OFFICIAL DOCUMENTS CREDIT NUMBER CR. 6310-GH Financing Agreement (Financial Sector Development Project) between REPUBLIC OF GHANA and INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER 6310-GH FINANCING AGREEMENT AGREEMENT dated as of the Signature Date between the REPUBLIC OF GHANA ("Recipient") and the INTERNATIONAL DEVELOPMENT ASSOCIATION ("Association"). The Recipient and the Association hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) apply to and form part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE II - FINANCING 2.01. The Association agrees to extend to the Recipient a credit, which is deemed as Concessional Financing for purposes of the General Conditions, in an amount equivalent to twenty-one million four hundred thousand Special Drawing Rights (SDR 21,400,000) (variously, "Credit" and "Financing"), to assist in financing the project described in Schedule I to this Agreement ("Project"). 2.02. The Recipient may withdraw the proceeds of the Financing in accordance with Section III of Schedule 2 to this Agreement. 2.03. The Maximum Commitment Charge Rate is one-half of one percent (1/2 of 1%) per annum on the Unwithdrawn Financing Balance. 2.04. The Service Charge is three-fourths of one percent (3/4 of 1%) per annum on the Withdrawn Credit Balance. 2.05. The Interest Charge is one and a quarter percent (1.25%) per annum on the Withdrawn Credit Balance. 2.06. The Payment Dates are April 1 and October I in each year. 2.07. The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 3 to this Agreement. 2.08. The Payment Currency is Dollar. 2 ARTICLE III - PROJECT 3.01. The Recipient declares its commitment to the objective of the Project. To this end, the Recipient shall carry out the Project in accordance with the provisions of Article V of the General Conditions and Schedule 2 to this Agreement. ARTICLE IV - EFFECTIVENESS; TERMINATION 4.01. The Additional Conditions of Effectiveness consist of the following: (a) The Recipient has prepared and adopted a Project Operations Manual satisfactory to the Association. (b) The Recipient has recruited a project coordinator and procurement specialist with skills, experience, training and under terms of reference satisfactory to the Association. 4.02. The Effectiveness Deadline is the date ninety (90) days after the Signature Date. 4.03. For purposes of Section 10.05(b) of the General Conditions, the date on which the obligations of the Recipient under this Agreement (other than those providing for payment obligations) shall terminate is twenty years after the Signature Date. ARTICLE V - REPRESENTATIVE; ADDRESSES 5.01. The Recipient's Representative is its minister responsible for finance. 5.02. For purposes of Section 11.01 of the General Conditions: (a) the Recipient's address is: Ministry of Finance P.O. Box MB40 Accra, Ghana; and (b) the Recipient's Electronic Address is: chiefdirector@nqmofep.gov.gh 3 5.03. For purposes of Section 11.01 of the General Conditions: (a) The Association's address is: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America; and (b) the Association's Electronic Address is: Telex: Facsimile: 248423 (MCI) 1-202-477-6391 4 AGREED as of the Signature Date. REPUBLIC OF GHANA By Auth ized Representative Name: 1EM 'tNw Ofiopj1-f0H I Title: I{' t-" c- "I t -4 Date: 6FtCAJ' /QP -,2 INTERNATIONAL DEVELOPMENT ASSOCIATION By Authorized Representative Name: SN& L-t Title: 6Dow" \befce Date: 6CO), a 5 SCHEDULE1 Project Description The objective is to promote financial sector soundness and access to financial services by individuals. The Project consists of the following parts: Part 1: Improving Financial Sector Regulatory Oversight and Market Transparency and Discipline (a) Enhancing the regulatory and supervisory framework and capacity for Specialized Deposit-Taking Institutions (SDIs) and credit unions through provision of technical advisory services and training. (b) Provision of technical advisory services, goods and training to build the capacity of the Ghana Cooperative Credit Unions Association to supervise credit unions. (c) Provision of technical advisory services, goods and training for the establishment of a domestic Credit Rating Agency including its structure, implementation arrangements, business model and sustainability, IT architecture and functionality. Part 2: Increasing the Outreach of Rural and Community Banks and Micro-Finance Institutions (MFIs) and Linking Village Saving Loan Associations (VSLA) to the Formal Financial Sector (a) Provision of technical advisory services for upgrading the ARB Apex Bank's IT systems to support the introduction of digital financial services and accommodate banking agent services; and, providing capacity building and training to staff on the requirements and potential of the new systems. (b) Provision of technical advisory services and training to develop and roll out an agent banking network managed by the ARB Apex Bank to improve consumers' access to formal financial services in the rural areas of the Recipient's territory. (c) Upgrading the management information system of the MFIs to support new services and providing MFIs with training on the new system. (d) Provide technical advisory services and goods to link VSLAs to formal financial services providers so that they can reap the benefits of engaging with the formal financial sector. -6- Part 3: Bolstering Financial Capability and Consumer Protection (a) Design and implementation of targeted financial education campaigns including systems to monitor progress in implementation. (b) Building regulatory capacity and systems for consumer protection. Part 4: Enhancing the Capacity for the Implementation and Monitoring of Financial Sector Policies and Supporting Project Implementation (a) Building the capacity of the Ministry of Finance's Financial Sector Division to carry out its responsibilities through training; provision of technical advisory services on conducting a financial inclusion survey; and establishing a website/database on financial inclusion and disseminating relevant information. (b) Supporting Project implementation including the recruitment of a project coordinator and procurement specialist, developing a communication strategy for the project, financing of Operating Costs and implementing a monitoring evaluation system. -7- SCHEDULE2 Project Execution Section I. Implementation Arrangements A. Institutional Arrangements 1. The Recipient's Ministry of Finance, shall through its Financial Sector Division, have overall responsibility for coordinating and managing the Project and providing implementation guidance to all the agencies implementing their respective activities in the Project. 2. To ensure effective Project implementation, the Recipient shall not later than 30 days after the Effectiveness Date or any other date agreed with the Association, assign and thereafter maintain throughout the implementation of the Project, at least one procurement assistant, financial management specialist and monitoring and evaluation specialist to assist the Project Director and Project Coordinator. 3. Project Steering Committee (a) The Recipient shall not later than 90 days after the Effectiveness Date or any other date agreed with the Association, establish and thereafter maintain throughout the implementation of the Project, a Project Steering Committee ("PSC") responsible for overseeing Project implementation and ensuring effective coordination and cooperation between the financial sector entities involved in the Project with a composition, mandate, terms of reference and resources satisfactory to the Association. Without limitation upon the generality of the foregoing, the PSC shall be chaired by the Minister or the Deputy Minister for Finance, and shall include, inter alia, representatives from ARB Apex Bank, Bank of Ghana, CUA, FSD, GHAMFIN, NIC, SEC and other relevant stakeholders. (b) The PSC shall meet at least biannually and shall be responsible for providing oversight on Project implementation, including, reviewing annual workplans and budgets and progress made towards achieving the Project's objective. 4. Technical Committee (a) To promote effective implementation of the Project, the Recipient shall not later than 90 days after the Effectiveness Date or any other date agreed with the Association, establish and thereafter maintain throughout implementation of the Project, a Project Technical Committee ("PTC") with a composition, mandate, terms of reference and resources satisfactory to the Association. The PTC shall be chaired by the Director of FSD or his -8- designee, and shall include, inter alia, representatives or technical focal points, inter alia, from ARB Apex Bank, Bank of Ghana CUA, FSD, GHAMFIN, NIC, SEC and other relevant stakeholders. (b) The PTC shall be responsible for, inter alia: (i) providing quality assurance on the technical aspects of the Project including reviewing and discussing quarterly progress reports prepared by the Project Coordinator (ii) addressing any technical or Project implementation challenges; and (iii) supporting the overall implementation of the Project. B. Other Implementation Arrangements 1. Project Operations Manual (a) The Recipient shall implement the Project in accordance with a manual (the Project Operations Manual), in form and substance satisfactory to the Association. (b) The Project Operations Manual may only be amended from time to time in consultation with, and after the Association's prior approval in writing. In case of any conflict between the terms of the Project Operations Manual and those of this Agreement, the terms of this Agreement shall prevail. C. Annual Work Plan and Budget 1 . The Recipient shall prepare and furnish to the Association not later than November 30 of each Fiscal Year during the implementation of the Project, a work plan and budget containing all activities proposed to be included in the Project during the following Fiscal Year, and a proposed financing plan for expenditures required for such activities, setting forth the proposed amounts and sources of financing thereof 2. Each such proposed work plan and budget shall specify any training activities that may be required under the Project, including: (a) the type of training; (b) the purpose of the training; (c) the personnel to be trained; (d) the institution or individual who will conduct the training; (e) the location and duration of the training; and (f) the cost of the training. 3. The Recipient shall afford the Association a reasonable opportunity to exchange views with the Recipient on each such proposed work plan and budget and shall thereafter ensure that the Project is implemented with due diligence during said following Fiscal Year in accordance with such work plan and budget as shall have been approved by the Association ("Annual Work Plan and Budget"). -9- 4. The Recipient shall not make or allow to be made any change to the approved Annual Work Plan and Budget without prior approval in writing by the Association. D. Safeguards The Recipient shall ensure that: (a) all consultancies related to technical assistance, design and capacity building under the Project, the application of whose results could have environmental, social and health and safety implications, shall only be undertaken pursuant to terms of reference reviewed and found satisfactory by the Association; and (b) such terms of reference shall require the technical assistance, design and capacity building activities to take into account the requirements of the applicable Association Safeguards Policies and EHS Guidelines. E. Mid-Term Review 1. The Recipient shall: (a) carry out not later than thirty-six (36) months from Effectiveness Date a midterm review to assess the overall progress in implementation of the Program; (b) prepare and fumish to the Association, at least three (3) months prior to such review, a progress report on the implementation of the Program, of such scope and in such detail as shall be acceptable to the Association; and (c) review, jointly with the Association, the report referred to in paragraph I above and thereafter take all measures required to ensure the efficient completion of the Program and the achievement of the objectives thereof, based on the conclusions and recommendations of said report and the Association's views on the matter. Section II. Project Monitoring, Reporting and Evaluation The Recipient shall furnish to the Association each Project Report not later than forty-five (45) days after the end of each calendar quarter, covering the calendar quarter. Section III. Withdrawal of the Proceeds of the Financing A. General Without limitation upon the provisions of Article II of the General Conditions and in accordance with the Disbursement and Financial Information Letter, the Recipient may withdraw the proceeds of the Financing to: (a) finance Eligible - 10- Expenditures; and (b) repay the Preparation Advance; in the amount allocated and, if applicable, up to the percentage set forth against each Category of the following table: Amount of the Percentage of Financing Allocated Expenditures to be Category (expressed in SDR) Financed (inclusive of Taxes) (1) Goods, works, non-consulting services, consulting services and Training (except Part 1(c)) for the Project (2) Goods, consulting services, Training and Operating Costs under Part 1(c) of the Project Amount payable (3) Refund of Preparation Advance 1,450,000 pursuant to Section 2.07(a) of the General Conditions TOTAL AMOUNT 21,400,000 B. Withdrawal Conditions; Withdrawal Period 1. Notwithstanding the provisions of Part A above, no withdrawal shall be made for: (a) payments made prior to the Signature Date; and (b) under category (2) unless and until the Recipient has: (i) obtained a license for the operation of the Credit Rating Agency (CRA) in accordance with the Recipient's national legal requirements; and (ii) ensured that in those cases where the Recipient, including ministries, departments, agencies, state owned enterprises and regulatory agencies, collectively holds more than 50% of the shares in the CRA, and all the Recipient's Government appointed directors are Independent Directors. 2. The Closing Date is September 30, 2023. SCHEDULE 3 Repayment Schedule Principal Amount of the Credit Date Payment Due repayable (expressed as a percentage)* On each April I and October 1: commencing October 1, 2023, to and 1.65% including April 1, 2043 commencing October 1, 2043, to and 3.40% including April 1, 2048. * The percentages represent the percentage of the principal amount of the Credit to be repaid, except as the Association may otherwise specify pursuant to Section 3.05(b) of the General Conditions. - 12- APPENDIX Definitions 1. "Annual Work Plan and Budget" means the work plan and budget prepared annually by the Recipient and approved by the Association in accordance with Section I.C of Schedule 2 to this Agreement; and "Annual Work Plans and Budgets" means more than one Annual Work Plan and Budget. 2. "Anti-Corruption Guidelines" means, for purposes of paragraph 5 of the Appendix to the General Conditions, the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011 and as of July 1, 2016. 3. "ARB Apex Bank" means the entity responsible for promoting and overseeing activities of all rural banks; established and operating pursuant to the Companies Act 1963 (Act 179) and the ARB Apex Bank Regulations, 2006 (Legislative Instrument 1825) or its successor. 4. "Bank of Ghana" or "BoG" means the Recipient's Central Bank or its successor. 5. "Category" means a category set forth in the table in Section III.A of Schedule 2 to this Agreement. 6. "Cooperative Credit Unions" or "CUAs" means the entity responsible for supervising credit unions on behalf of the Bank of Ghana, established and operating pursuant to the Cooperative Societies Act, 1968 (NLCD 252) or its successor. 7. "Credit Rating Agency" or "CRA" means a company to be established pursuant to the Companies Act 1963 (Act 179) and to be licensed by the Securities and Exchange Commission to operate a credit rating business or its successor. 8. "EHS Guidelines" means the World Bank Group Environmental, Health and Safety Guidelines published on www.ifc.org/ehsguidelines, as said guidelines are updated from time to time. 9. "FSD" means the Financial Sector Division of the Ministry of Finance. 10. "General Conditions" means the "International Development Association General Conditions for IDA Financing, Investment Project Financing", dated July 14, 2017. I1. "Ghana Microfinance Institutions Network" or "GHAMFIN" means the Recipient's network of microfinance institutions registered as company limited by - 13- guarantee and operating pursuant to the Companies Act 1963 (Act 179) or its successor. 12. "Independent Director" means a director who: (a) is not a substantial or majority shareholder of the CRA; (b) is not associated with any majority or substantial shareholder of the CRA, whether through business, family or personal relationships, or in any other way; (c) has not been employed by the CRA in an executive capacity within the last three years; (d) has not been a director of the CRA for more than nine years; (e) is not affiliated to an advisor or consultant to the CRA or a member of the CRA's senior management or a significant customer or supplier of the CRA or with a not-for-profit entity that receives significant contributions from the CRA; or (f) has not had any business relationship with the CRA (other than service as a director) within the last five years; (g) is not a significant supplier or customer of the CRA; (h) is not employed by a public company at which an executive officer of the CRA serves as a director; (i) is not a member of the immediate family of any natural person described above; or has not had any of the relationships described above with any affiliate of the CRA; and (j) is free from any other relationship with the CRA which may interfere with his or her capacity to act in an independent manner. 13. "National Insurance Commission" or "NIC" means the Recipient's insurance sector regulator established under Insurance Law 1989 (PNDC Law 227), and operating pursuant to Insurance Act, 2006 (Act 724), or its successor. 14. "Operating Costs" means the incremental expenses incurred on account of Project implementation, based on the Annual Work Plans and Budgets approved by the Association pursuant to Section I.C of Schedule 2 to this Agreement, including office equipment and supplies, office rental space, non-contractual staff, vehicle operation and maintenance, communication costs, office administration costs, utilities, travel and per diem, excluding the salaries of the Recipient's civil servants. 15. "Preparation Advance" means the advance referred to in Section 2.07(a) of the General Conditions, granted by the Association to the Recipient pursuant to the letter agreement signed on behalf of the Association on July 12, 2018, and on behalf of the Recipient on July 17, 2018. 16. "Project Operations Manual" means the manual referred to in Section I.B.2 of Schedule 2 of this Agreement, to be prepared by the Recipient satisfactory to the Association, describing and setting forth procedures for implementation of the Project and institutional arrangements, consistent with the provisions of this Agreement and with applicable laws and regulations and including, inter alia, timetables of actions required to be carried out under the Project, the respective roles and responsibilities of the agencies involved in the implementation of the Project, staffing, the fiduciary, technical and operational aspects and procedures - 14- for implementation of the Project, including the financial management procedures (budgeting, accounting and internal control, disbursement and flow of funds, financial reporting, annual reports, internal and external audit arrangements procedures and including the Project specific chart of accounts), procurement procedures, monitoring and evaluation arrangements, and other fiduciary and administrative arrangements and necessary terms of reference, as the same may be amended from time to time by agreement with the Association. 17. "Safeguard Policies" means, the Operational Policies (Ops) and Association's Procedures (BPs) of the Association, namely OP/BP 4.01 (Environmental Assessment), OP/BP 4.04 (Natural Habitats), OP/BP 4.09 (Pest Management), OP/BP 4.10 (Indigenous Peoples), OP/BP 4.11 (Physical Cultural Resources), OP/BP 4.12 (Involuntary Resettlement), OP/BP 4.36 (Forests), and OP/BP 4.37 (Safety of Dams); found at https://policies.worldbank.or. 18. "Securities and Exchange Commission" or "SEC" means the Recipient's capital markets regulator, established and operating pursuant to Securities Industry Act (Act 929) or its successor. 19. "Signature Date" means the later of the two dates on which the Recipient and the Association signed this Agreement and such definition applies to all references to "the date of the Financing Agreement" in the General Conditions. 20. "Specialized Deposit-Taking Institutions" or "SDIs" means the rural or community banks, savings and loans companies, finance houses, microfinance institutions, and any other institution that may be prescribed as such by the Bank of Ghana in accordance with the Banks and Specialized Deposit-Taking Institutions Act (Act 930). 21. "Training" means expenditures (other than those for consulting' services) incurred in connection with courses, seminars, workshops and other training activities, not included under goods or service providers' contracts, including costs of training materials, space and equipment rental, travel, per diem costs of trainees and trainers and trainers' fees (as applicable) based on an annual budget satisfactory to the Association.