Monday, March 13, 2006

Part III

Millennium Challenge Corporation Notice of Entering Into a Compact With the Government of the Republic of Benin; Notice

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MILLENNIUM CHALLENGE increased in recent years. Benin’s other financial services, small CORPORATION economy is narrowly dependent on businesses in Benin are unable to cotton production, subsistence expand production and employment. [MCC FR 06–05] agriculture and regional trade through This Project aims to improve the ability Notice of Entering Into a Compact With the Port of Cotonou. Key impediments of micro, small and medium-sized the Government of the Republic of to sustainable economic growth and enterprises (MSMEs) to respond to Benin poverty reduction are a poor investment opportunities by expanding access to climate and a lack of dynamic private financial services. The Project is AGENCY: Millennium Challenge sector activity. These are hindered by designed to expand the financial Corporation. land insecurity, lack of access to capital, services provided to MSMEs, improve ACTION: Notice. an inefficient judicial system, and an supervision of microfinance institutions increasingly uncompetitive Port of (MFIs), increase MFI operational self- SUMMARY: In accordance with Section Cotonou. sufficiency, decrease MFI portfolio at 610(b)(2) of the Millennium Challenge The five year, approximately $307 risk, and increase the number of loans Act of 2003 (Pub. L. 108–199, Division million Millennium Challenge Compact guaranteed with land titles. D), the Millennium Challenge with the Government of Benin (GOB) Corporation (MCC) is publishing a aims to increase investment and private 3. Access to Justice (‘‘Justice Project’’) summary and the complete text of the sector activity in Benin. The program to (approximately $34 million): A major Millennium Challenge Compact be funded under the Compact (Program) obstacle to investment and economic between the United States of America, seeks to remove key constraints to growth in Benin is the inefficiency of acting through the Millennium growth and supports improvements in the judicial system. Only 8 percent of Challenge Corporation, and the physical and institutional commercial cases filed are resolved Government of the Republic of Benin. infrastructures. The projects included in within a year. Benin was recently rated Representatives of the United States the Program reinforce each other and by the World Bank as among the most Government and the Government of the MCC estimates they will together difficult places in the world to enforce Republic of Benin executed the contribute to an economic rate of return a contract. This Project aims to Compact documents on February 22, (ERR) of 24 percent. strengthen the institutional environment 2006. for business and investment in Benin by II. Program Overview and Budget Dated: March 6, 2006. improving the ability of the judicial Benin’s MCA Program is a series of system to resolve claims. The Project is Jon A. Dyck, strategic investments designed to expected to increase the number of Vice President & General Counsel, improve core physical and institutional cases resolved per year by the Courts of Millennium Challenge Corporation. infrastructure and increase investment First Instance, increase the number of Summary of Millennium Challenge and private sector activity. The Program cases handled by the Arbitration Center, Compact With the Government of the comprises four Projects: ‘‘Access to and increase the number of registered Republic of Benin Land,’’ ‘‘Access to Financial Services,’’ enterprises. ‘‘Access to Justice,’’ and ‘‘Access to 4. Access to Markets (‘‘Markets I. Introduction Markets.’’ Situated in West Africa, between 1. Access to Land (‘‘Land Project’’) Project’’) (approximately $169 million): Nigeria and Togo in the Gulf of Guinea, (approximately $36 million): Investment The importance of the Port of Cotonou Benin is a very poor country with a climate studies list land access among to Benin’s economy has been increasing, population of nearly seven million, a the top constraints to business while its competitiveness has been third of which live in poverty. Progress development in Benin. This Project steadily decreasing. This Project is in development is attributed to reforms aims to create secure land tenure for the designed to promote access to markets initiated in the early 1990s as Benin poor and non-poor alike and to create by improving Port operations and transitioned from a Marxist-Leninist effective, transparent governance of land infrastructure. Specifically, it aims to state towards a pluralistic democracy and property issues. MCC anticipates improve Port performance and security, and market economy. this Project will reduce the time and expand capacity, and reduce costs. MCC Despite growth rates averaging 5 cost to obtain a title, reduce the number anticipates the Project will reduce percent per year in the past decade, of land disputes, and increase the delays at the Port and increase the rapid population growth has offset perception of land security. volume of imports and exports. much of these gains and poverty 2. Access to Financial Services The following table outlines the remains widespread. Per capita income (‘‘Financial Services Project’’) estimated MCC contribution to the in Benin remains below the sub-Sahara (approximately $20 million): Due to the Program by year and category for term African average and rural poverty has high cost or unavailability of credit and of the Compact.

Timeline Description Compact Compact Compact Compact Compact Compact YI YI Y2 Y3 Y4 Y5 ($US mil) ($US mil) ($US mil) ($US mil) ($US mil) ($US mil)

Access to Land ...... 4.56 10.43 8.55 7.37 5.11 36.02 Access to Financial Services ...... 3.15 5.42 5.41 4.71 0.96 19.65 Access to Justice ...... 3.83 7.85 9.06 6.97 6.56 34.27 Access to Markets ...... 9.45 30.13 66.29 62.36 1.22 169.45 Program Administration & Audits ...... 8.21 7.61 7.75 7.73 7.83 39.13 Monitoring & Evaluation ...... 3.19 1.69 1.24 1.24 1.42 8.78

Estimated Total...... 32.39 63.13 98.30 90.38 23.10 307.30

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III. Impact Other Highlights efficient land usage, and streamlining of customs processing. The Program is expected to impact up A. Consultative Process: This Program has undergone one of the most robust D. Environment and Social Impacts: to five million beneficiaries and lift an The Land and Financial Services estimated 250,000 Beninese out of consultative processes to date in an MCA-eligible country. Benin’s proposal Projects are expected to have few or no poverty by the year 2015. Specifically, adverse environmental and social is the product of a genuine, meaningful the Land Project is expected to assist an impacts. They have been placed in and participatory consultative process. estimated 115,000 rural and urban screening category ‘‘C’’ under the MCC Guided by the Poverty Reduction households with more secure and useful Environmental Guidelines. The Land Strategy Paper (PRSP), GOB’s tenure; contribute to a 50 percent Project is anticipated to have positive consultative process included a wide reduction in court cases related to land social effects as well as to foster land cross-section of private sector and civil disputes; and result in a 10 percent stewardship. The Financial Services society groups in the formulation of increase in investment in rural land and Project will incorporate training, Benin’s MCA priorities. Benin held a 20 percent increase in investment in technical assistance, and services, several consultative meetings with urban property. The Financial Services where appropriate, on strategies to Project is expected to expand financial representatives from various stakeholder avoid environmental and social risks services to MSMEs by nearly $60 groups as well as radio and television and enhance the sustained impact of million (a multiple of three times the events to broadly present the outlines of access to financial services. Both of Project’s funding), thereby increasing the proposal and garner feedback from these projects have specific MSME value added and incomes of the intended beneficiaries. The consultative commitments to take into account poor that own, are employed by, or do process was guided by the Benin gender concerns. business with those enterprises. The National Committee (BNC), whose The Justice Project has the potential Justice Project is anticipated to benefit members were elected or delegated by for modest, adverse environmental and approximately 2.38 million Beninese by their respective constituencies. social impacts because of construction bringing courts closer to rural Representation on the BNC includes six of a legal information center and populations and making them more representatives of GOB, three courthouses. The Justice Project has responsive and effective. Finally, a more representatives of civil society, three been placed in screening category ‘‘B’’ efficient Port will contribute to importer representatives of the Chamber of under the MCC Environmental and exporter value-added by reducing Commerce, three representatives of Guidelines. A framework environmental transportation costs and increasing the national labor unions, two and social assessment will be required level of Port operations. It is likely that representatives of the Agricultural to screen sites once they are proposed the anticipated reduction in shipping Chamber, and one representative of and provide guidance for site-specific costs will be passed on to wholesalers artisan associations. Environmental Management Plans and traders, and ultimately be reflected B. Government Commitment and (EMPs) and Resettlement Action Plans in lower consumer prices. Additional Effectiveness: The Program has received (RAPs) consistent with international added value in jobs from fish processing considerable attention during the best practices. To enhance the social and Port operations are expected from Compact development process. GOB impacts of this project, outreach will be improvements in several infrastructure allocated $680,000 for the preparation of designed to incorporate gender components. the proposal and has committed as part considerations as well as access by of the Compact to contribute an vulnerable segments of society. IV. Program Management additional 5 billion CFA ($9.2 million) The Markets Project has been placed to the Program during the Compact in screening category ‘‘A’’ under the GOB will create a legal entity (MCA- Term. One fourth of this contribution MCC Environmental Guidelines and Benin) to manage and oversee the has already been included in the will require a comprehensive implementation of the Program. This national budget for 2006 and will be Environmental and Social Impact entity will be comprised of an eleven- available immediately following Assessment (ESIA), conducted in member Board of Directors and a Compact signing. GOB has also phases. As a critical first step, technical, management team. The Board of expressed its commitment to the environmental, engineering and Directors will make certain strategic Program by its willingness to condition economic studies are required to decisions and recommendations, key activities upon requirements for evaluate alternatives and select the provide oversight of the Program institutional change and policy reform. preferred design to reduce implementation and ensure the success C. Sustainability: Sustainability will sedimentation of the harbor access and of the Program. MCA-Benin’s be ensured through training, capacity not adversely impact coastal erosion management will be responsible for the building, policy reforms and east of the Port; studies must also implementation of the Program, institutional changes. The Land and analyze disposal of potentially including contracting, program Justice Projects contain core training, contaminated dredged material, for the management, certain financial information and education campaigns selected alternative and new wharf management functions, and that will build public knowledge on construction. Based on these studies, an coordination of monitoring and land and justice issues, respectively. A ESIA and EMP will be required to evaluation. In addition, an eight- key objective of the Financial Services address impacts of increased Port member Advisory Council will be Project is to enhance the sustainability activity and new infrastructure and established to provide recommendations of existing commercial actors that compliance with international marine and feedback to the MCA-Benin Board service MSMEs. Beneficiaries of the conventions. An ESIA (combined or of Directors. Challenge Facility can be expected to separate, according to schedule needs) Independent fiscal and procurement continue to implement improvements in will be required for landside agents, selected through international financial technologies and institutional improvements, including an competitive search processes, will be capacities after Program support ends. environmental audit of the existing engaged to provide fiscal management The Markets Project includes greater operations, an Environmental and procurement services respectively. private management of operations, more Management Plan/System, and an

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overall EMP. Verification is required to Article IV. Conditions Precedent; Deliveries physical and institutional infrastructure determine if economic or physical Section 4.1 Conditions Prior to the Entry to increase investment and private displacement will occur and a RAP is into Force and Deliveries sector activity; Section 4.2 Conditions Precedent to MCC needed. Disbursements or Re-Disbursements Whereas, MCC has evaluated the E. Donor Coordination: MCC’s Article V. Final Clauses Proposal and related documents to investment would position the United Section 5.1 Communications determine whether the Proposal is States Government as the largest bi- Section 5.2 Representatives consistent with core MCA principles lateral donor to the country. Other major Section 5.3 Amendments and includes proposed activities and donors to Benin are the Netherlands, Section 5.4 Termination; Suspension projects that will advance the progress Denmark, France, Belgium and Section 5.5 Privileges and Immunities of Benin towards achieving economic Germany. Section 5.6 Attachments growth and poverty reduction; and GOB and MCC have convened various Section 5.7 Inconsistencies Section 5.8 Indemnification Whereas, based on MCC’s evaluation discussions and meetings with donor Section 5.9 Headings of the Proposal and related documents partners to ensure complementarity. Section 5.10 Interpretation; Definitions and subsequent discussions and The German development agency, Section 5.11 Signatures negotiations between the Parties, the Deutsche Gesellschaft fur Technische Section 5.12 Designation Government and MCC determined to Zusammenarbeit (GTZ), financed a pilot Section 5.13 Survival enter into this Compact to implement a phase of the Rural Land Plans upon Section 5.14 Consultation program using MCC Funding to advance Section 5.15 MCC Status which sections of GOB’s proposal are Benin’s progress towards economic based. A recent International Finance Section 5.16 Language Section 5.17 Publicity; Information and growth and poverty reduction (the Corporation Foreign Investment Marking ‘‘Program’’); Advisory Service (FIAS) investigation of Exhibit A: Definitions Now, Therefore, in consideration of the investment climate in Benin will Exhibit B: List of Certain Supplemental the foregoing and the mutual covenants recommend a reform agenda very Agreements and agreements set forth herein, the similar to what is proposed for MCC Schedule 2.1(a)(iii): Description of Compact Parties hereby agree as follows: funding. A number of multilateral and Implementation Funding bilateral donors, including the World Annex I: Program Description Article I. Purpose and Term Bank, France, Denmark, and the Schedule 1: Land Project Schedule 2: Financial Services Project Section 1.1 Objectives. The overall Netherlands, have been involved in Schedule 3: Justice Project objective of this Compact is to increase activities and studies aimed at Schedule 4: Markets Project investment and private sector activity in improving the performance of the Port Annex II: Summary of Multi-Year Financial Benin (‘‘Program Objective’’), which is of Cotonou. Plan key to advancing the goal of economic Annex III: Description of the M&E Plan Millennium Challenge Compact growth and poverty reduction in Benin Between the United States of America Millennium Challenge Compact (the ‘‘Compact Goal’’). The Parties have identified the following project-level Acting Through the Millennium This Millennium Challenge Compact objectives (each, a ‘‘Project Objective’’ Challenge Corporation and the (the ‘‘Compact’’) is made between the and together, the ‘‘Project Objectives’’) Government of the Republic of Benin United States of America, acting of this Compact to advance the Program through the Millennium Challenge Objective and Compact Goal, each of Table of Contents Corporation, a United States which is described in more detail in the Article I. Purpose and Term Government corporation (‘‘MCC’’), and Annexes attached hereto: Section 1.1 Objectives the Government of the Republic of (a) Strengthen property rights and Section 1.2 Projects Benin (the ‘‘Government’’) (referred to Section 1.3 Entry into Force; Compact investment (the ‘‘Land Objective’’); herein individually as a ‘‘Party’’ and Term (b) Expand access to financial services collectively, the ‘‘Parties’’). A Article II. Funding and Resources (the ‘‘Financial Services Objective’’); compendium of capitalized terms Section 2.1 MCC Funding (c) Improve ability of the justice Section 2.2 Government Resources defined herein is included, for system to enforce contracts and Section 2.3 Limitation on the Use or convenience only, in Exhibit A attached Treatment of MCC Funding hereto. reconcile claims (the ‘‘Justice Section 2.4 Incorporation; Notice; Objective’’); and Clarification Recitals (d) Improve access to markets through Section 2.5 Refunds: Violation Whereas, MCC, acting through its improvements to the Port of Cotonou Section 2.6 Bilateral Agreement Board of Directors, has selected the (‘‘Markets Objective’’). Article III. Implementation Republic of Benin as eligible to present The Government expects to achieve, Section 3.1 Implementation Framework to MCC a proposal for the use of and shall use its best efforts to ensure Section 3.2 Government Responsibilities the achievement of, the Compact Goal, Section 3.3 Government Deliveries Millennium Challenge Account Section 3.4 Government Assurances (‘‘MCA’’) assistance to help facilitate the Program Objective and Project Section 3.5 Implementation Letters; advance of economic growth and Objectives during the Compact Term. Supplemental Agreements poverty reduction in Benin; The Program Objective and the Section 3.6 Procurement; Awards of Whereas, the Government has carried individual Project Objectives Assistance out a consultative process with the collectively referred to herein as Section 3.7 Policy Performance; Policy country’s private sector and civil society ‘‘Objectives’’ and each individually as Reforms to outline the country’s priorities for the an ‘‘Objective.’’ Section 3.8 Records and Information; Section 1.2 Projects. The Annexes Access; Audits; Reviews use of MCA assistance and developed a Section 3.9 Insurance; Performance proposal, which final proposal was attached hereto describe the specific Guarantees submitted to MCC on September 5, 2005 projects and the policy reforms and Section 3.10 Domestic Requirements (the ‘‘Proposal’’); other activities related thereto (each, a Section 3.11 No Conflict Whereas, the Proposal focused on, ‘‘Project’’) that the Government will Section 3.12 Reports among other things, improving core carry out, or cause to be carried out, in

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furtherance of this Compact to achieve amended (the ‘‘Act’’), upon the Supplemental Agreement. On a the Objectives and the Compact Goal. conclusion of this Compact (and quarterly basis and upon the Section 1.3 Entry into Force; without regard to the satisfaction of all termination or expiration of this Compact Term. This Compact shall of the conditions for Entry into Force Compact, the Government shall return, enter into force on the date of the last required under Section 1.3), MCC shall or ensure the return of, all Accrued letter in an exchange of letters between make available One Million Five Interest to any United States the Principal Representatives of each Hundred Thirty Six Thousand Four Government account designated by Party confirming that each Party has Hundred and Ninety United States MCC. completed its domestic requirements for Dollars (USD $1,536,490) (‘‘Compact (d) Conversion; Exchange Rate. The entry into force of this Compact Implementation Funding’’) to facilitate Government shall ensure that all MCC (including as set forth in Section 3.10) certain aspects of Compact Funding that is held in the Permitted and that all conditions set forth in implementation as described in Account(s) shall be denominated in the Section 4.1 have been satisfied by the Schedule 2.1(a)(iii) attached hereto; currency of the United States of Government and MCC (the ‘‘Entry into provided, such Compact America (‘‘United States Dollars’’) prior Force’’). This Compact shall remain in Implementation Funding shall be to Re-Disbursement; provided, that a force for five (5) years from the Entry subject to (A) the limitations on the use certain portion of MCC Funding may be into Force, unless earlier terminated in or treatment of MCC Funding set forth transferred to a Local Account and may accordance with Section 5.4 (the in Section 2.3, as if such provision were be held in such Local Account in the ‘‘Compact Term’’). in full force and effect, and (B) any other currency of the Republic of Benin prior to Re-Disbursement in accordance with Article II. Funding and Resources requirements for, and limitations on the use of, such Compact Implementation the requirements of Annex I and any Section 2.1 MCC Funding. Funding as may be required by MCC in relevant Supplemental Agreement. To (a) MCC’s Contribution. MCC hereby writing; provided, further, that any the extent that any amount of MCC grants to the Government, subject to the Compact Implementation Funding Funding held in United States Dollars terms and conditions of this Compact, granted in accordance with this Section must be converted into the currency of an amount not to exceed Three Hundred 2.1(a)(iii) shall be included in, and not the Republic of Benin for any purpose, Seven Million Two Hundred and Ninety additional to, the total amount of MCC including for any Re-Disbursement or Eight Thousand and Forty United States Funding; and provided further, any any transfer of MCC Funding into a Dollars (USD $307,298,040) (‘‘MCC obligation to provide such Compact Local Account, the Government shall Funding’’) during the Compact Term to Implementation Funding shall expire ensure that such amount is converted enable the Government to implement upon the expiration or termination of consistent with Annex I, including the the Program and achieve the Objectives. this Compact or five (5) years from the rate and manner set forth in Annex I, (i) Subject to Sections 2.1(a)(ii), 2.2(b) conclusion of this Compact, whichever and the requirements of the and 5.4(b), the allocation of the MCC occurs sooner. Notwithstanding Disbursement Agreement or any other Funding within the Program and among anything to the contrary in this Supplemental Agreement between the and within the Projects shall be as Compact, this Section 2.1(a)(iii) shall Parties. generally described in Annex II or as provisionally apply prior to Entry into (e) Guidance. From time to time, MCC otherwise agreed upon by the Parties Force. may provide guidance to the from time to time. (b) Disbursements. Government through Implementation (ii) If at any time MCC determines that (i) Disbursements of MCC Funding. Letters on the frequency, form and a condition precedent to an MCC MCC shall from time to time make content of requests for MCC Disbursement has not been satisfied, disbursements of MCC Funding (each Disbursements and Re-Disbursements or MCC may, upon written notice to the such disbursement, an ‘‘MCC any other matter relating to MCC Government, reduce the total amount of Disbursement’’) to a Permitted Account Funding. The Government shall apply MCC Funding by an amount equal to the or through such other mechanism such guidance in implementing this amount estimated in the applicable agreed by the Parties under and in Compact. Detailed Financial Plan for the Program, accordance with the procedures and Section 2.2 Government Resources. Project or Project Activity or sub- requirements set forth in Annex I, the (a) The Government shall provide or activity for which such condition Disbursement Agreement or as cause to be provided such Government precedent has not been met. Upon the otherwise provided in any other funds and other resources, including expiration or termination of this relevant Supplemental Agreement. any Government contributions set out Compact, (A) any amounts of MCC (ii) Re-Disbursements of MCC forth on Annex II attached hereto, and Funding not disbursed by MCC to the Funding. The release of MCC Funding shall take or cause to be taken such Government shall be automatically from a Permitted Account (each such actions, including obtaining all released from any obligation in release, a ‘‘Re-Disbursement’’), shall be necessary approvals and consents, as are connection with this Compact and (B) made in accordance with the procedures specified in this Compact or in any any amounts of MCC Funding disbursed and requirements set forth in Annex I, Supplemental Agreement to which the by MCC to the Government as provided the Disbursement Agreement or as Government is a party or as are in Section 2.1(b)(i), but not re-disbursed otherwise provided in any other otherwise necessary and appropriate to as provided in Section 2.1(b)(ii) or relevant Supplemental Agreement. effectively carry out the Government otherwise incurred as permitted (c) Interest. Unless the Parties agree Responsibilities or other responsibilities pursuant to Section 5.4(e) prior to the otherwise in writing, any interest or or obligations of the Government under expiration or termination of this other earnings on MCC Funding that or in furtherance of this Compact during Compact, shall be returned to MCC in accrue (collectively, ‘‘Accrued Interest’’) the Compact Term and through the accordance with Section 2.5(a)(ii). shall be held in a Permitted Account completion of any post-Compact Term (iii) Notwithstanding any other and accrue in accordance with the activities, audits or other provision of this Compact and pursuant requirements for the accrual and responsibilities. The Government shall to the authority of Section 609(g) of the treatment of Accrued Interest as submit to the Parliament on an annual Millennium Challenge Act of 2003, as specified in Annex I or any relevant basis the amount of the upcoming year’s

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Government contribution for inclusion prohibitions shall apply to the same (d) Prohibition of Assistance Relating in the applicable finance law of Benin extent and in the same manner as such to Environmental, Health or Safety and such amount shall be committed in prohibitions apply to funds made Hazards. The Government shall ensure the national budget for that year for available to carry out Part I of such Act; that MCC Funding shall not be used to purposes of the Program, such or (ii) any provision of law comparable undertake, fund or otherwise support contribution to be allocated within and to the eleventh and fourteenth provisos any activity that is likely to cause a in furtherance of the Program as agreed under the heading ‘‘Child Survival and significant environmental, health, or by the Parties. The Government shall Health Programs Fund’’ of division E of safety hazard. Unless MCC and the disburse funds on a quarterly basis from Public Law 108–7 (117 Stat. 162), a Government agree otherwise in writing, this committed amount into an account, United States statute. the Government shall ensure that held at a bank acceptable to MCC, (b) United States Job Loss or activities undertaken, funded or designated solely for this purpose. Displacement of Production. The otherwise supported in whole or in part (b) If at any time during the Compact Government shall ensure that MCC (directly or indirectly) by MCC Funding Term, the Government materially Funding shall not be used to undertake, comply with environmental guidelines reallocates or reduces the allocation in fund or otherwise support any activity delivered by MCC to the Government or its national budget or any other that is likely to cause a substantial loss posted by MCC on its Web site or Beninese governmental authority at a of United States jobs or a substantial otherwise publicly made available, as departmental, municipal, regional or displacement of United States such guidelines may be amended from other jurisdictional level materially production, including: time to time (the ‘‘Environmental reallocates or reduces the allocation of (i) Providing financial incentives to Guidelines’’), including any definition its respective budget of the normal and relocate a substantial number of United of ‘‘likely to cause a significant expected resources that the Government States jobs or cause a substantial environmental, health, or safety hazard’’ or such other governmental authority, as displacement of production outside the as may be set forth in such applicable, would have otherwise United States; Environmental Guidelines. received or budgeted, from external or (ii) Supporting investment promotion (e) Taxation. domestic sources, for the activities missions or other travel to the United (i) Taxes. The Government shall contemplated herein, the Government States with the intention of inducing ensure that the Program, any Program shall notify MCC in writing within United States firms to relocate a Assets, MCC Funding and Accrued fifteen (15) days of such reallocation or substantial number of United States jobs Interest shall be free from any taxes reduction, such notification to contain or a substantial amount of production imposed under the laws currently or information regarding the amount of the outside the United States; hereafter in effect in the Republic of reallocation or reduction, the affected (iii) Conducting feasibility studies, Benin during the Compact Term. This activities, and an explanation for the research services, studies, travel to or exemption shall apply to any use of any reallocation or reduction. In the event from the United States, or providing Program Asset, MCC Funding and that MCC independently determines, insurance or technical and management Accrued Interest, including any Exempt upon review of the executed national assistance, with the intention of Uses, and to any work performed under annual budget that such a material inducing United States firms to relocate or activities undertaken in furtherance reallocation or reduction of resources a substantial number of United States of this Compact by any person or entity has occurred, MCC shall notify the jobs or cause a substantial displacement (including contractors and grantees) Government and, following such of production outside the United States; funded by MCC Funding, and shall notification, the Government shall (iv) Advertising in the United States apply to all taxes, tariffs, duties, and provide a written explanation for such to encourage United States firms to other levies (each a ‘‘Tax’’ and reallocation or reduction and MCC may relocate a substantial number of United collectively, ‘‘Taxes’’), including: (i) reduce, in its sole discretion, the total States jobs or cause a substantial (1) To the extent attributable to MCC amount of MCC Funding or any MCC displacement of production outside the Funding, income taxes and other taxes Disbursement by an amount equal to the United States; on profit or businesses imposed on amount estimated in the applicable (v) Training workers for firms that organizations or entities, other than Detailed Financial Plan for the activity intend to relocate a substantial number nationals of the Republic of Benin, for which funds were reduced or of United States jobs or cause a receiving MCC Funding, including taxes reallocated or (ii) otherwise suspend or substantial displacement of production on the acquisition, ownership, rental, terminate MCC Funding in accordance outside the United States; disposition or other use of real or with Section 5.4(b). (vi) Supporting a United States office personal property, taxes on investment (c) The Government shall use its best of an organization that offers incentives or deposit requirements and currency efforts to ensure that all MCC Funding for United States firms to relocate a controls in the Republic of Benin, or any is fully reflected and accounted for in substantial number of United States jobs other tax, duty, charge or fee of the annual budget of the Republic of or cause a substantial displacement of whatever nature, except fees for specific Benin on a multi-year basis. production outside the United States; or services rendered; for purposes of this Section 2.3 Limitations on the Use (vii) Providing general budget support Section 2.3(e), the term ‘‘national’’ refers or Treatment of MCC Funding. for an organization that engages in any to organizations established under the (a) Abortions and Involuntary activity prohibited above. laws currently or hereafter in effect in Sterilizations. The Government shall (c) Military Assistance and Training. the Republic of Benin, other than MCA- ensure that MCC Funding shall not be The Government shall ensure that MCC Benin or any other entity established used to undertake, fund or otherwise Funding shall not be used to undertake, solely for purposes of managing or support any activity that is subject to fund or otherwise support the purchase overseeing the implementation of the prohibitions on use of funds contained or use of goods or services for military Program or any wholly-owned in (i) paragraphs (1) through (3) of purposes, including military training, or subsidiaries, divisions, or Affiliates of section 104(f) of the Foreign Assistance to provide any assistance to the military, entities not registered or established Act of 1961 (22 U.S.C. 2151b(f)(1)–(3), a police, militia, national guard or other under the laws currently or hereafter in United States statute, which quasi-military organization or unit. effect in the Republic of Benin;

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(2) Customs duties, tariffs, import and such levy and tax payment, in Government in satisfaction of its export taxes, or other levies on the accordance with procedures agreed by obligations under this Section 2.3(g). importation, use and re-exportation of the Parties, whether by MCC or (h) Other Limitations. The goods, services, or the personal otherwise; provided, however, the Government shall ensure that the use or belongings and effects, including Government shall apply national funds treatment of MCC Funding, Accrued personally-owned automobiles, for to satisfy its obligations under this Interest, and Program Assets shall be Program use or the personal use of paragraph and no MCC Funding, subject to and in conformity with such individuals who are neither citizens nor Accrued Interest, or any assets, goods, other limitations (i) as required by the permanent residents of the Republic of or property (real, tangible, or intangible) applicable law of the United States of Benin and who are present in the purchased or financed in whole or in America now or hereafter in effect Republic of Benin for purposes of part (directly or indirectly) by MCC during the Compact Term, (ii) as carrying out the Program or their family Funding (‘‘Program Assets’’) may be advisable under or required by members, including all charges based on applied by the Government in applicable United States Government the value of such imported goods; satisfaction of its obligations under this policies now or hereafter in effect (3) Taxes on the income or personal paragraph. during the Compact Term, or (iii) to property of all individuals who are (iv) The Parties shall memorialize in which the Parties may otherwise agree neither citizens nor permanent residents a mutually acceptable Supplemental in writing. of the Republic of Benin, including Agreement or Implementation Letter or (i) Utilization of Goods, Services and income and social security taxes of all other suitable document the Works. The Government shall ensure types and all taxes on the personal mechanisms for implementing this that any Program Assets, services, property owned by such individuals, to Section 2.3(e), including (A) a formula facilities or works funded in whole or in the extent such income or property are for determining refunds for Taxes paid, part (directly or indirectly) by MCC attributable to MCC Funding; and the amount of which is not susceptible Funding, unless otherwise agreed by the (4) Taxes or duties levied on the last to precise determination, (B) a Parties in writing, shall be used solely in furtherance of this Compact. transaction for the purchase of goods or mechanism for ensuring the tax-free services funded by MCC Funding, (j) Notification of Applicable Laws importation, use, and re-exportation of including sales taxes, tourism taxes, and Policies. MCC shall notify the goods, services, or the personal value-added taxes (VAT), or other Government of any applicable United belongings of individuals (including all similar charges. The term ‘‘last States law or policy affecting the use or Providers) described in paragraph (i)(2) transaction’’ refers to the last transaction treatment of MCC Funding, whether or of this Section 2.3(e), (C) a requirement by which the goods or services were not specifically identified in this for the provision by the Government of purchased for use in the activities Section 2.3, and shall provide to the a tax-exemption certificate which funded by MCC Funding. Government a copy of the text of any (ii) This Section 2.3(e) shall apply, but expressly includes, inter alia, the thirty such applicable law and a written is not limited to (A) any transaction, (30) day refund requirement of Section explanation of any such applicable service, activity, contract, grant or other 2.3(e)(iii), and (D) any other appropriate policy. implementing agreement funded in Government action to facilitate the Section 2.4 Incorporation; Notice; whole or in part by MCC Funding; (B) administration of this Section 2.3(e). Clarification. any supplies, equipment, materials, (f) Alteration. The Government shall (a) The Government shall include, or property or other goods (referred to ensure that no MCC Funding, Accrued ensure the inclusion of, all of the herein collectively as ‘‘goods’’) or funds Interest nor Program Assets shall be requirements set forth in Section 2.3 in introduced into, acquired in, used or subject to any impoundment, rescission, all Supplemental Agreements to which disposed of in, or imported into or sequestration or any provision of law MCC is not a party and shall use its best exported from, the Republic of Benin by now or hereafter in effect in the efforts to ensure that no such MCC, or by any person or entity Republic of Benin that would have the Supplemental Agreement is (including contractors and grantees) as effect of requiring or allowing any implemented in violation of the part of, or in conjunction with, MCC impoundment, rescission or prohibitions set forth in Section 2.3. Funding or the Program; (C) any sequestration of any MCC Funding, (b) The Government shall ensure contractor, grantee, or other Accrued Interest or Program Asset. notification of all of the requirements organization carrying out activities (g) Liens or Encumbrances. The set forth in Section 2.3 to any Provider funded in whole or in part by MCC Government shall ensure that no MCC and all relevant officers, directors, Funding; and (D) any employee of such Funding, Accrued Interest, or Program employees, agents, representatives, organizations (the uses set forth in Assets shall be subject to any lien, Affiliates, contractors, sub-contractors, clauses (A) through (D) are collectively attachment, enforcement of judgment, grantees and sub-grantees of any referred to herein as ‘‘Exempt Uses’’). pledge, or encumbrance of any kind Provider. The term ‘‘Provider’’ shall (iii) If a Tax has been levied and paid (each a ‘‘Lien’’), except with the prior mean (i) MCA-Benin and any contrary to the requirements of this approval of MCC in accordance with Government Affiliate or Permitted Section 2.3(e), whether inadvertently, Section 3(c) of Annex I, and in the event Designee involved in any activities in due to the impracticality of of the imposition of any Lien not so furtherance of this Compact or (ii) any implementation of this provision with approved, the Government shall third party who receives at least USD respect to certain types or amounts of promptly seek the release of such Lien $50,000 in the aggregate of MCC taxes, or otherwise, the Government and if required by final non-appealable Funding (other than employees of MCA- shall refund promptly to MCC to an order, shall pay any amounts owed to Benin) during the Compact Term or account designated by MCC the amount obtain such release; provided, however, such other amount as the Parties may of such Tax in the currency of the the Government shall apply national agree in writing, whether directly from Republic of Benin, within thirty (30) funds to satisfy its obligations under MCC, indirectly through Re- days (or such other period as may be this Section 2.3(g) and no MCC Disbursements, or otherwise. agreed in writing by the Parties) after Funding, Accrued Interest, or Program (c) In the event the Government or the Government is notified in writing of Assets may be applied by the any Provider requires clarification from

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MCC as to whether an activity amount of MCC Funding, plus any and any of their respective directors, contemplated to be undertaken in Accrued Interest, then allocated to the officers, employees, contractors, sub- furtherance of this Compact violates or terminated or suspended portion; contractors, grantees, sub-grantees, may violate any provision of Section provided, further, that any refund of agents or representatives. 2.3, the Government shall notify, or MCC Funding or Accrued Interest shall (b) The Government shall ensure that ensure that such Provider notifies, MCC be to such account(s) as designated by no person or entity shall participate in in writing and provide in such MCC. the selection, award, administration, or notification a detailed description of the (b) Notwithstanding any other oversight of a contract, grant or other activity in question. In such event, the provision in this Compact or any other benefit or transaction funded in whole Government shall not proceed, and shall agreement to the contrary, MCC’s right or in part (directly or indirectly) by use its best efforts to ensure that no under this Section 2.5 for a refund shall MCC Funding, in which (i) the entity, relevant Provider proceeds, with such continue during the Compact Term and the person, members of the person’s activity, and the Government shall for a period of (i) five (5) years thereafter immediate family or household or his or ensure that no Re-Disbursements shall or (ii) one (1) year after MCC receives her business partners, or organizations be made for such activity, until MCC actual knowledge of such violation, controlled by or substantially involving advises the Government or such whichever is later. such person or entity, has or have a Provider in writing that the activity is (c) If MCC determines that any direct or indirect financial or other permissible. activity or failure to act violates, or may interest or (ii) the person or entity is Section 2.5 Refunds; Violation. violate, any Section in this Article II, negotiating or has any arrangement (a) Notwithstanding the availability to MCC may refuse any further MCC concerning prospective employment, MCC, or exercise by MCC of, any other Disbursements for or conditioned upon unless such person or entity has first remedies, including under international such activity, and may take any action disclosed in writing to the Government law, this Compact, or any Supplemental to prevent any Re-Disbursement related the conflict of interest and, following Agreement: to such activity. such disclosure, the Parties agree in (i) If any amount of MCC Funding or Section 2.6 Bilateral Agreement. All writing to proceed notwithstanding Accrued Interest, or any Program Asset, MCC Funding shall be considered such conflict. The Government shall is used for any purpose prohibited United States assistance under the ensure that no person or entity involved under this Article II or otherwise in Economic, Technical and Related in the selection, award, administration, violation of any of the terms and Assistance Agreement by and between oversight or implementation of any conditions of this Compact, any the Government of the United States of contract, grant or other benefit or guidance in any Implementation Letter, America and the Government of the transaction funded in whole or in part or any Supplemental Agreement Republic of Benin, dated May 27, 1961, (directly or indirectly) by MCC Funding between the Parties, MCC may, upon as amended from time to time (the shall solicit or accept from or offer to a written notice, require the Government ‘‘Bilateral Agreement’’). If there are third party or seek or be promised to repay promptly to MCC to an account conflicts or inconsistencies between any directly or indirectly for itself or for designated by MCC or to others as MCC parts of this Compact and the Bilateral another person or entity any gift, may direct the amount of such misused Agreement, as either may be amended gratuity, favor or benefit, other than MCC Funding or Accrued Interest, or from time to time, the provisions of this items of de minimis value and otherwise the cash equivalent of the value of any Compact shall prevail over those of the consistent with such guidance as MCC misused Program Asset, in United States Bilateral Agreement. may provide from time to time. Dollars, plus any interest that accrued or (c) The Government shall not would have accrued thereon, within Article III. Implementation designate any person or entity, thirty (30) days after the Government is Section 3.1 Implementation including any Government Affiliate, to notified, whether by MCC or other duly Framework. This Compact shall be implement, in whole or in part, this authorized representative of the United implemented by the Parties in Compact or any Supplemental States Government, of such prohibited accordance with this Article III and as Agreement between the Parties use; provided, however, the further specified in the Annexes and in (including any Government Government shall apply national funds relevant Supplemental Agreements. Responsibilities or any other to satisfy its obligations under this Section 3.2 Government responsibilities or obligations of the Section 2.5(a)(i) and no MCC Funding, Responsibilities. Government under this Compact or any Accrued Interest, nor Program Assets (a) The Government shall have Supplemental Agreement between the may be applied by the Government in principal responsibility for oversight Parties) or to exercise any rights of the satisfaction of its obligations under this and management of the implementation Government under this Compact or any Section 2.5(a)(i); and of the Program (i) in accordance with Supplemental Agreement between the (ii) If all or any portion of this the terms and conditions specified in Parties, except as expressly provided Compact is terminated or suspended this Compact and relevant herein or with the prior written consent and upon the expiration of this Supplemental Agreements, (ii) in of MCC; provided, however, the Compact, the Government shall, subject accordance with all applicable laws Government may designate MCA-Benin to the requirements of Sections 5.4(e) then in effect in Benin, and (iii) in a or, with the prior written consent of and 5.4(f), refund, or ensure the refund, timely and cost-effective manner and in MCC, such other mutually acceptable to MCC to such account(s) designated by conformity with sound technical, persons or entities, (each, a ‘‘Permitted MCC the amount of any MCC Funding, financial and management practices Designee’’) to implement some or all of plus any Accrued Interest, promptly, (collectively, the ‘‘Government the Government Responsibilities or any but in no event later than thirty (30) Responsibilities’’). Unless otherwise other responsibilities or obligations of days after the Government receives expressly provided, any reference to the the Government or to exercise any rights MCC’s request for such refund; Government Responsibilities or any of the Government under this Compact provided, that if this Compact is other responsibilities or obligations of or any Supplemental Agreement terminated or suspended in part, MCC the Government herein shall be deemed between the Parties each in accordance may request a refund for only the to apply to any Government Affiliate with the terms and conditions set forth

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in this Compact or such Supplemental Guidelines and shall obtain all or (ii) made to any third party, in Agreement (referred to herein necessary immigration, business and connection with or in furtherance of this collectively as ‘‘Designated Rights and other permits, licenses, consents and Compact, in violation of the United Responsibilities’’). Notwithstanding any approvals to enable them and their States Foreign Corrupt Practices Act of provision herein or any other agreement personnel to fully perform under such 1977, as amended (15 U.S.C. 78a et to the contrary, no such designation agreements. seq.). shall relieve the Government of such Section 3.3 Government Deliveries. Section 3.5 Implementation Letters; Designated Rights and Responsibilities, The Government shall proceed, and Supplemental Agreements. for which the Government shall retain cause others to proceed, in a timely (a) MCC may, from time to time, issue ultimate responsibility. In the event that manner to deliver to MCC all reports, one or more letters to furnish additional the Government designates any person notices, certificates, documents or other information or guidance to assist the or entity, including any Government deliveries required to be delivered by Government in the implementation of Affiliate, to implement any portion of the Government under this Compact or this Compact (each, an ‘‘Implementation the Government Responsibilities or any Supplemental Agreement between Letter’’). The Government shall apply other responsibilities or obligations of the Parties, in form and substance as set such guidance in implementing this the Government, or to exercise any forth in this Compact or in any such Compact. rights of the Government under this Supplemental Agreement. (b) The details of any funding, Compact or any Supplemental Section 3.4 Government Assurances. implementing and other arrangements Agreement between the Parties, in The Government hereby provides the in furtherance of this Compact may be accordance with this Section 3.2(c), following assurances to MCC that as of memorialized in one or more then the Government shall (i) cause the date this Compact is signed: agreements between (A) the Government (a) The information contained in the such person or entity to perform such (or any Government Affiliate or Proposal and any agreement, report, Designated Rights and Responsibilities Permitted Designee) and MCC, (B) MCC statement, communication, document or in the same manner and to the full and/or the Government (or any otherwise delivered or otherwise extent to which the Government is Government Affiliate or Permitted communicated to MCC by or on behalf obligated to perform such Designated Designee) and any third party, including Rights and Responsibilities, (ii) ensure of the Government on or after the date of the submission of the Proposal (i) are any of the Providers or Permitted that such person or entity does not Designee or (C) any third parties where assign, delegate or contract (or true, correct and complete in all material respects and (ii) do not omit neither MCC nor the Government is a otherwise transfer) any of such party, before, on or after the Entry into Designated Rights and Responsibilities any fact known to the Government that if disclosed would (A) alter in any Force (each, a ‘‘Supplemental to any person or entity and (iii) cause Agreement’’). The Government shall such person or entity to certify to MCC material respect the information delivered, (B) likely have a material deliver, or cause to be delivered, to MCC in writing that it will so perform such within five (5) days of its execution a Designated Rights and Responsibilities adverse effect on the Government’s ability to effectively implement, or copy of any Supplemental Agreement to and will not assign, delegate, or contract which MCC is not a party. (or otherwise transfer) any of such ensure the effective implementation of, Section 3.6 Procurement; Awards of Designated Rights and Responsibilities the Program or any Project or to Assistance. to any person or entity without the prior otherwise carry out its responsibilities (a) The Government shall ensure that written consent of MCC. or obligations under or in furtherance of (d) The Government shall, upon a this Compact, or (C) have likely the procurement of all goods, services request from MCC, execute, or ensure adversely affected MCC’s determination and works by the Government or any the execution of, an assignment to MCC to enter into this Compact or any Provider in furtherance of this Compact of any cause of action which may accrue Supplemental Agreement between the shall be consistent with the to the benefit of the Government, a Parties. procurement guidelines (the Government Affiliate or any Permitted (b) Unless otherwise disclosed in ‘‘Procurement Guidelines’’) reflected in Designee, including MCA-Benin, in writing to MCC, the MCC Funding made a Supplemental Agreement between the connection with or arising out of any available hereunder is in addition to the Government (and/or a mutually activities funded in whole or in part normal and expected resources that the acceptable Government Affiliate or (directly or indirectly) by MCC Funding. Government usually receives or budgets MCA-Benin) and MCC (the (e) The Government shall ensure that for the activities contemplated herein ‘‘Procurement Agreement’’), which (i) no decision of MCA-Benin is from external or domestic sources. Procurement Guidelines shall include modified, supplemented, unduly (c) This Compact does not conflict the following requirements: influenced or rescinded by any and will not conflict with any (i) Internationally accepted governmental authority, except by a international agreement or obligation to procurement rules with open, fair and non-appealable judicial decision, and which the Government is a party or by competitive procedures are used in a (ii) the authority of MCA-Benin shall which it is bound. transparent manner to solicit, award and not be expanded, restricted, or (d) No payments have been (i) administer contracts, grants, and other otherwise modified, except in received by any official of the agreements and to procure goods, accordance with this Compact, the Government or any other government services and works; Governance Agreement, the Governing body in connection with the (ii) Solicitations for goods, services, Documents or any other Supplemental procurement of goods, services or works and works shall be based upon a clear Agreement between the Parties. to be undertaken or funded in whole or and accurate description of the goods, (f) The Government shall ensure that in part (directly or indirectly) by MCC services or works to be acquired; all persons and individuals that enter Funding, except fees, taxes, or similar (iii) Contracts shall be awarded only into agreements to provide goods, payments legally established in the to qualified and capable contractors that services or works under the Program or Republic of Benin (subject to Section have the capability and willingness to in furtherance of this Compact shall do 2.3(e)) and consistent with the perform the contracts in accordance so in accordance with the Procurement applicable requirement of Beninese law with the terms and conditions of the

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applicable contracts and on a cost shall seek to maintain and to improve maintained for at least five (5) years effective and timely basis; and its level of performance under the after the end of the Compact Term or for (iv) No more than a commercially policy criteria identified in Section 607 such longer period, if any, required to reasonable price, as determined, for of the Act, and the MCA selection resolve any litigation, claims or audit example, by a comparison of price criteria and methodology published by findings or any statutory requirements. quotations and market prices, shall be MCC pursuant to Section 607 of the Act (c) Access. Upon the request of MCC, paid to procure goods, services, and from time to time (‘‘MCA Eligibility the Government, at all reasonable times, works. Criteria’’). shall permit, or cause to be permitted, (b) The Government shall maintain, Section 3.8 Records and authorized representatives of MCC, the and shall use its best efforts to ensure Information; Access; Audits; Reviews. Inspector General, the United States that all Providers maintain, records (a) Reports and Information. The Government Accountability Office, any regarding the receipt and use of goods, Government shall furnish to MCC, and auditor responsible for an audit services and works acquired in shall use its best efforts to ensure that contemplated herein or otherwise furtherance of this Compact, the nature all Providers and any other third party conducted in furtherance of this and extent of solicitations of prospective receiving MCC Funding, as appropriate, Compact, and any agents or suppliers of goods, services and works furnish to the Government (and the representatives engaged by MCC or a acquired in furtherance of this Compact, Government shall provide to MCC), any Permitted Designee to conduct any and the basis of award of contracts, records and other information required assessment, review or evaluation of the grants and other agreements in to be maintained under this Section 3.8 Program, at all reasonable times the furtherance of this Compact. and such other information, documents opportunity to audit, review, evaluate or (c) The Government shall use its best and reports as may be necessary or inspect activities funded in whole or in efforts to ensure that information, appropriate for the Government to part (directly or indirectly) by MCC including solicitations, regarding effectively carry out its obligations Funding or undertaken in connection procurement, grant and other agreement under this Compact, including under with the Program, the utilization of actions funded (or to be funded) in Section 3.12. goods and services purchased or funded whole or in part (directly or indirectly) (b) Government Books and Records. in whole or in part (directly or by MCC Funding shall be made publicly The Government shall maintain, and indirectly) by MCC Funding, and available in the manner outlined in the shall use its best efforts to ensure that Compact Records, including of the Procurement Guidelines or in any other all Providers maintain, accounting Government or any Provider, relating to manner agreed upon by the Parties in books, records, documents and other activities funded or undertaken in writing. evidence relating to this Compact furtherance of, or otherwise relating to, (d) The Government shall ensure that adequate to show, to the satisfaction of this Compact, and shall use its best no goods, services or works may be MCC, without limitation, the use of all efforts to ensure access by MCC, the funded in whole or in part (directly or MCC Funding, including all costs Inspector General, the United States indirectly) by MCC Funding which are incurred by the Government and the Government Accountability Office or procured pursuant to orders or contracts Providers in furtherance of this relevant auditor, reviewer or evaluator firmly placed or entered into prior to the Compact, the receipt, acceptance and or their respective representatives or Entry into Force, except as the Parties use of goods, services and works agents to all relevant directors, officers, may otherwise agree in writing. acquired in furtherance of this Compact employees, Affiliates, contractors, (e) The Government shall ensure that by the Government and the Providers, representatives and agents of the MCA-Benin and any other Permitted agreed-upon cost sharing requirements, Government or any Provider. Designee follows, and uses its best the nature and extent of solicitations of (d) Audits. efforts to ensure that all Providers prospective suppliers of goods, services (i) Government Audits. The follow, the Procurement Guidelines in and works acquired by the Government Government shall, on at least an annual procuring (including soliciting) goods, and the Providers in furtherance of this basis and as the Parties may otherwise services and works and in awarding and Compact, the basis of award of agree in writing, conduct, or cause to be administering contracts, grants and Government and other contracts and conducted, financial audits of all MCC other agreements in furtherance of this orders in furtherance of this Compact, Disbursements and Re-Disbursements Compact, and shall furnish MCC the overall progress of the during the year since the Entry into evidence of the adoption of the implementation of the Program, and any Force or since the prior anniversary of Procurement Guidelines by MCA-Benin documents required by this Compact or the Entry into Force in accordance with no later than the time specified in the any Supplemental Agreement between the following terms, except as the Disbursement Agreement. the Parties or reasonably requested by Parties may otherwise agree in writing. (f) The Government shall include, or MCC upon reasonable notice (‘‘Compact As requested by MCC in writing, the ensure the inclusion of, the Records’’). The Government shall Government shall use, or cause to be requirements of this Section 3.6 into all maintain, and shall use its best efforts used, or select or cause to be selected, Supplemental Agreements between the to ensure that all Covered Providers an auditor named on the approved list Government, any Government Affiliate maintain, Compact Records in of auditors in accordance with the or Permitted Designee or any of their accordance with generally accepted ‘‘Guidelines for Financial Audits respective directors, officers, employees, accounting principles prevailing in the Contracted by Foreign Recipients’’ (the Affiliates, contractors, sub-contractors, United States, or at the Government’s ‘‘Audit Guidelines’’) issued by the grantees, sub-grantees, representatives option and with the prior written Inspector General of the United States or agents, on the one hand, and a approval by MCC, other accounting Agency for International Development Provider, on the other hand. principles, such as those (1) prescribed (the ‘‘Inspector General’’), and as Section 3.7 Policy Performance; by the International Accounting approved by MCC, to conduct such Policy Reforms. In addition to the Standards Committee (an affiliate of the annual audits. Such audits shall be specific policy and legal reform International Federation of performed in accordance with such commitments identified in Annex I and Accountants) or (2) then prevailing in Audit Guidelines and be subject to the Schedules thereto, the Government Benin. Compact Records shall be quality assurance oversight by the

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Inspector General in accordance with audit necessitates adjustment of its own (f) Reviews or Evaluations. The such Audit Guidelines. An audit shall records, and require each such Covered Government shall conduct, or cause to be completed and delivered to MCC no Provider to permit independent auditors be conducted, such performance later than 90 days after the first period to have access to its records and reviews, data quality reviews, to be audited and no later than 90 days financial statements as necessary. environmental and social audits, or after each anniversary of the Entry into (vi) Audit Reports. The Government program evaluations during the Force thereafter, or such other period as shall furnish, or use its best efforts to Compact Term or otherwise and in the Parties may otherwise agree in cause to be furnished, to MCC an audit accordance with the M&E Plan or as writing. report in a form satisfactory to MCC for otherwise agreed in writing by the (ii) Audits of U.S. Entities. The each audit required by this Section 3.8, Parties. Government shall ensure that other than audits arranged for by MCC, (g) Cost of Audits, Reviews or Supplemental Agreements between the no later than 90 days after the end of the Evaluations. MCC Funding may be used Government or any Provider, on the one period under audit, or such other time to fund the costs of any Audits, reviews hand, and a United States non-profit as may be agreed by the Parties from or evaluations required under this organization, on the other hand, state time to time. Compact, including as reflected on that the United States organization is (vii) Other Providers. For Providers Exhibit A to Annex II, and in no event subject to the applicable audit who receive MCC Funding under this shall the Government be responsible for requirements contained in OMB Compact pursuant to direct contracts or the costs of any such Audits, reviews or Circular A–133, notwithstanding any agreements with MCC, MCC shall evaluations from financial sources other other provision of this Compact to the include appropriate audit requirements than MCC Funding. contrary. The Government shall ensure in such contracts or agreements and Section 3.9 Insurance; Performance that Supplemental Agreements between shall, on behalf of the Government, Guarantees. The Government shall, to the Government or any Provider, on the unless otherwise agreed by the Parties, MCC’s satisfaction, insure or cause to be one hand, and a United States for-profit conduct the follow-up activities with insured all Program Assets and shall Covered Provider, on the other hand, regard to the audit reports furnished obtain or cause to be obtained such other appropriate insurance and other state that the United States organization pursuant to such requirements. protections to cover against risks or is subject to audit by the cognizant (viii) Audit by MCC. MCC retains the liabilities associated with the operations United States Government agency, right to perform, or cause to be of the Program, including by requiring unless the Government and MCC agree performed, the audits required under Providers to obtain adequate insurance otherwise in writing. this Section 3.8 by utilizing MCC (iii) Audit Plan. The Government and post adequate performance bonds or Funding or other resources available to shall submit, or cause to be submitted, other guarantees. MCA-Benin or the MCC for this purpose, and to audit, to MCC no later than 20 days prior to Implementing Entity, as applicable, the date of its adoption a plan, in conduct a financial review, or otherwise shall be named as the payee on any such accordance with the Audit Guidelines, ensure accountability of any Provider or insurance and the beneficiary of any for the audit of the expenditures of any any other third party receiving MCC such guarantee, including performance Covered Providers, which audit plan, in Funding, regardless of the requirements bonds. MCC, and to the extent it is not the form and substance as approved by of this Section 3.8. named as the insured party, MCA-Benin MCC, the Government shall adopt, or (e) Application to Providers. The shall be named as additional insureds cause to be adopted, no later than sixty Government shall include, or ensure the on any such insurance or other (60) days prior to the end of the first inclusion of, at a minimum, the guarantee, to the extent permissible period to be audited (such plan, the requirements of: under applicable laws. The Government ‘‘Audit Plan’’). (i) Paragraphs (a), (b), (c), (d)(ii), shall ensure that any proceeds from (iv) Covered Provider. A ‘‘Covered (d)(iii), (d)(v), (d)(vi), and (d)(viii) of this claims paid under such insurance or Provider’’ is (A) a non-United States Section 3.8 into all Supplemental any other form of guarantee shall be Provider that receives (other than Agreements between the Government, used to replace or repair any loss of pursuant to a direct contract or any Government Affiliate, any Permitted Program Assets or to pursue the agreement with MCC) USD $300,000 or Designee or any of their respective procurement of the covered goods, more of MCC Funding in any MCA- directors, officers, employees, Affiliates, services, works, or otherwise; provided, Benin fiscal year or any other non- contractors, sub-contractors, grantees, however, at MCC’s election, such United States person or entity that sub-grantees, representatives or agents proceeds shall be deposited in a receives, directly or indirectly, USD (each, a ‘‘Government Party’’), on the Permitted Account as designated by $300,000 or more of MCC Funding from one hand, and a Covered Provider that MCA-Benin and acceptable to MCC or any Provider in such fiscal year or (B) is not a non-profit organization as otherwise directed by MCC. To the any United States Provider that receives domiciled in the United States, on the extent MCA-Benin is held liable under (other than pursuant to a direct contract other hand; any indemnification or other similar or agreement with MCC) USD $500,000 (ii) Paragraphs (a), (b), (c), (d)(ii), and provision of any agreement between or more of MCC Funding in any MCA- (d)(viii) of this Section 3.8 into all MCA-Benin, on the one hand, and any Benin fiscal year or any other United Supplemental Agreements between a other Provider or other third party, on States person or entity that receives, Government Party and a Provider that the other hand, the Government shall directly or indirectly, USD $500,000 or does not meet the definition of a pay in full on behalf of MCA-Benin any more of MCC Funding from any Covered Provider; and such obligation; provided, further, the Provider in such fiscal year. (iii) Paragraphs (a), (b), (c), (d)(ii), Government shall apply national funds (v) Corrective Actions. The (d)(v) and (d)(viii) of this Section 3.8 to satisfy its obligations under this Government shall use its best efforts to into all Supplemental Agreements Section 3.9 and no MCC Funding, ensure that Covered Providers take, between a Government Party and a Accrued Interest, or Program Asset may where necessary, appropriate and timely Covered Provider that is a non-profit be applied by the Government in corrective actions in response to audits, organization domiciled in the United satisfaction of its obligations under this consider whether a Covered Provider’s States. Section 3.9.

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Section 3.10 Domestic (i) Any report or document required precedence and prevail over the Requirements. The Government shall to be delivered to MCC under the domestic laws of Benin now or hereafter proceed in a timely manner to seek Environmental Guidelines, any Audit in effect and (3) each of the provisions ratification of this Compact, as Plan, or any component of the of this Compact to be valid, binding and necessary or required by the laws of the Implementation Plan; and in full force and effect under Beninese Republic of Benin, or similar domestic (j) Any other report, document or law; and requirement, in order that (i) this information requested by MCC or (ii) Attaches thereto, and certifies that Compact shall be given the status of an required by this Compact or any such attachments are, true, correct and international agreement, (ii) this Supplemental Agreement between the complete copies of all decrees, Compact shall take precedence and Parties. legislation, regulations or other governmental documents relating to its prevail over the domestic laws of Benin Article IV. Conditions Precedent; domestic requirements for this Compact now or hereafter in effect and (iii) each Deliveries of the provisions of this Compact is to enter into force and the satisfaction valid, binding and in full force and Section 4.1 Conditions Prior to the of Section 3.10, which MCC may post effect under Beninese law. The Entry into Force and Deliveries. As on its Web site or otherwise make Government shall initiate such process conditions precedent to the Entry into publicly available. promptly after the conclusion of this Force, the Parties shall satisfy the (f) MCC shall deliver a written Compact. Notwithstanding anything to conditions set forth in this Section 4.1. statement as to the incumbency and the contrary in this Compact, this (a) The Government (or a mutually specimen signature of the Principal Section 3.10 shall provisionally apply acceptable Government Affiliate) and Representative and each Additional prior to Entry into Force. MCC shall execute a Disbursement Representative of MCC executing any Section 3.11 No Conflict. The Agreement, which agreement shall be in document under this Compact such Government shall undertake not to enter full force and effect as of the Entry into written statement to be signed by a duly into any agreement in conflict with this Force. authorized official of MCC other than (b) (i) The Government shall deliver Compact or any Supplemental the Principal Representative or any such one or more of the Supplemental Agreement during the Compact Term. Additional Representative. Agreements or other document (g) The Government has not engaged Section 3.12 Reports. The identified on Exhibit B attached hereto, subsequent to the conclusion of this Government shall provide, or cause to which agreements or other documents Compact in any action or omission be provided, to MCC at least on each shall be fully executed by the parties inconsistent with the MCA Eligibility anniversary of the Entry into Force (or thereto and in full force and effect, or Criteria, as determined by MCC in its such other anniversary agreed by the (ii) the Government (or a mutually sole discretion. Parties in writing) and otherwise within acceptable Government Affiliate) and Section 4.2 Conditions Precedent to thirty (30) days of any written request MCC execute one or more term sheets MCC Disbursements or Re- by MCC, or as otherwise agreed in that set forth the material and principal Disbursements. Prior to, and as writing by the Parties, the following terms and conditions that will be condition precedent to, any MCC information: included in any such Supplemental Disbursement or Re-Disbursement, the (a) The name of each entity to which Agreement or document that has not Government shall satisfy, or ensure the MCC Funding has been provided; been entered into or effective as of the satisfaction of, all applicable conditions (b) The amount of MCC Funding Entry into Force (the ‘‘Supplemental precedent in the Disbursement provided to such entity; Agreement Term Sheets’’). Agreement. (c) A description of the Program and (c) The Government (or a mutually Article V. Final Clauses each Project funded in furtherance of acceptable Government Affiliate) and this Compact, including: MCC shall execute a Procurement Section 5.1 Communications. Unless (i) A statement of whether the Agreement, which agreement shall be in otherwise expressly stated in this Program or any Project was solicited or full force and effect as of the Entry into Compact or otherwise agreed in writing unsolicited; and Force. by the Parties, any notice, certificate, (ii) A detailed description of the (d) The Government shall deliver a request, report, document or other objectives and measures for results of written statement as to the incumbency communication required, permitted, or the Program or Project; and specimen signature of the Principal submitted by either Party to the other (d) The progress made by Benin Representative and each Additional under this Compact shall be (a) in toward achieving the Compact Goal and Representative of the Government writing, (b) in English and (c) deemed Objectives; executing any document under this duly given: (i) Upon personal delivery (e) A description of the extent to Compact, such written statement to be to the Party to be notified; (ii) when sent which MCC Funding has been effective signed by a duly authorized official of by confirmed facsimile or electronic in helping Benin to achieve the the Government other than the Principal mail, if sent during normal business Compact Goal and Objectives; Representative or any such Additional hours of the recipient Party, if not, then (f) A description of the coordination Representative. on the next business day; or (iii) three of MCC Funding with other United (e) The Government shall deliver a (3) business days after deposit with an States foreign assistance and other certificate signed and dated by the internationally recognized overnight related trade policies; Principal Representative of the courier, specifying next day delivery, (g) A description of the coordination Government, or such other duly with written verification of receipt to of MCC Funding with assistance authorized representative of the the Party to be notified at the address provided by other donor countries; Government acceptable to MCC, that: indicated below, or at such other (h) Any report, document or filing (i) Certifies the Government has address as such Party may designate: that the Government, any Government completed all of its domestic To MCC: Millennium Challenge Affiliate or any Permitted Designee requirements for (1) this Compact to be Corporation, Attention: Vice President submits to any government body in given the status of an international of Operations (with a copy to the Vice connection with this Compact; agreement, (2) this Compact to take President and General Counsel), 875

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Fifteenth Street, NW., Washington, DC specimen signature of the new Principal Activity were greater than the projected 20005, United States of America, Representative. expenditure for such activities Facsimile: (202) 521–3700, Phone: (202) Section 5.3 Amendments. The identified in the applicable Detailed 521–3600, e-mail: Parties may amend this Compact only Financial Plan or are projected to be [email protected] (Vice President by a written agreement signed by the greater than projected expenditures for of Operations); Principal Representatives of the Parties such activities; [email protected] (Vice and subject to the respective domestic (vii) If the Government (A) materially President and General Counsel). approval requirements to which this reallocates or reduces the allocation in To the Government: Ministry of Compact was subject. its national budget or any other Finance and Economy, Attention: Section 5.4 Termination; Government budget of the normal and Minister of Finance and Economy, Suspension. expected resources that the Government Route de l’Ae´roport, P.O. Box 302, (a) Subject to Section 2.5, either Party would have otherwise received or Cotonou, Republic of Benin, Facsimile: may terminate this Compact in its budgeted, from external or domestic 229 21 30 18 51, Phone: 229 21 30 69 entirety by giving the other Party thirty sources, for the activities contemplated 38. (30) days’ written notice. herein, (B) fails to contribute or provide With a copy to: Office of the Head of (b) Notwithstanding any other the amount, level, type and quality of State, Attention: Chief of Staff, provision of this Compact, including resources required to effectively carry Presidence de la Re´publique, Avenue de Section 2.1, or any Supplemental out the Government Responsibilities or la Marina, Cotonou, Republic of Benin, Agreement between the Parties, subject any other responsibilities or obligations Facsimile: 229 21 30 00 90, Phone: 229 to Section 2.5, MCC may suspend or of the Government under or in 21 30 06 36, MCA-Benin (to be formed), terminate this Compact or MCC furtherance of this Compact, or (C) fails Attention: National Coordinator, Funding, in whole or in part, and any to pay any of its obligations as required Immeuble Espace Dina, 6th Floor, obligation or sub-obligation related under this Compact or any Boulevard Saint Michel, Cotonou, thereto, upon giving the Government Supplemental Agreement, including Republic of Benin, Facsimile: 229 21 32 written notice, if MCC determines, in its such obligations which shall be paid 83 22, Phone: 229 21 32 83 19, e-mail: sole discretion, that: solely out of national funds; (i) Any use or proposed use of MCC [email protected]. (viii) If the Government, any Provider, Funding or Program Assets or continued or any other third party receiving MCC Notwithstanding the foregoing, any implementation of the Compact would Funding or using Program Assets, or any audit report delivered pursuant to be in violation of applicable law or of their respective directors, officers, Section 3.8, if delivered by facsimile or United States Government policy, employees, Affiliates, contractors, sub- electronic mail, shall be followed by an whether now or hereafter in effect; original in overnight express mail. This (ii) The Government, any Provider, or contractors, grantee, sub-grantee, Section 5.1 shall not apply to the any other third party receiving MCC representatives or agents, is found to exchange of letters contemplated in Funding or using Program Assets is have been convicted of a narcotics Section 1.3 or any amendments under engaged in activities that are contrary to offense or to have been engaged in drug Section 5.3. the national security interests of the trafficking; Section 5.2 Representatives. Unless United States; (ix) Any MCC Funding or Program otherwise agreed in writing by the (iii) The Government or any Permitted Assets are applied, directly or Parties, for all purposes relevant to this Designee has committed an act or indirectly, to the provision of resources Compact, the Government shall be omission or an event has occurred that and support to, individuals and represented by the individual holding would render the Republic of Benin organizations associated with terrorism, the position of, or acting as, Minister of ineligible to receive United States sex trafficking or prostitution; Finance and Economy of the Republic of economic assistance under Part I of the (x) An event or condition of any Benin, and MCC shall be represented by Foreign Assistance Act of 1961, as character has occurred that: (A) the individual holding the position of, amended (22 U.S.C. 2151 et seq.), by Materially and adversely affects, or is or acting as, Vice President for reason of the application of any likely to materially and adversely affect, Operations (each, a ‘‘Principal provision of the Foreign Assistance Act the ability of the Government or any Representative’’), each of whom, by of 1961 or any other provision of law; other party to effectively implement, or written notice to the other Party, may (iv) The Government or any Permitted ensure the effective implementation of, designate one or more additional Designee has engaged in a pattern of the Program or any Project or to representatives (each, an ‘‘Additional actions or omissions inconsistent with otherwise carry out its responsibilities Representative’’) for all purposes other the MCA Eligibility Criteria, or there has or obligations under or in furtherance of than signing amendments to this occurred a significant decline in the this Compact or any Supplemental Compact. The names of the Principal performance of the Republic of Benin on Agreement or to perform its obligations Representative and any Additional one or more of the eligibility indicators under or in furtherance of this Compact Representative of each of the Parties contained therein; or any Supplemental Agreement or to shall be provided, with specimen (v) The Government or any Provider exercise its rights thereunder; (B) makes signatures, to the other Party, and the has materially breached one or more of it improbable that the Objectives will be Parties may accept as duly authorized its assurances or any covenants, achieved during the Compact Term; (C) any instrument signed by such obligations or responsibilities under this materially and adversely affects the representatives relating to the Compact or any Supplemental Program Assets or any Permitted implementation of this Compact, until Agreement; Account or (D) constitutes misconduct receipt of written notice of revocation of (vi) An audit, review, report or any injurious to MCC, or constitutes a fraud their authority. A Party may change its other document delivered in furtherance or a felony, by the Government, any Principal Representative to a new of the Compact or any Supplemental Government Affiliate, Permitted representative of equivalent or higher Agreement or any other evidence Designee or Provider, or any officer, rank upon written notice to the other reveals that actual expenditures for the director, employee, agent, Party, which notice shall include the Program or any Project or Project representative, Affiliate, contractor,

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grantee, subcontractor or sub-grantee of (f) Other than payments permitted the members of the families of such any of the foregoing; pursuant to Section 5.4(e), in the event personnel, while such personnel are (xi) The Government or any Permitted of the suspension or termination of this performing duties in the Republic of Designee or Provider has taken any Compact or any Supplemental Benin, shall enjoy the privileges and action or omission or engaged in any Agreement, in whole or in part, the immunities that are enjoyed by a activity in violation of, or inconsistent Party, at MCC’s sole discretion, shall member of the United States Foreign with, the requirements of this Compact suspend, for the period of the Service, or the family of a member of the or any Supplemental Agreement to suspension, or terminate, or ensure the United States Foreign Service so which the Government or any Permitted suspension or termination of, as notified, as appropriate, of comparable Designee or Provider is a party; applicable, any obligation or sub- rank and salary of such personnel, if (xii) There has occurred a failure to obligation of the Parties to provide such personnel or the members of the meet a condition precedent or series of financial or other resources under this families of such personnel are not a conditions precedent or any other Compact or any Supplemental national of, or permanently resident in, requirements or conditions in Agreement, or to the suspended or the Republic of Benin. connection with MCC Disbursement as terminated portion of this Compact or Section 5.6 Attachments. Any set out in and in accordance with any such Supplemental Agreement, as annex, schedule, exhibit, table, Supplemental Agreement between the applicable. In the event of such appendix or other attachment expressly Parties; or suspension or termination, the attached hereto (collectively, the (xiii) Any MCC Funding, Accrued Government shall use its best efforts to ‘‘Attachments’’) is incorporated herein Interest or Program Asset becomes suspend or terminate, or ensure the by reference and shall constitute an subject to a Lien without the prior suspension or termination of, as integral part of this Compact. Section 5.7 Inconsistencies. approval of MCC, and the Government applicable, all such noncancelable commitments related to the suspended (a) Conflicts or inconsistencies fails to obtain the release of such Lien between any parts of this Compact shall (at its own expense and not with MCC or terminated MCC Funding. Any portion of this Compact or any such be resolved by applying the following Funding, Accrued Interest, or Program descending order of precedence: Assets) within thirty (30) days after the Supplemental Agreement that is not suspended or terminated shall remain in (i) Articles I through V and imposition of such Lien. (ii) Any Attachments. (c) MCC may reinstate any suspended full force and effect. (g) Upon the full or partial suspension (b) In the event of any conflict or or terminated MCC Funding under this or termination of this Compact or any inconsistency between this Compact Compact or any Supplemental MCC Funding, MCC may, at its expense, and any Supplemental Agreement Agreement if MCC determines, in its direct that title to Program Assets be between the Parties, the terms of this sole discretion, that the Government or transferred to MCC if such Program Compact shall prevail. In the event of other relevant party has demonstrated a Assets are in a deliverable state; any conflict or inconsistency between commitment to correcting each provided, for any Program Asset(s) any Supplemental Agreement between condition for which MCC Funding was partially purchased or funded (directly the Parties and any other Supplemental suspended or terminated. or indirectly) by MCC Funding, the Agreement, the terms of the (d) The authority to suspend or Government shall reimburse to a United Supplemental Agreement between the terminate this Compact or any MCC States Government account designated Parties shall prevail. In the event of any Funding under this Section 5.4 includes by MCC the cash equivalent of the conflict or inconsistency between the authority to suspend or terminate portion of the value of such Program Supplemental Agreements between any any obligations or sub-obligations Asset(s), such value as determined by parties, the terms of a more recently relating to MCC Funding under any MCC. executed Supplemental Agreement Supplemental Agreement without any (h) Prior to the expiration of this between such parties shall take liability to MCC whatsoever. Compact or upon termination of this precedence over a previously executed (e) All MCC Disbursements and Re- Compact, the Parties shall consult in Supplemental Agreement between such Disbursements shall cease upon good faith with a view to reaching an parties. In the event of any expiration, suspension, or termination agreement in writing on (i) the post- inconsistency between a Supplemental of this Compact; provided, however, (i) Compact Term treatment of MCA-Benin, Agreement between the Parties and any reasonable expenditures for goods, (ii) the process for ensuring the refunds component of the Implementation Plan, services and works that are properly of MCC Disbursements that have not yet the terms of the relevant Supplemental incurred under or in furtherance of this been released from a Permitted Account Agreement shall prevail. Compact before expiration, suspension through a valid Re-Disbursement or Section 5.8 Indemnification. The or termination of this Compact and (ii) otherwise committed in accordance Government shall indemnify and hold reasonable expenditures for goods and with Section 5.4(e), or (iii) any other MCC and any MCC officer, director, services (including certain matter related to the winding up of the employee, Affiliate, contractor, agent or administrative expenses) properly Program and this Compact. representative (each of MCC and any incurred within one hundred and Section 5.5 Privileges and such persons, an ‘‘MCC Indemnified twenty (120) days after the expiration, Immunities. MCC is an agency of the Party’’) harmless from and against, and suspension or termination of the Government of the United States of shall compensate, reimburse and pay Compact in connection with the America and its personnel assigned to such MCC Indemnified Party for, any winding up of the Program may be paid the Republic of Benin will be notified liability or other damages which (i) are from MCC Funding, provided that in the pursuant to the Vienna Convention on directly or indirectly suffered or case of clauses (i) and (ii) the request for Diplomatic Relations as members of the incurred by such MCC Indemnified such payment is (A) properly submitted mission of the Embassy of the United Party, or to which any MCC Indemnified within ninety (90) days after the States of America. The Government Party may otherwise become subject, expiration, suspension or termination of shall ensure that any personnel of MCC regardless of whether or not such the Compact and (B) subject to the prior so notified, including individuals damages relate to any third-party claim, written consent of MCC. detailed to or contracted by MCC, and and (ii) arise from or as a result of the

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negligence or willful misconduct of the contractors, sub-contractors, grantees, Compact or any Supplemental Government, any Government Affiliate, sub-grantees, representatives, and Agreement between the Parties. Such MCA-Benin or any Permitted Designee, agents. consultations shall begin at the earliest directly or indirectly connected with, (h) Any references to ‘‘Supplemental possible date. The request for any activities (including acts or Agreement between the Parties’’ shall consultations shall designate a omissions) undertaken in furtherance of mean any agreement between MCC on representative for the requesting Party this Compact; provided, however, the the one hand, and the Government or with the authority to enter consultations Government shall apply national funds any Government Affiliate or Permitted and the other Party shall endeavor to to satisfy its obligations under this Designee on the other hand. designate a representative of equal or Section 5.8 and no MCC Funding, (i) A compendium of capitalized comparable rank. If such representatives Accrued Interest, or Program Asset may terms defined herein is included, for are unable to resolve the matter within be applied by the Government in convenience only, in Exhibit A attached 20 days from the commencement of the satisfaction of its obligations under this hereto. consultations then each Party shall Section 5.8. Section 5.11 Signatures. A signature forward the consultation to the Section 5.9 Headings. The Section to this Compact or an amendment to Principal Representative or such other and Subsection headings used in this this Compact pursuant to Section 5.3 representative of comparable or higher Compact are included for convenience shall be delivered only as an original rank. The consultations shall last no only and are not to be considered in signature. With respect to all other longer than 45 days from date of construing or interpreting this Compact. signatures, a signature delivered by commencement. If the matter is not Section 5.10 Interpretation; facsimile or electronic mail in resolved within such time period, either Definitions. accordance with Section 5.1 shall be Party may terminate this Compact (a) Any reference to the term deemed an original signature, and the pursuant to Section 5.4(a). The Parties ‘‘including’’ in this Compact shall be Parties hereby waive any objection to shall enter any such consultations deemed to mean ‘‘including without such signature or to the validity of the guided by the principle of achieving the limitation’’ except as expressly provided underlying document, certificate, Compact Goal in a timely and cost- otherwise. notice, instrument or agreement on the effective manner and by the principles (b) Any reference to activities basis of the signature’s legal effect, of international law. Any dispute arising undertaken ‘‘in furtherance of this validity or enforceability solely because under or related to this Compact shall Compact’’ or similar language shall it is in facsimile or electronic form; be determined exclusively through the include activities undertaken by the without limiting the foregoing, a consultation mechanism set forth in this Government, any Government Affiliate, signature on an audit report or a Section 5.14. any Permitted Designee, any Provider or signature evidencing any modification Section 5.15 MCC Status. MCC is a any other third party receiving MCC identified in Sections 2(b) and (4)(a)(iv) United States government corporation Funding involved in carrying out the of Annex I, Section 4 of Annex II or acting on behalf of the United States purposes of this Compact or any Section 5(c) Annex III shall be followed Government in the implementation of Supplemental Agreement, including by an original in overnight express mail. this Compact. As such, MCC has no their respective directors, officers, Such signature shall be accepted by the liability under this Compact, is immune employees, Affiliates, contractors, sub- receiving Party as an original signature from any action or proceeding arising contractors, grantees, sub-grantees, and shall be binding on the Party under or relating to this Compact and representatives or agents, whether delivering such signature. the Government hereby waives and pursuant to the terms of this Compact, Section 5.12 Designation. MCC may releases all claims related to any such any Supplemental Agreement or designate any Affiliate, agent, or liability. In matters arising under or otherwise. representative to implement, in whole relating to this Compact, MCC is not (c) References to ‘‘day’’ or ‘‘days’’ or in part, its obligations, and exercise subject to the jurisdiction of the courts shall be calendar days unless provided any of its rights, under this Compact or or other body of Benin or any other otherwise. any Supplemental Agreement between jurisdiction and all disputes arising (d) The term ‘‘United States the Parties. MCC shall inform the under or relating to this Compact shall Government’’ shall, for the purposes of Government of any such designation. be determined in accordance with this Compact, mean any branch, agency, Section 5.13 Survival. Any Section 5.14. bureau, government corporation, Government Responsibilities, Section 5.16 Language. This government chartered entity or other covenants, or obligations or other Compact is prepared in English and in body of the Federal government of the responsibilities to be performed by the the event of any ambiguity or conflict United States. Government after the Compact Term between this official English version (e) The term ‘‘Affiliate’’ of a party is shall survive the termination or and any other version translated into a person or entity that controls, is expiration of this Compact and expire in any language for the convenience of the controlled by, or is under the same accordance with their respective terms. Parties, this official English version control as the party in question, whether Notwithstanding the termination or shall prevail. by ownership or by voting, financial or expiration of this Compact, the Section 5.17 Publicity; Information other power or means of influence. following provisions shall remain in and Marking. The Government shall (f) The term ‘‘Government Affiliate’’ is force: Sections 2.2, 2.3, 2.5, 3.2, 3.3, 3.4, give appropriate publicity to this an Affiliate, ministry, bureau, 3.5, 3.8, 3.9 (for one year), 3.12, 5.1, 5.2, Compact as a program to which the department, agency, government 5.4(d), 5.4(e) (for one hundred and United States, through MCC, has corporation or any other entity twenty days), 5.4(f), 5.4(g), 5.4(h), 5.5, contributed, including by posting this chartered or established by the 5.6, 5.7, 5.8, 5.9, 5.10, 5.11, 5.12, this Compact, and any amendments thereto, Government. Section 5.13, 5.14, and 5.15. on the Web site operated by MCA-Benin (g) References to any Affiliate or Section 5.14 Consultation. Either (‘‘MCA-Benin Website’’), identifying Government Affiliate herein shall Party may, at any time, request Program activity sites, and marking include any of their respective directors, consultations relating to the Program Assets; provided, any officers, employees, affiliates, interpretation or implementation of this announcement, press release or

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statement regarding MCC or the fact that Advisory Council shall have the Beneficiaries means the intended MCC is funding the Program or any meaning set forth in Section 3(e)(i) of beneficiaries identified in accordance other publicity materials referencing Annex I. with Annex I. MCC, including the publicity described Affiliate means the affiliate of a party, Bilateral Agreement means the in this Section 5.17, shall be subject to which is a person or entity that controls, Economic, Technical and Related prior approval by MCC and shall be is controlled by, or is under the same Assistance Agreement by and between consistent with any instructions control as the party in question, whether the Government of the United States of provided by MCC from time to time in by ownership or by voting, financial or America and the Government of the relevant Implementation Letters. Upon other power or means of influence. Republic of Benin, dated May 27, 1961, the termination or expiration of this References to Affiliate herein shall as amended from time to time. Compact, MCC may request the removal include any of their respective directors, BNC means Benin National of, and the Government shall, upon officers, employees, affiliates, Committee. such request, remove, or cause the contractors, sub-contractors, grantees, Board means the independent board removal of, any such markings and any sub-grantees, representatives, and of directors of MCA-Benin to oversee references to MCC in any publicity agents. MCA-Benin’s responsibilities and materials or on the MCA-Benin Website. Arbitration Center Activity is the obligations under this Compact. MCC may post this Compact, and any Project Activity related to expansion of BOC means the fish/seafood amendments thereto, on the Web site of the arbitration center under the Justice inspection handling facility at the Port. MCC. MCC shall have the right to use Project described in Section 2(a) of Business Registration Activity is the any information or data provided in any Schedule 3 to Annex I. Project Activity related to the business report or document provided to MCC for Attachments are any annex, schedule, registration center under the Justice the purpose of satisfying MCC reporting exhibit, table, appendix or other Project described in Section 2(b) of requirements or in any other manner. attachment expressly attached to this Schedule 3 to Annex I. In Witness Whereof, the undersigned, Compact. CAMeC means the Centre d’Arbitrage, duly authorized by their respective Audit Guidelines means the Mediation et Conciliation. Capacity Building Activity is the governments, have signed this Compact ‘‘Guidelines for Financial Audits Project Activity related to financial this 22nd day of February, 2006 and this Contracted by Foreign Recipients’’ institution and borrower capacity Compact shall enter into force in issued by the Inspector General of the building under the Financial Services accordance with Section 1.3. United States Agency for International Development. Project described in Section 2(a) of Done at Washington, DC in English. Schedule 2 of Annex I. Audit Plan means a plan, in For the United States of America, Cellule means the Cellule de accordance with the Audit Guidelines, acting through the Millennium Microfinance. for the audit of the expenditures of any Challenge Corporation, Name: John J. Chair means the Chair of the Board of Covered Providers, which audit plan, in Danilovich, Title: Chief Executive Directors. Officer. the form and substance as approved by Challenge Facility means a financial For the Government of the Republic of MCC, the Government shall adopt, or innovation and expansion challenge Benin, Name: Cosme Sehlin, Title: cause to be adopted, no later than sixty facility or FINECF described in Section Minister of Finance and Economy. (60) days prior to the end of the first 2(a) of Schedule 2 to Annex I. period to be audited. Chamber means the Chamber of Exhibit A—Definitions Auditor means the auditor(s) as Commerce. The following compendium of defined in, and engaged pursuant to, Civil Member(s) means the capitalized terms that are used herein is Section 3(h) of Annex I and as required representatives for the positions provided for the convenience of the by Section 3.8(d) of the Compact. identified in Sections 3(d)(ii)(2)(A)(vii)- reader. To the extent that there is a Auditor/Reviewer Agreement is an (xi) of Annex I designated to serve as conflict or inconsistency between the agreement between MCA-Benin and voting members on the Board for a one- definitions in this Exhibit A and the each Auditor or Reviewer, in form and year period. definitions elsewhere in the text of this substance satisfactory to MCC, that sets Compact means the Millennium Compact, the definition elsewhere in forth the roles and responsibilities of the Challenge Compact made between the this Compact shall prevail over the Auditor or Reviewer with respect to the United States of America, acting definition in this Exhibit A. audit, review or evaluation, including through the Millennium Challenge access rights, required form and content 2006 Baseline Data Survey shall have Corporation, and the Government of the of the applicable audit, review or the meaning set forth in Section 2(a)(i) Republic of Benin. evaluation and other terms and of Annex III. Compact Goal means advancing conditions such as payment of the Accrued Interest is any interest or economic growth and poverty reduction Auditor or Reviewer. in Benin. other earnings on MCC Funding that Bank(s) means each individually and accrues as specified in Section 2.1(c). Compact Goal Indicator(s) means the collectively, any bank holding an Indicators that will measure the results Act means the Millennium Challenge account referenced in Section 4(d) of for the overall Program on the intended Act of 2003, as amended. Annex I. Beneficiaries, as set out in the table at Additional Representative is a Bank Agreement means an agreement Section 2(a)(i) of Annex III. representative as may be designated by between MCA-Benin and a Bank, Compact Implementation Funding a Principal Representative, by written satisfactory to MCC, that sets forth the shall have the meaning set forth in notice, for all purposes other than signatory authority, access rights, anti- Section 2.1(a)(iii). signing amendments to this Compact. money laundering and anti-terrorist Compact Records shall have the ADR means alternative dispute financing provisions, and other terms meaning set forth in Section 3.8(b). resolution. related to the Permitted Account. Compact Reports are any documents AFD means the Agence Franc¸aise de BDS means business development or reports delivered to MCC in De´veloppement. services. satisfaction of the Government’s

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reporting requirements under this specifies a methodology, process and MCC), or other charter document Compact or any Supplemental timeline for the evaluation of planned, establishing or governing MCA-Benin. Agreement between the Parties. ongoing, or completed Project Activities Government means the Government Compact Term means the term for to determine their impact and likely of the Republic of Benin. which this Compact shall remain in sustainability. Government Affiliate is an Affiliate, force, which shall be the five (5) year Exempt Uses shall have the meaning ministry, bureau, department, agency, period from the Entry into Force, unless set forth in Section 2.3(e)(ii). government, corporation or any other earlier terminated in accordance with Facility Manager means the qualified entity chartered or established by the Section 5.4. independent management entity or Government. References to Government Component shall have the meaning entities that shall manage and Affiliate shall include any of their set forth in Section 2(a)(ii)(7) in implement the Challenge Facility. respective directors, officers, employees, Schedule 2 of Annex I. Final Evaluation shall have the affiliates, contractors, sub-contractors, Courts Activity is the Project Activity meaning set forth in Section 3(a) of grantees, sub-grantees, representatives, related to improved services of courts Annex III. and agents. under the Justice Project described in Financial Advisory Committee is a Government Members are the Section 2(c) of Schedule 1 to Annex I. stakeholders group that will provide government members identified in Covered Provider shall have the feedback and input to the Financial Section 3(d)(ii)(2)(A)(i)–(vi) of Annex I meaning set forth in Section 3.8(d)(iv). Services Project Division. serving as voting members on the Board, Designated Rights and Financial Enabling Environment and any replacements thereof in Responsibilities shall have the meaning Activity is the Project Activity related to accordance with Section 3(d)(ii)(2)(A) of set forth in Section 3.2(c). financial enabling environment under Annex I. Detailed Financial Plan means the the Financial Services Project described Government Party means the financial plans that specify respectively in Section 2(b) of Schedule 2 to Annex Government, any Government Affiliate, the annual and quarterly detailed I. any Permitted Designee or any of their budget and projected cash requirements Financial Plan means collectively, the respective directors, officers, employees, for the Program (including monitoring Multi-Year Financial Plan, each Affiliates, contractors, sub-contractors, and evaluation and administrative costs) Detailed Financial Plan, and each grantees, sub-grantees, representatives and each Project, projected both on a amendment, supplement or other or agents. commitment and cash requirement change thereto. Government Responsibilities shall basis. have the meaning set forth in Section Financial Plan Annex means Annex II Disbursement Agreement is a 3.2(a). of this Compact, which summarizes the Supplemental Agreement that MCC, the GTZ means Deutsche Gessellschaft Multi-Year Financial Plan for the Government (or a mutually acceptable Fu¨ r Technische Zusammenarbeit, Program. Government Affiliate and MCA-Benin GmbH. Financial Services Objective is a shall enter into that (i) further specifies IEC means information, education and Project Objective of this Compact and the terms and conditions of any MCC communication campaign. means to expand access to financial Disbursements and Re-Disbursements, IEC Activity is the Project Activity services. (ii) is in a form and substance mutually related to information, education, and Financial Services Project is the satisfactory to the Parties, and (iii) is communication Project Activity under Access to Financial Services Project, signed by the Principal Representative the Land Project described in Section and the Project described in Schedule 2 of each Party (or in the case of the 2(d) of Schedule 1 of Annex I. to Annex I, that the Parties intend to Government, the principal IFC means the International Finance implement in furtherance of the representative of the applicable Corporation. Financial Services Objective. Government Affiliate) and of MCA- Implementation Letter is a letter that Benin. FINECF means a financial innovation may be issued by MCC from time to EMICoV means Benin’s national and expansion challenge facility or the time to furnish additional information household living standards Challenge Facility described in Section or guidance to assist the Government in measurement survey (L’Enqueˆte 2(a) of Schedule 2 of Annex I. the implementation of this Compact. Modulaire Integre´e sur les Conditions Fiscal Accountability Plan shall have Implementation Plan is a detailed de Vie). the meaning set forth in Section 4(c) of plan for the implementation of the EMPs means Environmental Annex I. Program and each Project, which will be Management Plans. Fiscal Agent shall have the mean set memorialized in one or more documents Entry into Force shall have the forth in Section 3(g) of Annex I. and shall consist of: (i) A Multi-Year meaning set forth in Section 1.3. Fiscal Agent Agreement is an Financial Plan; (ii) Detailed Financial Environmental Guidelines means the agreement between MCA-Benin and Plans; (iii) Fiscal Accountability Plan; environmental guidelines delivered by each Fiscal Agent, in form and (iv) Procurement Plan; (v) Program and MCC to the Government or posted by substance satisfactory to MCC, that sets Project Work Plans; and (vi) M&E Plan. MCC on its website or otherwise forth the roles and responsibilities of the Implementing Entity means a publicly made available, as such Fiscal Agent and other appropriate Government Affiliate, nongovernmental guidelines may be amended from time terms and conditions, such as payment organization or other public- or private- to time. of the Fiscal Agent. ‘‘goods’’ refers to sector entity or persons to which MCA- ESI Officer means the Environmental any supplies, equipment, materials, Benin may provide MCC funding, and Social Assessment Director, an property or other goods. directly or indirectly, through an Officer of MCA-Benin. Governing Document means any Outside Project Manager, to implement ESIAs means environmental and decree, legislation, regulation, and carry out the Projects or any other social impact assessments. contractual arrangement (including a activities to be carried out in EU means the European Union. governance agreement by and among the furtherance of this Compact. Evaluation Component means the Government (or a mutually acceptable Implementing Entity Agreement is an component of the M&E Plan that Government Affiliate), MCA-Benin and agreement between MCA-Benin (or the

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appropriate Outside Project Manager) team of MCA-Benin to have overall Monitoring Component means the and an Implementing Entity, in form management responsibility for the component of the M&E Plan that and substance satisfactory to MCC, that implementation of this Compact. specifies how the implementation of the sets forth the roles and responsibilities Markets Objective is a Project Program and progress toward the of such Implementing Entity and other Objective of this Compact and means to Compact Goal and Objectives will be appropriate terms and conditions, such improve the Port of Cotonou. monitored. as payment of the Implementing Entity. Markets Project is the Access to MSMEs means micro and small- and Indicators shall mean the quantitative, Markets Project, and the Project medium-scale enterprises. objective and reliable data that the M&E described in Schedule 4 of Annex I, that Multi-Year Financial Plan means the Plan will use to measure the results of the Parties intend to implement in multi-year financial plan for the the Program. furtherance of the Markets Objective. Program and for each Project, which is Initial Technical Studies means the Material Agreement shall have the summarized in Annex II to this initial technical studies (engineering meaning set forth in Section3(c)(i)(5) of Compact. pre-feasibilty, environmental and Annex I. Multi-Year Financial Plan Summary economic) related to the Markets Project Material Re-Disbursement means any means a multi-year Financial plan described in Section 2(a) of Schedule 4 Re-Disbursement that requires MCC summary attached to this Compact as of Annex I. approval under applicable law, the Exhibit A of Annex II. Inspector General means the Inspector Procurement Agreement, any Governing ‘‘national’’ means, for purposes of General of the United States Agency for Document, or any Supplemental Section 2.3(e), organizations established International Development. Agreement. under the laws currently or hereafter in ISPS means the International Ship Material Terms of Reference means effect in the Republic of Benin, other and Port Security Code. any terms of reference for the than MCA-Benin or any other entity Justice Advisory Committee is a procurement of goods, services or works established solely for purposes of stakeholders group that will provide that requires MCC approval under managing or overseeing the feedback and input to the Justice Project applicable law, the Procurement implementation of the Program or any Division. Agreement, any Governing Document, wholly-owned subsidiaries, divisions, Justice Objective is a Project Objective or any Supplemental Agreement. or Affiliates of entities not registered or of this Compact and means to improve MCA means the Millennium established under the laws currently or the ability of the judicial system to Challenge Account. hereafter in effect in the Republic of MCA-Benin shall have the meaning enforce contracts and resolve claims. Benin. Justice Project is the Access to Justice set forth in Section 3(b) of Annex I and National Coordinator means the Project, and the Project described in as is further described in Section 3(d) of National Coordinator of MCA-Benin as Annex I. Schedule 3 of Annex I, that the Parties defined in Section 3(c)(i) of Annex I. MCA-Benin Website means the intend to implement in furtherance of NGOs means non-governmental website operated by MCA-Benin. the Justice Objective. MCA Eligibility Criteria means the organizations. Land Objective is a Project Objective Objective(s) are the Program Objective MCA selection criteria and methodology together with the following project-level of this Compact and means to published by MCC pursuant to Section objectives of this Compact that have strengthen property rights and 607 of the Act from time to time. investment. MCA National Coordinator means the been identified by the Parties, each of Land Project is the Access to Land National Coordinator of the Millennium which is (i) key to advancing the Project, and the Project described in Challenge Account under the Benin Compact Goal and (ii) described in more Schedule 1 to Annex I, that the Parties National Committee, as described in detail in the Annexes attached hereto: intend to implement in furtherance of Section 1(b) of Annex I. (a) the Land Objective, (b) the Financial the Land Project Objective. MCC means the Millennium Services Objective (c) the Justice Land Project Steering Group is a Challenge Corporation. Objective and (d) the Markets Objective. stakeholders group that will provide MCC Disbursement means the Objective Indicator means the feedback and input to the Land Project disbursement of MCC Funding by MCC Indicator for each Objective that will Division. from time to time to a Permitted measure the ultimate result for each of Lien means any lien, attachment, Account or through such other the individual Projects. A table of enforcement of judgment, pledge, or mechanism agreed by the Parties as Objective Indicator definitions is set encumbrance of any kind. defined in and in accordance with forth at Section 2(a)(ii) of Annex III. Local Account is an interest-bearing Section 2.1(b)(i). Observer(s) means the non-voting local currency of Benin bank account at MCC Disbursement Request means members of the Board as identified in a commercial bank, subject to MCC the applicable request that the Section 3(d)(ii)(2)(B) of Annex I. approval, to which the Fiscal Agent may Government and MCA-Benin will Officers shall have the meaning set authorize transfer from any U.S. Dollar jointly submit for an MCC Disbursement forth in 3(d)(iii)(3) of Annex I. Permitted Account for the purpose of as may be specified in the Disbursement OHADA means Organization for the making Re-Disbursements payable in Agreement. Harmonization of Business Law in local currency. MCC Funding shall have the meaning Africa. M&E Annex means Annex III of this set forth in Section 2.1(a). Outcome Indicator means the Compact, which generally describes the MCC Indemnified Party means MCC Indicator in the M&E Plan that will components of the M&E Plan for the and any MCC officer, director, measure the intermediate results Program. employee, Affiliate, contractor, agent or achieved under each of the Project M&E Plan means the plan to measure representative. Activities in order to provide early and evaluate progress toward MCC Representative is a measures of progress towards the achievement of the Compact Goal and representative designated by MCC to accomplishment of the Project Objectives of this Compact. serve as an Observer on the Board. Objective. A table of Outcome Indicator Management means the management MFIs means micro-finance definitions is set forth at Section 2(a)(ii) team or national program coordination institutions. of Annex III.

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Output Indicator means the Indicator forth the roles and responsibilities of the revised, by the Government on in the M&E Plan to measure the direct Procurement Agent with respect to the September 5, 2005. outputs of the Project Activities. conduct, monitoring, and review of Provider shall have the meaning set Outside Project Manager means the procurements and other appropriate forth in Section 2.4(b). qualified persons or entities engaged by terms and conditions, such as payment PRSP means the Poverty Reduction Management, on behalf of MCA-Benin, of the Procurement Agent. Strategy Paper. to serve as outside project managers in Procurement Agreement is a RAPs means Resettlement Action accordance with Section 3(d)(iii)(5) of Supplemental Agreement between the Plans. Annex I. Government (and/or a mutually Re-Disbursement is the release of PAC means the Port Autonome de accepted Government Affiliate or MCA- MCC Funding from a Permitted Cotonou. Benin) and MCC, which includes the Account. Panel shall have the meaning set forth Procurement Guidelines, and governs Registration Activity is the Project in Section 2(a)(ii)(3) of Schedule 2 to the procurement of all goods, services Activity related to achieving formal Annex I. and works by the Government or any property rights under the Land Project Parties means the United States of Provider in furtherance of this Compact. described in Section 2(b) of Schedule 1 America, acting through MCC, and the Procurement Guidelines shall have of Annex I. Government. the meaning set forth in Section 3.6(a). Reviewer shall have the meaning set Party means (i) the United States of Procurement Plan means a forth in Section 3(h) of Annex I. America, acting through MCC or (ii) the procurement plan adopted by MCA- Services and Information Activity is Government. Benin as set forth in Section 3(i) of the Project Activity related to improving Permitted Account(s) shall have the Annex I. land registration services and land meaning set forth in Section 4(d) of Program means a program, to be information management under the Annex I. implemented under this Compact, using Land Project described in Section 2(c) of Permitted Designee shall have the MCC Funding to advance Benin’s Schedule 1 of Annex I. meaning set forth in Section 3.2(c). progress towards economic growth and Special Account means a single, PFR means Plan Foncier Rural. poverty reduction. completely separate U.S. Dollar interest- Pledge means any pledge of any MCC Program Annex means Annex I to this bearing account at a commercial bank, Funding or any Program Assets, or any Compact, which generally describes the acceptable to MCC, to receive MCC guarantee directly or indirectly of any Program that MCC Funding will support Disbursements. indebtedness. in Benin during the Compact Term and Studies Activity means the feasibility Policy Activity is the Project Activity the results to be achieved from the studies and assessments Project Activity related to policy and legal reform under investment of MCC Funding. of the Markets Project described in the Land Project described in Section Program Assets means (i) MCC Section 2(a) of Schedule 4 to Annex I. 2(a) of Schedule 1 of Annex I. Funding, (ii) Accrued Interest, or (iii) Supplemental Agreement shall have Port means the Port of Cotonou. any assets, goods, or property (real, the meaning set forth in Section 3.5(b). Port Advisory Committee is a tangible, or intangible) purchased or Supplemental Agreement between the stakeholders group representing the financed in whole or in part by MCC Parties means any agreement between Markets Project beneficiaries that will Funding. MCC on the one hand, and the provide feedback and input to the Program Objective means the overall Government or any Government Markets Project Division. objective of the Program to which the Affiliate or Permitted Designee on the Port Institutional Activity means the Project Objectives contribute and means other hand. port institutional and systems to increase investment and private Supplemental Agreement Term improvements Project Activity of the sector activity in Benin, which is key to Sheets means one or more term sheets Markets Project as described in Section advancing the Compact Goal. that the Government (or mutually 2(b) of Schedule 4 to Annex I. Project(s) are the specific projects and acceptable Government Affiliate) and Port Security and Landside the policy reforms, and other activities MCC shall execute that set forth the Improvements Activity means the port related thereto that the Government will material and principal terms and security and landside improvements carry out, or cause to be carried out in conditions of each of the Supplemental Project Activity of the Markets Project as furtherance of this Compact to achieve Agreements identified in Exhibit B described in Section 2(c) of Schedule 4 the Objectives and the Compact Goal, attached hereto. to Annex I. specifically the Land Project, the Support Strategy Activity is the Principal Representative means (i) for Financial Services Project, the Justice Project Activity related to strategy and the Government, the individual holding Project and the Markets Project. programmatic coordination under the the position of, or acting as the Minister Project Activity means the activities Land Project described in Section 2(e) of of State in Charge of Planning and that will be undertaken in furtherance of Schedule 1 of Annex I. Development of the Republic of Benin, each Project. Target means each Indicator will have and (ii) for MCC, the individual holding Project Director shall have the one or more targets that quantifies the the position of, or acting as, the Vice meaning set forth in Section 3(d)(iii)(3) result and the expected time by which President for Operations. of Annex I. that result will be achieved. Procedural Code shall have the Project Division means the divisions Tax(es) shall have the meaning set meaning set forth in Section 2(c)(v)(1) of that manage the implementation of each forth in Section 2.3(e)(i). Schedule 3 to Annex I. Project. TEU means twenty-foot equivalent Procurement Agent shall have the Project Objective(s) means the project- unit, in Euro. meaning set forth in Section 3(i) of level objectives that will advance the TPI shall have the meaning set forth Annex I. Program Objective and Compact Goal, in Section 2(c)(v) of Schedule 3 to Procurement Agent Agreement is an each of which is described in more Annex I. agreement between MCA-Benin and detail in the Annexes of this Compact. United States Dollars (USD) means each Procurement Agent, in form and Proposal is the proposal for use of the currency of the United States of substance satisfactory to MCC, that sets MCA assistance submitted to MCC, as America.

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United States Government shall mean Term and the results to be achieved was developed in 2002 with broad any branch, agency, bureau, government from the investment of MCC Funding. participation from Beninese society. Its corporation, government chartered Prior to any MCC Disbursement or Re- development plan is based on four entity or other body of the Federal Disbursement, including for the Projects pillars: (i) Strengthening the government of the United States. described herein, MCC, the Government macroeconomic framework over the WAEMU means the West African (or a mutually acceptable Government medium-term; (ii) developing human Economic and Monetary Union. Affiliate) and MCA-Benin shall enter capital and environmental management; Waterside Improvements Activity into a Supplemental Agreement that (i) (iii) strengthening good governance and means the waterside improvements further specifies the terms and institutional capacity; and (iv) Project Activity described in Section conditions of such MCC Disbursements promoting employment and 2(d) of Schedule 4 to Annex I. and Re-Disbursements, (ii) is in a form strengthening the ability of the poor to Work Plans means work plans for the and substance mutually satisfactory to participate in decision-making and overall administration of the Program the Parties, and (iii) is signed by the production processes. The Program is and for each Project. Principal Representative of each Party focused primarily on supporting the (or in the case of the Government, the fourth pillar of the PRSP. Exhibit B—List of Certain Supplemental principal representative of the Agreements (b) Consultative Process applicable Government Affiliate) and of 1. Governing Document Principles. MCA-Benin (the ‘‘Disbursement The Proposal was the product of a 2. Fiscal Agent Agreement. Agreement’’). Except as specifically genuine, meaningful and participatory 3. Procurement Agent Agreement. provided herein, the Parties may amend consultative process. By decree, the 4. Form of Implementing Entity this Program Annex only by written Government designated the National Agreement. agreement signed by the Principal Coordinator of the Millennium 5. Form of Bank Agreement. Representative of each Party. Each Challenge Account (‘‘MCA National capitalized term in this Program Annex Coordinator’’), empowered the Benin Schedule 2.1(a)(iii)—Description of National Committee (‘‘BNC’’) to oversee Compact Implementation Funding shall have the same meaning given such term elsewhere in this Compact. Unless the Proposal development and charged Compact Implementation Funding otherwise expressly stated, each Section a Technical Team with shaping the reference herein is to the relevant Proposal. The MCA National The Compact Implementation Coordinator sought the participation of Section of the main body of the Funding provided pursuant to Section various stakeholders through Compact. 2.1(a)(iii) shall support the following workshops, meetings, and radio and activities and expenditures in an 1. Background and Benin Development television events. Initially a vision for amount not to exceed the amounts Strategy; Consultative Process the Program was presented to specified below: representatives from the government (a) Conduct some or all Initial (a) Background and Benin Development Strategy (both central and municipal), the private Technical Studies as described in sector, civil society, labor unions, Section 2(a)(i) of Schedule 4 of Annex Situated in West Africa, between artisans, and the agricultural sector. I, in an amount not to exceed USD Nigeria and Togo in the Gulf of Guinea, Among these groups, members were $800,000.a* Benin is a small and very poor country elected or delegated by their respective (b) Conduct the activities related to with a population of nearly seven constituencies to form the BNC. This the 2006 Baseline Data Survey as million, a third of which live in poverty. MCA working group consists of six described in Section 2(a)(i) of Annex III, Progress in development is largely a government Ministers, three Chamber of including: communication and result of reforms initiated in the early Commerce representatives, three civil transportation of survey staff, 1990s as Benin transitioned from a society representatives (elected), three supervision and quality assurance, and Marxist-Leninist state towards a labor union representatives, two data management, in an amount not to pluralistic democracy and market representatives of the Agricultural exceed USD $600,000.* economy. Chamber (elected), and one (c) Conduct fiscal and procurement Despite growth rates averaging 5% per representative of the artisan community. administration activities, in an amount year in the past decade, per capita Included in the working group are two not to exceed USD $500,000.* income in Benin remains below the sub- women, the Vice President of the (d) Payments for reasonable and Sahara African average and rural Chamber of Commerce and another who normal staff salaries and administrative poverty has increased in recent years. was elected by NGOs promoting expenses of MCA-Benin (or mutually Private sector activity and broad-based women’s rights. acceptable Government Affiliate) such investment that would lead to Working sessions were held based on as rent, computers, and other sustainable growth and poverty the PRSP to discuss the major information technology equipment, in reduction are hindered by land constraints to growth. Several iterations an amount not to exceed USD insecurity, lack of access to capital, an of the Proposal’s projects were vetted by $500,000.* inefficient judicial system, and an a broad audience through nationally uncompetitive Port of Cotonou. broadcast radio programs to garner Annex I—Program Description The Program is a series of strategic feedback from the targeted beneficiaries. This Annex I to the Compact (the investments designed to increase In September the MCA National ‘‘Program Annex’’) generally describes investment and private sector activity Coordinator convened a stakeholder the Program that MCC Funding will by improving core physical and meeting in which mayors from all 77 support in Benin during the Compact institutional infrastructure. The communes, and representatives of objectives of the Compact are fully microfinance institutions, the donor a* Notwithstanding the amount specified for this consistent with, and directly support, community and the central government activity or payment, the total amount of funds disbursed in accordance with Section 2.1(a)(iii) the priority areas identified by the gathered to discuss the land tenure, and shall not exceed the amount set forth in Section Government in the Poverty Reduction financial services components of the 2.1(a)(iii). Strategy Paper (‘‘PRSP’’). Benin’s PRSP Proposal. Continuing consultation

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throughout the proposal development the Schedules to this Program Annex. extent practicable, by income level, process has resulted in widespread The Schedules to this Program Annex gender, and age. The Land Project is endorsement by potential beneficiaries. identify the activities that will be expected to assist an estimated 115,000 On-going consultations with undertaken in furtherance of each rural and urban households with more stakeholders and beneficiaries are Project (each, a ‘‘Project Activity’’) as secure and useful tenure, contribute to planned during the Compact Term, well as the various activities within a a 50% reduction in court cases related including at the Project-level. Project Activity. Notwithstanding to land disputes, and result in a 10% Following MCC’s review of the anything to the contrary in this increase in investment in rural land and Proposal and discussions and Compact, the Parties may agree to a 20% increase in investment in urban negotiations of the Parties, the Parties modify, amend, terminate or suspend property. The Financial Services Project have identified certain mutually these Projects or to create a new project is expected to increase MSME value acceptable components of the Proposal by written agreement signed by the added and incomes of the poor that and other components developed Principal Representative of each Party own, are employed by, or do business through the discussions of the Parties without amending this Compact; with those enterprises. The expected that together shall constitute the provided, however, any such result is that by the end of the Compact Program. The Program is fully modification or amendment of a Project Term, financial services to MSMEs will consistent with, and directly supports or creation of a new project is (i) have expanded by nearly $60 million, PRSP, in particular the promoting consistent with the Objectives; (ii) does which represents a multiple of three employment and strengthening the not cause the amount of MCC Funding times the Project’s funding. A more ability of the poor to participate in to exceed the aggregate amount efficient Port will contribute to importer decision-making and production specified in Section 2.1(a) of this and exporter value-added through processes as noted above. Compact; (iii) does not cause the reducing transportation costs. Moreover, 2. Overview Government’s responsibilities or because Benin’s road transport industry contribution of resources to be less than is relatively competitive, it is likely that (a) Program Objectives. The Program specified in Section 2.2 of this Compact the anticipated reduction in shipping Goal and Objectives of the Compact are or elsewhere in this Compact; and (iv) costs will be passed on to wholesalers expected to have a substantial impact on does not extend the Compact Term. and traders, and ultimately be reflected increasing economic growth and Certain Project Activities of the Program in consumer prices. The Justice Project reducing poverty in Benin. The Program such as the policy reforms, the is expected to benefit land occupants, will accelerate economic growth and extension of financial services and court title holders, businesses and legal reduce poverty by removing constraints services, and improvements to the Port, professionals in the jurisdictions where to investment in key sectors of the the Project will be active. Beninese economy. The Program aims to will have an impact at the national level. The Land Project will be Overall, the Program is expected to increase investment and private sector impact an estimated five million activity by improving key institutional undertaken in targeted geographic areas of Benin, which are yet to be beneficiaries and raise one quarter of a and physical infrastructures through million Beninese out of poverty by four Projects: Access to Land, Access to determined, but will be selected based on the criteria set forth in the applicable 2015. Financial Services, Access to Justice, (d) Civil Society. Civil Society shall Schedule. and Access to Markets. Respectively, the participate in overseeing the Projects will address: Insecure land (c) Beneficiaries. The intended implementation of the program through tenure rights; insufficient access to beneficiaries of each Project are its representation on the Board of financial services for micro, small and described in the respective Schedule to Directors and the Advisory Council medium-enterprises (MSMEs); an this Program Annex and Annex III to the (which will include representatives inefficient and under-equipped judicial extent identified as of the date hereof. from non-governmental organizations system; and the degrading The intended beneficiaries shall be and private sector entities), as provided competitiveness of the Port. The identified more precisely during the in Section 3(d) and Section 3(e), Projects are complementary and support initial phases of implementation of the respectively, of this Program Annex. each other. The Land Project and Program. The Government shall provide Stakeholders will be able to weigh in by Financial Services Project will enhance to MCC information on the population a Land Project steering group and the use of land titles as collateral for of the areas in which the Projects will discussion groups for studies, the White loans or refinancing. The Justice Project be active, disaggregated by gender, Paper, and related legislative drafting. will support this relationship by income level and age. The Parties shall The Financial Services Project and the increasing the confidence in the judicial agree upon the description of the Markets Project will also incorporate the system to enforce contracts and intended beneficiaries and the Parties input of Stakeholders in advisory collateral interests. The Markets Project will make publicly available a more committees comprising non- will increase the flow of goods through detailed description of the intended governmental organizations and private the Port of Cotonou. In turn, beneficiaries of the Program, including sector entities. Finally, members of civil improvements to the physical publishing such description on the society may be recipients of training, infrastructure will enhance the success MCA-Benin Website. For each Project, technical assistance, or other public of Projects focusing on the institutional the Government shall ensure that MCA- awareness programs that are integral to environment. The sequencing and Benin presents to the Advisory Council the Projects. In addition, the Work Plans geographic selection criteria for (i) a detailed description of the intended or Procurement Plans for each Project activities undertaken in Projects will be beneficiaries and (ii) the methodology shall note the extent to which civil influenced by each of the other Projects. used to determine the intended society will have a role in the (b) Projects. The Parties have beneficiaries within sixty (60) days after implementation of or participation in a identified, for each Objective, Projects the commencement of the Project particular Project or Project Activity. that the Government will implement, or implementation and completion of the (e) Monitoring and Evaluation cause to be implemented, using MCC analysis of the intended beneficiaries (‘‘M&E’’). Annex III of this Compact Funding. Each Project is described in therein, disaggregated, to the maximum generally describes the plan to measure

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and evaluate progress toward (b) Government. (iii) Various ministries, bureaus and achievement of the Compact Goal and (i) The Government shall promptly agencies of the Government may serve Objectives of this Compact (the ‘‘M&E take all necessary and appropriate as Implementing Entities. Plan’’). As outlined in the Disbursement actions to carry out the Government (c) MCC. Agreement and other Supplemental Responsibilities and other obligations or (i) Notwithstanding Section 3.1 of this Agreements, continued disbursement of responsibilities of the Government Compact or any provision in this MCC Funding under this Compact under and in furtherance of this Program Annex to the contrary, and (whether as MCC Disbursements and Compact, including undertaking or except as may be otherwise agreed upon Re-Disbursements) shall be contingent, pursuing such legal, legislative or by the Parties from time to time, MCC among other things, on successful regulatory actions or procedural changes must approve in writing each of the achievement of targets set forth in the and contractual arrangements as may be following transactions, activities, M&E Plan. necessary or appropriate to achieve the agreements and documents prior to the 3. Implementation Framework Objectives, to successfully implement execution or carrying out of such the Program, to designate any rights or transaction, activity, agreement or The implementation framework and document and prior to MCC responsibilities to any Permitted the plan for ensuring adequate Disbursements or Re-Disbursements in Designee, and to establish a legal entity, governance, oversight, management, connection therewith: in a form mutually agreeable to the monitoring, evaluation and fiscal (1) MCC Disbursements; Parties, the form, structure and other accountability for the use of MCC (2) Each Detailed Financial Plan, and features of such legal entity to be Funding is summarized below and in any amendments thereto; determined and agreed upon by the the Schedules attached to this Program (3) The Multi-Year Financial Plan and Parties on or before the time specified Annex, or as may otherwise be agreed any amendments and annual in the Disbursement Agreement (‘‘MCA- in writing by the Parties. supplements thereto; (a) General. The elements of the Benin’’), which shall be a Permitted (4) Any Audit Plan; implementation framework will be Designee and shall be responsible for (5) Agreements (i) between the further described in relevant the oversight and management of the Government and MCA-Benin, (ii) Supplemental Agreements and in a implementation of this Compact on between the Government, a Government detailed plan for the implementation of behalf of the Government. The Affiliate, MCA-Benin or any other the Program and each Project, which Government shall promptly deliver to Permitted Designee on the one hand, will be memorialized in one or more MCC certified copies of any documents, and any Provider or Affiliate of a documents and shall consist of a Multi- orders, decrees, laws or regulations Provider, on the other hand, which Year Financial Plan, Detailed Financial evidencing such legal, legislative, Plans, a Fiscal Accountability Plan, a require such MCC approval under regulatory, procedural, contractual or applicable law, the Procurement Procurement Plan, Program and Project other actions. Work Plans, and an M&E Plan (the Agreement, any Governing Document, (ii) The Government shall ensure that ‘‘Implementation Plan’’). MCA-Benin or any other Supplemental Agreement shall adopt each component of the MCA-Benin is duly authorized and or (iii) in which the Government, a Implementation Plan in accordance organized, sufficiently staffed and Government Affiliate, MCA-Benin or with the requirements and timeframe as empowered to fully carry out the any other Permitted Designee appoints, may be specified in this Program Annex, Designated Rights and Responsibilities. hires, or engages any of the following in the Disbursement Agreement or as may Without limiting the generality of the furtherance of this Compact: otherwise be agreed by the Parties from preceding sentence, MCA-Benin shall be (A) Auditor; time to time. MCA-Benin may amend organized, and have such roles and (B) Reviewer; the Implementation Plan or any responsibilities, as described in Section (C) Fiscal Agent; component thereof without amending 3(d) of this Program Annex and as (D) Procurement Agent; this Compact, provided any material provided in any Governing Documents; (E) Each Bank; amendment of the Implementation Plan provided, however, the Government or (F) Outside Project Manager; or any component thereof has been another Permitted Designee may, subject (G) Implementing Entity; and approved by MCC and is otherwise to MCC approval, carry out any of the (H) Board of Directors member, consistent with the requirements of this roles and responsibilities designated to Observer, Officer, and other key Compact and any relevant be carried out by MCA-Benin and employee of MCA-Benin (including any Supplemental Agreement between the described in Section 3(d) of this compensation for such person). Parties. By such time as may be Program Annex or elsewhere in this (Any agreement described in clause (i) specified in the Disbursement Program Annex, any Governing through (iii) of this Section 3(c)(i)(5) and Agreement or as may otherwise be Document, or any other Supplemental any amendments and supplements agreed by the Parties from time to time, Agreement prior to and during the thereto, each, a ‘‘Material Agreement’’); MCA-Benin shall adopt one or more initial period of the establishment and (6) Any modification, termination or work plans for the overall staffing and operational formation of suspension of a Material Agreement, or administration of the Program and for MCA-Benin, but in no event longer than any action that would have the effect of each Project (collectively, the ‘‘Work the earlier of (1) the formation and such a modification, termination or Plans’’). The Work Plan(s) shall set forth convening of organizational meetings of suspension of a Material Agreement; the details of each activity to be the Steering Committee, formation and (7) Any agreement that is (A) not at undertaken or funded by MCC Funding operational establishment of MCA- arm’s length or (B) with a party related as well as the allocation of roles and Benin (including the selection and to the Government or MCA-Benin or any responsibilities for specific Project engagement of Officers and key of their respective Affiliates; activities, or other programmatic employees), and engagement of the (8) Any Re-Disbursement (each, a guidelines, performance requirements, Officers and (2) six months from the ‘‘Material Re-Disbursement’’) that targets, or other expectations for a Entry into Force, unless otherwise requires such MCC approval under Project. agreed by the Parties in writing. applicable law, the Procurement

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Agreement, any Governing Document, Document, the Procurement Agreement, consist of (a) an independent board of or any Supplemental Agreement; the Disbursement Agreement, or any directors (the ‘‘Board’’) to oversee MCA- (9) Any terms of reference (each, a other Supplemental Agreement between Benin’s responsibilities and obligations ‘‘Material Terms of Reference’’) for the the Parties. The Chair of the Board of under this Compact (including any procurement of goods, services or works Directors (the ‘‘Chair’’) and/or the Designated Rights and Responsibilities) that requires such MCC approval under National Coordinator of MCA-Benin (the and (b) a management team or national applicable law, the Procurement ‘‘National Coordinator’’) or other program coordination team Agreement, any Governing Document, designated Officer, as provided in (‘‘Management’’) to have overall or any Supplemental Agreement; applicable Governing Document, shall management responsibility for the (10) The Implementation Plan, certify any documents or reports implementation of this Compact. including each component plan thereto, delivered to MCC in satisfaction of the (ii) Board. and any material amendments and Government’s reporting requirements (1) Formation. The Government shall supplements to the Implementation under this Compact or any ensure that the Board shall be formed, Plan or any component thereto; Supplemental Agreement between the constituted, governed and operated in (11) Any pledge of any MCC Funding Parties (the ‘‘Compact Reports’’). accordance with the terms and or any Program Assets or any guarantee (ii) MCC shall have the authority to conditions set forth in the applicable directly or indirectly of any exercise its approval rights set forth in Governing Document and any other indebtedness (each, a ‘‘Pledge’’); this Section 3(c) in its sole discretion relevant Supplemental Agreement. (12) Any decree, legislation, and independent of any participation or (2) Composition. Unless otherwise regulation, contractual arrangement position taken by the MCC agreed by the Parties in writing, the (including a governance agreement by Representative at a meeting of the Board Board shall consist of at least nine (9) and among the Government (or a of Directors. MCC retains the right to and no more than eleven (11) voting mutually acceptable Government revoke its approval of any matter, members, one of whom shall be Affiliate), MCA-Benin and MCC), or agreement, or action if MCC concludes, appointed as the Chair as provided in other charter document establishing or in its sole discretion, that its approval applicable law, any Governing governing MCA-Benin (‘‘Governing was issued on the basis of incomplete, Document and subject to MCC approval, Document’’); inaccurate or misleading information and the non-voting observers identified (13) Any disposition (in whole or in furnished by the Government, MCA- below. part), liquidation, dissolution, winding Benin, or any Government Affiliate or (A) The Board shall initially be up, reorganization or other change of (A) Permitted Designee. Notwithstanding composed of eleven voting members as MCA-Benin, including any revocation any provision in this Compact or any follows, provided that the Government or modification of or supplement to any Supplemental Agreement to the members identified in subsections (i)— Governing Document related thereto, or contrary, the exercise by MCC of its (vi) below (the ‘‘Government Members’’) (B) any subsidiary or Affiliate of MCA- approval rights under this Compact or may be replaced by another government Benin; any Supplemental Agreement shall not official of comparable rank from a (14) Any change in character or (1) diminish or otherwise affect the ministry or other government body location of any Permitted Account; Government Responsibilities or any relevant to the Program activities, (15) Formation or acquisition of any other obligations or responsibilities of subject to approval by the Government subsidiary (direct or indirect) or other the Government under this Compact or and MCC (such replacement to be Affiliate of MCA-Benin; any Supplemental Agreement, (2) referred to thereafter as a Government (16) Any (A) change of a Board of transfer any such obligations or Member): Directors member, Observer, Officer or responsibilities of the Government, or (i) Chief of Staff of the Office of the other key employee or contractor of (3) otherwise subject MCC to any Presidency of the Republic of Benin; MCA-Benin, or change in the liability. (ii) Chief of Staff of the Ministry of composition of the Board of Directors of (d) MCA-Benin. Economy and Finance; MCA-Benin, including approval of the (i) General. Unless otherwise agreed (iii) Chief of Staff of the Ministry of nominee for Chair, (B) filling of any by the Parties in writing, MCA-Benin Planning and Development; vacant seat of the Chair, Board of shall, as a Permitted Designee, be (iv) Chief of Staff of the Ministry of Directors member, or an Observer or responsible for the oversight and Agriculture; vacant position of an Officer, key management of the implementation of (v) Chief of Staff of the Ministry of employee or contractor of MCA-Benin, this Compact. MCA-Benin shall be Public Works and Transportation; (C) filling of the seats designated as governed by applicable law and any (vi) Chief of Staff of the Ministry of representatives nominated by the Governing Documents, each such the Environment, Housing and Urban Advisory Council, if any, to the Board Governing Document to be in a form Planning; of Directors, and (D) filling any vacant and substance satisfactory to MCC and (vii) Representative from civil society seat on the Advisory Council; effective on or before the time specified (selected following a national assembly (17) The management information in the Disbursement Agreement, and of the non-governmental organizations system to be developed and maintained based on the following principles: and civil society and based upon by the Management of MCA-Benin, and (1) The Government shall ensure that selection criteria to be agreed by the any material modifications to such MCA-Benin shall not assign, delegate or Parties, including the capacity and system; contract any of the Designated Rights expertise of the individual to hold such (18) Any decision to amend, and Responsibilities without the prior position); supplement, replace, terminate, or written consent of the Government and (viii) President of the Chamber of otherwise change any of the foregoing; MCC. MCA-Benin shall not establish Commerce and Industry; and any Affiliates or subsidiaries (direct or (ix) The Chairman of the Chamber of (19) Any other activity, agreement, indirect) without the prior written Agriculture; document or transaction requiring the consent of the Government and MCC. (x) Representative from the Mayors’ approval of MCC in this Compact, (2) Unless otherwise agreed by the Council (which shall be the public applicable law, any Governing Parties in writing, MCA-Benin shall official holding the relevant office as

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such office is selected following a of the National Assembly to fill this seat Compact or any relevant Supplemental national assembly of the mayors on the Board. Agreement, the Board shall have the throughout Benin); and (E) The voting members identified in exclusive authority as between the (xi) A member of the Board of the Section 3(d)(ii)(2)(A) by majority vote Board and the Management for all National Assembly as designated by the may alter the size of the Board in actions defined for the Board in any National Assembly. accordance with the applicable Governing Document and which are (B) The non-voting observers (each, an Governing Document, so long as the expressly designated therein as ‘‘Observer’’) shall be: total does not exceed eleven members; responsibilities that cannot be delegated (i) A representative designated by in the event that such action is taken, further. MCC (the ‘‘MCC Representative’’); any change in the composition of the (4) Indemnification of Civil Members; (ii) A representative from the voting seats shall be subject to the Observers; and Officers. The Advisory Council; and approval of the Government and MCC. Government shall ensure, at the (iii) Representatives-elect for Civil (F) Subject to the Governing Government’s sole cost and expense, Members (defined below), who will be Documents, the Parties contemplate that that appropriate insurance is obtained non-voting observers for a one-year the Chief of Staff of the Office of the and appropriate indemnifications and period. Presidency shall initially fill the seat of other protections are provided, (C) Each Government Member Chair. acceptable to MCC and to the fullest (G) Each Observer shall have rights to position shall be filled by the extent permitted under the laws of the attend all meetings of the Board, individual, during the Compact Term, Republic of Benin, to ensure that (A) as participate in the discussions of the holding the office identified and such Civil Members and Observers shall not Board, and receive all information and be held personally liable for the actions individuals shall serve in their capacity documents provided to the Board, or omissions of the Board or MCA-Benin as the applicable Government official together with any other rights of access and (B) as Officers shall not be held and not in their personal capacity; in to records, employees or facilities as personally liable for the actions or the event that such member is unable to would be granted to a member of the omissions of the Board, MCA-Benin or participate in a meeting of the Board Board under any Governing Document. actions or omissions of the Officer so such member’s principal deputy may (H) The voting members identified in long as properly within the scope of participate in the member’s stead. Section 3(d)(ii)(2)(A) shall exercise their Officer’s authority. Pursuant to Section (D) The positions identified in Section duties solely in accordance with the 5.5 and Section 5.8 of this Compact, the 3(d)(ii)(2)(A)(vii)–(xi) of this Program best interests of MCA-Benin and the Government and MCA-Benin shall hold Annex shall be each individually Program and its Objectives and may not harmless the MCC Representative for referred to as a ‘‘Civil Member’’ and undertake any action that is contrary to any liability or action arising out of the collectively as ‘‘Civil Members.’’ Each those interests or would result in MCC Representative’s role as a non- Civil Member position shall be filled by personal gain or a conflict of interest. voting observer on the Board. The the individual, during the Compact (3) Roles and Responsibilities. Government hereby waives and releases Term, holding the office or position (A) The Board shall oversee the all claims related to any such liability identified in, or selected pursuant to, Management, the overall and acknowledges that the MCC Section 3(d)(ii)(2)(A)(viii)—(xi) and implementation of the Program, and the Representative has no fiduciary duty to such individuals shall serve in their performance of the Designated Rights MCA-Benin. In matters arising under or capacity as the incumbent in such office and Responsibilities. relating to the Compact, the MCC or position and not in their personal (B) Certain actions may be taken and Representative is not subject to the capacity; in the event that such member certain agreements, documents or jurisdiction of the courts or any other is unable to participate in a meeting of instruments executed and delivered, as body of Benin. MCA-Benin shall the Board such member’s principal the case may be, by MCA-Benin only provide a written waiver and deputy may participate in the member’s upon the approval and authorization of acknowledgement that no fiduciary duty stead, provided, however, any action the Board provided under applicable to MCA-Benin is owed by the MCC shall be taken only by a proxy signed by law or as set forth in any Governing Representative. the Civil Member. The Civil Member Document, including each MCC (iii) Management. Unless otherwise identified in Section 3(d)(ii)(2)(A)(vii) Disbursement Request, selection or agreed in writing by the Parties, the shall serve in their personal capacity termination of certain Providers, any Management shall report, through the and if such member is unable to component of the Implementation Plan, National Coordinator or other Officer as participate in a meeting of the Board, certain Re-Disbursements and certain designated in any Governing Document, such member may only send a terms of reference. directly to the Board and shall have the substitute as permitted in the applicable (C) The Chair shall certify the composition, roles and responsibilities Governing Document, provided, any approval by the Board of all Compact described below and set forth more action shall be taken only by a proxy Reports or any other documents or particularly in any Governing signed by the Civil Member. The term reports from time to time delivered to Document. of each Civil Member’s appointment to MCC by MCA-Benin (whether or not (1) Appointment of the National the Board shall be thirty (30) months; such documents or reports are required Coordinator. The National Coordinator other than the Civil Member identified to be delivered to MCC), and that such of MCA-Benin shall be selected by the in Section 3(d)(2)(ii)(A)(viii) and (ix) documents or reports are true, correct Board and hired after an open and which position shall be filled by the and complete. competitive recruitment and selection individual holding such position during (D) Without limiting the generality of process, which appointment shall be the Compact Term; provided, further if the Designated Rights and subject to MCC approval. Such the Civil Member designated pursuant Responsibilities that the Government appointment shall be further evidenced to Section 3(d)(ii)(2)(A)(xi) resigns or is may designate to MCA-Benin, and by such document as the Parties may removed from the Board of the National subject to MCC’s contractual rights of agree. Assembly, the National Assembly shall approval as set forth in Section 3(c) of (2) Appointment of Other Officers. designate another member of the Board this Program Annex or elsewhere in this Unless otherwise specified in any

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Governing Document, the other Officers Parties in writing and specified in the Projects, manage and coordinate of MCA-Benin shall be selected and applicable Governing Document: monitoring and evaluation, maintain hired by the National Coordinator after (A) Land Project Division. In addition internal accounting records, conduct an open and competitive recruitment to the Project Director, there shall be (i) and oversee certain procurements, and and selection process, which a Senior Land Administration Advisor such other responsibilities as set out in appointment shall be subject to the for period to be specified in the Work the applicable Governing Document or approval of the Board and MCC. Plan, (ii) a National Land Policy Reform delegated to Management by the Board (3) Composition. The Government Coordinator, and (iii) up to two Activity from time to time. shall ensure that the Management shall Implementation Managers. The Land (C) Appropriate Officers as designated be composed of qualified experts from Project Division will also receive in the Governing Documents shall have the public or private sectors, including feedback and input from a stakeholders the authority to contract on behalf of such offices and staff as may be group (the ‘‘Land Project Steering MCA-Benin under any procurement necessary to carry out effectively its Group’’), the composition and formation under the Program undertaken in responsibilities, each with such powers of which shall be specified in the accordance with the Procurement and responsibilities as set forth in any applicable Governing Document or Agreement and Procurement Governing Document, and from time to Implementation Plan. Guidelines. (B) Financial Services Project (D) Management shall have the time in any Supplemental Agreement Division. In addition to the Project obligation and right to approve certain between the Parties, including without Director, there shall be (i) an Enabling actions and documents or agreements, limitation the following: (i) National Environment Activity Coordinator and including certain Re-Disbursements, Coordinator; (ii) Administration and (ii) a Capacity Building Activity MCC Disbursement Requests, Compact Finance Director; (iii) Monitoring and Coordinator. The Financial Services Reports, certain human resources Evaluation Director; (iv) Land Project Project Division will also receive decisions and other certain actions, as Director, Financial Services Project feedback and input from a stakeholders provided in the applicable Governing Director, Justice Project Director and group (the ‘‘Financial Advisory Document. Markets Project Director (each a, Committee’’), the composition and (5) Additional Resources. ‘‘Project Director’’); (v) Environmental formation of which shall be specified in Management, on behalf of MCA-Benin, and Social Assessment Director; (vi) the applicable Governing Document or shall have the authority to engage Legal Counsel and (vii) Procurement Implementation Plan. qualified persons or entities to serve as Director (the persons holding the (C) Justice Project Division. In outside project managers (each, an positions in sub-clauses (i) through (vii) addition to the Project Director, there ‘‘Outside Project Manager’’) in the event and such other offices as may be created shall be a Justice Project Coordinator. that it is advisable to do so for the and designated in accordance with any The Justice Project Division will also proper and efficient day-to-day Governing Document and any other receive feedback and input from a management of a Project; provided, Supplemental Agreement between the stakeholders group (the ‘‘Justice however, that the appointment or Parties, shall be collectively referred to Advisory Committee’’), the composition engagement of any Outside Project as ‘‘Officers’’). In addition, MCA-Benin and formation of which shall be Manager, after a competitive selection will have an implementation staff in specified in the applicable Governing process, shall be subject to approval by each of the Project divisions as Document or Implementation Plan the Board and MCC prior to such described below and administrative or component. appointment or engagement. Upon other assistants and staff in other (D) Markets Project Division. The Board approval, Management, on behalf divisions as appropriate and budgeted Markets Project Division will also of MCA-Benin, may delegate, assign, or in the Detailed Financial Plan and receive feedback and input from a contract to the Outside Project Managers provided for in the applicable Work stakeholders group representing the such duties and responsibilities as it Plan or other Implementation Plan Markets Project beneficiaries (the ‘‘Port deems appropriate with respect to the component, and as otherwise agreed by Advisory Committee’’), the composition management of the Implementing MCC. The Administration and Finance and formation of which shall be Entities and the implementation of the Division and the Procurement Division specified in the applicable Governing specific Projects or Project Activities, shall have separate authorizations, Document or Implementation Plan. subject to Section 3.2(c) of the Compact; duties and responsibilities and each (4) Roles and Responsibilities. provided, however, that the shall report directly only to the National (A) Management shall assist the Board Management and the relevant Project Coordinator and the Board. The Parties in overseeing the implementation of the Manager shall remain accountable for contemplate that for purposes of the Program and shall have principal those duties and responsibilities and all initial period of operations, and in no responsibility (subject to the direction reports delivered by the Outside Project event longer than six months, MCA- and oversight of the Board and subject Manager. Independent of any request Benin may appoint an acting National to MCC’s contractual rights of approval from Management, the Board may Coordinator, subject to the approval of as set forth in Section 3(c) of this determine that it is advisable for MCA- MCC; provided, following such period, Program Annex or elsewhere in this Benin to engage one or more Outside the Board shall ratify the actions of such Compact or any relevant Supplemental Project Managers and the Board may acting National Coordinator and the Agreement) for the overall management direct Management to commence and Board shall select a permanent National of the implementation of the Program. conduct the competitive selection Coordinator through a competitive (B) Without limiting the foregoing process for such Outside Project selection process and subject to MCC general responsibilities or the generality Manager. Upon a finding by the Board approval in accordance with this Annex of Designated Rights and that Management has not responded to I. The divisions that manage the Responsibilities that the Government such a Board directive, the Board may implementation of each Project (‘‘Project may designate MCA-Benin, direct the Procurement Agent to Division’’) shall have the following Management shall develop the commence and conduct the competitive general organizational structure, or such components of the Implementation selection process for one or more other structure as may be agreed by the Plan, oversee the implementation of the Outside Project Managers.

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(e) Advisory Council. that such member is unable to manner as it would the annual (i) Formation and Composition. The participate in a meeting of the Advisory nomination. Government shall ensure the Council such member’s principal (v) Accessibility; Transparency. establishment of an advisory council deputy may participate in the member’s Advisory Council members will be with both governmental, private sector stead. accessible to the beneficiaries they and non-governmental representatives (2) In the event of a vacancy in represent to receive the beneficiaries’ (the ‘‘Advisory Council’’) consisting of positions identified in Sections 3(e)(i) comments or suggestions regarding the at least eight (8) and no more than (E) through (H) such vacancy to be filled Program. The minutes of all meetings of eleven (11) members, unless otherwise by nomination of the organization or the Advisory Council meetings and any agreed by the Parties, and comprised of group for whom such seat is designated subcommittees shall be made public on the following members: (A) Chief of and in the same manner as described in the MCA-Benin Website in a timely Staff of the Ministry of Foreign Affairs Section 3(e)(i) for the initial designation manner. and African Integration; (B) Chief of and as otherwise set forth in the (f) Implementing Entities. Subject to Staff of the Ministry of Industry and applicable Governing Document. the terms and conditions of this Commerce; (C) Chief of Staff of the (ii) Role. The Advisory Council shall Compact and any other Supplemental Ministry of the Interior, Security, and be a mechanism to provide Agreement between the Parties, MCA- Decentralization; (D) Chief of Staff of the representatives of the private sector, Benin may provide MCC Funding, Ministry of Justice; (E) a representative civil society and local and regional directly or indirectly through an from the Private Sector (selected governments the opportunity to provide Outside Project Manager, to one or more following a national assembly of the advice and input to MCA-Benin Government Affiliates or to one or more private sector); (F) a representative from regarding the implementation of the nongovernmental organizations or other public- or private-sector entities or the labor unions (selected following a Compact. During quarterly meetings of persons to implement and carry out the national assembly of the labor unions); the Advisory Council, Management Projects or any other activities to be (G) a representative from the regional shall present an update on the carried out in furtherance of this organizations (selected following a implementation of this Compact and Compact (each, an ‘‘Implementing national assembly of the regional progress towards achievement of the Entity’’). The Government shall ensure organizations); and (H) a representative Objectives. The Advisory Council will that MCA-Benin (or the appropriate from the National Artisan Federation have an opportunity to regularly Outside Project Manager) enters into an (selected following a national assembly provide to the Board, via the Chair, its of the National Artisan Federation). agreement with each Implementing views or recommendations on the Representatives described in (E) through Entity, in form and substance performance and progress on the (H) shall be selected and vacancies satisfactory to MCC, that sets forth the Projects and Project Activities, filled in accordance with the manner roles and responsibilities of such components of the Implementation and criteria set forth in the applicable Implementing Entity and other Plan, procurement, financial Governing Document, subject to MCC appropriate terms and conditions, such management or such other issues as may approval. Following the selection of the as payment of the Implementing Entity be presented from time to time to the representatives described in (E) through (the ‘‘Implementing Entity Agreement’’). Advisory Council or as otherwise raised (H), the results of the selection shall be An Implementing Entity shall report by the Advisory Council. Management posted on the MCA-Benin Website and directly to the relevant Project Manager published in the local newspaper. The shall provide copies of the M&E Plan or Outside Project Manager, as Government shall take all action and related reports to the Advisory designated in the applicable necessary and appropriate actions to Council simultaneously with the Implementing Entity Agreement or as ensure the Advisory is established transmittal to the Advisory Council of otherwise agreed by the Parties. The consistent with this Section 3(e) and as such documents and reports. The Board Implementing Entities shall be either (i) otherwise specified in the Governing may, in response to the Advisory pre-determined ministries, bureaus or Document or otherwise agreed in Council, require Management to provide agencies of the Government based on writing by the Parties. The composition such other information and documents their sector expertise with respect to of the Advisory Council may be as the Board deems advisable and certain activities or (ii) government adjusted by agreement of the Parties subject to appropriate treatment of the bodies, businesses, micro-finance from time to time to ensure, among information by the Advisory Council institutions (‘‘MFIs’’) and/or non- other things, a cross-section and its members. governmental organizations, vendors representative of the intended (iii) Meetings. The Advisory Council and contractors selected according to a beneficiaries. The number of members shall hold quarterly meetings of the full the Procurement Guidelines. of the Advisory Council may be Advisory Council as well as such other (g) Fiscal Agent. The Government increased, but in no event more than periodic meetings of the Advisory shall ensure that MCA-Benin engages eleven (11), upon the majority vote of Council or subcommittees thereof one fiscal agent following an the then existing members and the designated along sectoral, regional, or international competitive process (a vacancies created by such increase shall other lines, as may be necessary or ‘‘Fiscal Agent’’) who shall be be filled by the majority vote of the then appropriate from time to time. responsible for, among other things: (i) existing members, subject to the (iv) Board Observer. The Advisory Assisting MCA-Benin in preparing the approval of the Government and MCC. Council shall nominate, by majority Fiscal Accountability Plan, (ii) ensuring (1) Each member position identified decision, one individual, either from the and certifying that Re-Disbursements are in Sections 3(e)(i) of this Program Advisory Council or otherwise, to serve properly authorized and documented in Annex shall be filled by the individual, as an Observer to the Board for a one- accordance with established control during the Compact Term, holding the year term. The Advisory Council shall procedures set forth in the office identified and such individuals rotate its representative each year. Any Disbursement Agreement, the Fiscal shall serve in their capacity as the vacancy of the Observer seat designated Agent Agreement and other relevant applicable Government official and not for the Advisory Council shall be filled Supplemental Agreements; (iii) Re- in their personal capacity. In the event by the Advisory Council in same Disbursing from, cash management and

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account reconciliation of a Bank accordance with the M&E Plan, as Benin pursuant to the Procurement Account established and maintained by described more fully in Annex III, and/ Agreement (the ‘‘Procurement Plan’’). the Fiscal Agent for the purpose of or (ii) an independent evaluator to 4. Finances and Fiscal Accountability instructing Bank to make Re- assess performance as required under Disbursements from a Permitted the M&E Plan (each, a ‘‘Reviewer’’). (a) Financial Plans. Account (to which Fiscal Agent has sole MCA-Benin shall select the Auditor(s) (i) Multi-Year Financial Plan. The signature authority), following or Reviewers in accordance with any multi-year financial plan for the Program and for each Project (the applicable certification by the Fiscal Governing Document or other relevant ‘‘Multi-Year Financial Plan’’) is Agent; (iv) providing applicable Supplemental Agreement. The summarized in Annex II to this certifications for MCC Disbursement Government shall ensure that MCA- Compact. Requests; (v) maintaining and retaining Benin enters into an agreement with proper accounting, records and (ii) Detailed Financial Plan. During each Auditor or Reviewer, in form and the Compact Term, the Government document disaster recovery system of substance satisfactory to MCC, that sets all MCC Funded financial transactions shall ensure that MCA-Benin timely forth the roles and responsibilities of the delivers to MCC financial plans that and certain other accounting functions; Auditor or Reviewer with respect to the specify respectively the annual and (vi) producing reports on MCC audit, review or evaluation, including quarterly detailed budget and projected Disbursements and Re-Disbursements access rights, required form and content cash requirements for the Program (including any requests therefore) in of the applicable audit, review or (including monitoring and evaluation accordance with established procedures evaluation and other appropriate terms and administrative costs) and each set forth in the Disbursement and conditions such as payment of the Project, projected both on a commitment Agreement, the Fiscal Agent Agreement, Auditor or Reviewer (the ‘‘Auditor/ and cash requirement basis (each a the Fiscal Accountability Plan, or any Reviewer Agreement’’). In the case of a ‘‘Detailed Financial Plan’’). Each other relevant Supplemental financial audit required by Section 3.8(f) Detailed Financial Plan shall be Agreements, (vii) preparing budget of the Compact, such Auditor/Reviewer delivered by such time as specified in development procedures and the Agreement shall be effective no later the Disbursement Agreement or as may Compact implementation budget, (viii) than 120 days prior to the end of the otherwise be agreed by the Parties. The managing funds control, (ix) inventory relevant fiscal year or other period to be Multi-Year Financial Plan and each control, and (x) internal management of audited; provided, however, if MCC Detailed Financial Plan and each the Fiscal Agent operations. Upon the requires concurrent audits of financial amendment, supplement or other written request of MCC, the Government information or reviews of performance change thereto are collectively, the shall ensure that MCA-Benin terminates and compliance under this Compact, ‘‘Financial Plan.’’ the Fiscal Agent, without any liability to then such Auditor/Reviewer Agreement (iii) Expenditures. No financial MCC, and the Government shall ensure shall be effective no later than the date commitment involving MCC Funding that MCA-Benin engages a new Fiscal agreed by the Parties in writing. shall be made, no obligation of MCC Agent, subject to the approval by the Funding shall be incurred, and no Re- (i) Procurement Agent. The Board and MCC. The Government shall Disbursement shall be made or MCC Government shall ensure that MCA- ensure that MCA-Benin enters into an Disbursement Request submitted for any Benin engages one or more procurement agreement with each Fiscal Agent, in activity or expenditure, unless the form and substance satisfactory to MCC, agents through international expense is provided for in the Detailed that sets forth the roles and competitive process (each, a Financial Plan and unless uncommitted responsibilities of the Fiscal Agent and ‘‘Procurement Agent’’) to carry out and/ funds exist in the balance of the other appropriate terms and conditions, or certify specified procurement Detailed Financial Plan for the relevant such as payment of the Fiscal Agent activities in furtherance of this Compact period or unless the Parties otherwise (each, a ‘‘Fiscal Agent Agreement’’), on behalf of the Government, MCA- agree in writing. such Fiscal Agent Agreement shall not Benin, the Project Manager or (iv) Modifications to Multi-Year be terminated until MCA-Benin has Implementing Entity. The roles and Financial Plan or Detailed Financial engaged a successor Fiscal Agent or as responsibilities of such Procurement Plan. Notwithstanding anything to the otherwise agreed by MCC in writing. Agent and the criteria for selection of a contrary in this Compact, MCA-Benin (h) Auditors and Reviewers. The Procurement Agent shall be as set forth may amend or supplement the Multi- Government shall ensure that MCA- in the applicable Implementation Letter Year Financial Plan, or any component Benin carries out the Government’s or Supplemental Agreement. The thereof or any Detailed Financial Plan audit responsibilities as provided in Government shall ensure that MCA- without amending this Compact, Sections 3.8(d), (e) and (f) of this Benin enters into an agreement with the provided any material amendment or Compact, including engaging one or Procurement Agent, in form and supplement has been approved by MCC more auditors (each, an ‘‘Auditor’’) substance satisfactory to MCC, that sets and is otherwise consistent with the required by Section 3.8(d) of this forth the roles and responsibilities of the requirements of this Compact including Compact. As requested by MCC in Procurement Agent with respect to the Section 4 of Annex II and any relevant writing from time to time, the conduct, monitoring and review of Supplemental Agreement between the Government shall ensure that MCA- procurements and other appropriate Parties; provided, however, MCA-Benin Benin also engages (i) an independent terms and conditions, such as payment may modify the Detailed Financial Plan reviewer to conduct reviews of of the Procurement Agent (the to reallocate MCC Funding without performance and compliance under this ‘‘Procurement Agent Agreement’’). Any MCC prior approval to the extent that in Compact pursuant to Section 3.8(f) of Procurement Agent shall adhere to the the aggregate during the Compact Term this Compact, which reviewer shall procurement standards set forth in the the: have the capacity to (A) conduct general Procurement Agreement and (1) Reallocation of funds within a reviews of performance or compliance, Procurement Guidelines and ensure Project would not reduce or increase (B) conduct environmental audits, (C) procurements are consistent with the any line item in the Detailed Financial conduct data quality assessments in procurement plan adopted by MCA- Plan for a Project Activity more than the

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lesser of 10% of such relevant line item (b) Disbursement and Re- timing of reports; (v) preparing budget in the Detailed Financial Plan or USD Disbursement. The Disbursement development procedures and the $2,000,000, taking into account any Agreement (and disbursement schedules Compact implementation budget; (vi) modifications made pursuant to thereto), as amended from time to time, policies concerning records, document paragraph (B) such that any shall specify the terms, conditions and disaster recovery and public availability modifications made pursuant to (A) and procedures on which MCC of all financial information; (vii) (B) in the aggregate shall not exceed Disbursements and Re-Disbursements procurement and contracting practices, USD $2,000,000; shall be made. The obligation of MCC to including timely payment to vendors; (2) Re-allocation of funds within a make MCC Disbursements or approve (viii) inventory control; (ix) the role of Project Activity would not reduce or Re-Disbursements is subject to the independent auditors; (x) the roles of increase any line item in the Detailed fulfillment, waiver or deferral of any fiscal agents and procurement agents; Financial Plan for a sub-activity more such terms and conditions. The (xi) separation of duties and internal than the lesser of 10% of the relevant Government and MCA-Benin shall controls; and (xii) certifications, powers, line item in the Detailed Financial Plan jointly submit the applicable request for authorities and delegations. or USD $2,000,000 taking into account an MCC Disbursement (the ‘‘MCC (d) Permitted Accounts. The any modifications made pursuant to Disbursement Request’’) as may be Government shall establish, or cause to paragraph (A) such that any specified in the Disbursement be established, such accounts (each, a modifications made pursuant to (A) and Agreement. MCC will make MCC ‘‘Permitted Account,’’ and collectively (B) in the aggregate shall not exceed Disbursements in tranches to a ‘‘Permitted Accounts’’) as may be agreed USD $2,000,000; Permitted Account from time to time as by the Parties in writing from time to (3) Re-allocation of funds between provided in the Disbursement time, including: Projects would not reduce or increase Agreement or as may otherwise be (i) A single, completely separate U.S. any line item in the Detailed Financial agreed by the Parties, subject to Program Dollar interest-bearing account (the Plan for a Project Activity more than the requirements and performance by the ‘‘Special Account’’) at a commercial lesser of 10% of the relevant line item Government, MCA-Benin and other bank, subject to MCC approval, that is in the Detailed Financial Plan or USD relevant parties in furtherance of this procured through a competitive process; (ii) If necessary, an interest-bearing $500,000; Compact. Re-Disbursements will be (4) Re-allocation of funds within local currency of Benin account (the made from time to time based on Monitoring and Evaluation category of ‘‘Local Account’’) at a commercial bank, requests by an authorized representative the Detailed Financial Plan would not subject to MCC approval, that is of the appropriate party designated for reduce or increase more than the lesser procured through a competitive process the size and type of Re-Disbursement in of 10% of the relevant line item in the to which the Fiscal Agent may authorize accordance with any Governing Detailed Financial Plan for the M&E transfer from any U.S. Dollar Permitted Document and Disbursement activity or USD $500,000; or Account for the purpose of making Re- (5) Re-allocation of funds within Agreement; provided, however, unless Disbursements payable in local Program Administration category of the otherwise agreed by the Parties in currency; and Detailed Financial Plan would not writing, no Re-Disbursement shall be (iii) Such other interest-bearing reduce or increase more than the lesser made unless and until the written accounts to receive MCC Disbursements of 10% of the relevant line item in the approvals specified herein or in any in such banks as the Parties mutually Detailed Financial Plan for the Program Governing Document and Disbursement agree upon in writing. Administration expense category or Agreement for such Re-Disbursement No other funds shall be commingled USD $500,000. have been obtained and delivered to the in a Permitted Account other than MCC With respect to any modification Fiscal Agent. Funding and Accrued Interest thereon. pursuant to subparagraphs (1)–(5) (c) Fiscal Accountability Plan. By All MCC Funding held in an interest- above, such modification (A) shall be such time as specified in the bearing Permitted Account shall earn consistent with the Objectives and the Disbursement Agreement or as interest at a rate of no less than such Implementation Plan; (B) shall not otherwise agreed by the Parties, MCA- amount as the Parties may agree in the materially adversely impact the Benin shall adopt as part of the respective Bank Agreement or applicable Project, Project Activity, sub- Implementation Plan a fiscal otherwise. MCC shall have the right, activity, M&E activity or Program accountability plan that identifies the among other things, to view any administration activity; (C) shall not principles, mechanisms and procedures Permitted Account statements and cause the amount of MCC Funding to to ensure appropriate fiscal activity directly on-line, where feasible, exceed the aggregate amount specified accountability for the use of MCC or at such other frequency as the Parties in Section 2.1(a) of this Compact; and Funding provided under this Compact, may otherwise agree. By such time as (D) shall not cause the Government’s including the process to ensure that shall be specified in the Disbursement obligations or responsibilities or overall open, fair, and competitive procedures Agreement or as otherwise agreed by the contribution of resources to be less than will be used in a transparent manner in Parties, the Government shall ensure as specified in Section 2.2(a) of this the administration of grants or that MCA-Benin enters into an Compact, this Annex I or elsewhere in cooperative agreements and the agreement with each Bank, respectively, this Compact; provided, further, that procurement of goods and services for satisfactory to MCC, that sets forth the MCA-Benin shall promptly deliver to the accomplishment of the Objectives signatory authority, access rights, anti- MCC any such modified Detailed (the ‘‘Fiscal Accountability Plan’’). The money laundering and anti-terrorist Financial Plan, together with a modified Fiscal Accountability Plan shall set financing provisions, and other terms Multi-Year Financial Plan to reflect the forth, among other things, requirements related to the Permitted Account, corresponding modifications, and with respect to the following matters: (i) respectively (each, a ‘‘Bank further reflected in the Detailed Re-Disbursement, cash management and Agreement’’). For purposes of this Financial Plan submitted with the MCC account reconciliation; (ii) funds control Compact, the banks holding an account Disbursement Request at the next and documentation; (iii) accounting referenced in Sections 4(d) of this Disbursement Period. standards and systems; (iv) content and Program Annex are each a ‘‘Bank’’ and

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are collectively referred to as the (vii) A copy of the Disbursement in infrastructure is hindered by the lack ‘‘Banks.’’ Agreement, as amended from time to of land use planning and adequate (e) Currency Exchange. The Bank time; property tax administration. The lack of shall convert MCC Funding to the (viii) A copy of any documents related registered land rights also limits access currency of Benin at a rate to which the to the formation, organization and to credit, particularly since Benin parties to the Bank Agreement mutually governance of MCA-Benin including adheres to agreements under the agree with the Bank in the Bank any Governing Documents, together Organization for Harmonization of Agreement, subject to MCC approval. with any amendments thereto; Business Law in Africa (‘‘OHADA’’) (ix) A copy of the Procurement requiring land titles as a basis for 5. Transparency; Accountability Agreement (including Procurement pledging real property as collateral. Transparency and accountability to Guidelines), as amended from time to The Government is committed to MCC and to the beneficiaries are time and any procurement policies or changing this scenario. The Government important aspects of the Program and procedures and standard documents; has demonstrated a commitment to Projects. Without limiting the generality and adopting improved laws, regulations, of the foregoing, in an effort to achieve (x) A copy of information derived administrative processes and techniques the goals of transparency and from each Procurement Plan, as to meet its ambitious land policy vision. accountability, the Government shall specified in the Procurement It has already undertaken important ensure that MCA-Benin: Agreement, and all bid requests and legal reforms and experimented with awarded contracts. new approaches to formalizing property (a) Establishes an e-mail suggestion rights. The Government’s view of the box as well as a means for other written Schedule 1 to Annex I—Access to Land importance of converting to titles, albeit comments that interested persons may Project in a progressive, voluntary approach, use to communicate ideas, suggestions This Schedule 1 generally describes will be promoted and ways to make the or feedback to MCA-Benin. and summarizes the key elements of an process easier will be identified through (b) Considers as a factor in its Access to Land Project (the ‘‘Land this Project. With MCA support, a new decision-making the recommendations Project’’) that the Parties intend to land policy framework will be of the Board, particularly in MCA- implement in furtherance of the Land developed and over 100,000 households Benin’s deliberations over pending key Project Objective. Additional details will attain registered land rights. The Management decisions and key Board regarding the implementation of the Land Project will serve both rural and decisions as shall be specified in the Land Project will be included in the urban areas and will lead to: relevant Governing Document. Implementation Plan and in relevant significantly reduced time and costs to (c) Develops and maintains the MCA- Supplemental Agreements. obtain titles and record transfers; fewer Benin Web site in a timely, accurate and 1. Background land disputes; and increased sense of appropriately comprehensive manner, land security. These improvements such MCA-Benin Web site to include Insecure access to land is a should, in turn, motivate investment postings of information and documents determinant of poverty and a major and contribute, along with other in English and French. barrier to income growth in Benin as Projects, to income growth. (d) Posts on the MCA-Benin Website reflected in the Government’s Action and otherwise makes publicly available Plan and the Poverty Reduction Strategy 2. Summary of Projects and Activities in via appropriate mediums (including Document. Investment climate studies Project and Expected Results radio and print) in the appropriate list land access among the top The Land Project is designed to language the following documents or constraints to business development in establish secure access to land and information from time to time: Benin. Therefore, the Government’s efficient land administration services. (i) All minutes of the meetings of the Access to Land proposal was met with MCC Funding will support the Advisory Council and the meetings of strong civil society support. Inclusion of following Project Activities: • the Board; provided, however, in certain the Land Project in the Program reflects Policy and Legal Reform: To enable instances of sensitivity and solely as an understanding of the importance of sustainable, efficient land registration specified and in accordance with the sound property rights to overall services, gender equity, land dispute Governing Documents meeting minutes economic growth and to the owners and resolution and expanded use of land as may be maintained solely in the users of land across Benin. collateral, MCC Funding will support Currently, the title registration system corporate records of MCA-Benin legal, regulatory, administrative and is expensive, slow, and complex. For a without public release; informational reforms within a national small urban land parcel, titling and land policy framework encompassing (ii) The M&E Plan, as amended from registration costs approximately $1,400 time to time, along with periodic reports both rural and urban land. and can take up to two years to • Achieving Formal Property Rights on Program performance; complete. As a result, only 1% of to Land: To provide citizens with more (iii) Such financial information as households hold a formal title to their secure and useful records of their land may be required by this Compact or as land and a majority of the rural rights, MCC Funding will support may otherwise be agreed from time to population relies on oral customary conversion of 30,000 occupancy permits time by the Parties; land rights. In urban areas, individuals to land titles in urban areas and (iv) All Compact Reports; occupy land under a weak formally document land rights to 300 (v) All audit reports by an Auditor administrative permit while enterprises rural villages directly benefiting around and any periodic reports or evaluations occupy state land by concession. Land 85,000 households with certificates or by a Reviewer; disputes are prevalent and are estimated titles. (vi) All relevant Environmental to comprise more than 70% of all civil • Improve Land Registration Services Impact Assessments and supporting court cases in Benin. Women are often and Land Information Management: To documents, and such other disadvantaged under current practices reduce time and costs to register land environmental documentation as MCC while investors are unable to acquire and expand access to land information may request; sites with confidence. Public investment for public and private uses, MCC

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Funding will be used to upgrade and will affect the implementation strategy parameters; and the technical decentralize title registration services in to be used for certain other Land Project specifications of the certification twenty four communes and introduce activities or sub-activities. processes (particularly of the Plan map-based land information systems in Detailed assessments of a series of Foncier Rural ‘‘PFR’’); make twelve of these communes. topics will be produced by recommendations for changes to make • Information, Education and commissioned experts working in the process more affordable and/or Communication: To create broad consultation with key stakeholder efficient and its results more awareness of land policy reform, representatives. As a result, decision- sustainable; especially among more vulnerable makers will be better informed of best (3) An assessment of the number and groups, in order to help citizens options for detailing the legal, types of land conflicts encountered in understand, protect and use their land administrative and technical solutions the past under rural and urban pilot rights. needed to achieve secure land rights activities and how/if these conflicts • Support Land Program and efficient land access. Based on the have been resolved; recommend a Coordination: To strengthen the assessment process, a Land Policy strategy for strengthening the capacity to capacity to manage the reform process White Paper will be prepared to guide resolve land conflicts under formal and and to encourage active participation of public and private actors regarding the informal means; key stakeholder representatives, support reform process. Endorsement from (4) An analysis of how to effectively policy and program coordination senior Government of Benin officials, improve women’s access to land and the advisors, convene a Project steering including all relevant Ministers will be security of their tenure; propose a group, and establish working groups for sought by MCA-Benin. The Policy gender strategy on policy, legal, particular studies. Activity will also support drafting of a administrative, and/or project The M&E Plan (described in Annex National Land Policy Decree, drafting of implementation measures and provide III) will set forth anticipated results and, any needed legislation and/or guidelines for its implementation; where appropriate, regular benchmarks amendments, and, finally, the (5) Following the completion of the that may be used to monitor compilation of land laws into a new assessment described in paragraph (1) implementation progress. Performance Land Code to reinforce cohesiveness. above, compare technology options to against these benchmarks and the MCC Funding will support the meet information management needs at overall impact of the Land Project will following activities: national, regional and local levels be assessed and reported at the intervals (i) Conduct of assessments that will including mapping data, registration to be specified in the M&E Plan or as inform policy decisions and Land data, land market information and land otherwise agreed by the Parties from Project implementation strategies. The use planning; compare initial time to time. The Parties expect that assessments will further clarify issues investment costs as well as implied additional indicators will be identified and provide recommendations for operational and maintenance costs and during the implementation of the Land refining the reform strategy. Efficiency, capacity to sustain the systems; and Project. The expected results from, and affordability, sustainability, gender (6) An analysis of the operational the key benchmarks to measure progress equity, and the ability to manage the modalities for the communes in on the Project, Project Activities and reform process with minimum risk will implementing the proposed new rural sub-activities undertaken or funded be considered. The assessments listed land law and related financing needs; under the Land Project are set forth in below will be conducted by experts and make recommendations for the content Annex III. MCA-Benin will convene working for the regulations to this law. Estimated amounts of MCC Funding groups of stakeholder representatives (ii) Development, formalization and for each Project Activity for the Land that will consult on the terms of dissemination of a new land policy Project are identified in Annex II of this reference for and the preparation of the framework for Benin, that draws on the Compact. Conditions precedent to each assessments described below. MCA- assessments conducted under the sub- Land Project Activity and sequencing of Benin shall ensure that the results of activity described in Section 2(a)(i) these Project Activities shall be set forth these assessments are incorporated as above: in the Disbursement Agreement or other relevant in the complete and final Work (1) Draft and promote a Land Policy relevant Supplemental Agreements or Plans for the activities described in White Paper covering rural and urban component of the Implementation Plan. Sections 2(b)–(d) of this Schedule 1. The land and addressing the findings of the The following summarizes the Land assessments shall include the following assessments conducted under sub- Project Activities: topics, unless otherwise agreed by the activity described in Section 2(a)(i); seek (a) Project Activity: Policy and Legal Parties: its immediate endorsement by relevant Reform (the ‘‘Policy Activity’’). (1) A review of current practice and senior Government of Benin officials for Building from the Government’s proposed reforms related to the use in implementation of Projects and commitment to land reform, under this administrative structure and functions also a legislative mandate for Policy Activity, MCC funds will support of national, regional and local agencies compliance with its key provisions; three-stages to establish a more involved in implementation of land (2) Upon completion of sub-activity cohesive, functional land policy. The policy; clarify roles and responsibilities described in Section 2(a)(i) above, three stages are analysis, policy and propose an approach to achieve prepare a new procedural manual for formulation and legal reform. This greater operational efficiency and the transformation of urban and rural Policy Activity is national in scope and coherence; certificates into land titles; will address both urban and rural (2) A review of the processes for (3) Review of relevant current law and issues. MCA-Benin shall take account of titling (conversion) and registration to proposed legislation compared to the the relevant outputs of the Policy identify specific bottlenecks to an requirements of the Land Policy White Activity, as described below, in the full accelerated, quality implementation Paper; Implementation Plan (to be adopted pace, including a review of technical (4) Based on the conclusions reached following the completion of the relevant norms, administrative procedures, in paragraph 3 of this Section 2(a)(ii), assessments in this Policy Activity). It is evidences accepted and proofs required support the drafting of new or amended also anticipated that the Policy Activity to participate; taxes, fees and budget laws and regulations as called for such

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that the resulting body of land issuance of registered land titles professionals in use of digital imagery legislation removes disincentives to (incorporating recommendations of the and in improved surveying and register land rights and transactions, relevant assessments conducted under mapping techniques. facilitates compliance with relevant sub-activity described in Section 2(a)(i)). (v) Improvement of local capacity to agreements under OHADA; and (ii) Expansion of formal land rights in adapt to changing land tenure and use safeguards vulnerable populations to the rural areas. Consistent with existing patterns and to resolve case-specific extent feasible from risks and undue tax standards and guidelines, expand the issues that might arise during the burdens; creation of rural land plans, land tenure implementation of land tenure reforms (5) Following completion of the sub- certificates and local land management by: activity described in paragraph (4) of capacity: (1) Supporting communes in rural this Section 2(a)(ii), support the (1) For each rural commune meeting areas to develop improved social preparation of a draft unified Land Code the site selection criteria and chosen by programs and planning for the specific for submission to Parliament; and MCA-Benin for participation, (A) needs of landless peasants and migrants; (6) Conduct public consultation on conduct of information campaigns, (B) (2) Supporting the provision of and dissemination of the new legislation assessment of the socio-economic and paralegal, informational and other and procedures. land tenure conditions of villages in the advisory services related to land access (b) Project Activity: Achieving Formal area and (C) prepare village profiles and tenure security to citizens who Property Rights (the ‘‘Registration including documentation of any otherwise would not have access to Activity’’). By providing roughly location-specific land tenure terms and such services; 115,000 citizens with more secure and norms; (3) Improvement of the capacity of useful property rights, this Registration (2) Based on the conclusions reached citizens, local authorities and tribunals Activity will demonstrate the in paragraph (1) above and the to resolve disputes related to land effectiveness of Benin’s new policy and application of the more general site tenure; approaches. Support will be provided selection criteria to the villages within (4) Establishment of transitional for the conversion of urban housing each commune, final selection of measures, in urban areas, to protect the land use permits into land titles in villages for implementing the PFR rights of land occupants with selected neighborhoods primarily in process; certificates who delay or opt-out of the Cotonou, Parakou and Porto Novo. In (3) For selected villages, production of conversion process; and roughly 300 selected rural villages, the land use and tenure maps (the PFR) (5) In a few pilot sites, introduction of recording of rural land rights through using a participatory method and the use of parcel layout plans in written land plans and certificates of submission of the plan for public review irregularly developed neighborhoods as customary ownership will be and comment; and a step prior to the permit-title undertaken using an existing (4) Based on the PFR, issuance of conversion process (any site in which methodology. Additionally, converting rural land use certificates and such plans would call for resettlement rural land certificates to land titles will facilitation of formal, written records of of persons to sites outside the also be facilitated for beneficiaries that subordinate land rights such as neighborhood prior to the conversion of choose to participate. To facilitate tenancies using improved approaches permits to titles may not be selected for progress in the Government’s title (e.g., standard lease template). participation). conversion approach, the Registration (iii) Facilitation of voluntary, ‘‘on- The activities contemplated under Activity will support mapping and demand’’ conversion of rural land this Registration Activity may begin related technology improvements and certificates into land titles. Conversion with preparatory activities such as those will help communities to identify and of rural land certificates to land titles described in Sections 2(b)(i)(1) and (2), resolve any case-specific issues that through an efficient, affordable process. 2(b)(ii)(1) and (2), and 2(b)(v) above could arise during tenure formalization. Priority will be given to villages that under a provisional work plan; Specifically, MCC Funding will already have a PFR in place. provided, however, full implementation support the following: (iv) Improvements in capacity for will require a complete and final work (i) Expansion of formal registration of mapping and surveying. To facilitate plan which adopts, to MCC’s land rights in urban areas. Based on more rapid registration of land rights satisfaction, the recommendations and lessons learned in a pilot project and to establish databases that support findings of the relevant reports recently conducted by the Government, land information services e.g., for produced under the Project Activity improve and continue the process of planning and fiscal purposes and for described in Section 2(a)(i). transforming urban housing land land market research, support the (c) Project Activity: Improve Land permits to titles in selected following actions, incorporating as Registration Services and Land neighborhoods in Cotonou, Parakou, relevant recommendations from sub- Information Management (the ‘‘Services Porto Novo and possibly other cities. activity described in Section 2(a)(i): and Information Activity’’). For each neighborhood selected: (1) Creation of up-to-date digital To launch the process of moving (1) Investigation of the current status imagery of Benin’s land resources; Benin’s land registration system services of land tenure and records and take (2) Creation of regional scale maps for to the local level, new offices of the measures to organize data and prepare selected areas of the country indicating national property registry will be the areas for the conversion process; major topographic features and established (i.e., deconcentration) , and, (2) Organization and engagement of infrastructure systems, such regional select communes will be supported as the community as active and informed scale maps will be an important tool to authority is transferred to them to participants in the conversion process; the production of an integrated set of manage their land (i.e., and parcel maps generated through the decentralization). This Activity will (3) Measurement and mapping process of property rights formalization; help design, equip and adequately staff individual parcels, conduct public and new local registry offices. Communes review of parcel maps to gain agreement (3) Following the completion of the should be chosen from among those in among community members on the design strategy described in Section which implementation of the boundaries indicated on the maps, and 2(d)(iii), training for public and private Registration Activity will occur, unless

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otherwise agreed in writing with MCC. to manage and to quality control the a National Land Policy Reform Some communes will also experiment land information systems established in Coordinator and a long term policy with a cadastre or parcel-based (i) and (ii) of this Section 2(c). advisor familiar with international best registration system that may include (d) Project Activity: Information, practice in land administration. Among additional land information used for Education and Communication (‘‘IEC’’) their roles are, potentially, to (A) lead planning and fiscal purposes. Finally, (the ‘‘IEC Activity’’). the process of incorporation of the the Services and Information Activity MCA-Benin has an opportunity to results of the Policy Activity into will help make reliable land market promote good governance through practice by both project implementing information (e.g., recent sales and appropriate transparency and partners and more generally, in Benin; prices) available for use by households, consultation on the Project throughout (B) provide guidance on policy and investors and public offices. the Compact Term. Moreover, informed implementation oversight issues to Pending completion of the relevant and widespread participation in senior Government officials and MCA- studies in Policy Activity and planning, dispute resolution and Benin management; (C) facilitate incorporation of the recommendations decision-making are necessary for an linkages with the Financial Services into implementation plans, MCC effective system of land registration. The Project activities as relevant; (D) engage Funding will support the design and IEC Activity will ensure citizens have a other donors in Project specific implementation of more accessible, clear understanding of their rights and coordination; and, (E) respond to efficient, reliable land registration and responsibilities, and are able to beneficiary requests and queries. information services. The participate fully in the new processes of (ii) Establishment (including rules implementation strategy for each sub- planning, land securitization and regarding selection, composition, roles activity described below in paragraphs dispute resolution. and frequency of meetings) and (i), (ii) and (iii) shall promote, to the Specifically, MCC Funding will convening of a Steering Group for extent practicable, the harmonization of support IEC campaigns throughout the periodic consultations on the national, regional, and communal land Compact Term to include but not implementation of the Land Project e.g., data and uses including the mapping limited to the following topics (other the development of annual work plans, and certificate lists generated during the topics for these campaigns may be key terms of reference, draft reports and PFR process. implemented, subject to MCC approval): otherwise as appropriate; including key Specifically, MCC Funding will (i) Creation of broad awareness and stakeholder representatives, at least one support: understanding of the changing land person from each of the MCA-Benin (i) Deconcentration of the National policy regime and how it affects the Finance Services Project and the Justice Land Registration Services. rights of citizens; new processes and Project divisions, and a gender expert. (1) The establishment of regional services; gender considerations, and, (iii) Convening of discussion groups offices in Benin’s 12 prefectures and land markets and access to credit. for each of the assessments in Section communal service offices in 24 selected (ii) Conduct of specific public notice (2)(a)(i) and for the White Paper and communes; and and awareness of each activity and sub- corresponding legal reform work. (2) In the offices established pursuant activity and of the results relevant to (iv) Selection of sites for activities to paragraph (1) of this Section 2(c)(i), particular groups or communities. undertaken under this Project. Sites replacement of the manual system of (iii) Design of a training strategy shall be chosen by applying selection document administration with an precedent to implementation of any criteria developed by MCA-Benin, automated, digital records management training in the Registration Activity or subject to MCC approval, in a fair and system and training of land registry Services and Information Activity. transparent manner. MCA-Benin will office staff in the operation of these (e) Project Activity: Support Strategy publicize, including posting on the systems. and Programmatic Coordination (the MCA-Benin Website, both the criteria (ii) Decentralization of Land ‘‘Support Strategy Activity’’). for selection and the actual sites chosen, Administration. This Project Activity will ensure giving a brief justification for each site. (1) Assist in development of capacity coordination across the various Project These criteria will ensure that sites have of approximately 50 communes for land Activities and sub-Activities of the Land the following characteristics, among administration, such assistance to Project, across agencies involved in the others: representation of the North, include training, acquisition of land policy reform process, and South and Central regions of Benin; equipment and transitional operational facilitate ongoing consultation with sites that exhibit both poverty and near- support; and stakeholder groups. In the near term, term economic opportunity e.g., (2) Design and implementation of a this is critical to the Project urbanizing areas, high-value crop pilot parcel-based or cadastre- effectiveness in undertaking a production sites, and places where registration system in 12 of the comprehensive and diverse set of reform market participation is expanding; communes where MCC Funding will actions. By the end of the Compact willingness to comply with Benin’s support decentralization; this sub- Term, the MCA-Benin Access to Land Family Code; site of activity under the activity will support a more Project division could be transformed Financial Services Project and the comprehensive, systematic approach to into a national coordination unit to lead Justice Project; and location within the the establishment of a cadastre may be the completion of the reform scope of the decentralized registry and demonstrated in three of these twelve implementation process over a longer land information systems to be communes (one rural, one urban and time period. established under Services and one peri-urban). Specifically, in addition to an overall Information Activity set forth in Section (iii) Design and establishment of an Land Project Director and the ordinary 2(c) of this Schedule 1. These electronic national land market data Project-related operating expenses, MCC characteristics will be strategic to system. Funding will support: choosing sites that will more readily (iv) Provision of technical assistance, (i) Complement MCA-Benin experience near-term, economically training (consistent with the design management staff with a group of meaningful results including for the strategy completed pursuant to Section professionals dedicated to ‘‘change poor and women. The completion of 2(d)(iii)) and in relation to the capacity management and coordination,’’ namely this site selection shall be a condition

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precedent to certain activities under this been standardized and guidelines sustained and that near-term results Project. established which will be used in translate into long’term sustainable (v) Strengthening of the National Land implementation of this Project. change. The Government has set Commission for the transformation of In urban areas the Government ambitious targets for decreasing costs of urban land permits to titles by providing recently completed a pilot titling project land titling and registration and will be the resources and guidance to enhance that had positive but limited results. considering further rationalizing fee the quality and quantity of work it can The limited results were due to structures. The final choice of technical perform. substantial titling fees, a reluctance to solutions for information management being the initial participant (‘‘first 3. Beneficiaries and for supporting the process of adopter’’), insufficient public outreach, formalizing land tenure will be chosen The Land Project will encourage and administrative problems relating to on a best-value for cost in the specific investment in urban and rural land. A certificates previously pledged as context of Benin. The extensive new policy framework will enable a collateral. These limitations were consultation, information dissemination progressive transition between identified in the Proposal and will be and training embedded across all the customary and administrative land further addressed in the Implementation Project Activities will reinforce management to markets and a title Plan for the Registration Activity. consensus and make it more likely that registration system. With lower The ‘‘Transformation of Assets into people can take advantage of the new transactions costs and fewer disputes, Usable Capital in the Least Developed land policy framework. The review of the climate for investment, productivity Countries’’ project initiated by the the law will identify and address and finance will be improved. The Land International Land Coalition has chosen disincentives to keep land records Project will strengthen women’s land Benin as a pilot country. Under this formal over time. All together, these rights under the law and, more International Land Coalition initiative, features lend themselves to importantly, work to ensure the new the UNDP will support a stakeholder sustainability. family code is practiced widely. In analysis that could be used to refine the Cotonou, Porto-Novo and Parakou, the relevant components of the Project 7. Policy; Legal Reform; and Procedural three main cities in Benin, up to 30,000 Activity Implementation Plans. The Changes properties currently under Foreign Investors Advisory Service of The Parties have identified the administrative certificates will have the International Finance Corporation following policy, legal and regulatory titles. In twenty-four selected rural (‘‘IFC’’) will soon complete a study of reforms and actions that the communes, as many as 83,000 families land access and investment. Their Government shall pursue in support, in 300 villages will receive a certificate, preliminary recommendations are and to reach the full benefits, of the which can be subsequently turned into generally consistent with this Project, Land Project, the satisfactory a land title. Other rural land users, with some sub-activities herein having implementation of which will be without full ownership rights, will also been derived from it. conditions precedent to certain MCC have recorded agreements. Accurate Private professionals, e.g., surveyors, Disbursements as provided in the land rights information will benefit are currently called on by the Disbursement Agreement: potential local and international government to implement tasks within (a) Undertake policy, legal and/or investors, including Benin’s diaspora. the formalization process. To the extent procedural changes as called for in the For example, reliable and cost-effective feasible, the Land Project will promote final approved assessment reports inquiries of local records will be out-sourcing and development of produced under the Policy Activity: to possible before entering leases or private sector services related to land simplify, streamline and make purchasing land. Finally, there will be registration and land markets. Among affordable all processes related to formal better capacity for local planning and the key stakeholders that will guide the registration of land rights; tax administration which will benefit project implementation planning and (b) Endorse a Land Policy White local municipalities and civil society. participate in the studies undertaken Paper produced in conjunction with this Roughly 115,000 rural and urban pursuant to the Policy Activity, are Project; issue a National Land Policy households will have more secure and bankers and businessmen and civil Decree endorsing its vision, adopt a law useful tenure, affordable access to society organizations, e.g., women’s requiring compliance with it and pass a reliable land related information and groups. These are the end-users of the unified Land Code to consolidate the services; a 50% reduction in court cases improved formal property registration body of law that affects land rights; related to land disputes is targeted, and system and their perspectives will (c) Reform laws, regulations and a modest 10% to 20% investment provide much-needed insight into final administrative processes as needed to response is expected to boost income definition of land policy and of the most remove constraints to the use of land as earning opportunities. practical approaches to implementation. collateral; (d) Undertake measures to improve 4. Donor Coordination; Private Sector; 5. U.S. Agency for International Role of Civil Society the enforcement of Benin’s Family Development Code, Rural Code, and other legislation, In rural Benin, both Deutsche No USAID projects focus specifically as identified in the gender strategy Gesellschaft fu¨ r Technische on land access and security in Benin. undertaken pursuant to the Policy Zusammenarbeit (‘‘GTZ’’) GmbH However, MCA-Benin will continue to Activity, which give and protect (German) and Agence Francaise de dialogue with USAID to identify areas women’s rights to land; and De´veloppement (‘‘AFD’’) (French) have in which it can complement or (e) Undertake measures to ensure the supported successful land use pilot coordinate with e.g., women’s legal aid. property taxes do not discourage projects under the Program for Natural registration of land transactions and that 6. Sustainability Resources Conservation and safeguard against undue tax burdens. Management. A first phase of these pilot One of the prime concerns that will projects has recently ended and both underlie the series of evaluations 8. Proposals donors have expressed interested in conducted in the Policy Activity is the Under the Land Project, public continuing this work. The approach has need to ensure that investments can be solicitations for proposals are

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anticipated to procure goods and enterprises (one or more of such • Financial Institution and Borrower services, as needed, to implement all categories of enterprises, ‘‘MSMEs’’), Capacity Building Activity: This Project Land Project Activities. MCA-Benin will particularly those that are involved Activity aims to (a) improve the develop, subject to MCC approval, a directly or indirectly in the production capacity of financial institutions to process for consideration of both such of goods in Benin. For example, the expand existing or establish new proposals. While competitive banking sector, while possessing services for MSMEs and (b) improve the procurement will be the norm for this significant liquidity, has focused much capacity of MSMEs to access and use Land Project, MCA-Benin may also of its credit services on short-term expanded financial services consider, using a process developed financings and on larger companies, productively by improving their subject to MCC approval, any such as multinationals with branches in creditworthiness; and unsolicited proposals it might receive. Benin. Savings services in Benin have • Financial Enabling Environment Under Strategy Support Activity of this had limited penetration, with only a Activity: This Project Activity will Land Project, a Land Project Steering small fraction of the population owning undertake to identify and support legal Group and several working groups will a bank account. Although the and policy changes that are needed to be comprised to guide implementation microfinance sector is relatively vibrant facilitate the expansion of the financial planning and implementation of the in Benin, it faces significant challenges, sector in Benin. assessments to be conducted under the including the weak institutional The M&E Plan (described in Annex Policy Activity. MCA-Benin will capacity of many MFIs and the need for III) will set forth anticipated results and, determine the number and types of additional monitoring and supervision. where appropriate, regular benchmarks participants in these groups. A public Moreover, much of the financial sector that may be used to monitor call for expressions of interest to has focused on urban areas and on implementation progress. Performance participate will be made and candidates short-term commerce rather than long- against these benchmarks and the will be selected by a panel comprised of term production. overall impact of Financial Services MCA-Benin’s Land Project Director, The following factors contribute to the Project will be assessed and reported at Finance Project Director and one other limited scope of financial services to the intervals to be specified in the M&E person to be determined by MCA-Benin MSMEs: Plan or as otherwise agreed by the with MCC approval. The composition of • High transaction costs, especially in Parties from time to time. The Parties this panel shall be made publicly rural areas; expect that additional indicators will be available as will be their final selection • Lack of reliable information on identified during the implementation of for any particular group. clients; the Financial Services Project. The This Land Project also involves • Lack of creditworthiness of many expected results from, and the key selection of particular communes, borrowers; benchmarks to measure progress on, the villages or urban neighborhoods to • Limited resources and capacity of Project, Project Activities and sub- participate in Project Activities activities undertaken or funded under described in Sections 2(b) and (c) of this some of the financial intermediaries; and the Financial Services Project are set Schedule 1. As described in Sections forth in Annex III. • Perceived risk of clients, in part due 2(b) and (c), selection criteria for Estimated amounts of MCC Funding to lack of sufficient collateral (such as identifying communes, villages or urban for each Project Activity for the title) and the inability of lenders to neighborhoods to participate and a Financial Services Project are identified effectively enforce debts or sell method to apply these will be in Annex II of this Compact. Conditions collateral upon default, and price and developed by MCA-Benin, subject to precedent to each Financial Services yield risks inherent in agriculture. MCC approval. The criteria, method and Project Activity and sequencing of these final selections (including justifications) These factors constrain the growth of Project Activities shall be set forth in will be made known to the public. In MSMEs in Benin. The high cost or the Disbursement Agreement or other addition, MCA-Benin will incorporate unavailability of credit and other relevant Supplemental Agreements or into the method for applying the financial services, including savings, applicable component of the selection criteria a process for limits the capacity of small businesses Implementation Plan. consideration of unsolicited offers of in Benin to expand production and The following summarizes the participation by particular communes, employment, to respond to business Financial Services Project Activities: villages or urban neighborhoods. opportunities and to manage risk. (a) Project Activity: Financial Accordingly, alleviating these Institution and Borrower Capacity Schedule 2 to Annex I—Access to constraints, and creating a broader and Building (the ‘‘Capacity Building Financial Services Project deeper financial sector, should increase Activity’’) This Schedule 2 generally describes incomes of the poor that own, are The overall goal of this Project and summarizes the key elements of the employed by, or do business with Activity is to broaden and deepen the Access to Financial Services Project (the MSMEs. financial sector in Benin by improving ‘‘Financial Services Project’’) that the 2. Summary of Projects and Activities in both the supply of and demand for Parties intend to implement in Project and Expected Results financial services. It is intended to build furtherance of the Financial Services the capacity of financial institutions, as Objective. Additional details regarding The Financial Services Project is well as to improve MSMEs’ the implementation of the Financial designed to improve the ability of creditworthiness and ability to use Services Project will be included in the MSMEs, particularly those directly or financial services productively. Implementation Plan and in relevant indirectly involved in production in This Project Activity involves two Supplemental Agreements. Benin, to access financial services that sub-activities: will help them improve the • Demand and feasibility 1. Background sustainability of their businesses. assessments; and Benin has a shallow financial sector • The Financial Services Project • A financial innovation and that provides limited services to micro includes the following two Project expansion challenge facility (‘‘FINECF’’ and small- and medium-scale Activities: or the ‘‘Challenge Facility’’).

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(i) Demand and Feasibility agricultural and rural organizations. To components described below in Assessments. This sub-activity is the extent practical, these studies will paragraph (7). intended to help shape the criteria and focus on BDS in areas where the Land (2) Provision of guidance to guidelines for the Challenge Facility Project is likely to be active. applicants and development of described in Section 2(a)(ii), and to (4) Conduct of follow-up research and operating manual. The Facility Manager build on existing studies and improve studies or assessments, as needed will provide guidance to applicants the quality of information available to during the Compact Term, in the areas throughout the application procedure; potential applicants. Satisfactory covered by the studies and assessments, including guiding viable applicants completion of these studies, and set forth in paragraphs (1)–(3) of this through the process of preparing a brief dissemination of the key findings, shall sub-activity or other similar types of concept note for review, and ultimately therefore be conditions precedent to the studies. providing assistance with development Challenge Facility. The below studies (ii) Financial Innovation and of the full application. Challenge shall be conducted by an expert or Expansion Challenge Facility. MCC Facility funds shall assist (where experts retained after an international Funding shall support a demand-driven appropriate, based on need) in the competitive procurement; terms of and competitive mechanism that will development of applications that submit reference and procurement for these co-fund with participants technical a concept note with significant studies shall be subject to MCC assistance and capacity building for potential. The Facility Manager shall approval. The results of the studies may both financial institutions and MSMEs. develop a policy as part of the operating be further divided or combined into one This mechanism requires potential manual that will identify criteria for this or more reports, so long as they cover beneficiaries to compete for support assistance. the topics mentioned below or such based on transparent criteria and to (3) Review of applications and other topics as the Parties may agree in contribute a significant portion of the selection of funding awards. Following writing. MCC and MCA-Benin shall project costs. These elements help submission of applications, an independent panel (the ‘‘Panel’’) shall consider cost structures where public ensure that resources are directed to the review applications and make awards and private costs for the studies are most motivated institutions and to the based on selection criteria described shared, with the private portion to most promising projects. MCC Funding below and subject to MCC approval. expand over time. shall finance up to 66% of the cost of MCA-Benin shall post on the MCA- MCC Funding, together with potential selected projects with the share funded Benin Website the names and parallel or co-financing from other by MCC Funding decreasing over time descriptions of applications that receive sources, shall support the following: (this is a cap, and in some cases the (1) Conduct of demand study for awards, including amounts of awards. program criteria may set a lower services to MSMEs. This will study the (4) Development of award criteria. percentage of support by MCC Funding). demand for innovative and expanded The Facility Manager shall develop (A) Operating costs shall not be eligible for financial services (especially credit and award criteria consistent with paragraph savings) that may be provided to support and the remainder of a project’s (6) below and (B) an operating MSMEs by MFIs, banks and other costs must be provided by private procedures manual, each subject to financial institutions. To the extent enterprises (which may include NGOs). MCC and MCA-Benin approval. In practical, the study will assess demand The Challenge Facility shall emphasize developing the award criteria, efforts particularly among MSMEs involved in and encourage support for local service shall be made to support activities that production in Benin and in areas where providers. extend financial services to places Land Project is likely to be active. A qualified independent management outside Cotonou where the Land Project (2) Conduct of economic feasibility entity or entities shall manage and is (or is likely to be) active. Awards, if and cost assessment. An economic implement the Challenge Facility (the practical, will be awarded in kind rather feasibility and cost assessment will ‘‘Facility Manager’’), acceptable to MCC than in cash, where technical assistance determine the effectiveness of certain and MCA-Benin, selected after a or equipment or services are required. MFI investments in technologies that competitive tender. Funding for the Unless otherwise agreed by the Parties, have the potential to reduce operating Challenge Facility shall be conditioned the Facility Manager shall be costs, increase the scale of operations upon: (a) Feasibility and demand responsible for selecting the provider and expand services to MSMEs in studies having been satisfactorily through a competitive tender, in previously underserved regions and concluded; (b) terms of reference and accordance with the procurement sectors. The technologies that may be procurement of Facility Manager being guidelines that govern the Compact. explored and identified include, satisfactory to MCC and (c) operating (5) Support of donor coordination without limitation, smart cards, e- guidelines and criteria for each related to the Project Activity. The payment systems, management Component of Challenge Facility having Facility Manager, to the extent practical, information systems, and biometric been developed in form and substance shall support capacity building technology. To the extent practical, satisfactory to MCC. The Challenge activities that leverage other donor these studies will focus on MFIs Facility itself will not be making debt or support or enable the beneficiary to operating in areas where the Land equity investments or issuing guarantees attract financing from other sources (for Project is likely to be active. to recipients of support; however, its example, enabling an MFI to attract (3) Conduct of demand study for support, it is expected, will enable long-term financing from a bank or business development services. This institutions to better mobilize that enabling an MSME to obtain a loan). will study the demand for, and capacity capital from others. MCA-Benin and the Facility Manager within Benin to supply, business MCC Funding will support the shall seek to coordinate with other development services (‘‘BDS’’) to following activities, to be undertaken in donors to ensure that the MCA MSMEs involved in agricultural and the manner described: assistance is as effective as possible. non-agricultural sectors. In order to (1) Identification of viable applicants. (6) Development of criteria for determine capacity to supply such The Facility Manager shall filter support by the Challenge Facility. The services, the study will investigate expressions of interest and identify selection criteria for funding under the specialized BDS providers, MFIs and viable applicants for the three facility Components shall be determined by the

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Facility Manager, subject to approval by $250,000 per institution. Applications (iii) Training or other mechanisms to MCC and MCA-Benin. The Parties can come from individual institutions or improve the ability of MFI management anticipate that the criteria will include groups of up to ten institutions with one to access long-term financing and other (without limitation) the following institution taking the lead. Where the stable resources. categories: total project cost exceeds $500,000, the (iv) Assistance with compliance with (A) Market demand (there must be a application shall be subject to regulatory requirements. demonstrated need for the project); heightened review and additional (v) Evaluations of, and technical (B) Impact (the project must be selection criteria. A call for applications assistance to improve, operating expected to contribute, directly or shall be made up to twice per year, and capacity and efficiency of MFIs. indirectly, to improved incomes and the guidelines and criteria will be (C) The MSME Business Development opportunities for a substantial number clearly communicated. Applications Component shall support business of poor people; the applicant’s must be supported by a sound business development services for agricultural commitment to gender issues will be a plan by one of the eligible parties. In the and non-agricultural MSMEs. The positive factor); event MCA-Benin receives any objective is to improve access to finance (C) Effectiveness (the project’s impact unsolicited written applications or by improving the MSMEs’ must be expected to exceed its costs); proposals and such proposals have not creditworthiness and ability to use (D) Implementation Capacity been otherwise submitted to the Facility financial services productively. This (applicants must have the capacity to Manager through the call for Component may include the following implement the project successfully); applications, MCA-Benin shall forward types of funding: (E) Demonstration effect (the project (i) Funding to financial institutions, such applications to the Facility must be unlikely to be undertaken such as MFIs: Assistance designed to Manager. The Facility Manager will without the requested financial support. improve financial literacy and business evaluate such unsolicited applications In particular, projects suggested by for- management (including through in the same manner as those received profit entities, while permitted, shall be improved marketing, internal controls through the call and identify viable scrutinized. In addition, pilot projects and accounting), as well as to improve applications in accordance with shall be preferred over projects that the ability of borrowers to complete paragraph (1) above. involve larger, untested ideas); credit applications and access credit. (F) Commitment (applicants must (A) The Innovation Component shall (ii) Funding to rural networks and show their commitment through the support financial institutions (non- organizations (such as co-ops and share of project funding they are willing banks and banks) that expand their associations): Training and technology to contribute); product offering to MSMEs in to agricultural and rural networks and (G) Sustainability (the project must be previously underserved regions and organizations that present plans to build expected to lead to the improved sectors or introduce innovative the creditworthiness and productivity of financial sustainability of funding technologies that lead to economies of their MSME members. recipients, and the impact of the project scale and reduced operating costs and (iii) Funding to specialized BDS must be expected to extend beyond the risks. For example, funding may be used providers: Training and technology to termination of funding); to support investments in technology, assist local specialized business (H) Timing (the financial support of management information or development service providers in the project must be completed prior to communications services, or to provide improving their capacity to provide the termination of the proposed technical assistance and staff training to sustainable services. Program); assist with the design, implementation (8) Monitoring of progress of the (I) Limitations on Use of Funding (the and marketing of new financial products Challenge Facility projects. Funding proposed project must comply with the or services. agreements with entities receiving limitations on use and treatment of MCC (B) The Institutional Strengthening benefits shall include annual Funding as set forth in Section 2.3 of Component shall seek to strengthen the performance benchmarks to indicate this Compact); and capacity of selected microfinance progress in meeting objectives, with the (J) Other (the Facility Manager shall institutions in Benin by improving form of such agreements subject to the develop such other selection criteria for internal controls, transparency, approval of MCA-Benin and MCC and Components, including any criteria management, and ability to access will be specified as conditions to certain unique to particular Component). additional stable financial resources Re-Disbursements for the selected MCA-Benin shall post on the MCA- from commercial banks and investors at Challenge Facility project. In the case of Benin Website the selection criteria reduced costs. As a result, MFIs shall be developed by the Facility Manager, as the Institutional Strengthening able to provide better quality and Component, this might include items approved by MCC and MCA-Benin. cheaper products and services to (7) Implementation of Challenge such as capitalization and other MSMEs. This Component shall fund Facility Projects. Unless otherwise financial reporting requirements. In the technical assistance and grants for agreed by the Parties, there shall be the case of the Innovation Component, this equipment or supplies to build capacity following three sub-facilities (each a might include items such as increased within MFIs that significantly serve ‘‘Component’’ and each described more amount of services, number of new MSMEs. Unless otherwise agreed by the fully below) and to be funded equally; clients for all services and number of Parties, 10% of grants under this provided, however, there may be new credit clients. Failure to meet these Component shall go to each of the changes in allocations between the benchmarks may lead to termination of Components, subject to MCC approval: following: project support and in some cases a • The Innovation Component; (i) Promotion of transparency and requirement that the entity repay a • The Institutional Strengthening good governance at MFIs, such as portion of the assistance received. Component; and external audits and ratings and internal Repaid funds shall be used as grant • The MSME Business Development controls. funding to finance other activities under Component. (ii) Improvement of management/ the Challenge Facility. Support under each Component is analysis of long-term credit extended by (9) Conduct of information, education, expected to range from $25,000 to MFIs with national or regional scope. and communications campaign. To

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improve the quality and responsiveness governance of MFIs in Benin. MCC above, MCC Funding shall support of proposals, a portion of the MCC Funding will not be used for salaries of analysis of, and advocacy for, changes Funding for FINECF shall be used to Cellule staff. This sub-activity will in West African regional and Benin support market information campaigns. improve the capacity of the Cellule to national regulations of the financial The campaigns shall inform potential increase its monitoring and licensing sector that are intended to expand applicants about FINECF’s objectives activities and use resources more access to financial services prudently. and guidelines for targeted technical effectively; On an annual basis, areas of focus for assistance and grants. Where (2) Improvement of rules and these regulatory changes shall be agreed appropriate, certain trainings, technical procedures for microfinance. An outside upon between MCC and MCA-Benin, assistance, and services will be advisor shall be engaged to work with and are expected to include the priority provided through FINECF to incorporate the Cellule to improve rules and reforms identified in the multi- information on strategies for avoiding procedures in Benin regarding stakeholder forums described above. environmental and social risks, using microfinance, and improve the Other stakeholders may, at this stage, environmental and social review criteria efficiency and effectiveness of the present to MCA-Benin unsolicited and enhancing the sustainability of Cellule. It is intended that the advisor proposals for interventions or activities loans. shall come for approximately two weeks that were not identified in the multi- (b) Project Activity: Financial a quarter, at least for the first year, with stakeholder forums. In implementing Enabling Environment Activity (the limited follow-up visits thereafter; and these activities, MCA-Benin shall ‘‘Financial Enabling Environment (3) Conduct of audits of microfinance coordinate with other development Activity’’). institutions, with the goal of further organizations and government agencies The objective of the Financial strengthening the supervision of MFIs in involved in the financial sector in Benin Enabling Environment Activity is to Benin. Institutions to be audited will be and in West Africa. identify and support legal and policy recommended by the Cellule, with the MCC Funding will support the changes that are needed to facilitate the criteria for selection submitted to MCC following: deepening and expansion of the for approval. Funding for audits will be (1) Technical assistance in identifying financial sector in Benin. conditioned on the development by the areas of regulatory reform; and The Financial Enabling Environment Ministry of Finance and Economy of a (2) Drafting of regulations and/or Activity consists of the following sub- plan, approved by MCC, for the policy papers, and other acceptable activities: sustainability of the conduct of audits advocacy and consensus building • Strengthening of Microfinance beyond the Compact Term. mechanisms in areas of regulatory focus Supervision: Support for Cellule de (ii) Multi-stakeholder forums. approved by MCC and MCA-Benin of Microfinance (‘‘Cellule’’), microfinance (1) Design workshops and electronic the areas of focus. supervisory authority in the Ministry of forums to promote the discussion and (iv) Credit bureau capacity building. Finance, and for audits of microfinance exchange of ideas on policies and To build the capacity of the Consortium institutions. strategies for expanding access to Alafia (a microfinance trade association) • Multi-stakeholder forums: Conduct financial services. Where relevant, credit information bureau, MCC of electronic and/or physical forums to implementers of other Projects in this Funding will support the following: discuss potential improvements to laws Program (especially Land Project and (1) Conduct of studies to assess and policies relating to an expanded Justice Project) will also have demand, feasibility and cost- financial sector and use of land titles as representatives involved in the design effectiveness of the recommended collateral. and implementation of these forums; improvements; and • Improvement of regulatory and (2) Improvements to Consortium environment: Support for financial (2) Conduct of workshops and Alafia (a microfinance trade association) sector regulatory changes by funding the electronic forums designed under credit information bureau, following analysis of and advocacy for such paragraph (1) above. Topics for these completion of the studies conducted changes. forums shall be approved by MCC and pursuant to paragraph (1) above and • Credit Bureau capacity building: MCA-Benin and are expected to subject to agreement between MCC and Building the capacity of the MFI credit include, for example (1) actions and MCA-Benin that: there is sufficient information bureau so that it can track initiatives needed to ensure successful demand, that the feasibility has been the payment history of borrowers more use of land titles as collateral for loans demonstrated, and that the proposed accurately. (with the participation of the costs are acceptable. This activity will • Land titles as collateral: Provision implementers of the Land Project, build capacity of the credit information of support to assist ability of financial including the MCA-Benin Land Project bureau to track information and more institutions to use land titles as division); and (2) legal and regulatory precisely identify customers in a credit collateral in loans or refinancings. hurdles, at the national and regional information database, including not just MCC Funding will support the level, to development and negative (i.e., missed payment) following activities: implementation of expanded financial information, but also positive (i.e., (i) Strengthening of Microfinance services and new products. The satisfied payment) information of Supervision. Government, including the Ministry of clients. The activity may also link the (1) Build capacity of the Ministry of Finance, shall participate in these credit bureau database with databases Finance and Economy’s Cellule de forums and respond to reasonable issues that include bank customer data. Microfinance, which currently serves as raised therein. The presentations to and (v) Land titles as collateral for loans. the supervisory authority for results or feedback generated from these This sub-activity will provide technical microfinance in Benin, by providing forums shall be posted on the MCA- assistance and other capacity building support in areas such as technical Benin Web site. for financial institutions, particularly assistance, training, and acquisition of (iii) Improvement of regulatory MFIs, to support their ability to make software and equipment. The goal of environment. Following completion of title-based-loans or refinance portfolios this support is to improve the initial multi-stakeholder forums of loans secured by land titles. The supervision, transparency and convened pursuant to paragraph (ii) financial institutions to receive this

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assistance shall be selected based on applicants to demonstrate the need for such plan may include mechanism for criteria developed by MCA-Benin, funding should enhance rather than funding via national funds and private subject to MCC approval. It is expected duplicate donor efforts. In addition, funds and adjustments in staffing. that these financial institutions shall be policy and regulatory initiatives funded 7. Policy; Legal Reform; and Procedural under this Project will be designed to located or serve areas covered by the Changes Land Project. MCA-Benin shall post on complement and support the efforts of the MCA-Benin Web site the selection other donors that are leading similar The Parties have identified the criteria. initiatives at the regional level. following policy, legal and regulatory The activities MCC Funding will Private Sector: MSMEs are a reforms and actions that the support under this sub-activity are particular focus of this project, and an Government shall pursue in support, expected to include, without limitation: assessment of their financial services and to reach the full benefits, of the (1) Technical assistance to MFIs to needs will help drive the focus of the Financial Services Project, the improve credit management and Challenge Facility and efforts to support satisfactory implementation of which assessment for secured loans and to policy and legal reforms. will be conditions precedent to certain assist them in using portfolios of Civil Society: The multi-stakeholder MCC Disbursements as provided in the secured loans as collateral for MFI forums are designed to solicit Disbursement Agreement: financing obtained from banks; suggestions from a wide range of voices (a) The implementers of the Financial (2) Development of standardized in society to improve the regulatory and Services Project, including the MCA- forms; and policy environment. In addition, a Benin Financial Services Project (3) Installation of mechanisms of number of the recipients of FINECF division, shall participate in the collaboration between financial funding are likely to be local NGOs. development of the Land Policy White institutions and land authorities to Paper through representation on the 5. U.S. Agency for International facilitate and accelerate the treatment of Land Project Steering Committee and in Development the files of application for credit. the relevant working group(s). The USAID was consulted during the Government shall commit to adopt the 3. Beneficiaries design of the Project, and their input reforms consistent with this Land Policy The principal beneficiaries of the will be solicited throughout the White Paper that are necessary to ensure Financial Services Project are expected implementation and monitoring of the effective use of land titles as collateral to be people who own, are employed by, Financial Services Project. This Project for loans and to enable financial or do business with MSMEs in Benin. will benefit from the lessons learned institutions to effectively enforce their Particular efforts shall be made to reach from USAID’s main microfinance collateral interest in such title; MSMEs in traditionally underserved project which is nearing the end of its (b) The Government shall develop a areas of the country, as well as in areas term. To the extent applicable, this funding and sustainability plan for the where the Land Project is likely to be Project will be coordinated with Cellule that shows appropriate use of active. ongoing and future agricultural and MCC Funding and is satisfactory to The urban and rural poor will benefit other programs focused on increasing MCC, including a commitment to directly, due to their (or the MSME with the breadth and quality of demand for finance significantly increased and whom they do business or are financial services. adequate staffing for the Cellule as soon employed) gaining access to a broader as practical through the budget, fees, or 6. Sustainability and more effective menu of financial another sustainable mechanism. The products and services. They will also The Financial Services Project is not amount funded by this sustainable benefit indirectly, because financial intended to create a new, sustainable funding mechanism must grow over sector deepening has been shown to institution or financial mechanism. time and eventually replace the MCC lead to economic growth and Rather, it is intended to enhance the Funding. This commitment must be in disproportionately benefit the poor. The success of existing commercial actors form and substance acceptable to MCC. Financial Services Project, in particular, that service MSMEs and make them In addition, the Government shall will benefit poor women. When more sustainable. Beneficiary commit to working with the outside managed effectively, microfinance has institutions of the Challenge Facility, for advisor to the Cellule funded under the significant economic and social benefits example, can be expected to continue to Compact and adopting reasonable for women, and by strengthening the implement improvements in financial reforms suggested by advisor; microfinance sector in Benin, this technologies and institutional capacities (c) The Government shall develop and Project will extend these benefits to a after Program support ends, since seek MCC approval of a funding and larger percent of the population. participating institutions are required to sustainability plan for the Showing commitment to gender issues present sustainable, economically implementation of regular audits of will be weighted positively in the viable, plans for assistance and microfinance institutions, as well as of criteria for allocating funding in demonstrate their financial commitment a plan for selection of these institutions; FINECF. to the project. Moreover, by (d) Support for improvements to the demonstrating best practices, the Project credit bureau for microfinance shall be 4. Donor Coordination; Private Sector; will also encourage other financial conditioned upon the results of a study Role of Civil Society institutions or business development (or studies) of feasibility and demand Donor Coordination: The Financial service providers to follow the (with procurement approved by MCC). Services Project complements the innovations of participating institutions. An implementation plan and detailed activities of other donors. The World Support for portions of the Financial budget for improvements, based on the Bank, United Nations Development Enabling Environment Activity shall be results of the feasibility and demand Program, African Development Bank, conditioned on Benin having presented study (or studies), shall be submitted to and several bilateral donors have been and developed a funding and MCC for approval; active in MFI and other financial sector sustainability plan for the microfinance (e) The National Policy for activities. The demand-driven nature of supervisory authority in the Ministry of Microfinance shall be adopted in form the FINECF and the requirement for Finance that is satisfactory to MCC; and substance satisfactory to MCC; and

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(f) The Government shall develop and reality of slow, costly and uncertain potential litigants who live great advocate for, and use its best efforts to justice. distances from current courts. New adopt and implement, those reasonable Throughout West Africa alternative courts will be built, to an established legal and regulatory reforms, if any, that dispute resolution (‘‘ADR’’) is becoming modern design, beginning late in year are identified by the multi-stakeholder an increasingly viable means to resolve two of the Justice Project. Training of forums in the Financial Enabling commercial disputes. As part of Benin’s current judges and other court Environment Activity as necessary to obligations under OHADA, the Centre personnel will begin in year one of the expand, significantly and sustainably, d’Arbitrage, Mediation et Conciliation Justice Project. A financing facility to financial services offered to MSMEs. A (‘‘CAMeC’’) has been formed within the support legal aid to assist poorer yearly report, including a summary of Chamber of Commerce and Industry in litigants will also be established. The the forums and a resulting work plan, Cotonou. It has not yet begun to conduct construction of the courts will be linked shall be submitted to MCC for approval. arbitrations or other ADR activities. to growth and training of new judges; as The Chamber of Commerce (the noted Section 6 below, the Government 8. Proposals ‘‘Chamber’’) has initiated and is of Benin will hire new judges and other Mechanisms for consideration of managing a successful program in personnel on an appropriate schedule to solicited and unsolicited Challenge business registration that this Justice staff the new courts and to allow for Facility applications shall be as Project will build upon. Rather than a training prior to their assignment to the described above in Section 2(a)(ii). lengthy corporate registration courts. Finally, the Justice Project will Mechanisms for consideration of proceeding through many offices in increase the likelihood of success of solicited and unsolicited proposals for many agencies, the Chamber has both the Land Project and Financial regulatory reforms shall be as described developed a service that has already Services Project by increasing speed and reduced the average time for the above in Section 2(b)(ii). likelihood of contract enforcement. registration of companies from over In addition, as appropriate, MCA- three months to ten days by centrally 2. Summary of Project Activities Benin will develop, subject to MCC managing the process of corporate The overall objective of the Justice approval, a process for consideration of registrations. The Business Registration solicited and unsolicited proposals. Project is to improve the investment Center is based in Cotonou with small climate by increasing the confidence in With respect to solicited proposals, the satellite offices in Porto-Novo, Abomey, evaluation process will include, the judicial system to enforce contracts. and Parakou. In response to the conditions noted consistent as appropriate with the The Government has already begun an above, this Project has three main Procurement Guidelines, the issuance of extensive process of legal reform: hiring components: a published request for proposals with additional new judges and court • Support the expansion of the Center specific identified evaluation criteria personnel, improving court and peer reviewers. administration, and building new of Arbitration, Mediation and courthouses. In addition, other donors Conciliation at the Chamber of Schedule 3 to Annex I—Access to Commerce; Justice have already made commitments to the • improvement of Benin’s judicial Improvement of the Registration This Schedule 3 generally describes infrastructure. The Inspection General Center (Guichet Unique); and • the key elements of an Access to Justice service provides supervision for the Improved services of courts Project (the ‘‘Justice Project’’) that the courts. It assures that courts are all including capacity building and training Parties intend to implement. Additional performing with uniform quality, for judges, court personnel, legal aid, details regarding the implementation of provides guidance to new judges, and and Inspection General service; creation the Access to Justice Project will be initiates investigations when improper of a legal information center; included in the Implementation Plan behavior by court personnel is reported. development of a public awareness and in relevant Supplemental MCC’s contribution will fit with Benin’s campaign; and the construction of new Agreements. ongoing legal reform plans and courthouses. The following summarizes the 1. Background complement the work of other donors. A notable failure of the current judicial contemplated Justice Project Activities. A major obstacle to Benin’s economic system is the lack of access to legal The M&E Plan (described in Annex III) growth is the inadequate physical and information and the absence of a central will set forth anticipated results and, institutional infrastructure of the location for legal information—whether where appropriate, regular benchmarks judicial system. The judicial system and it is the decisions of courts, the laws of that may be used to monitor courthouses serving Benin at Benin, or legal texts, either in paper or implementation progress. Performance independence in 1960 are largely the electronic form. Greater knowledge of against the benchmarks and the overall same system and courthouses that the laws and courts of Benin for large impact of the Justice Project will be serves Benin now. Archaic laws, few numbers of people will lead to greater assessed and reported at the intervals to and insufficiently trained judges, certainty in commercial transactions, be specified in the M&E Plan or as insufficient administrative capacity, and reduced demand for courts in minor otherwise agreed by the Parties from poor access to legal information disputes, and less fear of the judicial time to time. The Parties expect that combine with few and old courthouses system for more serious disputes. additional benchmarks will be to deny access to justice to many Informed public awareness of legal and identified during the implementation of Beninese. If individuals or businesses judicial issues is critical to public the Justice Project. Estimated amounts dare to proceed into the maze of the confidence in the judicial system. For of MCC Funding for each Project courts, expense, delays (it takes an this reason, the Government proposed Activity for the Justice Project are average of 570 days to enforce a the creation of a Legal Information identified in Annex II of this Compact. contract), and the risk of corruption Center. Conditions precedent to each Project mean that justice is a highly uncertain This Project also aims at assisting Activity and sequencing of the Project result. Business decisions are skewed, litigants in Benin currently suffering Activities shall be set forth in the and business expansion is stifled by the from case backlogs and litigants or Disbursement Agreement, other relevant

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Supplemental Agreements, or MCC Funding will support the General Service and its ability to serve component of the Implementation Plan. following activities: the increased number of courts (a) Project Activity: Expansion of the (i) Evaluation of the performance of contemplated by Benin’s legal reform Arbitration Center (‘‘Arbitration Center existing offices to identify necessary plan, the work of other donors and this Activity’’). improvements and assist with design of Project: Increased access to ADR will reduce new offices and services of the Business (1) Training of new and existing the burden on courts, reduce the cost of Registration Center. personnel of the Inspection General dispute resolution, and allow for faster (ii) Introduction of new services such Service to improve their ability to resolution of commercial disputes. as a system for registration under the supervise the courts, advise court staff, Companies and individuals engaging in Investment Code. and identify unethical behavior; and commercial activities are the expected (iii) Training of new staff in (2) Development of training materials beneficiaries for this Project Activity. regulations, rules and procedures to build Inspection General Service Increased economic activity and a related to formation of companies. capacity. (iv) Development and maintenance of growing number of entrants to (iii) Legal Information Center. The an electronic database of companies in commercial activity are expected proposed Legal Information Center to be Benin. results, supporting the Program located in Cotonou will serve not just as (v) Provision of computers and other law library, but as a center for the Objective. This Project Activity will office equipment for new offices of the facilitate a plan to fully launch disseminating of court decisions, laws, Business Registration Center. and other legal information. The Legal operations of CAMeC involves capacity (vi) Conduct of public outreach to building, public outreach, and Information Center will be open to the business community including seminars public, both physically and budgetary support (e.g., staff costs). and publicity or informational electronically. The Legal Information MCC Funding will support the materials. Center will: Serve as a central location following activities: (c) Project Activity: Improved for case records; convert case records (i) Training for arbitrators and CAMeC Services of Courts (‘‘Courts Activity’’). and other legal documents to electronic staff in arbitration procedures and ADR The Courts Activity will allow Benin media; provide public access to laws and arbitration management. to move forward its ten year plan for and other legal documents; serve as a (ii) Development of institutional improvement of the judiciary by resource and training center for judges, management and operational providing basic training, court court personnel, and government procedures. management, guidance, and physical officials. (iii) Promotion of public outreach, and institutional infrastructure. MCC Funding will support the including production of training and MCC Funding will support the following activities: publicity materials and maintaining of following activities: (1) Following the completion of the Web site with relevant documents and (i) Training of judges and court Category B environmental and social information. personnel. assessment framework specified in (1) Prior to commencing of activities (iv) Support for staff salaries at the Section 2(c)(v)(3) and an individual described in paragraphs (2) through (5) CAMeC; provided, however, MCC EMP or environmental assessment below, design of a comprehensive Funding will gradually phase out over (including an EMP) as determined capacity building strategy for judges and the Compact Term as an incentive for according to the framework and subject court personnel; CAMeC to promote a commercially to adoption of the Procedural Code and viable pricing structure for provision of (2) Training of both new and current judges in substantive and procedural other Codes specified in Section and access to services of the Arbitration 2(c)(v)(1), construction and equipment Center and to ensure sustainability of matters, particularly in commercial issues as the laws of Benin are of a new Legal Information Center. the activity after the Compact Term. Hazardous and toxic materials will not (v) Acquisition of new equipment and modernized and harmonized, under the OHADA process, with the rest of be permitted to be used or result as by- some additional rented space for francophone West Africa; products from construction and CAMeC as increased caseload warrants. (3) Training of court personnel, operation of the buildings; (b) Project Activity: Business including clerks and court officials, in (2) Development of an electronic Registration Center (Guichet Unique) modern case management procedures, database of legal information and (‘‘Business Registration Activity’’). use of technology, and other substantive documents; and The Business Registration Project and procedural matters as the courts (3) Conduct of a public awareness Activity is intended to greatly reduce modernize; campaign to demystify law and legal the steps required to register a company. (4) Continuing training of current proceedings to the broader public. This This Project Activity will track the judges and court staff as well as training will involve ‘‘open days’’ at the courts reduction of registration time year by of new hires, particularly on and the Legal Information Center, year, from the current average of twenty commercial issues. This activity will publication of legal information for non- days. MCC support will strengthen build on training programs already lawyers, information dissemination via current operations in Cotonou, Porto- underway supported by various the media, and other outreach efforts Novo, Abomey and Parakou and support European aid agencies; and such as coordination with the outreach opening new satellite offices in (5) Development of comprehensive activities of the CAMeC and Business Natitingou and Lokossa. Investment in training materials and judicial bench- Registration Center to introduce existing and new offices will further books and other documents to support consumers and the broader public to the speed, simplify and reduce the cost of improved functioning of the courts and workings of each institution. Media corporate registration, and make this further development of local training outreach will also be an important service available to more enterprises. It capacity, to support efforts to aspect to the public awareness is expected that these improvements institutionalize the capacity building campaign, along with publication of will encourage the formation of process. informational and legal materials in companies, boost employment in the (ii) Inspection General Service. To French and major local languages, and formal sector and increase incomes. improve the efficiency of the Inspection the development of a web-based

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information system based at the Legal keeping with regional best practices, as case management, and training goals Information Center. determined by independent experts; and other conditions precedent have (iv) Legal Aid. (2) Select sites for courthouses. MCA- been achieved. Process of construction (1) Support of poorer litigants gaining Benin shall select sites based on its of final four courthouses may access to legal services by law identification of viable sites. MCA- commence one year after construction professionals (lawyers and others) and Benin shall consider input from civil starts for first set of TPI, assuming to information materials such as on society and other stakeholders, continued satisfaction of conditions processes and rights by establishing a including any unsolicited proposals for precedent and other criteria such as case fund for this purpose. Initial funding sites from communities or others. The management and training. Hazardous will be USD$1,000,000. An additional criteria for selection of courthouse and toxic materials will not be matching amount of up to locations shall be as follows: (i) permitted to be used or result as by- USD$1,500,000 will be provided from Population density in surrounding area; products from construction and MCC Funding on a dollar for dollar (ii) commercial activity in the operation of the buildings; and basis to match funds provided by non- surrounding area; (iii) proximity of (5) Following the construction MCC sources, such as other bi-lateral or proposed court site to underserved undertaken in accordance with multilateral donors, foundations or populations and other courts; (iv) links paragraph (2) above, equip newly corporations; and to other Projects, in particular the Land constructed courthouses. This includes (2) Funding shall be provided to, and Project and Financial Services Project computers, furniture, and other services provided by, existing non- and (v) restrictions on selection of sites necessary items and systems. governmental organizations (‘‘NGOs’’) that are (A) contaminated with toxic or (vi) Case Management. To the active in Benin, or by a not-for-profit hazardous waste, (B) require major facilitate increasing the speed and entity established in the future to service infrastructure improvements efficiency of the processing cases through judicial system, MCC Funding provide these services. MCA-Benin shall (such as new roads, water supply or will support the following: conduct a competitive selection process treatment, transmission lines or sewage (1) Conduct of a survey of current case to determine the best value providers of treatment), or (C) in sensitive locations as defined in Appendix C of the management system and develop legal aid services eligible for funding. recommendations for improvement in The selection process shall include an Environmental Guidelines; (3) Preparation of a Category B case management and will include evaluation by, among others, the Justice environmental and social assessment, recommendations regarding Project Manager of proposals by pursuant to the Environmental administrative risks including time candidate NGO for use of funds. Final Guidelines, for the courthouses and the limits to process cases, procedures for selection of NGOs and awards shall be Legal Information Center will be assignment of judges to cases, and subject to MCC approval. Funding shall required to provide pertinent guidance technology to manage case flow though support selected NGOs implement the in the form of a framework document. court system; and proposed legal aid services. This will allow more rapid and efficient (2) Development by the courts of (v) New Courthouses. environmental and social assessment of improved regulations and more effective This sub-activity, the capstone to the the courthouses and the Legal administrative processes to manage Justice Project, will support the creation Information Center. This document will cases and implementation of those of new courthouses ‘‘ one appellate be used to screen sites, according to regulations and processes. court in Abomey, a region that is MCC Environmental Guidelines, focus Implementation will include currently lacking in appellate court the content of Environmental incorporation of recommendations capacity, and eight courts of first Management Plans (‘‘EMPs’’) or any developed in paragraph (1) above which instance (Tribunaux de Premier Resettlement Action Plans (‘‘RAPs’’), MCA-Benin and MCC deem advisable. Instance) (‘‘TPI’’) distributed throughout and provide standard contract/bid 3. Beneficiaries the country. Another key requirement clauses for impact mitigation during for this activity will be that a system for construction and operation. The The intended beneficiaries of the case management is developed as framework document will provide Justice Project will be ordinary citizens described in Section 2(c)(vi) and that criteria for determining when individual as well as MSMEs and other commercial support of legal aid services is environmental and social assessments actors. Currently only 8% of commercial undertaken as described in Section or solely EMPs of the buildings are cases received in a given year are treated 2(c)(iv), likewise in keeping with needed and will incorporate procedures by the system. This case backlog modern best practices, and to address economic or physical diminishes confidence in the system implemented prior to construction of displacement consistent with the World and increases the potential for the courthouses. Bank policy on Involuntary corruption. Benin was recently rated by MCC Funding will support the Resettlement in effect as of the date the World Bank’s ‘‘Doing Business in following: hereof; 2006’’ as among the most difficult (1) Evaluation of Codes to be adopted. (4) Subject to completion and countries in the world to do business. As condition to MCC Disbursements satisfactory results of the environmental By improving the capacity of the court and prior to commencement of and social assessment framework system to resolve claims, the Project construction, a new Code of Civil conducted under paragraph (1) above will benefit all users hindered by delays Commercial, Administrative and Social and an individual EMP or and backlogs. It will also support the Procedure of Benin (‘‘Procedural Code’’) environmental and social assessment benefits of the Land Project and and such other codes as may be (including an EMP) for each Financial Services Project by increasing identified by the time specified in the construction, as determined according the likelihood of timely and appropriate Disbursement Agreement and agreed by to the framework, construction of enforcement of contracts and resolution the Parties, must be passed by the courthouses. Construction of four TPI of other disputes. The Legal Information legislature and adopted by the and one appellate court can commence Center is expected to reach a large class Government. The Procedural Code, as as early as the end of year two of of beneficiaries including judges, passed by the legislature must be in compact, assuming code modernization, government officials, business

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representatives, and the general public. offered valuable assistance in the conditions precedent to certain MCC Poorer litigants will benefit from the development of this Project. Disbursements as provided in the legal aid services. Disbursement Agreement: 6. Sustainability (a) Passage of the new Procedural 4. Donor Coordination; Role of Private To sustain the Justice Project there Sector and Civil Society Code and other codes as identified in will need to be sufficient demand for accordance with Section 2(c)(v)(1). The (a) Donors. The Justice Project will Alternative Dispute Resolution in Benin new Procedural Code should include benefit significantly from lessons and satisfaction by the Government of adequate provisions pertaining to the learned by the European Union (‘‘EU’’) key conditions precedent related to of speed with which court cases are heard, regarding the construction and court construction, and court design and and the means by which cases proceed equipping of new courthouses. A maintenance. To mitigate the risk of through the courts; insufficient ADR-related demand, current EU project is underway to (b) Development and implementation refurbish several existing courthouses market pricing mechanisms will be built into the CAMeC support. This will of enhanced case management and build four new TPIs and appellate techniques and implementation of the court. Assuming the Beninese and promote development of a fee-supported ADR system. Initiation of court case management system developed others are satisfied with the design of based on recommendations formed the courts being built by the EU, the construction process will be set at the end of year two of the Compact Term, pursuant to Section 2(c)(vi), including Justice Project would follow the same modernized methods of case assignment design. Several donors have been which will give the Government time to make necessary required Project-related and case tracking, even though not engaged with projects related to Access required as part of the Procedural Code; to Justice. Bi-lateral assistance from legal reforms. Construction and (c) Development of CAMeC activities France and Belgium has supported re- maintenance will also benefit, by measures, acceptable to MCC, to drafting of codes for which MCC will respectively, from EU experience in facilitate the removal of old cases from require enactment as conditions court construction, and be sustained by the TPI to CACeM; precedent to court construction. MCC the increased annual budget of the will coordinate with in particular AFD Ministry of Justice. The Government (d) Undertake, as necessary, steps to in connection with the adoption and will ensure the sustainability of the support the enforceability of arbitral development of the Procedural Code as Legal Information Center by ensuring awards; the AFD has supported the code support for adequate staffing of Legal (e) As necessary and if evaluation of redrafting efforts. Their involvement Information Center during and Business Registration Center indicates provides some comfort that the codes following the Compact Term. warranted, undertake improvements in are modern and harmonized, where The key to ensuring environmental regulations, policies or procedures appropriate, with codes of neighboring and social sustainability of the Project is related to business registration and countries. Neither the World Bank nor ongoing public consultation. By the company formation; the African Development Bank have time specified in the Disbursement (f) Hire and train new judges and justice sector projects in Benin but both Agreement, MCA-Benin shall engage the court personnel sufficient to staff new are interested in promoting passage of Environment and Social Assessment courts; and Director, subject to MCC approval, as modernized codes as it will increase the (g) Commitment by the Government of described in Section 3(d)(iii)(3) of likelihood and degree of success of budgetary resources to support salaries other World Bank programs. It is Annex I. Environmental and social analyses of for judges and other court personnel and anticipated that some of the NGOs the courthouses and the Legal for the maintenance of those courts supported by the legal aid services Information Center will be conducted as constructed under this Project. activity described in Section 2(c)(iv) part of the technical survey and design may funded as well by other donors and 8. Proposals to determine the environmental impacts it is also possible that some of the and existence of economic and physical Objective selection criteria for the matching funds contemplated with displacement. In addition to the selection of NGOs to be supported by respect to that activity could be analyses, EMPs satisfactory to MCC will the legal aid sub-activity of the Courts provided by other bilateral or be developed, implemented and Activity shall be as specified in Section multilateral donors (as well as private monitored during project 2(c)(iv)(2). Objective selection criteria sector or other sources). implementation. and procedures for determining the (b) Private Sector. It is anticipated that Disbursement of MCC Funding will be locations (towns) of the courthouses to members of the private bar and business contingent upon issuance of be constructed under the Courts sector will actively participate in the environmental licenses, as needed, or Activity shall be as specified in Section public outreach and other activities of any other required permits and subject 2(c)(v)(2). the Business Registration Center, Legal to the environmental and social Schedule 4 to Annex I—Access to Information Center, and the CAMeC. assessment review described as Markets Project (c) Civil Society. Civil society and requirements under Sections 2(c)(v)(3) other stakeholders, including and (4). This Schedule 4 generally describes communities or municipalities, will and summarizes the key elements of an have the opportunity to participate in 7. Policy; Legal Reform; and Procedural Access to Markets Project that the courthouse selection process or submit Changes Parties intend to implement in proposals for sites as described in The Parties have identified the furtherance of the Markets Objective Section 2(c)(v)(2). following policy, legal and regulatory (the ‘‘Markets Project’’). Additional reforms and actions that the details regarding the implementation of 5. U.S. Agency for International Government shall pursue in support, the Access to Markets Project will be Development and to reach the full benefits, of the included in the Implementation Plan USAID supports a Women’s Legal Justice Project, the satisfactory and in relevant Supplemental Rights Initiative in Benin that has implementation of which will be Agreements.

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1. Background Port and reducing vehicle operating the Disbursement Agreement or other Benin’s economy is dependent on costs. relevant Supplemental Agreements or The Markets Project includes the cotton production, subsistence component of the Implementation Plan. following Project Activities: The following summarizes the agriculture and an increasingly • Studies and Port Institutional Markets Project: uncompetitive Port of Cotonou (the Activity: This Project Activity will The Project will address institutional, ‘‘Port’’). Key impediments to sustainable include key feasibility studies, landside and waterside improvements economic growth are its poor environmental assessments and revision necessary to meet the unmet demand investment climate and lack of dynamic of master plan for the Port, as well as and address resulting inefficiencies. private sector activity. Benin has long the computerization and streamlining of Because of the complexity and timing of been a strategic trading center and a customs clearance procedures for the sub-activities, the environmental keystone in the trade corridor that links merchandise, technical assistance and and social assessment requirements will the landlocked countries of the West training in information systems and Port be implemented in a phased manner. African Economic and Monetary Union management, and improvements to To support the expansion and (‘‘WAEMU’’) with Nigeria, Europe, and legal, fiscal and institutional improvement of the Port, MCC Funding the Americas. Trade and transport have frameworks that govern the sub- will be used for the following activities: traditionally made up a large part of the activities. (a) Project Activity: Feasibility nation’s economy, and limitations in • Port Security and Landside Studies and Assessments (‘‘Studies Benin’s transportation network have Improvements: This Project Activity Activity’’). increased costs for raw materials to the will address the safety and security (i) Conduct of initial technical studies country and the region. The bottleneck aspects of the Port for compliance with (engineering pre-feasibility, at the Port has impeded access to international safety requirements environmental and economic) (‘‘Initial external markets by agricultural and (conforming to International Ship and Technical Studies’’) to evaluate in fish/shrimp producers and processors. Port Security Code (‘‘ISPS’’) standards). further detail the costs, engineering and Improved Port facilities will lower The expansion and reconfiguration plan environmental aspects of the key production and marketing costs and for the Port under this Project Activity waterside components of the Markets encourage greater agricultural includes: major improvements to the Project. These Initial Technical Studies production as well as increased trade physical infrastructure including the will: between Benin and other countries. access gates, access road, vehicle access (1) Objectively evaluate alternative This Project is designed to promote facilities, storage areas, and the schemes that address sedimentation of access to markets by improvements to construction of a compulsory inspection the harbor access, including but not the Port of Cotonou, including a fish facility for fish and seafood products limited, to the use of other studies and inspection facility. This Project aims to with associated training and technical proposals related to erosion control and improve Port performance and security, assistance. environmental impacts; expand capacity, and reduce costs. A • Waterside Improvements: This (2) Evaluate the dredging for the new more efficient Port will contribute to Project Activity will support the South wharf; importer and exporter value-added construction of a new South wharf to (3) Perform any additional sampling through reducing transportation costs accommodate additional containerized and testing of sediments related to the and improving product quality. merchant marine vessels and a dry bulk wharf or other areas to be dredged as Moreover, because Benin’s road conveyor system; environmental part of the harbor access; transport industry is relatively management improvements; and, an (4) Determine needs as well as options competitive, it is likely that the environmentally appropriate solution to for disposal of dredged material; (5) Evaluate the engineering to the anticipated reduction in shipping costs address sedimentation of the Port’s pre-feasibility level; and will be passed on to wholesalers and entrance. (6) Provide expanded information on The M&E Plan (described in Annex traders, and ultimately be reflected in costs and benefits. consumer prices. Finally, both the III) will set forth anticipated results and, Based on the recommendations of the Project Activities and the policy or other where appropriate, regular benchmarks Initial Technical Studies, the actions the Government will undertake that may be used to monitor Government shall select, subject to MCC as set forth in Section 6 of this Schedule implementation progress. Performance approval, its preferred option that will 4 are designed to reduce the potential against these benchmarks and the both reduce sedimentation of the Port for corruption at the Port. overall impact of the Markets Project access channel and not adversely Expanding the Port to meet Benin’s will be assessed and reported at the impact coastal erosion and also select, long-term developmental needs will intervals to be specified in the M&E subject to MCC approval, disposal of require a significant number of large Plan or as otherwise agreed by the dredged material and other key investments. Due to the complexity and Parties from time to time. The Parties waterside component options. scope of the Port expansion plan, not expect that additional indicators will be (ii) Following the satisfactory only will it take several years to design, identified during the implementation of completion of the Initial Technical build and construct the facilities to meet the Markets Project. The expected Studies, conduct of detailed engineering a growing future demand but it will also results from, and the key benchmarks to and economic feasibility studies of the be necessary to accommodate current measure progress on the Project, Project entire Markets Project, including studies demands by upgrading existing Port Activities and sub-activities undertaken to ensure appropriate scheduling and facilities. or funded under the Markets Project are budgeting have been established. These set forth in Annex III. feasibility studies shall include, but not 2. Summary of Projects and Activities in Estimated amount of MCC Funding Project and Expected Results be limited to, studies regarding: for the Project Activity for this Markets (1) Port container scanning system; The objective of the Markets Project is Project is identified in Annex II of this and to improve the Port of Cotonou through Compact. Conditions precedent to the (2) A dry port facility at Tori. increasing the efficiency at the Port and Project Activities and sequencing of the (iii) Following the satisfactory volume of goods flowing through the Project Activities shall be set forth in completion of the Initial Technical

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Studies, conduct of Environmental and govern Port activities including to respond to significant discharges of Social Impact Assessments (‘‘ESIAs’’) restructuring concession agreements hazardous materials in the Port and for landside improvements described in with stevedoring companies, conducting other equipment and activities related to Section 2(c)(ii), fish/seafood inspection independent financial audits and the EMP/EMS; and handling facility services described project reviews, and implementing with (6) Installation of fire control and in Section 2(c)(iii), and waterside additional consultants the existing and prevention equipment; improvements described in Section 2(d). new Port rules and regulations based (7) Construction of a compulsory The ESIAs will address landside and upon consultant recommendations for inspection base for fish and seafood waterside in the following manner: port best practices. PAC and the products and facilities for efficiently off- (1) The ESIA for Port landside Government will cooperate with the loading and handling product before rehabilitation/ restructuring shall MCA-Benin consultant(s) including transport to processing centers, market, incorporate an Environmental providing unlimited access to the PAC or ships for export; and Management Plan/System (based on an Director General, Customs Department (8) Technical assistance and training audit of existing operations as well as and other PAC related entities for of appropriate regulatory agency staff in the assessment of the proposed development, recommendation and seafood/fish inspection and safety activities), an overall Environmental evaluation of potential improvements in administration. Management Plan, language for bid PAC and Customs Department policies, solicitations and construction contracts (iii) Fish/seafood inspection and procedures, rules and regulation; and handling facility (‘‘BOC’’) services. to implement the EMP, and, if needed, (iii) Training for tug boat and ship a Resettlement Action Plan (consistent pilots for night docking of petroleum (1) Development and adoption of a with World Bank Policy on Involuntary cargo ships. management plan for the BOC including Resettlement), all of which shall be (c) Project Activity: Port Security and required training and technical subject to MCC approval. Port Landside Improvements (the ‘‘Port assistance program targeted at Autonome de Cotonou (‘‘PAC’’) shall Security and Landside Improvements inspectors, other employees, and user adopt the EMP/EMS, implement the Activity’’). associations; HIV/AIDS awareness program and Subject to the satisfactory results of (2) Adoption of improved design and implement any RAP, prior to initiation the Studies Activity assessments and procedures for BOC including of construction under the landside studies described in Section 2(a), a plan mechanized off-loading based on improvements activity described in for renegotiation of PAC concessions required demand study; and Section 2(c)(ii). and reallocation of berths and land (3) Development and implementation (2) The ESIA for waterside usage satisfactory to MCC, of a user fee system to defray some improvements will include an EMP as implementation of any RAP, adoption of operation and maintenance costs of the well as language for bid solicitations the EMP and implementation of the BOC. and construction contracts to implement HIV/AIDS awareness plan, MCC (d) Project Activity: Waterside the EMP, all of which shall be subject Funding will support the following Improvements (the ‘‘Waterside to MCC approval. Such language must capital improvements and other goods Improvements Activity’’). Upon cover capital and maintenance dredging and services at the Port: completion, satisfactory to MCC, of the and dredged material disposal as well as (i) Port security. Acquisition and Studies Activity described in Section construction work. PAC shall adopt the installation of, and training associated 2(a) and the execution of PAC EMP prior to initiation of any with, an integrated security system for concessions and reallocation of berths construction. The ESIA for the compliance with ISPS standards, and land usage, each with results waterside may be combined with the including oceanographic monitoring satisfactory to MCC and subject to ESIA for the landside, if timing of systems, video surveillance systems, adoption of the EMP and construction activity permits. and radio communications systems. implementation of the HIV/AIDS (iv) Following the satisfactory (ii) Landside Improvements. awareness plan, MCC Funding will completion of the Initial Technical (1) Front-end engineering and design support the following waterside Studies and feasibility studies work to for major civil and mechanical facilities improvements: be conducted under Section 2(a)(ii), and works, which shall be completed (i) Front-end engineering and design development of a revised master plan prior to any sub-activities set forth in for major civil and mechanical facilities, for the Port that consolidates the this Section 2(c)(ii); works and dredging and dredged expected improvements, operational (2) Port road construction and material disposal, which shall be environment and land use for long term rehabilitation including upgrading and completed prior to any sub-activities set planning purposes which master plan expanding existing Port roads, forth in this Section 2(d). shall be completed in conjunction with illumination, and gate system. Other the feasibility studies work to be works include constructing an east-side (ii) New South wharf construction of conducted under Section 2(a)(ii) and gate, rezoning by berth usage, land and approximately 595 meters of berth space which master plan may be updated warehousing to achieve efficient for new terminal operations, and periodically thereafter. operations; mitigating measures associated with (b) Project Activity: Port Institutional (3) Construction of a dry bulk dredging and dredged material disposal, and Systems Improvements (‘‘Port conveyor system leading to storage/ in accordance with the results of the Institutional Activity’’). truck loading bins provided by private Initial Technical Studies. (i) Computerization and streamlining sector operators; (iii) Sedimentation control scheme of customs clearance procedures for (4) North wharf structural that permits reduction of the merchandise including information improvements including reinforcements sedimentation at the Port entrance and technology systems, warehouse to wharf substructure (as needed) to does not adversely impact coastal computer management system, and accommodate rail mounted gantries and erosion, in accordance with the results transit cargo system; mobile cranes; of the Initial Technical Studies. (ii) Improvements in the legal, fiscal (5) Acquisition and implementation of (iv) Acquisition of additional tug boat and institutional frameworks that pollution control equipment necessary with necessary pilot training.

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3. Beneficiaries appropriate private sector participation 7. Policy; Legal Reform; and Procedural The principal beneficiaries of the at each stage of the sub-activities Changes Markets Project are expected to be including renegotiation of existing The Parties have identified the Beninese importers, exporters and concession agreements to provide for following policy, legal and regulatory consumers, including individuals and the appropriate investments by the reforms and actions that the businesses, through improved quality of private operators in the Port. Government shall pursue in support, transportation services and fish 5. U.S. Agency for International and to reach the full benefits, of the processing facilities following the Development; U.S. Government Access to Markets, the satisfactory upgrades to and expansion of the Port. Agencies implementation of which will be The intended beneficiaries will be conditions precedent to certain MCC identified more precisely, and where MCC will seek to coordinate with Disbursements as provided in the possible disaggregated by gender, age, USAID during the Compact Term, as Disbursement Agreement: location and income level during the appropriate, though there is not (a) Renegotiation of existing lease and initial phases of the implementation of currently any USAID activity in this concession agreements and port leases the Markets Project. area. In addition MCC will seek to on terms acceptable to MCC that The principal intended beneficiaries coordinate with the U.S. Department of provide for capital investment based of this Project are potentially quite Homeland Security and U.S. Coast upon the market demand for Port broad. As the economy of Benin is Guard on the Markets Project. services; in all cases, for any concession driven by foreign trade and that foreign 6. Sustainability within the port right-of-way the PAC trade is dependent the Port, both shall be the grantor and the beneficiary consumers of imported products and (a) Improvements to the cargo of the income resulting from the exporters of Beninese products will handling operations and the physical concession or lease. To the extent not benefit directly or indirectly from layout of the Port will improve the covered in the renegotiation of the efficiency gains in Port operations that financial performance of the Port. The existing concession agreements, translate into lower transportation costs introduction of private sector completion of new concession of goods or increased operating margins participation in operations is also agreements for terminal operations of for Beninese operators and businesses. critical to the sustainability of the the new South wharf berths shall Markets Project. Part of the restructuring include private capital investments 4. Donor Coordination; Private Sector of the Port needs to include revenue acceptable to MCC based upon the (a) Donor Coordination. The World from the concessions, which are now demand for Port services; Bank has been working with the paid to a different Government agency (b) The Government and PAC shall Government to expand private as a conduit to the state owned agree to enforce maritime-related management at the Port. The Markets stevedoring company, in order to international and regional conventions Project Activities will be coordinated support port services and to increase and agreements to which they are with the study of privatization options transparency and Port efficiency. signatory, including the MARPOL and competitiveness at the Port that the (b) Investments by private sector International Convention for the World Bank expects to complete by tenants and other users of the Port will Prevention of Pollution from Ships and December 2006. The Danish and Dutch provide complementary improvements the UN Convention on the Law of the governments have been active in that will contribute to the long-term Sea, and shall also agree to supporting analyses of improvements at sustainability of the Port’s ability to internationally accepted practices, such the Port. The Danish and other studies meet market demand. as the London Dumping Convention and were used to assess the sedimentation (c) The Port’s financial condition has Protocol (to which Benin is not and erosion control problems. MCC will suffered from declining revenues and signatory) for the disposal of dredged coordinate with DANIDA (the Danish from increasing labor costs. In addition, material, including contaminated aid agency), the Dutch embassy, the its revenues have been declining material, and the control of pollution in Japanese International Cooperation recently due to restrictions on Nigerian the harbor, its entrance and the landside Agency, the World Bank, Islamic import policies. Port operations; Development Bank, African (d) A rationalized user fee schedule (c) By the time specified in the Development Bank, Arab Bank for for the BOC will be developed as part Disbursement Agreement, PAC shall Economic Development in Africa, OPEC of a required demand study to help create and fill the permanent staff Funds, Saudi Funds, and the defray some of the inspection costs position of PAC Environmental Government to (i) assess and address the associated with its operation and Manager, whose qualifications, selection erosion and port sedimentation maintenance. and replacement shall be acceptable to problems and (ii) ensure all sub- (e) Essential to the environmental MCC. The PAC Environmental Manager activities support Port improvements to sustainability of the Markets Project is shall serve as the PAC representative maximize the benefits available of donor the conduct of the Initial Technical concerning the environmental aspects of activities. Studies, as well as the landside ESIA, the Project Activities and other (b) Private Sector. In order to achieve the waterside ESIA and the associated environmental management activities of the expected benefits from MCC EMPs, each as described in Section 2(a). PAC. The Government shall ensure that Funding, several improvements at the (f) The key to ensuring environmental the PAC provides appropriate resources Port are dependent on private sector and social sustainability of the Project is to the PAC Environmental Manager as complementary investments and ongoing public consultation. By the identified by PAC and as recommended expanded private sector management time specified in the Disbursement by MCA-Benin port advisor consultant services associated with the operations Agreement, MCA-Benin shall engage the as provided for in Section 2(b)(ii) above of the Port. MCA-Benin will work with Environment and Social Assessment and the ESI Officer. PAC to coordinate with existing private Director (‘‘ESI Officer’’), subject to MCC (d) The Government and PAC shall sector operators at the Port, and MCA- approval, as described in Section provide a permanent office for the MCA- Benin and PAC will establish the 3(d)(iii)(3) Annex I. Benin port advisor adjacent to the office

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of the Director General of the PAC. The (n) The Government agrees not to 3. Estimated Contributions of the Parties Government and PAC Board of Directors institute or continue a tax, levy, duty, or The Multi-Year Financial Plan shall facilitate and endorse the other charge or any delivery procedure Summary identifies the estimated assistance by the MCA-Benin port or requirement at the Port or elsewhere annual contribution of MCC Funding for advisor to the Director General of the since commencement of MCC review on Program administration, monitoring and PAC in the implementation of private August 1, 2005 of the port proposal evaluation, and each Project. The management activities and operational which may affect the competitiveness of Government’s contribution of resources improvements associated with the the Port without the prior consent of to Program administration, monitoring Markets Project; MCC; and and evaluation, and each Project shall (o) Completion of the World Bank (e) Execution of private management consist of (a) ‘‘in-kind’’ contributions in privatization and competitiveness study or concession agreements satisfactory to the form of Government Responsibilities by the time specified in the MCC for the dry bulk conveyor, and the and any other obligations and Disbursement Agreement, with BOC, and other new facilities to be responsibilities of the Government commitments by the PAC and other constructed at the Port; Satisfactory identified in this Compact, including Government Affiliates to implement progress on meeting ISPS certification, contributions identified in the notes to recommendations as requested by MCC in particular implementing the Multi-Year Financial Plan Summary, and satisfactory implementation of such recommendations as specified by MCC (b) such other contributions or amounts recommendations. in the Disbursement Agreement or as identified in notes to the Multi-Year otherwise; Annex II—Summary of Multi-Year Financial Plan Summary, and (c) such (g) Development and ongoing Financial Plan other contributions or amounts as may satisfactory implementation of a This Annex II to this Compact (the be identified in relevant Supplemental program to accomplish financial control Agreements between the Parties or as and other recommendations as may be ‘‘Financial Plan Annex’’) summarizes the Multi-Year Financial Plan for the may otherwise be agreed by the Parties; specified by the independent financial provided, in no event shall the auditor contemplated by the Markets Program. Each capitalized term in this Financial Plan Annex shall have the Government’s contribution of resources Project; be less than the amount, level, type and (h) Commitment shall be made by the same meaning given such term elsewhere in this Compact. quality of resources required to Government to fund, or commitments effectively carry out the Government shall be made by another funding source 1. General Responsibilities or any other satisfactory to MCC, for amounts in responsibilities or obligations of the excess of budgeted amount in the A multi-year financial plan summary (‘‘Multi-Year Financial Plan Summary’’) Government under or in furtherance of financial plan including amounts that this Compact. may be necessary for environmental is attached hereto as Exhibit A. By such mitigation and remediation. All time as specified in the Disbursement 4. Modifications Beninese environmental and other Agreement, MCA-Benin will adopt, subject to MCC approval, a Multi-Year The Parties recognize that the permits (including any necessary or anticipated distribution of MCC advisable environmental certificates Financial Plan that includes, in addition to the multi-year summary of Funding between and among the under Benin law) shall be issued, valid various Program activities and Project and in full effect; anticipated estimated MCC Funding and the Government’s contribution of funds and Project Activities will likely require (i) Support the redesign of the BOC to and resources, an estimated draw-down adjustment from time to time during the ensure that specifications address likely rate for the first year of the Compact Compact Term. In order to preserve traffic and activity requirements, Term based on the achievement of flexibility in the administration of the including equipment for mechanical performance milestones, as appropriate, Program, in addition to Section 4(a)(iv) unloading of seafood cargo, and that a and the satisfaction or waiver of of Annex I, the Parties may, upon demand study is completed as specified conditions precedent. Each year, at least agreement of the Parties in writing and by MCC; 30 days prior to the anniversary of Entry without amending this Compact, change (j) Support the design, approval and into Force, the Parties shall mutually the designations and allocations of implementation of a rationalized user agree in writing to a Detailed Financial funds between Program administration fee system for the BOC; Plan for the upcoming year of the and a Project, between one Project and (k) Support the design, approval, and Program, which shall include a more another Project, between different implementation of a capacity building detailed plan for such year, taking into activities within a Project, or between a training and technical assistance plan account the status of the Program at Project identified as of the Entry into for cold chain, product quality such time and making any necessary Force and a new Project, without assurance; adjustments to the Multi-Year Financial amending this Compact; provided, (l) Satisfactory results from customs Plan. however, that such reallocation (a) is and warehouse systems implementation consistent with the Objectives, (b) does reflected in reduced in Port cargo 2. Implementation and Oversight not cause the amount of MCC Funding processing time; The Multi-Year Financial Plan and to exceed the aggregate amount (m) The Government agrees not to each Detailed Financial Plan shall be specified in Section 2.1(a) of this institute a container scanning system at implemented by MCA-Benin, consistent Compact, and (c) does not cause the the Port (1) until after a study of the with the approval and oversight rights Government’s obligations or effectiveness of such a scanning system of MCC and the Government as responsibilities or overall contribution has been completed pursuant to Section provided in this Compact, the 2(a)(i) or (2) in the event that MCC Governing Documents and the the Stakeholders’ Committee and Steering determines that the Government b Committee), the responsibilities of the Government Disbursement Agreement. and MCC in achieving the Compact Goal and proposed scanning system would be Objectives, and the process for the identification of detrimental to the effectiveness of MCC b The role of civil society in the implementation beneficiaries are addressed elsewhere in this investments at the Port; of this Compact (including through participants on Compact and therefore are not repeated here.

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of resources to be less than specified in Program and each Project is subject to sub-activities and other aspects of how Section 2.2(a) of this Compact, this satisfactory progress in achieving the the Parties intend the Projects to be Annex II or elsewhere in this Compact. Objectives and on the fulfillment or implemented will be set forth in the 5. Conditions Precedent; Sequencing waiver of any conditions precedent Implementation Plan, including Work specified in the Disbursement Plans for the applicable Project, and MCC Funding will be disbursed in Agreement for the relevant Program MCC Disbursements and Re- tranches. The obligation of MCC to activity or Project or Project Activity. Disbursements will be disbursed approve MCC Disbursements and The sequencing of Project Activities or consistent with that sequencing. Material Re-Disbursements for the

EXHIBIT A.—MULTI-YEAR FINANCIAL PLAN SUMMARY [In thousands]

Project Year 1 Year 2 Year 3 Year 4 Year 5 Total

1. Access to Land: (a) Policy Activity ...... 520 260 520 0 0 1,300 (b) Registration Activity...... 3,310 6,550 4,605 4,375 4,320 23,160 (c) Services and Information Activity 1 ...... 510 3,350 3,205 2,775 620 10,460 (d) IEC Activity ...... 100 150 100 100 50 500 (e) Support Strategy Activity ...... 120 120 120 120 120 600 Sub-Total ...... 4,560 10,430 8,550 7,370 5,110 36,020

2. Access to Financial Services:

(a) Capacity Building Activity ...... 1,770 3,570 3,870 3,570 270 13,050 (b) Financial Enabling Environment Activity ...... 1,380 1,850 1,540 1,140 690 6,600 Sub-Total ...... 3,150 5,420 5,410 4,710 960 19,650

3. Access to Justice Activity: (a) Arbitration Center (CAMeC) ...... 400 160 140 180 0 880 (b) Business Registration Activity ...... 470 830 330 200 0 1,830 (c) Courts Activity 23 ...... 2,960 6,860 8,590 6,590 6,560 31,560 Sub-Total ...... 3,830 7,850 9,060 6,970 6,560 34,270

4. Access to Markets: (a) Studies Activity ...... 5,993 2,101 0 0 0 8,094 (b) Port Institutional Activity ...... 3,251 4,876 1,196 980 1,016 11,319 (c) Port Security and Landside Improvements Activ- ity 4 ...... 200 23,154 42,158 8,151 200 73,863 (d) Waterside Improvements Activity 5 ...... 0 0 22,939 53,232 0 76,171 Sub-Total ...... 9,444 30,131 66,293 62,363 1,216 169,447

Monitoring and Evaluation...... 3,190 1,690 1,240 1,240 1,420 8,780 Sub-Total ...... 3,190 1,690 1,240 1,240 1,420 8,780

Program Administration and Control: (a) Program Administration 6 ...... 3,395 2,795 2,933 2,919 3,015 15,057 (b) Fiscal and Procurement Agent ...... 3,398,688 3,398,688 3,398,688 3,398,688 3,398,688 16,993,440 (c) Audits...... 1,416,120 1,416,120 1,416,120 1,416,120 1,416,120 7,080,600

Sub-Total 7 ...... 8,209,808 7,609,808 7,747,808 7,733,808 7,829,808 39,131,040

Total Estimated MCC Contribution 8 ...... 32,383,808 63,130,808 98,300,808 90,386,808 23,095,808 307,298,040 1 MCC Disbursements in connection with this Activity shall be conditioned upon, among others, the completion, satisfactory to MCC, of the rel- evant studies in Policy Activity and incorporation of the recommendations into implementation plans as appropriate. 2 After the first $1 million for the legal aid services sub-activity described in Section 2(c)(iv) of Schedule 3 to Annex I, any additional MCC Dis- bursement for this sub-activity shall be conditioned upon the Government obtaining matching funds to support the legal aid services program de- scribed in Section 2(c)(iv) of Schedule 3 of Annex I. 3 MCC Disbursements in connection with the new courthouses sub-activity described in Section 2(c)(v) of Schedule 3 to Annex I, shall be con- ditioned upon, among others, passage of the Procedural Code and certain other codes, which codes should contain adequate provisions in areas as may be specified by MCC in the relevant Supplemental Agreement (including with respect to the Procedural Code, provisions pertaining to the speed with which court cases are heard, and the means by which cases proceed through the courts). 4 MCC Disbursements in connection within the landside improvements sub-activity described in Section 2(c)(ii) of Schedule 4 of Annex I shall be conditioned upon, among others, the following: (i) Renegotiation of existing concession and lease agreements on terms acceptable to MCC that provide for capital investment based upon the demand for Port services, (ii) a contract management program of the dry bulk conveyor sys- tem acceptable to MCC, (iii) the completion of Initial Technical Studies, (iv) a Government commitment of funding, or commitments obtained from another funding source (satisfactory to MCC) for amounts in excess of budgeted amount in the Detailed Financial Plan, including amounts that may be necessary for environmental and mitigation, and (v) subject to results, satisfactory to MCC, of feasibility studies and ESIA that includes an environmental audit and EMP, (vi) redesign of the fish inspection facility, (vii) completion of a World Bank privatization and competitiveness study, and (viii) selection of a construction management agent.

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5 MCC Disbursement in connection with the waterside improvements sub-activity described in Section 2(d) of Schedule 4 of Annex I shall be conditioned upon, among others, the following: (i) Satisfactory results of the Initial Technical Studies, (ii) demonstration, satisfactory to MCC, of improvements in customs and warehouse systems operations, (iii) implementation of recommendations of the independent financial auditor, (iv) obtaining environmental permits, (v) a Government commitment of funding, or commitments obtained from another funding source (satisfactory to MCC) for amounts in excess of budgeted amount in the Detailed Financial Plan, including amounts that may be necessary for environmental and mitigation, (vi) results, satisfactory to MCC, of feasibility studies and ESIA that includes an environmental audit and EMP and (vii) the completion of a long-term management services agreement for the operation of a Port sedimentation facility (or other harbor dredging program, as appro- priate) on terms satisfactory to MCC. 6 The total administration budget as a percentage of the Program cost is equal to 5.61%. 7 The total implementation budget as a percentage of the Program cost is equal to 14.59%. 8 Total Government contribution of 5 billion CFA to be included in the annual national budget (1.25 billion CFA per year during the first four years of Compact) and to be allocated in a manner agreed upon by the Parties in writing.

Annex III—Description of the M&E Plan program and the timeline for achieving determine their impact and likely them. sustainability (the ‘‘Evaluation This Annex III to the Compact (the 1. Overview Component’’), and (c) other components ‘‘M&E Annex’’) generally describes the of the M&E Plan described below. components of the Monitoring and Prior to disbursement for any Project Information regarding the Program’s Evaluation (M&E) Plan for the Benin (other than administrative expenses), performance, including the M&E Plan, the parties shall formulate an M&E Plan Program, and how progress toward the and any amendments or modifications that specifies (a) how the Compact Goal will be measured. Each thereto, as well as periodically- implementation of the Program and capitalized term in this Annex III shall generated reports, will be made publicly have the same meaning given such term progress toward the Compact Goal and Objectives will be monitored (the available on the MCA-Benin Web site elsewhere in this Compact. This Annex and elsewhere. The Compact Goal, represents the agreement between the ‘‘Monitoring Component’’), (b) a methodology, process and timeline for Objectives and Outcomes of the MCA- Government of Benin and the MCC on Benin Program are summarized in the the Goals and Objectives of the MCA the evaluation of planned, ongoing, or completed Project Activities to following diagram:

2. Monitoring Component quantitative, objective and reliable data the Compact Goal (each, a ‘‘Compact (‘‘Indicators’’). Each Indicator will have Goal Indicator’’) will measure the To monitor progress toward the one or more targets that quantifies the results for the overall Program on the achievement of the Compact Goal, result and the expected time by which intended beneficiaries (collectively, the Objectives and Outcomes, the that result will be achieved (‘‘Target’’). ‘‘Beneficiaries’’). Monitoring Component of the M&E Plan shall contain the following elements: The M&E Plan will detail the process for Second, the indicators for each measuring and reporting on Indicators Objective (each, an ‘‘Objective (a) Indicators. The M&E Plan shall at several levels. First, the indicators for measure the results of the Program using Indicator’’) will measure the ultimate

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result for each of the individual M&E Plan (‘‘2006 Baseline Data level and age, where appropriate and to Projects. Third, intermediate indicators Survey’’). The Government will also the extent practicable. For some (each, an ‘‘Outcome Indicator’’) will fund a portion of the 2006 baseline indicators baseline data was not measure the intermediate results survey. All EMICoV data will be available as of the date of conclusion on achieved under each of the Project disaggregated by gender, income and the Compact. For such indicators Activities in order to provide early age group where appropriate. MCC identified in the tables that follow, the measures of progress towards the Funding in connection with the 2006 M&E Plan and Disbursement Agreement accomplishment of the Project Baseline Data Survey shall support will specify requirements for baseline Objective. Further, other indicators will activities such as the following: data collection that shall be met prior to be included in the M&E Plan to measure • Training of field and data entry disbursing funds for each Project or the direct outputs of the Project staff; Project Activity. Subject to prior written Activities (each, an ‘‘Output Indicator’’). • Conducting pilot test of survey approval from MCC, MCA-Benin may Benin’s national household living questionnaire; modify and add Indicators or refine the standards measurement survey • Communication and transportation Targets of existing Indicators. (L’Enque´te Modulaire Integre´e sur les for survey staff; (i) Compact Goal Indicators. The M&E Conditions de Vie (‘‘EMICoV’’) will • Supervision and Quality Assurance; Plan shall contain the Compact Goal provide baseline data where identified. and Indicators and their definitions, as listed MCC Funding will support the 2006 • Data Management. in the table below. The corresponding baseline survey as well as regular For all indicators, data collection will Targets to be achieved are in the tables follow-up surveys as described in the be disaggregated by gender, income that follow.

COMPACT GOAL INDICATORS

Purpose Indicator Definition of indicator

Increase household income in land and fi- Average annual household income in the land Average revenue and consumption level per nance-targeted areas. and finance areas. household land/finance areas measured through the national living standards meas- urement survey (EMICoV). Increase value added to MSMEs ...... Profits and wages of MSMEs benefiting from Additional profits and wages of MSMEs that Access to Finance capacity building activity. are clients of institutions that are bene- ficiaries of the Challenge Facility. Increase value added due to port infrastructure Profits and wages of Port users ...... Additional profits and wages of Port users. improvements.

COMPACT GOAL TARGETS

Indicators Baseline Year 1 Year 2 Year 3 Year 4 Year 5

Average household income in the land TBD 1 ...... Estimated at 7% in- and finance areas. crease in treated areas compared to untreated areas Profits and wages of MSMEs benefiting Zero 2 ...... USD$5 million. from the Capacity Building Activity. Additional annual profits and wages of Zero ...... USD$36 million.3 Port users. 1 EMICoV will provide baseline data to be available starting in August 2006. 2004 GNP per capita is estimated at USD$538. 2 Benin will estimate current wages and profits of client enterprises of MFIs in the Demand Study at the end of the third quarter, Year 1 of the Compact Term. 3 Port users include: Ship-owners, firms operating within the port and trucks transporting cargo to and from the Port.

(ii) Objective and Outcome Indicators. their definitions, as listed in the tables achieved are in the tables following the The M&E Plan shall contain the below. The corresponding Targets to be definitions. Objective and Outcome Indicators and

ACCESS TO LAND PROJECT INDICATORS

Purpose Indicator Definition of indicator

Objective: Strengthen property rights and increase in- Total value of additional investment in tar- Value of investments made to rural land par- vestment in rural and urban land. geted rural land parcels. cels per year; land investment data will come from self-reported data through EMICoV. Total value of additional investment in tar- Value of investments made to urban land par- geted urban land parcels. cels per year; land investment data will come from self-reported data through EMICoV. Outcomes:

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ACCESS TO LAND PROJECT INDICATORS—Continued

Purpose Indicator Definition of indicator

Reduced time to obtain new land title ...... Average time required to obtain a new land Average time associated with obtaining land title. title, disaggregated by rural and urban areas.1 Reduced costs to obtain new land title ...... Average cost required to obtain a new land Average cost associated with obtaining land title. title, disaggregated by rural and urban areas.1 Perception of land tenure security in- Percent of respondents perceiving greater Share of respondents perceiving land tenure creased. land security. security; as measured through EMICoV. Data should be disaggregated by inhab- itants of communities benefiting from the Registration Activity and those that are not. Reduction in number of land disputes ...... Number of land disputes brought to court ...... Total number of land disputes registered at TPIs, per year. Number of land disputes reported by com- Total number of land disputes (not brought to mune heads. formal court) as reported by commune heads as measured through EMICoV. 1 Disaggregated time and costs to obtain a land title was not available as of the date of conclusion of the Compact. Going forward, data will be collected and reported for the rural and urban areas separately.

ACCESS TO LAND PROJECT TARGETS

Baseline Year 1 Year 2 Year 3 Year 4 Year 5

Objective Level Indicators (Metric of Project success observable by end of Compact Term). Total value of additional investment in tar- Zero 1 ...... 5% increase ...... 10% increase geted rural land parcels. from base- from base- line. line. Total value of additional investment in tar- Zero (Current ...... 8% increase 15% increase 20% increase geted urban land parcels. level for from base- from base- from base- Cotonou line. line. line. only is USD$310 million). Outcome Level Indicators (Early indicators of Project Activities impact on Objec- tives). Average time required to obtain a new land 12 months ...... 10 months ...... 6 months. title. Average cost required to obtain a new land USD$1,300 ...... USD$180. title. Percent of respondents perceiving greater TBD 1 ...... 30% increase ...... 50% increase land security. from base- from base- line for ben- line for ben- eficiary eficiary communes. commu- nities. Number of land disputes brought to court .. 8000 2 ...... 50% reduction in MCA–tar- geted zones. Number of land disputes reported by com- TBD 1 ...... mune heads. 1 EMICoV will provide baseline data to be available starting in August 2006. 2 This baseline figure is an estimate. Data will be verified by quarter 3 of Year 1 of the Compact Term.

ACCESS TO FINANCE PROJECT INDICATORS

Purpose Indicator Definition of Indicator

Objective: Expand access to financial services ...... Value of new financial services offered by fi- Total incremental increase in value of new nancial institutions. credit extended and savings received by fi- nancial institutions participating in the project.1 Outcomes:

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ACCESS TO FINANCE PROJECT INDICATORS—Continued

Purpose Indicator Definition of Indicator

Strengthened capacity of select financial institu- Average portfolio-at-risk > 30 days partici- Share of value of all loans outstanding that tions. pating MFIs. have one or more installments of principal past due over 30 days. Participating institu- tions institutions will be compared to a na- tional average. Operational self-sufficiency of participating Operating revenue/(financial expense + loan MFIs (%). loss provision + operating expense). Meas- ures extent of cost coverage from operating revenues. Participating institutions will be compared to national average. Indicator val- ues are illustrative of each class/cohort’s performance. Strengthened monitoring capacity of Super- Number of MFIs supervised by the Micro- Total number of micro finance institutions that visory Authority. finance Cellule. are supervised and have received rec- ommendations from the Ministry of Finance Supervisory Authority. Improved use of land titles as collateral ...... Number of new bank credits guaranteed with Total number of loans guaranteed by land ti- land titles. tles, per year. 1 Indicator and target will be amended if services other than credit and savings are offered.

ACCESS TO FINANCE PROJECT TARGETS

Baseline Year 1 Year 2 Year 3 Year 4 Year 5

Objective Level Indicators (Metric of Project success observable by end of Compact Term): Value of new financial services offered USD$155 Mil- ...... USD$24 Mil- ...... USD$59 Mil- by financial institutions lion in Cred- lion. lion. it and USD$73 Million in savings.1. Outcome Level Indicators (Early indi- cators of Project Activities impact on Objectives): Average portfolio-at-risk > 30 days of 10% 2 ...... 8% ...... 7% ...... 6% ...... 5% participating financial institutions. Operational self-sufficiency of partici- 103% 2 ...... 106% ...... 109% ...... 112% pating financial institutions. Number of MFIs supervised by the 27 ...... 35 ...... 40 ...... 50 ...... 75 Microfinance Cellule. Number of new bank credits guaran- 60 ...... 100 ...... 150 ...... 200 teed with land titles. 1 Current aggregate value of savings and credit offered in system as cited in National Policy for Micro finance. 2 These baseline values represent the national average. Once financial institutions are selected, baselines will be recalculated. Targets values are average values for cohort/class entering the Program after 2, 3, 4, and 5 years.

ACCESS TO JUSTICE PROJECT INDICATORS

Purpose Indicator Definition of Indicator

Objective: Improved ability of justice system to enforce Average time required to enforce a contract ... Number of days associated with filing pay- contracts and reconcile claims. ment dispute in court until moment of actual payment. Percent of firms reporting confidence in the ju- Percent of manufacturing firms who agree dicial system. with statement ‘‘I have confidence in the ju- dicial system.’’ Outcomes: Increased efficiency and improved services of Number of cases processed at Arbitration Number of cases processed at Chamber of courts and the arbitration center. Center. Commerce Arbitration Center, per year. Percent of all cases resolved in TPI courts per Share of number of cases resolved of total year. cases filed at all TPIs, per year. Percent of all cases resolved in court of ap- Share of number of cases resolved of total peals per year. cases filed at court of appeals, per year. Increased access to court system ...... Average distance required to reach TPI (km) Distance between village and jurisdictional TPI in kilometers.

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ACCESS TO JUSTICE PROJECT INDICATORS—Continued

Purpose Indicator Definition of Indicator

Improved enterprise registration center ...... Number of enterprises registered through the Annual number of enterprises registered with registration center. Chamber of Commerce Guichet Unique central or satellite offices. Average time required to reigster an enter- Number of days associated with registering prise (days). enterprise with Chamber of Commerce Guichet Unique central or satellite offices, per year.

ACCESS TO JUSTICE PROJECT TARGETS

Baseline Year 1 Year 2 Year 3 Year 4 Year 5

Objective Level Indicators (Metric of Project success observable by end of Compact Term): Average time required to enforce a contract 570 ...... 470 ...... 370 (days). Percent of firms reporting confidence in the 35% ...... 47% ...... 60% judicial system. Outcome Level Baseline Year Indicators (Early indicators of Project Activities im- pact on Objectives) Number of cases processed at Arbitration 0 ...... 25 ...... 150 ...... 200 ...... 250 Center. Percent of all cases resolved in TPIs per 40% ...... 45% ...... 50% year. Percent of all cases resolved in court of ap- 8% ...... 12% ...... 15% ...... 18% ...... 21% ...... 24% peals per year. Average Distance required to reach TPI 50 ...... 34 (km). Number of enterprises registered through 9,600 (total to ...... 1,400 ...... 1,000 ...... 500 the business registration center. 2004). Average time required to register an enter- 20 ...... 10 ...... 3 prise (days).

ACCESS TO MARKETS PROJECT INDICATORS

Purpose Indicator Definition of indicator

Objective: Improve access to markets through improve- Volume of merchandise traffic through the Total volume of exports and imports passing ments to the Port of Cotonou. PAC (million metric tons). through Port of Cotonou, per year in million metric tons. Port surcharges due to delay ...... Surcharge associated with congestion per twenty-foot equivalent unit (‘‘TEU’’), in Euro. Outcomes: Reduced ship wait time ...... Bulk ship carriers waiting times at the Port Number of days bulk carrier must wait at an- (days). chor (before proceeding to berth) and at berth. Streamlined customs clearance procedures ..... Average customs clearance times at Port ...... Time associated with moving merchandise through customs procedures. Increased satisfaction with Port operations Port user satisfaction ...... Share of port users satisfied with Port oper- among users. ations, estimated through Port user survey. Reduced average duration of stay of trucks at Average duration of stay of trucks at Port ...... Average duration of stay trucks at Port. Port. Increased usage of import/export facilities of Volume of seafood exports processed through Total volume of seafood exports processed Port among fishing/seafood businesses. BOC (tons). through the BOC (tons).

ACCESS TO MARKETS PROJECT TARGETS

Baseline Year 1 Year 2 Year 3 Year 4 Year 5

Objective Level Indicators (Metric of Project success observable by end of Compact Term): Volume of merchandise traffic through the PAC (million metric tons)...... 4.1 4.9 5.2 5.6 5.9 6.3 Port surcharges due to delay (Euros) ...... 125 ...... 50 25 Outcomes—Bulk ship carriers waiting times at the Port (days): 7 ...... 5 3

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ACCESS TO MARKETS PROJECT TARGETS—Continued

Baseline Year 1 Year 2 Year 3 Year 4 Year 5

Average customs clearance times at the Port (days) ...... 5 ...... 3 ...... 1 Port user satisfaction ...... 50% ...... 65% 70% 75% Average duration of stay of trucks at Port (hours) ... 24 ...... 18 12 7 Volume of seafood exports processed through BOC (tons) ...... 0 ...... 250 500 Note: Attainment of most targets in the Markets Project tables in the years specified depends on the successful completion of early sub- activities.

(iii) The final M&E Plan will also otherwise requested by MCC, the quality Determination of the evaluation include a number of activity-level of the data gathered through the M&E methodologies will be condition (Output) measures that will track Plan shall be reviewed to ensure that precedent for specified MCC progress toward realizing the direct data reported are as reliable, timely and Disbursements. outputs of the Projects and Activities. valid as resources will allow. The (c) Ad Hoc Evaluations or Special Examples of the indicators likely to be objective of any data quality review will Studies. In addition to the evaluations included are: be to verify the quality and the described in the M&E Plan, MCC may (1) Number of villages with plan consistency of performance data, across require ad hoc evaluations or special foncier rural (PFRs); different implementation units and studies prior to the expiration of the (2) Number of urban land titles reporting institutions. Such data quality Compact Term. If MCA-Benin engages transformed from permis d’habiter or reviews also will serve to identify where an evaluator, the evaluator will be an living permits in Cotonou, Parakou and consistent levels of quality are not externally contracted independent Porto Novo; possible, given in-country capacity or source subject to the prior written (3) Number of clients of financial other constraints. approval of MCC for terms of reference service providers trained; 3. Evaluation Component and final selection, following a tender in (4) Average cost of registering an accordance with the Procurement enterprise with Chamber of Commerce The Program shall be evaluated on the Guidelines, and otherwise in Guichet Unique; extent to which the interventions accordance with any relevant (5) Number of judicial employees contribute to the Compact Goal and Implementation Letter or Supplemental receiving pre-service training; and Objectives. The Evaluation Component Agreement. The cost of an independent (6) Port meeting ISPS standards. shall contain the methodology for evaluation or special study may be paid (b) Beneficiaries. The M&E plan shall conducting the most rigorous impact from MCC Funding. If MCA-Benin describe the beneficiaries of the Program evaluations feasible and cost-effective, requires an ad hoc independent in detail, including the expected as well as the process and timeline for evaluation or special study at the number of beneficiaries, their income, analyzing data. The Evaluation request of the Government for any gender and other general demographic Component shall contain two types of reason, including for the purpose of characteristics. reports: A Final Program Evaluation and contesting an MCC determination with (c) Data Collection and Reporting. The Project, Project Activity, or Interim respect to a Project or Project Activity or M&E Plan shall establish guidelines for Evaluations. to seek funding from other donors, no data collection and a reporting (a) Final Evaluation. MCC will engage MCC Funding or MCA-Benin resources framework, including a schedule of an independent evaluator to conduct a may be applied to such evaluation or Program reporting and responsible program evaluation at the expiration or special study without MCC’s prior parties. In addition, MCA-Benin shall termination of the Program (‘‘Final written approval. conduct regular assessments of program Evaluation’’). The evaluation performance to measure progress on the methodology, timeline, data collection, 4. Other Components of the M&E Plan Goals and Objectives and to alert all and analysis requirements will be In addition to the Monitoring and parties to any problems in finalized and detailed in the M&E Plan. Evaluation Components, the M&E Plan implementation. These assessments will The Final Evaluations must at a shall include the following components report actual results compared to the minimum (i) estimate quantitatively and for the Program, Projects and Project Targets on the Indicators referenced in in a statistically valid way, the causal Activities, including, where the Monitoring Component, explain relationship between the Compact Goals appropriate, roles and responsibilities of deviations between these actual results (to the extent possible), the Objectives the relevant parties and Providers: and Targets, and describe any planned and Outcomes; (ii) determine if and actions to address performance analyze the reasons why the Compact (a) Costs. A detailed annual budget problems. With respect to any data or Goals, Objectives and Outcomes were or estimate for all components of the M&E reports received by MCA-Benin, MCA- were not achieved; and (iii) assess the Plan. Benin shall promptly deliver such overlapping benefits of the Projects. (b) Assumptions and Risks. Any reports to MCC along with any other (b) Project or Interim Evaluations. The assumptions and risks external to the related documents, as specified in the Evaluation Component in the M&E Plan Program that underlie the M&E Plan or as may be requested from will also describe other individual accomplishment of the Objectives and time to time by MCC, and will make Project, Project Activity, or Interim Outcomes; provided such assumptions these assessments available to the Evaluations. The evaluation and risks shall not excuse performance public on their Web site. methodology, timeline, data collection, of the Parties, unless otherwise (d) Data Quality Reviews. As and analysis requirements will be expressly agreed to in writing by the determined in the M&E Plan or as finalized and detailed in the M&E Plan. Parties.

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5. Implementation of the M&E Plan (b) MCC Disbursement and Re- Annex, the Parties may modify or Disbursement for a Project Activity. As amend the M&E Plan or any component (a) Approval and Implementation. a condition to each MCC Disbursement thereof, including those elements The approval and implementation of the or Re-Disbursement there shall be described herein, without amending the M&E Plan, as amended from time to satisfactory progress on the M&E Plan Compact; provided, any such time, shall be in accordance with this for the relevant Project or Project modification or amendment of the M&E M&E Annex, and any other relevant Activity, and substantial compliance Plan is reviewed by the Stakeholders’ Supplemental Agreement. Stakeholders’ with the M&E Plan, including any Committee and has been approved by Committee’s review of the completed reporting requirements. In addition, for MCC in writing and is otherwise portions of the M&E Plan shall be certain activities, collection of baseline consistent with the requirements of this required prior to the expiration of the data will be condition precedent for Compact and its Objectives, and any first year of the Program. Review and specified MCC Disbursements. relevant Supplemental Agreement approval of the M&E Plan shall be (c) Modifications. Notwithstanding between the Parties. completed by time specified in the anything to the contrary in the Compact, [FR Doc. 06–2252 Filed 3–10–06; 8:45 am] Disbursement Agreement. including the requirements of this M&E BILLING CODE 9210–01–P

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