CREDIT NUMBER 1808 TO Development Credit Agreement (Agricultural Extension Project) between REPUBLIC OF TOGO and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated 3, 1987 CREDIT NUMBER 1808 TO DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated 3, 1987, between REPUBLIC OF TOGO (the Borrower)V anf/ INTERNATIONAL DEVELOPMENT ASSOCIATION (the Association). WHEREAS 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; 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 Develop- ment Credit Agreements" of the Association, dated January 1, 1985, with the last sentence of Section 3.02 del-ted (the General Conditions) constitute an integral part of this Agreement. Section 1.02. Unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following additional terms have the following meanings: (a) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; (b) "Project Preparation Advances" means the project prepa- ration advances granted by the Association to the Borrower pursuant to an exchange of letters dated June 20, 1985 and September 19, 1985, between the Borrower and the Association; (c) "MDR" means Minist&re du D6veloppement Rural, a Ministry of the Borrower responsible for rural development matters; (d) "DGDR" means Direction Gen6rale du Ddveloppement Rural, a general directorate within MDR; -2- (e) "DCV" means Direction de la Coop6ration et de la Vulgarisation, a directorate within DGDR responsible for farmers extension services operations; (f) "DAF" means Direction Administrative et Financiere, a directorate responsible for administrative and financial matters within MDR; (g) "DRA" means Direction de la Recherche Agronomique, a directorate responsible for applied agricultural research within MDR; (h) "DRDR" means Direction R6gionale de D6veloppement Rural, a decentralized directorate of MDR responsible for rural development matters at the regional level; (i) "Project Area" means the area under the jurisdiction of the DRDRs, responsible, respectively, for Savannah region, Kara region, Plateaux region and Maritime region; (j) "Project Account" means the account referred to in Section 3.01 (b) of this Agreement; and (k) "CFAF" means 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 Siet forth or referred to in the Development Credit Agreement, an amount in various currencies equivalent to seven million six hundred thousand Special Drawing Rights (SDR 7,600,000). 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 expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project described in Schedule 2 to this Agreement and to be financed out of the proceeds of the Credit. (b) The Borrower shall, for the purposes of the Project, open and maintain in CFAF a special account in a commercial bank on terms and conditions satisfactory to the Association, Deposits into, and payments out of, the Special Account shall be made in accordance with the provisions of Schedule 4 to this Agreement. - 3 - (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 cancelled. Section 2.03. The Closing Date iall be June 30, 1993 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 at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not withdrawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agreement to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) 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 thaxt 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. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each April 1 and October 1 commencing October 1, 1997, and ending April 1, 2037. Each installment to and including the installment payable on April 1, 2007 shall be one-half of one percent (1/2 of 1%) of such principal amount, and each installment thereafter shall be one and one-half percent (1-1/2%) of such principal amount. Section 2.08. The currency of the French Republic is hereby specified for the purposes of Section 4.02 of the General Conditions. -4- 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 DCV under the overall responsibility of DGDR with due diligence and efficiency and in conformity with appropriate administrative, financial and agricultural practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) Without limitation to the generality of the provisions of paragraph (a) above with regard to the provision of funds, the Borrower shall: (i) open and thereafter maintain in CFAF and in the name of DCV an account (the Project Account) in a commercial bank on ,erms and conditions satisfactory to the Association; and (ii) thereafter deposit into the Project Account on the first day of every calendar quarter commencing on January 1, 1988 an amount equivalent to the financial requirements of the Project as assessed by DCV for that quarter. (c) Amounts deposited in the Project Account pursuant to paragraph (b) (ii) above shall be used only to make payments to meet expenditures made or to be made in respect of the reasonable cost of goods and services for the Project. Section 3.02. To assist the Borrower in carrying out the Project, the Borrower shall: (a) (i) employ at all times as heads of DCV, DAF and DRDRs, Togolese nationals with qualifications and experience satisfactory to the Association; (ii) designate as counterparts to the specialists referred to in Section II (b) of Schedule 3 to this Agreement Togolese nationals with qualifications and experience satisfactory to the Association; (iii) redeploy extension staff during the execution of the Project so as to achieve a ratio of 1 extension agent for about 200 farmers no later than December 31, 1991; (iv) take all measures necessary to achieve a ratio of 1 head of sub-sector for 8 extension agents no later than December 31, 1991; and (v) not hire further subject matter -5- specialists until December 31, 1992 except as required to fill budgetary positions with the Association's approval. (b) ensure that, each year, DCV, DRA, DAF and DRDRs: (i) prepare Project related work programs and budgets; (ii) submit them, not later than October 31 of each year, to the Association for its review and approval; and (iii) execute said work pro, rams as approved by the Association; and (c) submit to the Association: (i) no later than December 31, 1988; (ii) no later than December 31, 1989 the results of the studies referred to respectively in Part C.3 (a) and (b) of the Project; and (iii) implement the recommendations of said studies as they shall have been agreed upon with the Association. Section 3.03. Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for 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. 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, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and -6- (iii) furnish to the Association such other information concerning said records, 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 statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the completion of the audit 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 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. 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 the organization, functions and responsibilities of DGDR, DCV and DRDRs shall have been amended in such way as to materially and adversely affect the carrying out of the Project. Section 5.02. Pursuant to Section 7.01 (d) of the General Conditions, the following additional event is specified, namely, that the event specified in Section 5.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrow/4!r. -7- ARTICLE VI Effective Date; Termination Section 6.01. The following events are specified as additional conditions to the effectiveness of the DeveloprA-it Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the Borrower has furnished the Association with an audit satisfactory to the Association of the accounts of DRDRs of the Project Area for the fiscal year ended December 31, 1986; and (b) the Borrower has: (i) established for DAF and the DRDRs of the Project Area a financial management system satisfactory to the Association; (ii) appointed the head of DCV; (iii) recruited the experts referred to in Section II (b) of Schedule 3 to this Agreement and designated their counterparts. 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 of the Borrower 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 Economy and Finance P.O. Box 387 Lom6 Republic of Togo Cable address: Telex: MINFIE:TO 5286 -8- For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties hereto, acting through their duly authorized representatives, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF TOGO By // ~ /~ 4/w Authori ed Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /b Z-u'j (T4> )' RegionaYVice President Africa -9- 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 allor ,,on of the amounts of the Credit to each Category and the p- contage 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) Civil Works 700,000 100% (2) Equipment and 1,250,000 100% Vehicles (3) Technical 940,000 100% Assistance (4) Consultants' 550,000 100% Services (5) Training 860,000 100% (6) Operating Costs 1,650,000 100% during FY 1 90% during FY 2 60% during FY 3 44% thereafter (7) Refunding of 630,000 Amount due pur- Project Prepara- suant to Section tion Advances 2.02 (c) of this Agreement (8) Unallocated 1,020,000 TOTAL 7,600,000 - 10 - 2. For the purposes of this Schedule: (i) the term "operating costs" means expenditures for current expenses (except for staff salaries) such as lubricants, fuel, office supplies, and travel expenses required for the Project; and (ii) the term "Fiscal Year" means each consecutive Fiscal Year of the Borrower during which the Project is being implemented, starting on January 1 and ending on December 31 of each year. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expenditures prior to the date of this Agreement. - 11 - SCHEDULE 2 Description of the Project The objective of the Project is to improve the capability of the Borrower to deliver adequate and efficient agricultural extension services which are required to increase production and productivity in the Borrower's agricultural sector and thereby to increase farmers' income. 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: Institutional Building 1. (a) Strengthening of DGDR's technical capability and financial management through the reorganization of DCV and the strengthening of DAF; (b) streamlining of DAF's financial management and accounting system; and (c) establishment of a monitoring and evaluation unit at DGDR. 2. Strengthening of DRDRs' technical capability and financial management through: (a) redefinition of responsibilities for delivery of extension services in the field; and (b) establishment of: (i) a monitoring and evaluation unit; and (i" a financial management and accounting system. Part B: Training 1. Formulation of short- and long-term training programs and carrying out of said programs for the relevant staff of DGDR and DRDRs at all levels through seminars, refresher courses and study tours. 2. Construction and equipping of four DRDR training centers. Part C: Research 1. Construction and equipping of six new research out-stations and rehabilitation of six existing ones. - 12 - 2. Formulation and carrying out of applied and adaptive research programs. 3. (a) A study on the role and contribution of women in agriculture and rural development; and (b) a study to assess the current DRDRs' organizational structure and recommend appropriate changes. Part D: (a) Construction of about 12 DRDR import distribution stores and about 85 import distribution stores in selected villages; (b) construction of about 12 offices and housing for DRDRs; and (c) acquisition of equipment, furniture, vehicles, supplies and spare parts. The Project is expected to be completed by December 31, 1992. - 13 - SCHEDULE 3 Procurement and Consultants' Services Section I. Procurement of Goods and Works Part A: International Competitive Bidding 1. Except as provided in Part B hereof, goods and works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in May 1985 (the Guidelines). 2. To the extent practicable, contracts for vehicles shall be grouped in bid packages estimated to cost the equivalent of $200,000 or more each. Part B: Other Procurement Procedures 1. Goods estimated to cost the equivalent of $50,000 or more per contract may be procured under contracts awarded on the basis of competitive bidding, advertised locally, in accordance with procedures satisfactory to the Association, provided that: (i) all bids shall be opened in public and bidders' representatives shall be allowed to be present; (ii) criteria for evaluating bids shall be set out clearly and communicated to all bidders; and (iii) foreign companies shall not be required to be incorporated in Togo in order to participate in the bidding. 2. Goods estimated to cost the equivalent of less than $50,000 or more per contract may be procured under contracts awarded through direct shopping on the basis of evaluation and comparison of bids invited from a list of at least three reputable suppliers. Part C: Review by the Association of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $200,000 or more, the procedures set forth in - 14 - paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. Where payments for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract required to be furnished to the Association pursuant to said paragraph 2 (d) shall be furnished to the Association prior to the making of the first payment out of the Special Account in respect of such contract. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. Where payme- :s for such contract are to be made out of the Special Account, such procedures shall be modified to ensure that the two conformed copies of the contract, together with the other information required to be furnished to the Association pursuant to said paragraph 3, shall be furnished to the Association as part of the evidence to be furnished pursuant to paragraph 4 of Schedule 4 to this Agreement. (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Association has authorized withdrawals from the Credit Account on the basis of statements of expenditure. Such contracts shall be retained in accordance with Section 4.01 (c) (ii) of this Agreement. 2. The figure of 15% is hereby specified for purposes of paragraph 4 of Appendix 1 to the Guidelines. Section II. Employment of Consultants (a) In order to assist the Borrower in carrying out the Project, the Borrower shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Such consultants shall be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. (b) Without limitations to the provisions of paragraph (a) above, the Borrower shall employ the following experts: (i) 1 agricultural extension specialist; (ii) 1 agro-economist; - 15 - (iii) 1 monitoring and evaluation specialist; and (iv) 1 financial management specialist. - 16 - SCHEDULE 4 Special Account 1. For the purposes of this Schedule: (a) the term "eligible Categories" means Categories 1 through 6 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 of CFAF 150,000,000 to be withdrawn from the Credit Account and deposited in the Special Account pursuant to paragraph 3 (a) of this Schedule. 2. Except as the Association shall otherwise agree, 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 may be made as follows: (a) On the basis of a request or requests by the Borrower for a deposit or deposits which add up to the aggregate amount of the Authorized Allocation, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and deposit in the Special Account such amount or amounts as the Borrower shall have requested. (b) The Borrower shall furnish to the Association requests for replenishment of the Special Account at such intervals as the Association shall specify. On the basis of such requests, the Association shall withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts not exceeding the amount of payments made out of the Special Account for eligible expenditures. All such deposits shall be withdrawn by the Association from the Credit Account under the respective eligible - 17 - Categories, and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. 4. For each payment made by the Borrower out of the Special Account for which the Borrower requests replenishment pursuant to paragraph 3 (b) of this Schedule, the Borrower shall furnish to the Association, prior to or at the time of such request, such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expen- ditures. 5. (a) Notwithstanding the provisions of paragraph 3 of this Schedule, no further deposit into the Special Account shall be made by the Association when either of the following situations first arises: (i) 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; or (ii) the total unwithdrawn amount of the Credit allocated to the eligible Categories, minus the amount of any outstanding special commitment entered into by the Association pursuant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the Authorized Allocation. (b) 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 any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower - 18 - shall, promptly upon notice from the Association, 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. No further deposit by the Association into the Special Account shall be made until the Borrower has made such deposit or refund. (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 for crediting to the Credit Account. INTERNATIONAL DEVELOPMENT ASSOCIATIOT\ CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the International Development Association. FOR SECRETARY