CREDIT NUMBER 6663-BJ




               Project Agreement
    (Agricultural Competitiveness a nd Export Diversifi cation Project)


                                 between


         INTERNATIONAL DEVELOPMENT ASSOCIATION


                                   and


AGENCY FOR PROMOTION OF INVESTMENT AND EXPORTS (APIEx)
                                                                    CREDIT NUMBER 6663-BJ

                                   PROJECT AGREEMENT

       AGREEMENT between lNTERNATlONAL DEVELOPMENT ASSOClA T ION
("Association") and Agency for Promotion of Investment and Exports (APIEx) ("Project
Implementing Entity") ("Project Agreement") in connection with the Financing Agreement
("Financing Agreement") of the Signature Date between the REPUBLIC OF BENIN ("Recipient)
and the Association, concerning Credit No. 6663-BJ. The Association and the Project
Implementing Entity hereby agree as follows:

                  ARTICLE I -      GENERAL CONDITIONS; DEFINITIONS

1.0 l.   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
         t he 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 Component one (1) and three
         (3) of the Project in accordance with the provisions of Article V of the General Conditions
         and the Schedule to tllis Agreement, and shall provide promptly as needed, the funds ,
         facilities, services and other resources required for its Respective Part of the Project.

                               ARTICLE III -      TERMINATION

3.01.    For purposes of Section IO.OS (c) of the General Conditions, the date on which the
         provisions of this Agreement shall terminate is twenty years after the Signature Date.
                                                 -2-




                     ARTICLE IV -       REPRESENTATIVE; ADDRESSES

4.0 l.   The Project Implementing Entity's Representative is its general director.

4.02.    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

         (b)     the Association's Electronic Address is:

                 Telex:                   Facsimile:

                 248423(MC I) or          (+)) 202-477-6391

4.03.     For purposes of Section 11.01 of the General Conditions:

         (a)     the Project Implementing Entity's address is:

                 Agence de Promotion des Jnvestissements et des Exportations (AP/Ex)
                 Jmmeuble AP!EX/ANAEP, Lot 368, Face Hall des Arts
                 01 BP 5160, Cotonou
                 Republique du Benin; and

         (b)     the Project Implementing Entity's Electronic Address is:

                 Telephone:                       Facsimile:

                 (+229) 21318650                  (+229)21318659
                 (+229) 2 1318672

                 Emai l:

                 contact@ A Pl Ex. bj
                                              -3-




AGREED as of the later of the two dates written below.



                       INTERNATIONAL DEVELOPMENT ASSOCIATION




                       By


                                                        Authorized Representative




                       AGENCY FOR PROMOTION OF INVESTMENT AND EXPORTS




                       By


                                                        Authorized Representative

                                               Name:         iJe
                                                         _ li_ _l_
                                                                 f_SA
                                                                    _       ; --
                                                                      N_GB~ES
                                               Title:   ~\5\~~             G<L!'\~~
                                               Date:      ~,'b\ <.:) b \ 't,(.:) ID
                                                                \.      1
                                                 -4-




                                           SCHEDULE

       Execution of the Proj ect Implementing Entity's Respective Part of the Project

Section l.      Implementation Arrangements

A.      Institutional Arrangements

APIEx shall carry out Component one ( 1) and three (3) of Project and to this end, shall:

        (a)     hire and appoint: (i) a component coordinator APIEx; (ii) a private sector and value
                chains development specialist; (iii) a market infrastructure specialist; (iv) a chief
                accountant; and (v) a procurement specialist on the basis of terms of reference,
                qualifications, integrity and experience acceptable to the Association; and

        (b)     be a member of the Project's technical committee.

B.      Matching Grant Operating Manual, Risk Sharing Facility Manual

1.      For the purposes of implementing Part 3.1 of the Project, APIEx shall prepare and adopt a
        Matching Grant Operating Manual in form and substance acceptable to the Association,
        including, inter a/ia, an elaboration of the eligibility criteria and terms and conditions, and
        procedures for preparation, approval and monitoring and evaluation, of Matching Grants.

2.      For the purposes of implementing Part 3.2 of the Project, AP!Ex shall cause FONAGA to
        maintain, in accordance with terms of reference acceptable to the Association, a Risk
        Sharing Facility Manual, containing detailed arrangements and procedures for the Risk
        Sharing Facility, including inter alia: (i) eligibility criteria, detailed rules and procedures
        for selection of Participating Banks; (ii) legal arrangements to be entered into between
        FONAGA and Participating Bank and between Participating Banks and Private Sector
        Operators; ( iii) administration, financial management and accounting procedures; and
        (iv) such other administrative, technical and organizational arrangements and procedures
        as shall be required for purposes of implementation of Part 3.2 of the Project.

3.      APIEx shall implement the Project in accordance with the Project Implementation Manual,
        the Matching Grant Operating Manual, Risk Sharing Facility Manual; provided, however,
        that, in the event of any conflict between the provisions of these manuals and those of this
        Agreement, this Agreement shall prevail.

4.      Except as the Association shall otherwise agree, APIEx shall not amend, waive or
        otherwise modify the Matching Grant Operating Manual , Risk Sharing Facility Manual;
        (or any provision thereof) if, in the opinion of the Association, such amendment, waiver or
        other modification may materially and adversely affect the implementation of the Project.
                                            -5-




C.   Subsidiary Agreement
1.    APIEx shall enter into a subsidiary agreement with the Recipient ("Subsidiary
      Agreement"), under terms and conditions approved by the Association, which shall include
      the following:

      (a)     APIEx shall carry out Component one (1) and three (3) of Project in accordance
              with the provisions of this Agreement, the Financing Agreement, and the PIM;

      (b)    APIEx shall exercise its rights under the Subsidiary Agreement in such a manner
             as to protect the interests of the Recipient and the Association and to accomplish
             the purposes of the Financing Agreement; and

      (c)    except as the Association shall otherwise agree, APIEx or the Recipient shall not
             assign, amend, abrogate or waive the Subsidiary Agreement or any of its
             provisions.

2.    APIEx shall exercise its rights and carry out their obligations under the Subsidiary
      Agreement in such manner as to protect the interests of APIEx and the Association and to
      accomplish the purposes of the Financing Agreement.

D.    Matching Grant Mechanism

1.    APIEx disburse Matching Grants to Beneficiaries for Sub-projects in accordance with
      eligibility criteria and procedures set forth in the Matching Grant Operating Manual and
      acceptable to the Association which shall include the following:

      (a)    No proposed Sub-project shall be eligible for financing under a Matching Grant to
             a Beneficiary unless APIEx, shall have determined on the basis of an appraisal
             carried out in accordance with guidelines acceptable to the Association and
             elaborated in the Matching Grant Operating Manual, that:

             (i)     the proposed Sub-project:

                     (A)     (I) is designed under the Window A for micro and small agro-
                             processing operators and agriculture service providers to finance
                             the expansion and/or upgrade of their existing activities; (2) is
                             designed under the Window B to invest the acquisition of
                             agricultural production equipment and machinery, post-harvest
                             technologies and storage facilities by small and medium
                             geoprocessing operators and agriculture providers; or (3) is
                             designed under the Window C to finance the expansion and/or
                             upgrade of their existing facilities by small and medium agro-
                             processing units and agriculture service providers;

                     (B)     is technically feasible and economically and financially viable;
                             and
                                 -6-




        (C)      if, pursuant to the environmental and social frameworks, one or
                 more Safeguard Documents for the Sub-project are required, such
                 Safeguard Documents have been prepared by the Rec ipient and
                 a pproved by the Association in accordance with the provis ions of
                 paragraph; and


(ii)    the fo llowing Sub-projects shall not be eligible fo r fi nancing, as further set
        forth in the Matching Grant Operating Manual :

        (A)     any Sub-projects involving non-eligible expenditures (as such
                term is defi ned in the Matching Grant Operating Manual);

        (B)     any Sub-projects affecting international waterways, natural
                habitats, disputed areas or indigenous peoples;

        (C)     any Sub-projects involving the convers ion or degradati on of forest
                areas;

        (D)     any Sub-projects involving the involuntary taking of land or
                involuntary resettlement resulting in relocation or loss of shelter,
                loss of assets or access to assets. loss of income sources or means
                of livelihood, or involving the involuntary restriction of access to
                legally designated parks and protected areas;

        (E)     any Sub-projects involving the construction or rehabi litation of
                dams; and

        (F)     any Sub-projects that would be classifi ed as 'Category A' in
                accordance with the Bank' s policies and procedures; and

(iii)   the proposed Beneficiary:

        (A)     is a natural person or a legal entity established and operating under
                the laws of the Recipient with the organization, management,
                technical capacity and financial resources necessary to carry out
                the proposed Sub-project; and

        ( B)    (i) under Window A, has demonstrated the capacity, and has
                committed to fi nance at least 15% of the total estimated cost of
                the Sub-proj ect out of its own resources or other loans; (ii) under
                Window B, has demonstrated the capacity, and has committed to
                finance at least 20% of the total estimated cost of the Sub-project
                out of its own resources or other loans; and (iii) under Window C,
                has demonstrated the capacity, and has committed to finance at
                least 50% of the total estimated cost of the Sub-project out of its
                own resources, unless the proposed Beneficiary is, or is owned by.
                a woman or Youth, in which case the proposed Beneficiary has
                committed to fi nance at least 40% of the total estimated cost of
                                            -7-




                             the Sub-project out of its own resources or other loans and
                             committed to provide I 0% in in-kind contributions.

     (b)     The maximum amount: (i) of all Matching Grants to a single Beneficiary shall not
             exceed the equivalent of one hundred (100) thousand United States Dollars; and
             (ii) of each Matching Grant for a Sub-Project under Window A shall not exceed
             seven (7) thousand United States Dollars; (iii) each Matching Grant for a Sub-
             Project under Window B shall not exceed twenty-five (25) thousand United States
             Dollars; and (iv) each Matching Grant for a Sub-Project under Window C s hall not
             exceed one hundred (100) thousand Un ited States Dollars.

2.   For purposes of the implementation of Part 3.1 (a) of the Project, APIEx, shal l make each
     Matching Grant under a Matching Grant Agreement with the respective Beneficiary on
     terms and conditions approved by the Association, which shall include the following:

     (a)     The Matching Grant shall be made on a non-reimbursable grant basis.

     (b)     The Recipient shall obtain rights adequate to protect its interests and those of the
             Association, including the right to:

             (i)     suspend or terminate the right of the Beneficiary to use the proceeds of the
                     Matching Grant, or obtain a refund of all or any part of the amount of the
                     Matching Grant then withdrawn, upon the Beneficiary 's failure to perform
                     any of its obligations under the Matching Grant Agreement; and

             (ii)    require each Beneficiary to:

                     (A)     carry out its Sub-project with due diligence and efficiency and in
                             accordance with sound technical, economic, financial,
                             managerial, environmental and social standards and practices
                             satisfactory to the Association, including in accordance with the
                             provisions of the Safeguard Frameworks (and any Safeguard
                             Document required for the Sub-project pursuant to the Safeguard
                             Frameworks), and the Anti-Corruption Guidelines applicable to
                             recipients of loan proceeds other than the Recipient;

                     (B)      provide, promptly as needed, the resources required for the
                              purpose;

                     (C)     procure the goods and services to be financed out of the Matching
                             Grant in accordance with the provisions of Section Ill of this
                             Schedule;

                     (D)     maintain policies and procedures adequate to enable it to monitor
                             and evaluate in accordance with indicators acceptable to the
                             Association, the progress of the Sub-project and the achievement
                             of its objectives;
                                             -8-




                      (E)     (I) maintain a financial management system and prepare financiaJ
                              statements in accordance with consistently applied accounting
                              standards acceptable to the Association, both in a manner
                              adequate to reflect its operations, including the operations,
                              resources and expend itures related to the Sub-project; and (2) at
                              the Association's or the Recipient's request, have such financial
                              statements audited by independent auditors acceptable to the
                              Association, in accordance with consistently applied auditing
                              standards acceptable to the Association, and promptly furnish the
                              statements as so audited to the Recipient and the Association, and
                              pennit the Association to make such statements as so audited
                              available to the public, along with the Matching Grant Agreement;

                     (F)      enable the Recipient and the Association to inspect the Sub-
                              project, its operation and any relevant records and documents; and

                     (G)      prepare and furnis h to the Recipient and the Association all such
                              information as the Recipient or the Association shall reasonably
                              request relating to the foregoing.

3.   APIEx shall exercise its rights and carry out its obligations under each Matching Grant
     Agreement in such manner as to protect the interests of the Recipient and the Association
     and to accomplish the purposes of the Financing.

4.   Except as the Association shall otherwise agree, APIEx shall not assign, amend, abrogate
     or waive any Matching Grant Agreement or any of its provisions.

E.   FONAGA Risk Sharing Facility

I.   To facilitate the carrying out of Part 3.2(a) and (b), APIEx shall make the proceeds of the
     Financing allocated from time-to-time to Category four ( 4) of the table set forth in Section
     III of this Schedule, available to FONAGA; under a Risk Sharing Facility Framework
     Agreement between the APIEx and FON A GA under terms and conditions approved by the
     Association.

2.   APIEx shall exercise its rights under the Risk Sharing Facility Framework Agreement in
     such manner as to protect its interests and the interests of the Association in order to
     accomplish the purposes of the Financing.

3    APIEx may not assign, amend, abrogate or waive the Risk Sharing Facility Framework
     Agreement without the prior written approval of the Association.

4.   In the event of any conflict between the provisions of the Risk Sharing Facility Framework
     Agreement and the provisions of this Agreement, the provisions of this Agreement shall
     prevail.

5.   Without limitation upon the provisions of Section 3.0 I of this Agreement, APIEx shall:
     (a) carry out Part 3.2(a) and (b) of the Project in accordance with the provisions of this
                                                -9-




       Agreement, the Risk Sharing Facility Framework Agreement, the Risk Sharing Facility
       Manual, and the Partial Credit Guarantee Agreements; all on terms and conditions
       acceptable to the Association; (b) carry out all its obligations and take all actions necessary
       on its part to enable FONAGA to perform all of FONAGA's obligations under said
       agreements; (c) not take or permit to be taken any action which would prevent or interfere
       with such performance; and (d) except as the Association shall otherwise agree, waive said
       agreements or any provision thereof.

6.     AP IEx shall, for purposes of Part 3.2(a) and Part 3.2(b) of the Project, entrust FONAGA
       to open and maintain, on behalf of the Recipient, an account on terms and conditions
       satisfactory to the Association (the "Risk Sharing Facility Account"). Deposits into, and
       payments out of the Risk Sharing Facility Account shall be made in accordance with the
       terms and conditions set forth in this Agreement, the Risk Sharing Faci lity Framework
       Agreement and the Risk Sharing Facility Manual.

7.      The proceeds of the Financing deposited in the Risk Sharing Facility Account shall be used
        exclusively for making payments to Participating Banks in case of default by Private Sector
        Operators under Loan Agreements between Participating Banks and private sector
        operators participating in the Subsidized Concession Model, all in accordance with the
        terms of this Agreement, the Risk Sharing Facility Framework Agreement and the Risk
        Sharing Facility Manual.

8.      APIEx may, through FONAGA, refund to the Association any amount on deposit in the
        Risk Sharing Facility Account, which FONAGA shall have determined will not be required
        to cover payments due under or in connection with the Partial Credit Guarantee
        Agreements.

9.      APIEx shall, through FONAGA, promptly refund, prior to the Closing Date, to the
        Association any balance in the Risk Sharing Facility Account remaining after deducting
        the total amount of commitments under each Partial Credit Guarantee Agreement that has
        not expired or said agreement has not otherwise terminated in accordance with its terms.

10.     Refunds to the Association made pursuant to paragraphs 8 and 9 above or otherwise
        pursuant to the provisions of the Risk Sharing Facility Framework Agreement shall be
        credited, prior to the Closing Date. to the Financing Account for subsequent withdrawal or
        for cancellation in accordance with the relevant provisions of this Agreement, including
        the General Conditions.

F.      Commercial Guarantee Mechanism

For the implementation of Part 3.2(e) of the Project, APrEx shall:

        (a)     make available a portion of the proceeds under Category four (4) to Guarantee
                Beneficiaries, on terms and conditions acceptable to the Association and further
                detailed in the Project Implementation Manual;

        (b)     ensure that prior to providing any Commercial Guarantee, have entered, with the
                respective selected Guarantee Beneficiary, into an agreement ("Guarantee
                                            -I 0-




             Agreement") on terms and conditions acceptable to the Association, including,
             inter alia: ( i) the Guarantee Agreement's expiry date shall be on or before the
             closing date of the present Agreement; (ii) the obligation of the Guarantee
             Beneficiary to comply with the pertinent provisions of the Project Implementation
             Manual, the Safeguard Documents, and the Anti-Corruption Guidelines applicable
             to recipients of loan proceeds other than the Recipient; and (iii) the right of AP!Ex
             to terminate the right of the Guarantee Beneficiary to use the Commercial
             Guarantee, upon the Guarantee Beneficiary's failure to perform any of its
             obligations under the Guarantee Agreement, and/or Project Implementation
             Manual, including compliance with the Safeguard Documents;

     (c)     ensure that the proceeds of Commercial Guarantee shall be used exclusively for
             eligible expenditures in accordance with the terms of this Agreement, the Project
             Implementation Manual, and the Guarantee Agreement;

     (d)     refund to the Association any amount which APlEx have determined it will not be
             required to cover payments due under or in connection w ith the Commercial
             Guarantee Agreements;

     (e)     promptly refund, prior to the Closing Date, to the Association any balance
             remaining after the commitments under each Commercial Guarantee Agreement
             has expired or said agreement has otherwise terminated in accordance with its
             terms; and

     (f)     refund to the Association made pursuant to paragraphs (d) and (e) above shall be
             credited, prior to the Closing Date, to the Financing Account for subsequent
             withdrawal or for cancellation in accordance with the relevant provisions of this
             Agreement, including the General Conditions.

G.   Environmental and Social Standards.

I.   APlEx shall ensure that Component one (I) and three (3) of the Project is carried out in
     accordance with the Environmental and Social Standards. in a manner acceptable to the
     Association.

2.   Without limitation upon paragraph I above, APIEx shall ensure that the that Component
     one ( I ) and three (3) of the Project is implemented in accordance w ith the Environmental
     and Social Comm itment Plan ("ESCP"), in a manner acceptable to the Association. To this
     end, APl Ex s hall ensure that:

     (a)     the measures and actions speci lied in the ESCP are implemented with due
             diligence and efficiency, and provided in the ESCP;

     (b)     sufficient funds are available to cover the costs of implementing the ESCP;

     (c)     policies and procedures are maintained, and qualified and experienced staff in
             adequate numbers are retained to implement the ESCP, as provided in the ESCP;
             and
                                                -II-




        (d)     the ESCP, or any provision thereof, is not amended, repealed, suspended or
                waived, except as the Association shall otherwise agree in writing, as specified in
                the ESCP, and ensure that the revised ESCP is disclosed promptly thereafter.

3.      In case of any inconsistencies between the ESCP and the provisions of this Agreement, the
        provisions of this Agreement shall prevail.

4.      The Project Implementing Entity shall ensure that:

        (a)     all measures necessary are taken to collect, compile, and furnish to the Association
                through regular reports, with the frequency specified in the ESCP, and promptly
                in a separate report or reports, if so requested by the Association, information on
                the status of compliance with the ESCP and the environmental and social
                instruments referred to therein, all such reports in form and substance acceptable
                to the Association, setting out, inter a/ia: (i) the status of implementation of the
                ESCP; (ii) conditions, if any, which interfere or threaten to interfere with the
                implementation of the ESCP; and (iii) corrective and preventive measures taken or
                required to be taken to address such conditions; and

        (b)     the Association is promptly notified of any incident or accident related to or having
                an impact on the Project which has, or is likely to have, a significant adverse effect
                on the environment, the affected communities, the public or workers, in
                accordance with the ESCP, the environmental and social instruments referenced
                therein and the Environmental and Social Standards.

5.      The Project Implementing Entity shall establish, publicize, maintain and operate an
        accessible grievance mechanism, to receive and facilitate resolution of concerns and
        grievances of Project-affected people, 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.

Section II.     Project Monitoring, Reporting and Evaluation

A.      Project Reports.

1.      The Project Implementing Entity shall monitor and evaluate the progress of its Respective
        Part of the Project and prepare Project Reports for its Respective Part of the Project in
        accordance with the provisions of Section 5.08 (b) of the General Conditions and on the
        basis of the indicators acceptable to the Association. Each such Project Report shall cover
        the period of one calendar semester and shall be furnished to the Recipient not later than
        forty-five (45) days after the end of the period covered by such report for incorporation and
        forwarding by the Recipient to the Association of the overall Project Report.

2.      The Project Implementing Entity shall provide to the Recipient not later than thirty (30)
        days, for incorporation in the report referred to in Section 5.08(c) of the General Conditions
        all such information as the Recipient or the Association shall reasonably request for the
        purposes of such Section.