09-Jul-2024 Date: _______________________ Honorable Yussuf Murangwa Minister of Finance and Economic Planning Kigali, Rwanda Excellency: Re: Republic of Rwanda - Credit Nos. 7084-RW, 7085-RW and Grant No. E017-RW Commercialization and De-Risking for Agricultural Transformation Project Amendment to the Financing Agreement We refer to the Financing Agreement (the “Financing Agreement”) between the Republic of Rwanda (the “Recipient”) and the International Development Association (the “Association”) dated May 2, 2022, for the Commercialization and De-Risking for Agricultural Transformation Project (the “Project”). We also refer to the additional financing for the Project, recently approved by the Association on June 30, 2024, which entails some modest restructuring to the Project. Accordingly, we are pleased to inform you that the Association hereby proposes to: (a) amend Schedule 1 to the Financing Agreement to read as set forth in annex 1 to this letter of Amendment (“Amendment Letter”); (b) revise the disbursement table under Section III.A of Schedule 2 to the Financing Agreement to read as set forth in annex 2 to this Amendment Letter. (c) amend Section III.B(1) of Schedule 2 to the Financing Agreement to read as set forth in annex 3 to this Amendment Letter; and (c) amend the Appendix to the Financing Agreement to reflect the additional definition below and the remaining definitions in the Appendix renumbered accordingly: i. “Results-based Climate Finance” means a climate finance mechanism that provides a financial reward in the form of grant payments for the achievement of agreed-upon and verifiable climate-related outcomes, to be designed and piloted under subcomponent 2.1 of the Project, leveraging the existing credit line. 1 Please note that the capitalized terms used in this Amendment Letter and not defined herein have the meanings ascribed to them in the Financing Agreement. All other provisions of the Financing Agreement, except as herein specifically amended, shall remain in full force and effect. Please indicate your agreement to the amendments mentioned above, on behalf of the Recipient, by countersigning and dating this Amendment Letter. This Amendment Letter shall become effective as of the date the legal agreement for the additional financing for the Project dated (TF No. TF0C5464) becomes effective. Sincerely, By ______________________________ Sahr Kpundeh Country Manager for Rwanda Eastern and Southern Africa Region AGREED: REPUBLIC OF RWANDA By: _____________________________ Honorable Yussuf Murangwa Minister of Finance and Economic Planning 25-Jul-2024 Date: _________________________ 2 Annex 1 SCHEDULE 1 Project Description The objectives of the Project are to increase the use of irrigation and commercialization among producers and agribusiness firms in supported value chains, and to increase access to agricultural finance. The Project consists of the following parts: Part 1: Value Chain and Infrastructure Development 1.1 Supporting irrigation rehabilitation and development through: (a) the rehabilitation and improvement of existing large- and small- scale irrigation systems and development of new ones, in line with climate-resilient standards, including pre-feasibility and feasibility studies, preparation of detailed designs, construction supervision and quality assurances, construction of irrigation water abstraction, delivery, distribution, and drainage structures; and (b) technical assistance to establish, organize and strengthen irrigation water user associations and to incentivize farmers to adopt energy-saving technologies for water management. 1.2 Carrying out land husbandry and climate-smart agronomic measures and surveys for soil conservation and management. 1.3 Supporting innovation and services for agri-business value chain development, by: (a) supporting investments to facilitate access to production and agribusiness assets, the development of technology and the increase of capacity in the public seed system that underpins the private seeds supply chains. (b) providing services and technical assistance to commercial producers and agribusinesses for capacity improvement to meet sanitary and phytosanitary and other quality requirements, to develop quality and bankable business plans, to improve post harvesting handling, processing, and marketing; and to market production and improve produce aggregation models for cooperatives; and (c) promoting women and youth engagement in agriculture to enhance innovative technology in production and commercialization of different value chains; including setting up, capitalizing, and operationalizing a fund (Innovation Challenge Fund) to contribute to the financing of testing or scaling up ideas, developed by young value chain actors and service providers benefiting actors of the agri-food value chain. 3 Part 2: Agricultural Finance and Insurance Expanding the supply of affordable financial services, by: 2.1 Scaling up agricultural finance, through: (a) (i) the extension of a line of credit for agriculture and livestock production and post-harvest finance; and (ii) extension of grants through the Results Based Climate Finance mechanism as an incentive to eligible beneficiaries that have invested in climate smart agriculture technologies; and (b) the development of the institutional capacity of participating financial institutions in agriculture and livestock production and post-harvest financing to deliver financial services at affordable costs, including the design of new products, the digitalization of financial services and the improvement of financial literacy and risk management. 2.2 Strengthening agricultural insurance, through: (a) institutional strengthening; development and delivery of cost effective agricultural/livestock insurance products; improvement of data collection, storage and availability for agriculture insurance use; and development of reinsurance; (b) premia co-financing, including subsidies and outreach to farmers; (c) development and provision of training of public and private insurance actors and outreach activities; and (d) establishment of a digital platform linking producers, insurance and financial services and development of fintech solutions. Part 3: Project Management Supporting the management of the Project by: (1) RAB; and (2) BRD, including in each case with respect to procurement and financial management; environmental and social safeguards implementation and compliance; monitoring and evaluation; communication and knowledge management, as well as providing support related to policy, regulatory and technical aspects relevant to the Project and the achievement of its objectives. Part 4: Contingency Emergency Response Component Providing immediate response to an Eligible Emergency, as needed. 4 Annex 2 Percentage of Expenditures Amount of Amount of Amount of to be Financed Credit an Credit B the Grant Allocated Allocated Allocated (inclusive of Taxes) (expressed in (expressed in (expressed From Credit A/ Credit Category Yen) EUR) in SDR) B/and Grant (1) Goods, works, non-consulting services, 938,324,987 49,800,000 40,000,000 6.8/46.6/46.6% consulting services, Training Costs and Incremental Operating Costs for the Parts 1, 2.2 and 3.1 of the Project, but expressly excluding (i) land expenditures, (including compensation for land acquisition related to the implementation of a resettlement instrument), or cash compensation and other assistance paid in cash for involuntary resettlement, (ii) Matching Grants, and (iii) Capitalization of fund (2) Matching Grants under Part 1.3(a) of the 801,975,000 3,650,000 2,950,000 45.8/27/27.2% Project (3) Capitalization of fund (Innovation 132,900,000 550,000 450,000 48.1/25.7/26.2% Challenge Fund) under Part 1.3(c) of the Project (4) Goods, works, non-consulting services, 179,100,000 700,000 550,000 50/25.3/24.7% consulting services, Training Costs and Incremental Operating Costs for Parts 2.1(b) and 3.2 of the Project (5) Line of Credit under Part 2.1(a) of the 3,177,500,000 12,300,000 9,850,000 50/25/25% Project and grants under Part 2.1 (a)(ii) of the Project (6) Emergency Expenditures under Part 4 of 0 0 0 0 the Project TOTAL AMOUNT 5,229,799,987 67,000,000 53,800,000 5 Annex 3 “B. Withdrawal Conditions; Withdrawal Period 1. Notwithstanding the provisions of Part A above, no withdrawal shall be made: (a) for payments made prior to the Signature Date; or (b) Under Category (5) unless and until the Line of Credit Manual has been updated and adopted, in form and substance satisfactory to the Association; or (c) under Category (6) for Emergency Expenditures, unless and until all of the following conditions have been met in respect of said expenditures: (A) (AA) the Recipient has determined that an Eligible Crisis or Emergency has occurred, and has furnished to the Association a request to withdraw Financing amounts under Category (6); and (BB) the Association has agreed with such determination, accepted said request and notified the Recipient thereof; and (B) the Recipient has adopted the CERC Manual and Emergency Action Plan, in form and substance acceptable to the Association.” 6