CREDIT NUMBER 6870-MW GRANT NUMBER D804-MW Project Agreement (Southern Africa Trade and Connectivity Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and ROADS AUTHORITY CREDIT NUMBER 6870-MW GRANT NUMBER D804-MW PROJECT AGREEMENT AGREEMENT between INTERNATIONAL DEVELOPMENT ASSOCIATION (“Association”) and ROADS AUTHORITY (“Project Implementing Entity”) (“Project Agreement”) in connection with the Financing Agreement (“Financing Agreement”) of the Signature Date between the Republic of Malawi (“Recipient”) and the Association. The Association and the Project Implementing Entity hereby agree as follows: ARTICLE I — GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to the Financing Agreement) apply to and form part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the Financing Agreement or the General Conditions. ARTICLE II — PROJECT 2.01. The Project Implementing Entity declares its commitment to the objectives of the Project. To this end, the Project Implementing Entity shall carry out Parts 1.1(a)(ii), 1.2(a)(i) and (iv), 4.1(a) and 4.2(a) (“PIE Parts”) of the Project in accordance with the provisions of Article V of the General Conditions and the Schedule to this Agreement, and shall provide promptly as needed, the funds, facilities, services and other resources required for the Project. ARTICLE III — REPRESENTATIVE; ADDRESSES 3.01. The Project Implementing Entity’s Representative is its chief executive officer. 3.02. For purposes of Section 11.01 of the General Conditions: (a) the Association’s address is: International Development Association 1818 H Street, NW Washington, DC 20433 United States of America; and -2- (b) the Association’s Electronic Address is: Telex: Facsimile: 248423(MCI) or 1-202-477-6391 3.03. For purposes of Section 11.01 of the General Conditions: (a) the Project Implementing Entity’s address is: Functional Building Paul Kagame Road Private Bag B346 Lilongwe 3 Malawi; and (b) the Project Implementing Entity’s Electronic Address is: Facsimile: +265 1750307 -3- AGREED, as of the latest of the two dates written below. INTERNATIONAL DEVELOPMENT ASSOCIATION By ____________________________________ Authorized Representative Hugh Riddell Name: ______________________________ Country Manager Title: ______________________________ 15-Jul-2021 Date: ______________________________ ROADS AUTHORITY By ____________________________________ Authorized Representative Eng. Emmanuel J. Matapa Name: ____________________________ CEO Title: _____________________________ 19-Jul-2021 Date: _____________________________ -4- SCHEDULE Execution of PIE Parts of the Project Section I. Implementation Arrangements A. Project Implementation Unit 1. For purposes of implementing the PIE Parts of the Project, the Project Implementing Entity shall maintain, during the implementation of the Project, a unit with the necessary autonomy and technical capacity to undertake the management, coordination, supervision, monitoring and evaluation of activities under the PIE Parts of the Project (“PIE’s PIU”). Notwithstanding the aforementioned, the Project Implementing Entity shall: (a) maintain the PIE’s PIU, during the implementation of the Project, with key staff in a number and with functions, experience, responsibilities and qualifications acceptable to the Association as described in the Project Operations Manual, including, inter alia: a social safeguards specialist, an environmental safeguards specialist and a procurement specialist. 2. Notwithstanding the provisions set out in Section I.A. above, by not later than four (4) months after the Effective Date, the Project Implementing Entity shall hire one (1) manager and four (4) environmental and social safeguard specialists; all with functions, experience, responsibilities and qualifications acceptable to the Association. B. Project Operations Manual By not later than one (1) month after the Effective Date, the Project Implementing Entity shall adopt and thereafter maintain, during the implementation of the Project, a Project operations manual (“Project Operations Manual”). The Project Implementing Entity shall carry out the PIE Parts of the Project in accordance with the Project Operations Manual, in a manner satisfactory to the Association, which shall contain detailed guidelines, methods and procedures for the implementation of the PIE Parts of the Project, including, inter alia: (a) administration and coordination; (b) performance indicators; (c) monitoring and evaluation; (d) financial, procurement and accounting procedures; (e) social and environmental safeguards; (f) corruption and fraud mitigation measures; (g) roles and responsibilities of various agencies in the implementation of the Project, and such other arrangements and procedures as shall be required for the effective implementation of the PIE Parts of the Project. Except as the Association shall otherwise agree in writing, the Project Implementing Entity shall not amend or waive, or permit to be amended or waived any provision of the Project Operations Manual. In case of conflict between the provisions of the Project Operations Manual and this Agreement, those of this Agreement shall prevail. -5- C. Subsidiary Agreement The Project Implementing Entity shall carry out the PIE Parts of the Project in accordance with the provision of the Subsidiary Agreement. Except as the Association shall otherwise agree in writing, the Project Implementing Entity shall not amend or waive, or permit to be amended or waived any provision of the Subsidiary Agreement. D. Annual Work Plans and Budget The Project Implementing Entity shall furnish the Annual Work Plan and Budget to the Association for its approval, after obtaining clearance from the Recipient and not later than February of each year during the implementation of the Project, or such later date as the Association may agree, an annual work plan and budget containing all activities to be carried out in the following fiscal year, including the costs associated to the implementation of the Stakeholder Engagement Plan, modified in a manner satisfactory to the Association, taking into account the Association’s comments and views on the matter. E. Safeguards 1. The Project Implementing Entity shall ensure, or cause to be ensured, that the Project is carried out in accordance with the Safeguard Instruments, including the guidelines, rules and procedures defined in said Safeguard Instruments. 2. The Project Implementing Entity shall take, or cause to be taken, the following actions in a manner acceptable to the Association: (a) Project activities shall be screened in accordance with the ESMF and RPF to determine if any ESMP, or RAP is needed; whenever a ESMP would be required on the basis of the ESMF: (i) each ESMP shall be prepared in accordance with the requirements of the ESMF, adopted and disclosed by the Project Implementing Entity, and subject to prior approval by the Association; (ii) each ESMP shall include the necessary measures to help prevent and, as necessary, respond appropriately to the risks and incidences of sexual exploitation and abuse and sexual harassment against women, children and other vulnerable groups; and (iii) the Project Implementing Entity shall refrain from tendering any civil works contract during the implementation of the Project unless and until such ESMP has been prepared in accordance with the ESMF, adopted and disclosed by the Project Implementing Entity, and approved by the Association; and -6- (b) whenever a RAP would be required on the basis of the RPF: (i) each such RAP shall be prepared in accordance with the requirements of the RPF, adopted and disclosed by the Project Implementing Entity, and subject to prior approval by the Association; (ii) the Project Implementing Entity shall refrain from tendering any civil works contract during t h e implementation of the Project unless and until such RAP has been prepared in accordance with the RPF, adopted, disclosed and implemented by the Project Implementing Entity, and approved by the Association; and (iii) no works under the Project shall be commenced until: (A) all measures required to be taken under said RAP prior to the initiation of said works have been taken; (B) the Project Implementing Entity has prepared and furnished to the Association a report in form and substance satisfactory to the Association, on the status of compliance with the requirements of said RAP; and (C) the Association has confirmed that said works may be commenced. 3. If any activity under the Project would involve Affected People, the Project Implementing Entity shall: (a) ensure that no physical or economic displacement, limitation of access to natural resources shall occur before resettlement measures under the relevant ESMP and RAP, including, in the case of either physical or economic displacement, full payment to Affected People of fair compensation at replacement value and of other assistance required for relocation and livelihoods restauration, have been implemented; and (b) provide from its own resources, any financing required for any measures under sub-paragraph (a) above but no limited to any costs associated with land acquisition required under PIE Parts of the Project. 4. The Project Implementing Entity shall take all measures necessary for carrying out the requirements of the Safeguard Instruments in a timely manner. 5. No works shall be eligible for financing unless: (a) prior to the commencement of such works: (i) an ESMP was prepared, adopted and disclosed by the Project Implementing Entity, and approved by the Association; and (ii) in case such works are expected to cause involuntary resettlement, a RAP was prepared, adopted, disclosed and implemented by the Project Implementing Entity, and approved by the Association; or (b) to the extent that such works have already commenced, an Environmental and Social Audit of such works was completed, under terms of reference and by an independent entity satisfactory to the Association, and the recommendations under said Environmental and Social Audit have been implemented in a manner satisfactory to the Association. -7- 6. (a) By not later than four (4) months after the Effective Date, the Project Implementation Entity shall adopt, and thereafter maintain, during the implementation of the Project, the Stakeholder Engagement Plan. The Project Implementing Entity shall carry out the Stakeholder Engagement Plan with due diligence and efficiency and to communicate it to the Project stakeholders: (i) to achieve their participation and support of the Project all along the period of the implementation of the Project; and (ii) to ensure its measures and recommendations are implemented throughout the implementation of the Project, in particular with a focus on the inclusion of project affected parties including disadvantaged and vulnerable groups. Except as Association shall otherwise agree, the Project Implementation Entity shall ensure that the Stakeholder Engagement Plan is not amended, suspended or waived. In case of any inconsistencies between the provisions of the Stakeholder Engagement Plan and the provisions of this Agreement, the provisions of this Agreement shall prevail. (b) Without limitation upon any of its reporting obligations under this Agreement, the Project Implementing Entity shall regularly collect, compile, and submit to the Association, and promptly in a separate report whenever the Association may require, information on the status of compliance with the Stakeholder Engagement Plan. Such information shall include: (i) measures taken in furtherance of the Stakeholder Engagement Plan; (ii) conditions, if any, which interfere or threaten to interfere with the smooth implementation of the Stakeholder Engagement Plan; and (iii) remedial measures taken or required to be taken to address such conditions. 7. (a) By not later than four (4) months after the Effective Date, the Project Implementation Entity shall adopt, and thereafter maintain, during the implementation of the Project, the Labor Management Plan. The Project Implementation Entity shall ensure that the project is implemented in accordance with the systemic approach to the management of labor issues set forth in the Labor Management Plan and that its measures are implemented with due diligence and efficiency, in particular those addressing issues of child and forced labor, labor influx, terms and conditions of employment and nondiscrimination and equal opportunity. Except as the Association shall otherwise agree, the Project Implementing Entity shall ensure that the Labor Management Plan is not amended, suspended or waived. In case of any inconsistencies between the provisions of the Labor Management Plan and the provisions of this Agreement, the provisions of this Agreement shall prevail. -8- (b) Without limitation upon any of its reporting obligations under this Agreement, the Project Implementing Entity shall regularly collect, compile, and submit to the Association, and promptly in a separate report whenever the Association may require, information on the status of compliance with the Labor Management Plan. Such information shall include: (i) measures taken in furtherance of the Labor Management Plan; (ii) conditions, if any, which interfere or threaten to interfere with the smooth implementation of the Labor Management Plan; and (iii) remedial measures taken or required to be taken to address such conditions. 8. Without limitation to its other reporting obligations under this Agreement and under Section 4.08 of the General Conditions, the Project Implementing Entity shall include in the Project Reports referred to in Section II.A of this Schedule adequate information on the implementation of the Safeguard Instruments, giving details of: (a) measures taken in furtherance of such Safeguard Instruments; (b) conditions, if any, which interfere or threaten to interfere with the smooth implementation of such Safeguard Instruments; and (c) remedial measures taken or required to be taken to address such conditions and to ensure the continued efficient and effective implementation of such Safeguard Instruments. 9. The Project Implementing Entity shall establish, publicize, maintain and operate an accessible grievance mechanism, to receive and facilitate resolution of concerns and grievances of Affected People under the Project, and take all measures necessary and appropriate to resolve, or facilitate the resolution of, such concerns and grievances, in a manner acceptable to the Association. The Project Implementing Entity shall ensure that the aforementioned grievance mechanism includes defined pathways for resolving complaints as defined in the Stakeholder Engagement Plan. 10. If sixty (60) days prior to the Closing Date, the Bank determines that there are measures and actions specified in the Safeguard Instruments which will not be completed by the Closing Date, the Project Implementing Entity shall: (a) not later than thirty (30) days before the Closing Date, prepare and present to the Association, an action plan satisfactory to the Association on the outstanding measures and actions, including a timetable and budget allocation for such measures and actions; and (b) thereafter, carry out said action plan in accordance with its terms and in a manner acceptable to the Association. -9- 11. The Project Implementing Entity shall ensure, that all bidding documents and contracts for civil works under the PIE Parts of the Project include the obligation of contractors, subcontractors and supervising entities: (a) to comply with the relevant aspects of Safeguard Instruments; (b) to adopt and implement measures to assess and manage the risks and impacts of labor influx and workers’ camps; and (c) to adopt and enforce codes of conduct that should be provided to and signed by all workers, detailing measures on environmental, social, health and safety, gender-based violence and violence against women, children and other vulnerable groups; all as applicable to such civil works commissioned or carried out pursuant to said contracts. 12. The Project Implementing Entity shall ensure that all technical assistance under the PIE Parts of the Project, application of whose results would have environmental and social implications, shall only be undertaken pursuant to terms of reference reviewed and found satisfactory to the Association, such terms of reference shall ensure that the technical assistance takes into account, and calls for application of the Association’s environmental and social safeguards policies. 13. The Project Implementing Entity shall maintain, throughout the period of implementation of the Project, a gender-based violence service provider, with qualifications, experience and under terms of reference satisfactory to the Association, to sensitize Project-related workers and communities on gender- based violence matters. Section II. Project Monitoring, Reporting and Evaluation A. Project Reports The Project Implementing Entity shall monitor and evaluate the progress of the PIE Parts of the Project and prepare Project Reports in accordance with the provisions of Section 5.08 (b) of the General Conditions and on the basis of indicators acceptable to the Association and laid out in the Project Operations Manual. Each such Project Report shall cover the period of one calendar quarter, and shall be furnished to the Recipient not later than two weeks after the end of the period covered by such report for incorporation and forwarded by the Recipient to the Association of the overall Project Report.