Public Disclosure Authorized NUMBER SOdocuments.worldbank.org/curated/en/... · due diligence and...

CONFORMED COPY

CREDIT NUMBER 635 SO

DEVELOPMENT CREDIT AGREEMENT

(North-West Region Agricultural Development Project)

between

SOMALI DEMOCRATIC REPUBLIC

and

INTERNATIONAL DEVELOPMENT ASSOCIATION

Dated J-U:y 7, 1976

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

DEVELOPMENT CREDIT AGREEMENT

AGREEMENT, dated July 7, 1976, between SOMALI DEMOCRATIC

REPUBLIC (hereinafter called the Borrower) and INTERNATIONAL

DEVELOPMENT ASSOCIATION (hereinafter called the Association).

-2-

ARTICLE I

General Conditions; Definitions

Section 1.01. The parties to this Agreement accept all the

provisions of the General Conditions Applicable to Development

Credit Agreements of the Association, dated March 15, 1974, with

the same force and effect as if they were fully set forth herein

(said General Conditions Applicable to Development Credit Agree-

ments of the Association being hereinafter called the General

Conditions).

Section 1.02. Wherever used in this Agreement unless the

context otherwise requires, the several terms defined in the

General Conditions have the respective meanings therein set forth

and the following additional terms have the following meanings:

(a) "PIU" means the Project Implementation Unit to be es-

tablished pursuant to Section 3.02 (a) of this Agreement; and

(b) "Management Team" means the team of experts referred

to in.Section 3.02 (b) of this Agreement.

-3-

ARTICLE II

The Credit

Section 2.01. The Association agrees to lend to the Borrower,

on the terms and conditions in the Development Credit Agreement

set forth or referred to, an amount in various currencies equiva-

lent to ten million dollars ($10,000,000).

Section 2.02. The amount of the Credit may be withdrawn from

the Credit Account in accordance with the provisions of Schedule

1 to this Agreement, as such Schedule may be amended from time to

time, 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 and to be financed out of the proceeds of

the Credit.

Section 2.03. Except as the Association shall otherwise agree,

the goods, works and services (other than consultants' services) for

the Project to be financed out of the proceeds of the Credit, shall

be procured in accordance with the provisions of Schedule 3 to this

Agreement.

Section 2.04. The Closing Date shall be June 30, 1983 or such

later date as the Association shall establish. The Association shall

promptly notify the Borrower of such later date.

Section 2.05. The Borrower shall pay to the Association a ser-

vice charge at the rate of three-fourths of one per cent (3/4 of

1%) per annum on the principal amount of the Credit withdrawn and

outstanding from time to time.

-4-

Section 2.06. Service charges shall be payable semi-annually

on June 1 and December 1 in each year.

Section 2.07. The Borrower shall repay the principal amount

of the Credit in semi-annual installments payable on each June 1

and December 1 commencing December 1, 1986, and ending June 1,

2026, each installment to and including the installment payable

on June 1, 1996 to be one-half of one per cent (1/2 of 1%) of

such principal amount, and each installment thereafter to be one

and one-half per cent (1-1/2%) of such principal amount.

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.

-5-

ARTICLE III

Execution of the Project

Section 3.01. The Borrower shall carry out the Project 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 purpose.

Section 3.02. (a) For the purpose of carrying out the Proj-

ect, the Borrower shall establish and maintain a Project Implemen-

tation Unit ('IU) attached to its Ministry of Agriculture.

(b) The PIU shall consist of a Project Manager and a team

of euperts, collectively called the Management Team, provided by

the consultants referred to in Section 3.03 of this Agreement and

comprising of a Land Use Planning Engineer (Team Leader and Deputy

Project Manager), a Soil Conservation Officer, Chief Mechanic, an

Extension Training Officer and a Horticultural Extension Officer,

and such other support staff as shall be necessary.

(c) The Borrower shall maintain an adequate level of support-

ing staff attached to the PIU during the implementation of the

Project.

(d) The PIU shall be supervised by a ministerial committee

consisting of the Secretaries of State for Finance and Agriculture

of the Borrower, and the President of the Somali Development Bank.

-6-

Section 3.03. For the purposes listed below, the Borrower

shall employ consultants acceptable to the Association, upon terms

and conditions satisfactory to the Association:

(i) the preparation of feasibility studies for fur-

ther development of soil and water resources in

the North-West and Bay Regions;

(ii) the development of small irrigated farms;

(iii) the development of a training program;

(iv) the establishment of quantum and criteria for

recovery of costs of land bunding; and

(v) the formation of the Management Team.

Section 3.04. For the purpose of development of the small

irrigated farms under the Project, the Borrower shall cause the

Chairman, Regional Council (North-West Region) to invite applica-

tions for settlement of said farms. Allocations for settlements

shall be made in accordance with criteria to be agreed between

the Borrower and the Association by a committee consisting of

the Chairman, Regional Council (North-West Region), the Project

Manager and the Horticultural Extension Officer.

Section 3.05. (a) The Borrower undertakes to insure, or make

adequate provision for the insurance of, the imported goods to be

financed out of the proceeds of the Credit against hazards inci-

dent to the acquisition, transportation and delivery thereof to

0

-7-

the place of use or installation, and for such insurance any

indemnity shall be payable in a currency freely usable by the

Borrower to replace or repair such goods.

(b) Except as the Association shall otherwise agree, the

Borrower shall cause all goods and services financed out of the

proceeds of the Credit to be used exclusively for the Project.

Section 3.06. (a) The Borrower shall furnish to the Associ-

ation, promptly upon their preparation, the plans, specifications,

reports, contract documents and work and procurement schedules

for the Project, and any material modifications thereof or addi-

tions thereto, in such detail as the Association shall reason-

ably request.

0(b) The Borrower: (i) shall maintain records adequate to

record the progress of the Project (including the cost thereof)

and to identify the goods and services financed out of the pro-

ceeds of the Credit, and to disclose the use thereof in the

Project; (ii) shall enable the Association's accredited repre-

sentatives to visit the facilities and construction sites in-

cluded in the Project and to examine the goods financed out of

the proceeds of the Credit and any relevant records and docu-

ments; and (iii) shall furnish to the Association all such in-

formation as the Association shall reasonably request concerning

the Project, the expenditure of the proceeds of the Credit and

the goods and services financed out of such proceeds.

S1

0

ARTICLE IV

Other Covenants

Section 4.01. The Borrower shall maintain or cause to be

maintained records adequate to reflect in accordance with con-

sistently maintained appropriate accounting practices the opera-

tions, 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.

Section 4.02. The Borrower shall cause its Ministry of Agri-

culture to: (i) maintain separate accounts in respect of expendi-

tures under the Project; (ii) have said accounts for each fiscal

year audited, in accordance with sound auditing principles con-

sistently applied, by independent auditors acceptable to the

Association; (iii) furnish to the Association as soon as avail-

able, but in any case not later than six months after the end

of each such year, (A) certified copies of financial statements

for such year as so audited and (B) the report of such audit by

said auditors, of such scope and in such detail as the Association

shall have reasonably requested; and (iv) furnish to the Associa-

tion such other information concerning the said accounts and the

audit thereof as the Association shall from time to time reason-

ably request.

Section 4.03. The Borrower shall, after completion of the

Project, operate and maintain the water points, gully erosion

pilot area, the Geed-Deeble Horticultural Station and the Aburin

Farm, and shall continue seed multiplication program at the Geed-

Deeble Horticultural Station and the Aburin Farm.

-9-

Section 4.04. The Borrower shall, within one year from the

date of this Agreement, or such other date as the Association shall

agree, appoint suitably qualified candidates to the positions of a

horticulturist at the Geed-Deeble Horticultural Station and a farm

manager at the Aburin Farm.

Section 4.05. In order to facilitate implementation of the

Project, the Borrower shall make available to the PIU topographicalmaps to be prepared from the aerial photographs of its North-West

Region taken on behalf of the Borrower in 1973.

Section 4.06. The Borrower shall take all necessary action to

safeguard existing use of surface and underground waters and to

ensure that agricultural credit will be available to individual

land users under the Project for the development of water resourceson their holdings.

Section 4.07. (a) The Borrower shall cause PIU and the consul-tants to undertake a study of the method and criteria to be adoptedin the recovery of the bunding costs from the farmers participating

in the Project on the basis of experience gained in the initialperiod of the project implementation.

(b) The Borrower shall, by August 31, 1980, or such otherdate as the Association may agree, submit for review by the Asso-

ciation detailed proposals on the quantum and method of such re-

covery, and shall recover such costs from the farmers in suchamounts and in accordance with such procedures as shall be agreedupon between the Borrower and the Association.

-10-

ARTICLE V

Effective Date; Termination

Section 5.01. 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) a suitably qualified Project Manager for PIU has been

appointed in consultation with the Association; and

(b) the consultants referred to in Section 3.03 of this

Agreement have been appointed.

Section 5.02. The date October 5, 1976, is hereby specified

for the purposes of Section 12.04 of the General Conditions.

Section 5.03. The obligations of the Borrower under Section

4.03 of this Agreement shall cease and determine on the date on

which the Development Credit Agreement shall terminate or on a

date twenty-five years after the date of this Agreement, which-

ever shall be the earlier.

ARTICLE VI

Representative of the Borrower; Addresses

Section 6.01. The Secretary of State for Finance of the

Borrower is designated as representative of the Borrower for

the purposes of Section 11.03 of the General Conditions.

Section 6.02. The following addresses are specified for

the purposes of Section 11.01 of the General Conditions:

For the Borrower:

The Secretary of State for FinanceGovernment of the Somali Democratic

O RepublicMogadiscioSomali Democratic Republic

Cable address:

MINFINMogadiscio

For the Association:

International Development Association1818 H Street, N.W.Washington, D.C. 20433United States of America

Cable address:

INDEVASWashington, D.C.

-12 0

IN WITNESS WHEREOF, the parties hereto, acting through their

representatives thereunto duly authorized, have caused this Agree-

ment 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.

SOMALI DEMOCRATIC REPUBLIC

By /a/ Abdullahi Ahmed AddouAuthorized Representative

INTERNATIONAL DEVELOPMENT ASSOCIATION

By /s/ Stanley PleaseActing Regional Vice President

Eastern Africa

-13-

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 expen-

ditures for itefas so to be financed in each Category:

Amunt of theCredit Allocated % of

(Expressed in ExpendituresCategory Dollar Equivalent) to be Financed

(1) Vehicles, tractors,equipment andmaterials:, 3,610,000

(a) directly im- 100% of foreignported expenditures

(b) imported equip- 70%ment procuredlocally

(2) Operating costsfor bunding andwater points includ-ing extension andtraining 3,477,500 45%

(3) Salaries of 100% of foreignManagement Team 786,000 expenditures

(4) Feasibilitystudies andtechnical 100% of foreignassistance 1,600,000 expenditures

(5) Unallocated 526,500

TOTAL 10,000,000

- 14-

2. For the purposes of this Schedule the term "foreign expenditures"

means expenditures for goods or services supplied from, the terri-

tory, and in the currency, of any country other than the Borrower,

3. The disbursement percentages have been calculated in compli-

ance with the policy of the Association that no proceeds of the

Credit shall be disbursed on account of payments for taxes levied

by, or in the territory of, the Borrower on goods or services,

or on the importation, manufacture, procurement or supply thereof;

to that end, if any event occurs which shall affect the amount

of any such taxes included in the cost of any item to be financed

out of the proceeds of the Credit, the Association may, by notice

to the Borrower, correspondingly adjust the disbursement percentage

then applicable to such item.

4. Notwithstanding the provisions of paragraph 1 above, no with-

drawals shall be made in respect of expenditures prior to the date

of this Agreement.

5. Notwithstanding the allocation of an amount of the Credit or

the disbursement percentages set forth in the table in paragraph 1

above, if the Association has reasonably estimated that the amount

of the Credit then allocated to any Category will be insufficient

to finance the agreed percentage of all expenditures in that Cate-

gory, the Association may, by notice to the Borrower: (i) reallo-

cate to such Category to the extent required to meet the estimated

shortfall proceeds of the Credit which are then allocated to another

Category and which in the opinion of the Association are not needed

to meet other expenditures; and (ii) if such reallocation cannot

-15-

fully meet the estimated shortfall, reduce the disbursement percen-

tage then applicable to such expenditures in order that further

withdrawals under such Category may continue until all expenditures

thereunder shall have been made.

6. If the Association shall have reasonably determined that the

procurement of any item in any Category is inconsistent with the

procedures set forth or referred to in this Agreement, no expendi-

tures for such item shall be financed out of the proceeds of the

Credit and the Association may, without in any way restricting

or limiting any other right, power or remedy of the Association

under the Development Credit Agreement, by notice to the Borrower,

cancel such awount of the Credit as in the Association's reasonable

opinion, represents the amount of such expenditures which would

otherwise have been eligible for financing out of the proceeds of

the Credit.

-16 0

SCHEDULE 2

Description of the Project

The Project is part of the Borrower's six year program of

redevelopment through soil and water conservation and other meas-

ures designed to increase agricultural production, to assist the

current trend to settled agriculture and to establish a technical

basis for future development in its North-West and Bay Regions.

The Project consists of:

A. The construction of field bunds on about 25,000 hectares,

restoration of existing field bunds on about 2,000 hectares and

establishment of experimental gully erosion control works.

B. The development of about 50 small irrigated farms.

C. The improvement of crop trials and training facilities at

the Aburin dry-land demonstration and experimental farm.

D. The extension of the Geed-Deeble Horticultural Station to

improve fruit crop trials, nursery production and sorghum seed

multiplication.

E00 The rehabilitation and expansion of extension services to

dry-land farmers.

F. The construction of about 100 water points for human con-

sumption and about 50 for livestock.

- 17 -

G. Utilization of consultants' services to provide technical

assistance, training and preparation of two feasibility studies.

The Project is expected to be completed by December 31, 1982.

-18-

SCHEDULE 3

Procurement

A. International Competitive Bidding

1. Except as provided in Parts B and C hereof, goods, works and

services shall be procured under contracts to be awarded in accor-

dance with procedures consistent with those set forth in Part A

of the "Guidelines for Procurement under World Bank Loans and

IDA Credits" published by the Bank in August 1975 (hereinafter

called the Guidelines), on the basis of international competitive

bidding.

2. Identical or similar items of equipment shall, to the extent

possible, be consolidated in a single invitation for the purpose of

bidding by each participant.

B. Other Procurement Procedures

1. Contracts for the construction of buildings and concrete water

tanks, dug wells and installation of irrigation equipment in small

irrigated farms may be awarded on the basis of competitive bidding

advertised locally in accordance with procedures acceptable to the

Association.

2. Pumps and irrigation equipment for small-scale irrigation

farms may be procured by the farmers locally from existing commer-

cial channels.

- 19 -

3. Single units of tractors and cultivation equipment, and office

equipment may he procured locally by following usual procurement

procedures of the Borrower.

C. Procurement Without Contracting

Construction of field bunds and water points and the extension

of the Geed-Deeble Horticultural Station may be done through force

account.

D. Review of Procurement Decisions by Association

1. With respect to all contracts for vehicles, tractors and

equipment estimated to cost the equivalent of $50,000 or more:

(a) Before bids are invited, the Borrower shall furnish to

the Association, for its comments, the text of the invitations to

bid and the specifications and other bidding documents, together

with a description of the advertising procedures to be followed

for the bidding, and shall make such modifications in the said

documents or procedures as the Association shall reasonably request.

Any further modification to the bidding documents shall require the

Association's concurrence before it is issued to the prospective

bidders.

(b) Promptly after the bids have been received, the Borrower

shall inform the Association of the names of the bidders and the

respective amounts of the bids.

-20-

(c) After bids have been received and evaluated, the Borrower

shall, before a final decision on the award is made, inform the

Association of the name of the bidder to which it intends to award

the contract and the reasons for the intended award and shall fur-

nish to the Association, in sufficient time for its review, a

detailed report on the evaluation and comparison of the bids re-

ceived, and such other information as the Association shall reason-

ably request. The Association shall, if it determines that the

intended award would be inconsistent with the Guidelines or this

Schedule, promptly inform the Borrower and state the reasons for

such determination.

(d) The terms and conditions of the contract shall not,

without the Association's concurrence, materially differ from

those on which bids were asked or prequalification invited.

(e) Two conformed copies of the contract shall be furnished

to the Association promptly after its execution and prior to the

submission to the Association of the first application for with-

drawal of funds from the Credit Account in respect of such contract.

2. With respect to each contract to be financed out of the pro-

ceeds of the Credit and not governed by the preceding paragraph,

the Borrower shall furnish to the Association, promptly after its

execution and prior to the submission to the Association of the

first application for withdrawal of funds from the Credit Account

in respect of such contract, two conformed copies of such contract,

together with the analysis of bids, recommendations for award and

such other information as the Association shall reasonably request.

- 21 -

The Association shall, if it determines that the award of the

contract was not consistent with the Guidelines or this Schedule,

promptly inform the Borrower and state the reasons for such deter-

mination.