a)
the Borrower has established an accounting and financial 
management system satisfactory to the Association; 
(b)
the Borrower has adopted the Project Manuals;
(c)
the Borrower has furnished to the Association the signed 
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Memoranda of Understanding referred in paragraph 4 of Schedule 4 to this 
Agreement (with the exception of the Memoranda of Understanding signed 
with the Districts in Zanzibar, also referred to in paragraph 4 of 
Schedule 4 to this Agreement); 
(d)
the Borrower has confirmed that the MIS system referred to 
in paragraph 12 of Schedule 4 to this Agreement is operational; 
(e)
TASAF MU has been established in accordance with the 
provisions of paragraph 1 (a) of Schedule 4 to this Agreement; and
(f)
each District Steering Committee has been established in 
accordance with the provisions of paragraph 3 of Schedule 4 to this 
Agreement (with the exception of the District Steering Committees for 
Zanzibar, also referred to in paragraph 3 of Schedule 4 to this 
Agreement).
Section 6.02. 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 at the time responsible for finance of 
the Borrower 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
P.O. Box 9111
Dar es Salaam
United Republic of Tanzania
Cable address:
Telex:
Facsimile:
TREASURY
41329
(255-51) 117790
Dar es Salaam
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.
UNITED REPUBLIC OF TANZANIA
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By /s/ Alex C. Massinda
Authorized Representative
INTERNATIONAL DEVELOPMENT ASSOCIATION
By /s/ Callisto Madavo
Regional Vice President
Africa
SCHEDULE 1
Withdrawal of the Proceeds of the Credit
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)
Community
   23,400,000
95% of amounts paid
Subprojects 
by TASAF MU
(2)
Public Works
    9,300,000
95% of amounts paid
Subprojects
by TASAF MU
(3)
Equipment,
    2,000,000
100% of foreign
furniture, vehicles, 
expenditures and
and supplies
90% of local
expenditures
(4)
Consultants’
    3,150,000
100% 
services, training 
workshops, 
studies, and audits 
(5)
Operating costs
    3,150,000
90% 
(6)
Refunding of
      950,000
Amount due pursuant
Project Preparation
to Section 2.02 (c) 
of
Advance
this Agreement
(7)
Unallocated
    3,550,000
TOTAL
   45,500,000
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 
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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 incremental recurrent 
expenditures incurred on account of the Project for TASAF MU contract 
staff remuneration, per diems, benefits, office supplies, fuel, 
maintenance of vehicles, maintenance of equipment, telephone and other 
communications charges, office rent, and insurance for vehicles including 
motorcycles, office equipment and furniture, but excluding salaries of 
officials of the Borrower's civil and public service.
3.
Notwithstanding the provisions of paragraph 1 above, no withdrawals 
shall be made in respect of payments made for (a) expenditures prior to 
the date of this Agreement; and (b) expenditures under Categories (1) and 
(2) unless the Community Subproject Grants and the Public Works 
Subproject Grants have been made in accordance with the criteria, 
procedures, and terms and conditions set forth or referred to in 
paragraphs 7, 8, 10, and 11 of Schedule 4 to this Agreement, 
respectively. 
4.
The Association may require withdrawals from the Credit Account to 
be made on the basis of statements of expenditure (a) for expenditures 
under contracts for works and goods not exceeding $100,000 equivalent 
each; (b) for expenditures under contracts for consultants’ services, 
provided by firms, not exceeding $100,000 equivalent each; and (c) for 
expenditures under contracts for consultants’ services provided by 
individuals, incremental operating costs, as well as training, workshops, 
studies, audits, Community Subprojects, and Public Works Subprojects not 
exceeding $50,000 equivalent each, all under such terms and conditions as 
the Association shall specify by notice to the Borrower. 
SCHEDULE 2
Description of the Project
The objectives of the Project are to enhance and sustain the 
provision and use of resource endowments by Beneficiaries, which will 
contribute to poverty reduction through (i) the improvement of 
socioeconomic infrastructure and basic social and economic services; (ii) 
the increase in capacity and skills among rural and peri-urban 
communities; and (iii) the creation of temporary safety-net programs for 
the poorest and most vulnerable sections of the communities. 
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:
Community Development Initiatives
Promotion, identification, design, appraisal, implementation, 
supervision, and evaluation of community-based socioeconomic 
infrastructure Community Subprojects and provision of Community 
Subproject Grants for the financing thereof, for the rehabilitation, 
extension, construction, and equipment for sustainable basic and 
post-basic education, health facilities, construction and rehabilitation 
of economic infrastructure, including markets, small-scale water supply, 
storm drainage and sanitation, access roads, bridges, and natural 
resource management. 
Part B:
Public Works Program
Carrying out Public Works Subprojects consisting of labor-intensive 
works as a safety-net scheme in targeted poor rural and urban areas, 
including road rehabilitation and maintenance, land husbandry and 
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afforestation, water supply and sanitation and drainage schemes, water 
retention structures, and the construction of terraces, and provision of 
financing therefor.
Part C:
Institutional Development
1.
Strengthening the capacity of TASAF MU and national, regional, and 
district agencies to implement the Community and Public Works 
Subprojects, and monitor and evaluate the overall implementation of the 
Project, through the provision of training in the use of procedures, 
systems, and criteria developed under TASAF MU.
2.
Carrying out studies relevant to the objectives of the Project, 
including annual Beneficiary assessments, impact assessments, national 
welfare monitoring and analysis, and strategic and technical studies to 
determine the future role of TASAF MU.
3.
Carrying out IEC activities, including the production of flyers, 
posters, radio programs, videos, and the use of drama groups, about the 
objectives, working principles, and activities related to the Program.
* * *
The Project is expected to be completed by December 31, 2004.
SCHEDULE 3
Procurement and Consultants’ Services
Section I.
Procurement of Good and Works
Part A:
General
1.
Goods and works shall be procured in accordance with (a) the 
provisions of Section I of the “Guidelines for Procurement under IBRD 
Loans and IDA Credits” published by the Bank in January 1995 and revised 
in January and August 1996 and September 1997 and January 1999 (the 
Guidelines) and the following provisions of this Section.
2.
In paragraphs 1.6 and 1.8 of the Guidelines, the references to 
“Bank member countries” and “member country” shall be deemed to be 
references, respectively, to “Participating Countries” and “Participating 
Country.”
Part B:
International Competitive Bidding
Except as otherwise provided in Part C of this Section, works shall 
be procured under contracts awarded in accordance with the provisions of 
Section II of the Guidelines and paragraph 5 of Appendix 1 thereto.
Part C:
Other Procurement Procedures
1.
National Competitive Bidding
Goods estimated to cost less than $100,000 equivalent per contract, 
up to an aggregate amount not to exceed $600,000 equivalent, may be 
procured under contracts awarded in accordance with the provisions of 
paragraphs 3.3 and 3.4 of the Guidelines.
2.
National Shopping and IAPSO
Goods estimated to cost less than $25,000 equivalent per contract, 
up to an aggregate amount not to exceed $700,000 equivalent (such 
aggregate amount to apply solely to Part C of the Project), may be 
procured under contracts awarded on the basis of national shopping 
procedures in accordance with the provisions of paragraphs 3.5 and 3.6 of 
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the Guidelines, or through IAPSO.
3.
Community Participation
Goods and works required for Parts A and B of the Project may be 
procured in accordance with procedures acceptable to the Association and 
documented in the Project Manuals.
4.
Procurement of Small Works
Subproject works under Part A of the Project estimated to cost 
$25,000 equivalent or less per contract, and under Part B of the Project 
estimated to cost $50,000 equivalent or less per contract, may be 
procured under lump-sum, fixed-price contracts awarded on the basis of 
quotations obtained from three (3) qualified domestic contractors in 
response to a written invitation. The invitation shall include a detailed 
description of the works, including basic specifications, the required 
completion date, a basic form of agreement acceptable to the Association, 
and relevant drawings, where applicable. The award shall be made to the 
contractor who offers the lowest price quotation for the required work 
and who has the experience and resources to complete the contract 
successfully.
5.
Force Account
Works which meet the requirements of paragraph 3.8 of the 
Guidelines and costing $10,000 equivalent or less in the aggregate, up to 
an aggregate amount not to exceed $200,000 equivalent, may, with the 
Association's prior agreement, be carried out by force account in 
accordance with the provisions of said paragraph of the Guidelines.
Part D:
Review by the Association of Procurement Decisions
1.
Procurement Planning
Prior to the issuance of any invitations to prequalify for bidding 
or to bid for contracts, the proposed procurement plan for the Project 
shall be furnished to the Association for its review and approval, in 
accordance with the provisions of paragraph 1 of Appendix 1 to the 
Guidelines. Procurement of all goods and works shall be undertaken in 
accordance with such procurement plan as shall have been approved by the 
Association and with the provisions of said paragraph 1.
2.
Prior Review
With respect to (i) each contract for goods and works estimated to 
cost the equivalent of $100,000 or more; (ii) the first five contracts 
for goods and works under Parts A and B of the Project estimated to cost 
the equivalent of $25,000 or more; and (iii) the first five contracts for 
goods and works under Part C of the Project estimated to cost the 
equivalent of $25,000 or more, but less than the equivalent of $100,000, 
respectively, procured in accordance with National Competitive Bidding, 
the procedures set forth in paragraphs 2 and 3 of Appendix 1 to the 
Guidelines shall apply.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this 
Part, the procedures set forth in paragraph 4 of Appendix 1 to the 
Guidelines shall apply.
Section II.
Employment of Consultants
Part A:
General
1.
Consultants’ services shall be procured in accordance with (a) the 
provisions of the Introduction and Section IV of the “Guidelines: 
Page  13
Selection and Employment of Consultants by World Bank Borrowers” 
published by the Bank in January 1997 and revised in September 1997 and 
January 1999 (the Consultant Guidelines) and the following provisions of 
this Section II.
2.
In paragraph 1.10 of the Consultant Guidelines, the references to 
“Bank member countries” and “member country” shall be deemed to be 
references, respectively, to “Participating Countries” and “Participating 
Country.”
Part B:
Quality- and Cost-Based Selection
1.
Except as otherwise provided in Part C of this Section, 
consultants’ services shall be procured under contracts awarded in 
accordance with the provisions of Section II of the Consultant 
Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 thereto, and 
the provisions of paragraphs 3.13 through 3.18 thereof applicable to 
quality- and cost-based selection of consultants.
2.
The following provisions shall apply to consultants’ services to be 
procured under contracts awarded in accordance with the provisions of the 
preceding paragraph.  The shortlist of consultants for services estimated 
to cost less than $100,000 equivalent per contract may comprise entirely 
national consultants in accordance with the provisions of paragraph 2.7 
of the Consultant Guidelines.
Part C:
Other Procedures for the Selection of Consultants 
1.
Selection Based on Consultants’ Qualifications
Services for consultants under Part C of the Project estimated to 
cost less than $100,000 equivalent per contract may be procured under 
contracts awarded in accordance with the provisions of paragraphs 3.1 and 
3.7 of the Consultant Guidelines.
2.
Single-Source Selection
Services for consultants may, with the Association's prior 
agreement, be procured in accordance with the provisions of paragraphs 
3.8 through 3.11 of the Consultant Guidelines.
3.
Individual Consultants
Services for consultants for tasks that meet the requirements set 
forth in paragraph 5.01 of the Consultant Guidelines, may be procured 
under contracts awarded to individual consultants in accordance with the 
provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines.
Part D:
Review by the Association of the Selection of Consultants
1.
Selection Planning
Prior to the issuance to consultants of any requests for proposals, 
the proposed plan for the selection of consultants under the Project 
shall be furnished to the Association for its review and approval, in 
accordance with the provisions of paragraph 1 of Appendix 1 to the 
Consultant Guidelines.  Selection of all consultants’ services shall be 
undertaken in accordance with such selection plan as shall have been 
approved by the Association and with the provisions of said paragraph 1.
2.
Prior Review
(a)
With respect to each contract for the employment of 
consulting firms estimated to cost the equivalent of $100,000 or more, 
the procedures set forth in paragraphs 1, 2 (other than the third 
subparagraph of paragraph 2 (a)), and 5 of Appendix 1 to the Consultant 
Page  14
Guidelines shall apply.
(b)
With respect to each contract for the employment of 
consulting firms estimated to cost the equivalent of $50,000 or more, but 
less than the equivalent of $100,000, the procedures set forth in 
paragraphs 1, 2 (other than the second subparagraph of paragraph 2 (a)), 
and 5 of Appendix 1 to the Consultant  Guidelines shall apply.
(c)
With respect to each contract for the employment of 
individual consultants estimated to cost the equivalent of $50,000 or 
more, the qualifications, experience, terms of reference, and terms of 
employment of the consultants shall be furnished to the Association for 
its prior review and approval. The contract shall be awarded only after 
the said approval shall have been given.
3.
Post Review
With respect to each contract not governed by paragraph 2 of this 
Part, the procedures set forth in paragraph 4 of Appendix 1 to the 
Consultant Guidelines shall apply.
SCHEDULE 4
Implementation Program
General
1.
TASAF MU 
(a)
The Borrower shall (i) establish and maintain TASAF MU which 
shall be responsible for the day-to-day implementation of the Project; 
and (ii) at all times maintain within TASAF MU staff with qualifications 
and terms of reference acceptable to the Association, including an 
Executive Director, Directors for Community Development Initiatives and 
the Public Works Program, a Director for Finance, as well as heads of 
Monitoring and Evaluation and Capacity Building Units and an Internal 
Audit Officer.
(b)
TASAF MU shall (i) maintain the Project Manuals for the 
implementation of all components of the Project, (ii) take all measures 
necessary to ensure that the Project is carried out in conformity with 
the Project Manuals, (iii) not amend or waive any provision thereof 
which, in the opinion of the Association, will materially or adversely 
affect the implementation of the Project; and (iv) prepare the annual 
work plans for approval by the NSC.
2.
NSC 
(a)
The Borrower shall maintain the NSC, to oversee the work of 
TASAF MU.  Unless the Association shall otherwise agree, the NSC shall 
(i) be chaired by a representative of the Vice President's Office, or any 
other person designated by the President’s Office; and (ii) comprise, 
inter alia, the following members:  representatives of the President’s 
Office, the ministries responsible for finance; community development, 
women's affairs and children; regional administration and local 
government; labor and youth; as well as by representatives of NGOs, 
research institutions, and Interfaith.
The Executive Director of TASAF 
MU shall be the Secretary and an ex-officio member.
(b)
The NSC shall, on behalf of the Borrower, (i) provide 
overall policy guidance on the management of the Project, (ii) give TASAF 
MU directives and guidance on the interpretation of the Borrower’s 
policies pertaining to those sectors affected by the Project, (iii) 
approve TASAF MU’s annual work plans, (iv) review quarterly and annual 
reports and semiannual and annual audits; and (v) monitor and evaluate 
Project implementation and impact. 
Page  15
3.
District Steering Committees
The Borrower shall establish and maintain the District Steering 
Committees which shall be responsible for the processing, the 
recommendation, and the approval of Subprojects.  Unless the Association 
shall otherwise agree, each District Steering Committee shall consist of, 
inter alia, the District Commissioner, the TASAF District Officer, the 
District Executive Director, NGOs, and private sector contractors.  The 
District Steering Committees for Zanzibar shall be established by May 1, 
2001.  All other District Steering Committees shall be established by the 
Effective Date.  The TASAF Program Officer will be an ex-officio member 
of the District Steering Committee.
4.
Memoranda of Understanding 
TASAF MU shall enter into Memoranda of Understanding, acceptable to 
the Association, with (a) the Bureau of Statistics to formalize its role 
in the implementation of the Subprojects; and (b) the Executive Directors 
of each District guaranteeing to provide full-time TASAF District 
officers and support staff in sufficient numbers, as well as adequate 
office space.  The Memoranda of Understanding (i) with the Executive 
Directors of the Zanzibar Districts shall be finalized by May 1, 2001; 
and (ii) with the Executive Directors of all other Districts shall be 
finalized by the Effective Date.
5.
The Borrower shall designate desk officers in its ministries and 
departments, who shall be assigned to work with TASAF MU and to carry out 
the following activities: (a) provide information to TASAF MU on sectoral 
gaps, policies, and norms; (b) provide feedback on issues arising from 
the implementation of the Subprojects; (c) obtain approval of 
Subprojects’ inclusion under the Project; and (d) monitor whether 
sectoral recurrent budgets cover assets created under the Project. Such 
designation shall be formalized by the issuance of ministerial circulars 
by the relevant Permanent Secretary.
6.
Performance Indicators, Annual and Midterm Reviews
The Borrower shall: 
(a)
maintain policies and procedures adequate to enable it to 
monitor and evaluate on an ongoing basis, in accordance with the 
indicators set forth in Schedule 6 to this Agreement, the carrying out of 
the Project and the achievement of the objectives thereof;
(b)
prepare, under terms of reference satisfactory to the 
Association, and furnish to the Association, on or about November of each 
year for the annual reviews, and November 1, 2002 with respect to the 
midterm review, an annual progress report integrating the results of the 
monitoring and evaluation activities performed pursuant to paragraph (a) 
of this Section, on the progress achieved in the carrying out of the 
various components of the Project during the period preceding the date of 
said report based on the work plan for the period under review and 
setting out the measures recommended to ensure the efficient carrying out 
of the Project and the achievement of the objectives thereof during the 
period following such date; and
(c)
review with the Association, by December of each year for 
the annual reviews and December 30, 2002 with respect to the midterm 
review, or such later date as the Association shall request, the report 
referred to in paragraph (b) of this Section and, thereafter, take all 
measures required to ensure the efficient completion of the Project and 
the achievement of the objectives thereof, based on the conclusions and 
recommendations of the said report and the Association’s views on the 
matter.
Part A of the Project
Page  16
7.
Eligibility Criteria for Community Subprojects
Without limitation on the provisions of paragraph 1 (b) above, no 
Community Subproject shall be eligible for financing out of the proceeds 
of the Credit unless the Executive Director of TASAF MU shall have 
determined, on the basis of an appraisal conducted in accordance with the 
guidelines set forth in the Project Manuals, that the Community 
Subproject satisfies the eligibility criteria specified in more detail in 
the Project Manuals, which shall include the following:
(a)
the Community Subproject shall be for social and economic 
infrastructure and services, including primary health, basic education, 
rural water supply, feeder roads, and the construction of markets and 
granaries;
(b)
the Community Subproject shall be initiated by a Beneficiary 
duly represented by a Community Project Committee;
(c)
the Community Subproject shall be economically, financially, 
and technically viable in accordance with the standards specified in the 
Project Manuals;
(d)
except as the Association shall otherwise agree, the 
Beneficiary shall provide not less than 20% of the estimated costs of the 
Community Subprojects in the form of cash, materials, labor, or other 
services and not less than 5% of the estimated costs of Community 
Subprojects for boreholes and Community Subprojects related to HIV/AIDS; 
and
(e)
the Community Subproject shall be in compliance with the 
standards set forth in the applicable laws of the Borrower relating to 
health, safety, and environmental protection.
8.
Terms and Conditions of Community Subprojects Grants
In financing Community Subprojects, TASAF MU shall enter into a 
Community Subproject Agreement with the Beneficiary, under terms and 
conditions which shall include the following:
(a)
financing to be on a grant basis and, unless otherwise 
agreed with the Association, not to exceed the equivalent of $25,000 per 
Community Subproject Grant;
(b)
the obligation to carry out the Community Subproject in 
accordance with the Project Manuals, with due diligence and efficiency 
and in accordance with sound technical, financial, environmental, and 
managerial standards and to maintain adequate records to reflect, in 
accordance with sound accounting practices, the operations, resources, 
and expenditures in respect of the Community Subproject;
(c)
the requirement that (i) the goods, works, and services to 
be financed from the proceeds of the Credit shall be procured in 
accordance with the procedures set forth in Schedule 3 to this Agreement; 
and (ii) such goods, works, and services shall be used exclusively in the 
carrying out of the Community Subproject;
(d)
the right of TASAF MU to inspect by itself, or jointly with 
the Association if the Association shall so request, the goods, works, 
sites, plants, and construction included in the Community Subproject, the 
operations thereof, and any relevant records and documents;
(e)
the right of TASAF MU to obtain all information as TASAF MU 
or the Association shall reasonably request regarding the administration, 
operation, and financial conditions of the Subproject; and
(f)
the right of TASAF MU to suspend or terminate the right of 
the Beneficiary to use the proceeds of the Credit for the Community 
Page  17
Subproject upon the failure by the Beneficiary to perform any of its 
obligations under the Community Subproject Agreement.
9.
In order to assist communities to expeditiously implement Community 
Subprojects, TASAF MU shall maintain a unit cost data bank for monitoring 
the cost of materials, goods, works, and services and update such data on 
a semiannual basis. 
Part B of the Project
10.
Eligibility Criteria for Public Works Subprojects 
Without limitation on the provisions of paragraph 1 (b) above, no 
Public Works Subproject shall be eligible for financing out of the 
proceeds of the Credit unless the Executive Director of TASAF MU shall 
have determined, on the basis of an appraisal conducted in accordance 
with the guidelines set forth in the Project Manuals, that the Public 
Works Subproject satisfies the eligibility criteria specified in more 
detail in the Project Manuals, which shall include the following:
(a)
the nature and size of the Public Works Subproject is such 
that it cannot be carried out by the relevant community on a self-help 
basis;
(b)
the unskilled labor content of the Public Works Subproject 
is not less than 40% of the total cost thereof; and
(c)
implementation of the Public Works Subproject will not 
require highly specialized technical inputs and procedures and can be 
started expeditiously. 
11.
Terms and Conditions of Financing for Public Works Subprojects 
In financing Public Works Subprojects, TASAF MU shall enter into a 
Public Works Subproject Agreement with a District Steering Committee, 
under terms and conditions which shall include the following:
(a)
financing to be on a grant basis and, unless otherwise 
agreed with the Association, not to exceed the equivalent of $50,000 per 
Public Works Subproject;
(b)
the obligation to carry out the Public Works Subproject in 
accordance with the Project Manuals, with due diligence and efficiency 
and in accordance with sound technical, financial, environmental, and 
managerial standards and to maintain adequate records to reflect, in 
accordance with sound accounting practices, the operations, resources, 
and expenditures in respect of the Public Works Subproject;
(c)
the requirement that (i) the goods, works, and services to 
be financed from the proceeds of the Credit shall be procured in 
accordance with the procedures set forth in Schedule 3 to this Agreement; 
and (ii) such goods, works, and services shall be used exclusively in the 
carrying out of the Public Works Subproject;
(d)
the right of TASAF MU to inspect by itself, or jointly with 
the Association if the Association shall so request, the goods, works, 
sites and construction included in the Public Works Subproject, the 
operations thereof, and any relevant records and documents;
(e)
the right of TASAF MU to obtain all information as TASAF MU 
or the Association shall reasonably request regarding the administration, 
operation, and financial conditions of the Public Works Subproject; and
(f)
the right of TASAF MU to suspend or terminate the right of 
the District Steering Committee to use the proceeds of the Credit for the 
Public Works Subproject upon the failure by the District Steering 
Committee to perform any of its obligations under the Public Works 
Page  18
Subproject Financing Agreement.
Part C of the Project 
12.
The Borrower shall establish an MIS system, satisfactory to the 
Association, to monitor and report on a monthly basis both the physical 
progress and financial status of Community and Public Works Subprojects 
and other activities under the Project. 
SCHEDULE 5
Special Account
1.
For the purposes of this Schedule:
(a)
the term “eligible Categories” means Categories (1) through 
(5) 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 the 
Project and to be financed out of the proceeds of the Credit 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 $1,000,000 to be withdrawn from the Credit Account and deposited into 
the Special Account pursuant to paragraph 3 (a) of this Schedule, 
provided, however, that unless the Association shall otherwise agree, the 
Authorized Allocation shall be limited to $500,000 until the aggregate 
amount of withdrawals from the Credit Account plus the total amount of 
all outstanding special commitments entered into by the Association 
pursuant to Section 5.02 of the General Conditions shall be equal to or 
exceed SDR 2 million. 
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 Association 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 Association a request or requests for deposit into 
the Special Account of an amount or amounts which do not exceed the 
aggregate amount of the Authorized Allocation. On the basis of such 
request or requests, the Association shall, on behalf of the Borrower, 
withdraw from the Credit 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 
Association requests for 
deposits into the Special Account at such intervals 
as the Association shall specify.
(ii)
Prior to or at the time of each such request, the 
Borrower shall furnish to 
the Association 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 Association 
shall, on behalf of the Borrower, 
withdraw from the Credit 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 
paid out of the Special 
Account for eligible expenditures. All such deposits 
Page  19
shall be withdrawn by the Association from the Credit 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 Association shall reasonably 
request, furnish to the Association 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 
Association shall not be required to make further deposits into the 
Special Account:
(a)
if, at any time, the Association shall have determined that 
all further withdrawals should be made by the Borrower directly from the 
Credit Account in accordance with the provisions of Article V of the 
General Conditions and paragraph (a) of Section 2.02 of this Agreement;
(b)
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, any of the audit reports required to be furnished to 
the Association pursuant to said Section in respect of the audit of the 
records and accounts for the Special Account;
(c)
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 the 
provisions of Section 6.02 of the General Conditions; or
(d)
once the total unwithdrawn amount of the Credit allocated to 
the eligible Categories, minus the total amount of all outstanding 
special commitments entered into by the Association pursuant to Section 
5.02 of the General Conditions with respect to the Project, shall equal 
the equivalent of twice the amount of the Authorized Allocation.
Thereafter, withdrawal from the Credit Account of the remaining 
unwithdrawn amount of the Credit allocated to the eligible Categories 
shall follow such procedures as the Association shall specify by notice 
to the Borrower. Such further withdrawals shall be made only after and to 
the extent that the Association 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 Association 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 Association, the 
Borrower shall, promptly upon notice from the Association, (A) provide 
such additional evidence as the Association may request; or (B) 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 or the 
portion thereof not so eligible or justified. Unless the Association 
shall otherwise agree, no further deposit by the Association 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 Association 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 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 
Page  20
Account.
(d)
Refunds to the Association made pursuant to paragraphs 6 
(a), (b), and (c) of this Schedule shall be credited to the Credit 
Account for subsequent withdrawal or for cancellation in accordance with 
the relevant provisions of this Agreement, including the General 
Conditions.
SCHEDULE 6
Performance Indicators
Part A:
Community Development Initiatives
·
Number of Community Subproject requests received, approved, funded, 
and completed by sector and geographic distribution
·
Number of women in Community Project Committees
·
Number of women trained in the operation and maintenance of water 
facilities
·
Completion time of Community Subprojects
·
Number of proposals received from the urban areas, approved, 
funded, and completed 
·
Access to safe water sources–distance to the water point and time 
savings 
Part B:
Public Works Program 
·
Number of persons/months of employment created by gender under the 
urban and rural Subprojects 
·
Labor intensity: percentage of unskilled labor cost to total 
project cost 
·
Number of projects approved, funded and completed by sector and 
geographic distribution 
·
Number of households benefiting from employment 
·
Total wage income transferred in US dollar equivalent 
Part C:
Institutional Development 
·
Workshops/meetings/studies/field visits by type of training 
provided and number and type of participants 
·
Number of people trained in project cycle management and basic 
bookkeeping 
·
Number of strategic and technical studies, beneficiary and impact 
assessments carried out and disseminated 
·
Number of IEC messages by type, medium, and coverage