CONFORMED COPY

CREDIT NUMBER 486 ET

Development Credit

Agreement(Second Wolano Agricultural Development Project)

BETWEEN

EMPIRE OF ETHIOPIA

AND

INTERNATIONAL DEVELOPMENT ASSOCIATION

DATED JUNE 26, 1974

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CONFORMED COPY

CREDIT NUMBER 486 ET

Development Credit

Agreement(Second Wolamo Agricultural Development Project)

BETWEEN

0EMPIRE OF ETHIOPIA

AND

INTERNATIONAL DEVELOPMENT ASSOCIATION

DATED JUNE 26, 1974

DEVELOPMENT CREDIT AGREEMENT

AGREEMENT, dated June 26, 1974, between EMPIRE OF ETHIOPIA(hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENTASSOCIATION (hereinafter called the Association).

WHEREAS (A) The Borrower has requested the Association to assist in the

financing of the Project described in Schedule 2 to this Agreement (hereinaftercalled the Project) by extending the Credit as hereinafter provided; and

(B) By a development credit agreement dated November 26, 1969,(hereinafter called the First Credit Agreement) between the Borrower and theAssociation, the Association granted to the Borrower a credit in various currenciesequivalent to three million five hundred thousand dollars ($3,500,000) to assistin financing the first phase of an intensive program of agricultural developmentto be continued and expanded under the Project to be financed hereunder;

NOW THEREFORE the parties hereto hereby agree as follows:

ARTICLE I

General Conditions; Definitions

Section 1.01. The parties to this Agreement accept all the provisions of theGeneral Conditions Applicable to Development Credit Agreements of theAssociation, dated March 15, 1974, with the same force and effect as if they werefully set forth herein (said General Conditions Applicable to Development CreditAgreements of the Association being hereinafter called the General Conditions).

Section 1.02. Wherever used in this Agreement, unless the context otherwiserequires, the several terms defined in the General Conditions have the respectivemeanings therein set forth and the following additional terms have the followingmeanings:

(a) "WADU" means the Wolamo Agricultural Development Unit, a separateentity within the Extension and Project Implementation Department of its Ministryof Agriculture of the Borrower established pursuant to the First Credit Agreement;

(b) "Project Area" means the area comprising the Wolamo Awraja(District) of the Borrower including such areas as were included in the ProjectArea under the First Credit Agreement;

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(c) "Revolving Fund" means the fund created pursuant to Section 4.16

of the First Credit Agreement;

(d) "AIDB" means the Agricultural and Industrial Development Bank ofthe Borrower;

(e) "CMC" means an organization established by WADU as a cooperativebut not yet registered as such; and

(f) "WFCU" means the Wolamo Farmers Cooperative Union, a centralorganization of cooperatives in the Project Area.

ARTICLE II

The Credit

Section 2.01. The Association agrees to lend to the Borrower, on the termsand conditions in the Development Credit Agreement set forth or referred to, anamount in various currencies equivalent to twelve million dollars ($12,000,000).

Section 2.02. The amount of the Credit may be withdrawn from the CreditAccount in accordance w-th the provisions of Schedule I to this Agreement, assuch 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 costof goods and services required for the Project and to be financed out of the proceedsof the Credit.

Section 2.03. Except as the Association shall otherwise agree, contracts forthe purchase of goods, the carrying out of works or services (other than consultants'services) for the Project and to be financed out of the proceeds of the Credit,shall be awarded in accordance with the provisions of Schedule 3 to this Agreement.

Section 2.04. The Closing Date shall be June 30, 1980 or such other dateas shall be agreed between the Borrower and the Association.

Section 2.05. The Borrower shall pay to the Association a service chargeat the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principalamount of the Credit withdrawn and outstanding from time to time.

Section 2.06. Service charges shall be payable semi-annually on June I andDecember 1 in each year.

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Section 2.07. The Borrower shall repay the principal amount of the Creditin semi-annual installments payable on each June I and December 1 commencingDecember 1, 1984, and ending June 1, 2024, each installment to and includingthe installment payable on June 1, 1994 to be one-half of one per cent (1/2 of1%) of such principal amount, and each installment thereafter to be one andone-half per cent (1-1/2%) of such principal amount.

Section 2.08. The currency of the United States of America is herebyspecified for the purposes of Section 4.02 of the General Conditions.

ARTICLE III

Execution of the Project

Section 3.01. The Borrower shall carry out the Project through the Extensionand Project Implementation Department of its Ministry of Agriculture (hereinafterEPID-WADU), and with the assistance, inter alia, of -'her appropriate agenciesand instrumentalities of the Borrower with due diligence and efficiency and inconformity with appropriate administrative, agricultural, engineering and financialpractices, and shall provide, promptly as needed, the funds, facilities, services andother resources required for the purpose.

Section 3.02. The Borrower shall cause WADU to provide adequate andappropriate staff, and such consultancy services as may be necessary to supportit, for the purpose of the timely carrying out of the studies included in Part (4)of the Project. The Borrower shall consult with the Association to determine thestaffing and consultancy services requirements of the said studies, and the termsof reference therefor.

Section 3.03. (a) The Borrower undertakes to insure or to cause the insuranceof, or to make adequate provision for the insurance of, the imported goods tobe financed out of the proceeds of the Credit against hazards incident to theacquisition, transportation and delivery thereof to the place of use or installation,and for such insurance any indemnity shall be payable in a currency freely usableby the Borrower to replace or repair such goods.

(b) Except as the Association shall otherwise agree, the Borrower shallcause all goods and services financed out of the proceeds of the Credit to be usedexclusively for the Project.

Section 3.04. (a) The Borrower shall furnish or cause to be furnished tothe Association, promptly upon their preparation, the reports, plans, specifications,

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contract documents and work and procurement schedules for the Project, and anymaterial modifications thereof or additions thereto, in such detail as the Associationshall reasonably request.

(b) The Borrower: (i) shall maintain or cause to be maintained recordsadequate to record the progress of the Project (including the cost thereof) andto identify the goods and services financed out of the proceeds of the Credit,and to disclose the use thereof in the Project; (ii) shall enable the Association'saccredited representatives to visit the facilities and sites included in the Projectand to examine the goods financed out of the proceeds of the Credit and anyrelevant records and documents; and (iii) shall furnish or cause to be furnishedto the Association all such information as the Association shall reasonably requestconcerning the Project, the expenditure of the proceeds of the Credit and thegoods and services financed out of such proceeds.

Section 3.05. (a) Under the terms and conditions set forth in Schedule 4to this Agreement as the same may be amended from time to time by agreementbetween the Borrower and the Association, and contained in a subsidiary loanagreement acceptable to the Association, the Borrower shall relend one millioneight hundred thousand dollars ($1,800,000) or such other sum as the Associationshall from time to time agree to AIDB for the purpose of financing the provisionof seasonal credits under Parts (1) and (2) of the Project for farm inputs in theProject Area. AIDB shall provide the said seasonal credits through cooperativesand WADU, under terms and conditions approved by the Association.

(b) The Borrower shall exercise its rights under the subsidiary loanagreement in such manner as to protect the interests of the Borrower and theAssociation and to accomplish the purposes of the Credit. Except as the Associationshall otherwise agree, the Borrower shall not assign, amend, abrogate or waive thesubsidiary loan agreement or any provision thereof.

Section 3.06. The Borrower shall cause WADU or AIDB, as the case maybe, to relend to cooperatives and CMC's in the Project Area all funds necessaryfor the acquisition of cooperative stores and offices and the equipment thereof,constructed or purchased under the Project, on terms and conditions to be approvedby the Association.

Section 3.07. The Borrower shall cause WADU to adopt project evaluationprocedures acceptable to the Association.

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ARTICLE IV

Other Covenants

Section 4.01. (a) The Borrower shall maintain or cause to be maintainedrecords adequate to reflect in accordance with consistently maintained appropriateaccounting practices the operations, resources and expenditures, in respect of theProject, of the departments or agencies of the Borrower responsible for carryingout the Project or any part thereof.

(b) The Borrower shall cause WADU to: (i) have its accounts and financialstatements (balance sheets, statements of income and expenses and relatedstatements) including without limitation those relating to the Revolving Fund andCMC's for each fiscal year audited, in accordance with sound auditing principlesconsistently applied, by independent auditors acceptable to the Association; (ii)furnish to the Association as soon as available, but in any case not later thansix months after the end of each such year, (A) certified copies of its financialstatements for such year as so audited and (B) the report of such audit by saidauditors, of such scope and in such detail as the Association shall have reasonablyrequested; and (iii) furnish to the Association such other information concerning

* the accounts and financial statements of WADU and the audit thereof as theAssociation shall from time to time reasonably request.

(c) The Borrower shall cause WFCU and all of the (i) CMC's, and (ii)cooperatives, in the Project Area, to adopt satisfactory accounting proceduresadequate to reflect their income and expenditures, and shall cause all CMC's andcooperatives in the Project Area to have their accounts and financial statementsaudited semi-annually by the Controller of WFCU under the supervision of WADU,and all the accounts and financial statements of said cooperatives and WFCU tobe audited annually by its Registrar of Cooperatives. The Borrower shall submitor cause to be submitted all such audits and accompanying reports to theAssociation for its review and comments no later than six months after the endof each such annual audit period.

Section 4.02. The Borrower shall cause AIDB and WADU, as the case maybe, to take out and maintain with responsible insurers, or to make other provisionsatisfactory to the Association for, insurance of farm inputs and vehicles financedout of the proceeds of the Credit against such risks and in such amounts as shallbe consistent with appropriate practice.

Section 4.03. The Borrower shall cause WADU to prepare a plan of workin advance of each fiscal year to be approved by the Borrower and the Association,

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and shall advance to WADU at three monthly intervals such sums as may be requiredto enable WADU to carry out the succeeding quarter's portion of the said approvedannual plan of work.

Section 4.04. In order to carry out Part (3)(b) of the Project, the Borrowershall cause WADU to prepare a rural crafts development plan, such plan to includeprovisions for the training and employment of instructors, and for the extensionof credit facilities for the purchase of tools and other equipment related to theimplementation of said plan. The Borrower shall cause WADU to submit the saidplan to the Association for its approval prior to its implementation.

Section 4.05. The Borrower shall arrange for appropriate coordinationbetween its Institute of Agricultural Research and WADU with regard to crop trialsand research activities related to agricultural output in the Project Area.

Section 4.06. The Borrower shall provide or cause to be provided promp,tlyas needed all funds necessary and take or cause to be taken all other action asmay be required to adequately maintain the roads and tracks to be constructedunder the Project.

Section 4.07. The Borrower shall cause WADU at all times to employqualified and experienced staff, and shall consult with the Association prior tothe initial or new appointment of the personnel to the following positions inWADU: (i) Director- and, (ii) Heads of the (A) Extension and Training Division,(B) Marketing and Credit Division, (C) Finance Division, (D) CooperativeDevelopment Section and (E) Artificial Insemination Section.

Section 4.08. The Borrower shall cause WADU to submit to the Associationfor its review and comments the design of the water supply system for the twosettlements included in Part 3(b) of the Project.

ARTICLE V

Remedies of the Association

Section 5.01. The Association may, upon the occurrence of certain eventsspecified in Sections 6.02 or 7.01 of the General Conditions or in Sections 5.02and 5.03 of this Agreement and the continuance thereof for the period, if any,specified for the purpose: (i) suspend in whole or in part the right of the Borrowerto make withdrawals from the Credit Account or (ii) declare the principal of theCredit then outstanding to be due and payable immediately together with thecharges thereon.

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Section 5.02. For the purposes of Section 6.02 of the General Conditions,the following additional events are specified:

(a) an event giving the Association the right to suspend the right of theBorrower to withdraw the proceeds of the First Credit Agreement in whole orin part shall have occurred; and

(b) the Borrower or any other authority having jurisdiction shall have takenany action without the prior approval of the Association for the dissolution ordisestablishment of WADU, AIDB or of any of the 'articipating cooperatives orCMC's in the Project Area and such dissolution or disestablishment would in theopinion of the Association materially or adversely affect the execution of or thebenefits expected to be derived from the Project, provided, however, that theaforesaid shall not apply to the dissolution or disestablishment of a CMC uponbecoming a cooperative.

Section 5.03. For the purposes of Section 7.01 of the General Conditions,the following additional events are specified:

(a) the event specified in paragraph (b) of Section 5.02 of this Agreementshall occur and shall continue for a period of 60 days after notice thereof shallhave been given by the Association to the Borrower; and

(b) the proceeds provided under the First Credit Agreement shall havebeen declared, or become, due and payable in advance of the agreed maturitythereof.

ARTICLE VI

Effective Date; Termination

Section 6.01. The following events are specified as additional conditions tothe effectiveness of the Development Credit Agreement within the meaning ofSection 12.01(b) of the General Conditions:

(a) the Borrower and AIDB shall have entered into the subsidiary loanagreement required by Section 3.05 of this Agreement;

(b) the settlers in the settlements established pursuant to the First CreditAgreement shall have obtained leases adequate to ensure their tenure on termsand conditions satisfactory to the Association;

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(c) EPID and AIDB shall have entered into an agreement satisfactory tothe Association setting forth the conditions of their cooperation in respect of thecarrying out of Parts (1) and (2) of the Project including, inter alia, the provisionand collection of farm credit and the distribution of farm inputs; and

(d) WFCUJ and AIDB shall have entered into an agreement satisfactoryto the Association setting forth the terms and conditions under which extensionof seasonal credits to cooperatives in the Project Area will be prolided.

Section 6.02. The lollowing are specified as additional matters. w ithir themeanint, of Section 12.02(b) of the General Condition. to be in illied in theopinion or opinions to be furnished to the Association:

(a) the execution and delivery of the subsidiary loan agreement have beenduly authorized or ratified by all necessary governmental, corporate andadministrative action, and said agreement constitutes a valid and binding obligationof the Borrower and AIDB in accordance with its terms;

(b) the leases referred to in Section 6.01(b) of this Agreement hae beenduly authorized and constitute valid and binding obligations k the Bomm e, er inaccordance with their terms:

(c) the execution and delivery of the agreement referred to in Section6.01(c) of this Agreement has been duly authorized or ratified by all necessarygovernmental, corporate and administrative action, and said agreement constitiltesa valid and binding obligation of EPID and AIDB in accordance with its terms;and

(d) the execution and delivery of the agreement referred to in Section6.01(d) of this Agreement has been duly authorized or ratified by all necessarygovernmental, corporate and administrative action, and said agreement constitutesa valid and binding obligation of WFCU and AIDB in accordance with its terms.

Section 6.03. A date 90 days after the date of this Agreement is herebyspecified for the purposes of Section 12.04 of the General Conditions.

Section 6.04. The obligations of the Borrower under Articles Ill and IVof this Agreement and the provisions of Section 5.02 of this Agreement and thoseof Section 5.03 of this Agreement shall cease and determine on the date on which

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the Development Credit Agreement shall terminate or on a date twenty-five yearsafter the date of this Agreement, whichever shall be the earlier.

ARTICLE VII

Representative of the Borrower; Addresses

Section 7.01. The Minister of Finance of the Borrower is designated asrepresentative of the Borrower for the purposes of Section 11.03 of the GeneralConditions.

Section 7.02. The following addresses are specified for the purposes ofSection 11.01 of the General Conditions:

For the Borrower:

Ministry of FinanceAddis AbabaEthiopia

Cable address:

Ministry of FinanceAddis Ababa

For the Association:

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

Cable address:

INDEVASWashington, D.C.

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IN WITNESS WHEREOF, the parties hereto, acting through their

representatives thereunto duly authorized, 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.

EMPIRE OF ETHIOPIA

By /s/ Ghebeyehou MekbibAuthorized Representative

INTERNATIONAL DEVELOPMENT ASSOCIATION

By /s/ Bernard R. BellRegional Vice President

Eastern Africa

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SCHEDULE 1

Withdrawal of the Proced2s of the Credit

1. The table below sets forth the Categories of items to be financed out ofthe proceeds of the Credit, the allocation of the amounts of the Credit to eachCategory and the percentage of expenditures for items so to be financed in eachCategory:

Amount of theCredit Allocated % of

(Expressed in ExpendituresCategory Dollar Equivalent) to be Financed

I. Incremental farm 1,800,000 100% of foreigninputs to be fi- expenditures ornanced under sea- 69% of total ex-sonal loans penditures

II. Machinery and 360,000 100% of foreignequipment ex- expenditures orcluding rural 69% of total ex-water supply pendituresequipment

III. Vehicles 530,000 100% of foreignexpenditures or69% of total ex-penditures

IV. WADU buildings 200,000 69% of total ex-including live- pendituresstock market

V. WADU contribution 410,000 69% of total ex-to cooperative pendituresstaff salaries,buildings andequipment

VI. Road construction 600,000 69% of total ex-including salaries pendituresof WADU Road Per-sonnel

VII. Salaries, material 250,000 50% of total ex-and equipment for penditureswater supply forfarmers and settle-ments

VIII. Assistance to 150,000 69% of total ex-rural artisans penditures

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Amount of theCredit Allocated % of

(Expressed in ExpendituresCategory Dollar Equivalent) to be Financed

IX. Salaries of WADU 3,000,000 59% of total ex-staff including penditures includ-expatriates ex- ing staff continu-cluding road con- ing First Projectstruction and activitieswater supply per-sonnel

X. WADU operating 1,300,000 59% of total ex-expenses penditures includ-

ing continuationof First Projectactivities

X1. Studies 200,000 69% of total ex-penditures

XII. Unallocated 3,200,000

TOTAL 12,000,000

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

expenditures for goods or services supplied from, the territory, and in the currency,of any country other than the Borrower.

3. The disbursement percentages have been calculated in compliance 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 supplythereof; 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 proceedsof the Credit, the Association may, by notice to the Borrower, correspondinglyadjust the disbursement percentage then applicable to such item.

4. Notwithstanding the provisions of paragraph I above, no withdrawals 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 I above, if the

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Association has reasonably estimated that the amount of the Credit then allocatedto any Category will be insufficient to finance the agreed percentage of allexpenditures in that Category, the Association may, by notice to the Borrower:(i) reallocate to such Category to the extent required to meet such estimatedshortfall proceeds of the Credit which are then allocated to another Category andwhich in the opinion of the Association are not needed to meet other expendituresand (ii) if such reallocation cannot fully meet the estimated shortfall, reduce thedishursement percentage then applicable to such expenditures in order that furtherwk thIrawah undi such Category may Continue until all expenditures thereundersal!l ha%v been made.

b. If the Association shall have reasonably determined that the procurementof any item in any Category is inconsistent with the procedures set forth or referredto in this Agreement, no expenditures for such item shall be financed out of theproceeds of the Credit and the Association may, without in any way restrictingor limiting any other right, power or remedy of the Association under theDevelopment Credit Agreement, by notice to the Borrower, cancel such amountof the Credit as in the Association's reasonable opinion, represents the amountof such expenditures which would otherwise have been eligible for financing outof the proceeds of the Credit.

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SCHEDULE 2

Description of the Project

The, Project is the continuation and expansion over a five year period ofthe rural development program initiated under the First Credit Agreement. It wouldprovide credit for incremental agricultural inputs, suppo.t 'or cooperativedevelopment, facilities for livestock development, and technical and administrativeservices to small farmers in the Project Area.

In particular the Project would provide support for increased WADUextension, training, technical, and administrative activities and services for thefollowing:

(1) In the Woredas (sub-districts) of Sodo and Bolosso of Wolamo Awraja:

(a) Extension services to farmers not benefiting from proceeds of the FirstCredit Agreement, and animal health, soil conservation and homeeconomics services and incremental agricultural inputs and relatedcredit to all farmers in the area whether they have been beneficiariesof funds provided under the First Credit Agreement or not; and

(b) The introduction of new services, including livestock and poultrydevelopment, promotion of improved fodder crops, and theestablishment of a primary livestock market and holding ground.

(2) Throughout the remaining Woredas of the Project Area:

The introduction of extension, elementary animal health, soilconservation and home economics services, together with credit forthe purchase of agricultural inputs.

(3) In areas covered by (1) and (2) above, the Project would further include:

(a) Continued support for 1.3 CMC's and WFCU; and

(b) Establishment of a further 39 CMC's including the construction ofstores and offices and provision of equipment therefor, constructionof about 600 km of minor roads and tracks (including upgrading oftracks), improvement of rural water supplies for farmers and for twosettlements in the Project Area, assistance to rural artisans, and theprovision of expanded administrative services.

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(4) The Project will also include:

(a) A monitoring study of the soil conservation program to provide datafor the formulation of a more extensive program of erosion controlin the territories of the Borrower;

(b) A study on the suitability of available land for further settlementwithin the Project Area;

(c) A study of control and use of ranching land within the Project Area;and

(d) An experimental program for improvement of coffee quality.

The Project is expected to be completed by June 30, 1979.

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SCHEDULE 3

Procurement

A. General Procedures

1. Except as provided in Part A.2 hereof, contracts shall be let under procedures

consistent with those set forth in the "Guidelines for Procurement under World

Bank Loans and IDA Credits" published by the Bank in April 1972, as revised

in October 1972 (hereinafter called the Guidelines), on the basis of international

competitive bidding.

2. The following procurement procedures shall apply in respect of the goods

and works set forth hereunder to be financed in whole or in part out of the proceeds

of the Credit:

(a) Construction of WADU headquarters shall be awarded to the lowest

evaluated bidder on the basis of competitive bidding advertised locally.

(b) All other civil works included in the Project will be carried out by

WADU force account.

(c) Contracts for goods and services costing less than $30,000 equivalent

would be awarded on the basis of the Borrower's normal procurement procedures,but orders would be grouped together whenever possible and all orders in excess

of $30,000 will be subject to the procedures set forth in Parts A(1) and C(l)

of this Schedule 3.

B. Evaluation and Comparison of Bids for Goods; Preference for Domestic

Manufacturers

1. For the purpose of evaluation and comparison of bids for the supply of

goods subject to international competitive bidding: (i) bidders shall be required

to state in their bid the c.i.f. (port of entry) price for imported goods, or the

ex-factory price for domestically-manufactured goods; (ii) customs duties and other

import taxes on imported goods, and sales and similar taxes on

domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower

of inland freight and other expenditures incidental to the delivery of goods to

the place of their use or installation shall be included.

2. Goods manufactured in the Empire of Ethiopia may be granted a margin

of preference in accordance with, and subject to, the following provisions:

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(a) All bidding documents for the procurement of goods shall clearlyindicate any preference which will be granted, the information required to establishthe eligibility of a bid for such preference and the following methods and stagesthat will be followed in the evaluation and comparison of bids.

(b) After evaluation, responsive bids will be classified in one of thefollowing three groups:

(1) Group A: bids offering goods manufactured in the Empire ofEthiopia if the bidder shall have established to the satisfactionof the Borrower and the Association that the manufacturing costof such goods includes a value added in the Empire of Ethiopiaequal to at least 20% of the ex-factory bid price of such goods.

(2) Group B: all other bids offering goods manufactured in theEmpire of Ethiopia.

(3) Group C: bids offering any other goods.

(c) All evaluated bids in each group shall be first compared amongthemselves, excluding any customs duties and other import taxes on goods to beimported and any sales or similar taxes on goods to be supplied domestically, todetermine the lowest evaluated bid of each group. The lowest evaluated bid ofeach group shall then be compared with each other, and if, as a result of thiscomparison, a bid from group A or group B is the lowest, it shall be selectedfor the award.

(d) If, as a result of the comparison under paragraph (c) above, the lowestbid is a bid from group C, all group C bids shall be further compared with thelowest evaluated bid from group A after adding to the c.i.f. bid price of theimported goods offered in each group C bid, for the purpose of this furthercomparison only, an amount equal to (i) the amount of customs duties and otherimport taxes which a non-exempt importer would have to pay for the importationof the goods offered in such group C bid, or (ii) 150 of the c.i.f. bid price ofsuch goods if said customs duties and taxes exceed I 5/( of such price. If the groupA bid in such further comparison is. the lowest, it shall be selected for the award;if not, the lowest evaluated bid from group C shall be selected.

C. Review of Procurement Decisions by Association

1. With respect to all contracts for goods estimated to cost the equivalent ofS30,000 or more:

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

furnished 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) After bids have been received and evaluated, the Borrower shall, before

a final decision on the award is made, inform or cause to be informed 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 furnish to the Association, in

sufficient time for its review, a detailed report on the evaluation and comparison

of the bids received, together with the recommendation for award and such other

information as the Association shall reasonably request. The Association shall, if

it determines that the intended award would be inconsistent with the provisions

of this Agreement, promptly inform the Borrower and state the reasons for such

determination.

(c) 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.

(d) 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 withdrawal of funds from the Credit Account

in respect of such contract.

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

Credit and not governed by the preceding paragraph, the Borrower shall furnish

or cause to be furnished 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. The

Association shall, if it determines that the award of the contract was not consistent

with the provisions of this Agreement, promptly inform the Borrower and state

the reasons for such determination.

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SCHEDULE 4

Principal Terms and Conditionsof Project On-Lending Operations

On-Lending Terms of Seasonal Credit for Farm Inputs

(a) The Borrower will on-lend to AIDB on the following terms:

Annual Interest Rate: 7-1/4%

Period: 15 years, including 5 yearsof grace on payment ofprincipal

(b) AIDB will on-lend to farmers who are members of a CMC on thefollowing terms:

Annual Interest Rate: 12%

Period: 11 months

In the granting of credit and collection of repayments, AIDB wouldappoint WADU as an agent and would pay WADU for these services2% of the credit amount per annum.

(c) For distribution of credit and collection of repayments for loans under(b) above WADU would attempt to use the services of WFCU andthe CMC's, and would pay 1% of the credit amount per annum toWFCU and a further 1% to CMC's for those services. If WADU isunable to secure the foregoing arrangements, alternative arrangementsacceptable to the Association will be substituted therefor.

(d) AIDB will on-lend to WFCU on the following terms:

Annual Interest Rate: 10%

Period: 12 months

(e) WFCU will on-lend to cooperatives on the following terms:

Annual Interest Rate: 11%

Period: 12 months

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(f) Cooperatives will on-lend to their member farmers on the followingterms:

Annual Interest Rate: 12%

Period: II months