OFFICAL DOCUMMU The World Bank 1818 H Street N.W. (202) 477-1234 INTERNAT ONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT .G.- 0 M Cable Address: INTBAFRAD INTERNAT ONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS June 29, 2012 [I.E. Dr. Mohammed Saeed Al-Saad Minister of Planning and International Cooperation P. 0. Box 175 Sana'a, Republic of Yemen Re: Credit No. 4220-YEM Rainfed Agriculture and Livestock Project Amendment to the Development Credit Agreement [wellency: We refer to the Development Credit Agreement (Rainfed Agriculture and Livestock Project) between the Republic of Yemen (the Borrower) and the International Development Association (the Association) dated September 11, 2006 (the Development Credit Agreement), as amended. We also refer to your letter dated March 13, 2012, requesting certain amendments to the Development Credit Agreement. We are pleased to inform you that the Association, after due consideration, has acceded to your requests. Accordingly, the Development Credit Agreement is hereby amended as follows: 1. Part B of the preamble to the Development Credit Agreement is hereby amended as follows: "(B) Part BA (b) and Part C of the Project will be carried out by Social Fund for Development (SFD) with tie Borrower's assistance and, as part of such assistance, the Borrower will make part of the proceeds of the credit provided for in Article 11 of this Agreement (the Credit) available to SFD, as set forth in this Agreement; and" 2. Section 1.02 (b) of the Development Credit Agreement is amended to read as follows: "(b) "Eligible Categories" means Categories (1), (4), and (5) set forth in the table in Part A.1 of Schedule I to this Agreement in respect of Parts A and B of the Project and Category (2) set forth in said table in respect of Part C of the Project." 3. Section 1.02(d) of the Development Credit Agreement is amended to read as follows: "(d) Environmental Management Plan" or "EMP" means the Borrower's environmental management plan for the Project fumished to the Association on July 21, 2005. and updated May 23, 2012, as such EMP may be updated from time to time by agreement between the Borrawer and the Association, setting forth the measures to be taken during the implementation and operation of the Project to offset or reduce adverse environmental impacts to levels acceptable to the Association" I Paragraphs (j) and (k) of Section 1.02 of the Development Credit Agreement are amended to read as follows: "(j) "Parts A and B PIP' means the Borrower's Project implementation plan, furnished to the Association on November 23, 2005, and updated May 28, 2012, setting forth the procedures, methodology, plans of implementation and specialists acceptable to the Association required for carrying out Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5)of the Project, as such plan may be updated from time to time by agreement of the Borrower and the Association; (k) "Part C PIP" means SFD's Project implementation plan, furnished to the Association on November 23, 2005, and updated May 28, 2012, setting forth the procedures, methodology, plans of implementation and required personnel acceptable to the Association required for carrying out Part A2(a), (3), Part B4(b) and Part C of the Project, as such plan may be updated from time to time by agreement of SFD and the Association;" 5. The Closing Date in Section 2.03 of the Development Credit Agreement is amended to read September 30, 2014. 5. Section 3.01(a) and (b) of the Development Credit Agreement is amended to read as follows: "Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, shall carry out Part Al, A2(b) and (c), A4, and Part 13 (1), (2), (3), 4(a) and (5) of the Project through MAI, with due diligence and efficiency and in conformity with appropriate administrative, economic, environmental, engineering, inancial and technical practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the Project. (b) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end, without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, shall for the purpose of Part A2(a), (3), Part B4(b) and Part C of the Project cause SFD to perform in accordance with the provisions of the Project Agreement all the obligations of SFD therein set forth, shall take and cause to be taken all actian, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable SFD to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance." 7. Section 3.01 (e) of the Development Credit Agreement is amended to read as follows: "(e) Without limitation upon the provisions of paragraph (a) of this Section and except as the Borrower and the Association shall otherwise agree, the Borrower shall carry out Part Al, A2(b) and (c), A4, and Part 13 (1), (2), (3), 4(a) and (5) of the Project in accordance with the Implementation Program set firth in Schedule 4 to this Agreement" 8 Section 4.01 of the Development Credit Agreement is amended to read as follows: "Section 4.01. (a) The Borrower shall maintain a financial management system, including records and accounts, and prepare financial statements in accordance with consistently applied accounting standards acceptable to the Association, adequate to reflect the operations, resources and expenditures related to Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project." Section 4.02(a) of the Development Credit Agreement is amended to read as follows: 2 "Section 4.02. (a) Without limitation upon the Borrower's progress reporting obligations set out in Schedule 4 to this Agreement, the Borrower shall prepare and furnish to the Association a financial monitoring report, in form and substance satisfactory to the Association, which: (i) sets forth sources and uses of funds for Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project, both cumulatively and for the period covered by said report, showing separately funds provided under the Credit, and explains variances between the actual and planned uses of such funds; (ii) describes physical progress in implementation of Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project, both cumulatively and for the period covered by said report, and explains variances between the actual and planned Project implementation; and (iii) sets forth the status of procurement under Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project, as at the end of the period covered by said report." 10 The table at paragraph I of Section A of Schedule 1 of the Development Credit Agreement is arrended as follows: "1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the % of Credit Allocated Expenditures (Expressed in SDR) to be Financed Category (1) Works, Goods, 2,170,380 100% Training and Incremental Operating Costs under Parts A and B of the the Project (pro memoria) (2) Goods, Consultants' 7,400,000 100% Services, PRP Grants and Incremental Operating Costs for the Governorates within the Project Area under Part C of the the Project (3) Unallocated 0 3 (4) Works, Goods, 4,229,620 100% Consultants' Services, Training and Incremental Operating Costs under Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project (5) Goods, 200,000 100% Consultants' Services, Training and Incremental Operating Costs under Part A2(a), and (3) and Part B 4(b) of the Project TOTAL 14,000,000" 11 Paragraph 3 of Section A of Schedule 1 of the Development Credit Agreement is amended as follows: "3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of payments made in respect of: (a) payments made for expenditures prior to the date of this Agreement, except that wi-hdrawals, in an aggregate amount not exceeding the equivalent of SDR200,000, may be made on account of payments made for expenditures before that date but after December 1, 2005; (b) payments made for PRP Grants under Category (2), unless a Manual of Procedures for PRP Grants, satisfactory to the Association, specifying the eligibility criteria, procedures for selection, disbursement mechanisms and expected Beneficiary contributions for PRP Activities, has been approved by the Association; and (c) under Category (1) after the date of this amendrient." 12. Paragraph I of Section B of Schedule 1 of the Development Credit Agreement is amended as follows: "1. The Borrower may, for the purposes of each of: (i) Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) open and maintain in United States dollars a separate special deposit account in its Central Bank on terms and conditions satisfactory to the Association (Special Account for Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project); and (ii) Part A2(a), (3), Part B4(b) and Part C of the Project, open and maintain in United States dollars a separate special deposit account in a commercial bank on terms and conditions satisfactory to the Association, including appropriate protection against set-off, seizure or attachment (Special Account for Part A2(a), (3), Part B4(b) and Part C of the Project)." 13. In Annex A to Schedule 1 of the Development Credit Agreement, all references to "Parts A and B of the Project" shall hereby be replaced with "Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project". 14. In Annex B to Schedule 1 of the Development Credit Agreement, all references to "Part C of the Project" shall hereby be replaced with "Part A2(a), (3), Part B4(b) and Part C of the Project". 15. Part B4 of the project description at Schedule 2 of the Development Credit Agreement is amended to read as follows: 4 "4. (a) Establishing a public-private partnership based on a contracting system for sanitary mandate and epidemiosurveillance, and (b) promoting accessible delivery of proximity veterinary and animal husbandry services and goods to livestock owners through the provision of goods, technical advisory services and training." 16. Paragraph 1(a) of Section IIB of Schedule 3 of the Development Credit Agreement is amended to read as follows: "B. Other Procurement Procedures 1. National Competitive Bidding. (a) Goods and works may be procured under contracts awarded on the basis of Nati:)nal Competitive Bidding, in compliance with the provisions of the Procurement Guidelines and as set out in the Procurement Plan." 17. Paragraph 2 of Section IIB of Schedule 3 of the Development Credit Agreement is amended to read as follows: "2. Shopping. Goods may be procured under contracts awarded on the basis of Shopping in compliance with the provisions of the Procurement Guidelines and as set out in the Procurement Plan." I8. Section IIIA of Schedule 3 of the Development Credit Agreement is amended to read as follows: "A. Quality- and Cost-based Selection. Except as otherwise provided in Part B of this Section, consultants' services shall be procured under contracts awarded on the basis of Quality- and Cost-based Selection." 19. Section A of Schedule 4 of the Development Credit Agreement is amended to read as follows: "A. Implementation and Coordination of Parts A and B of the Project 1. The Borrower shall v.,st the overall responsibility for the implementation of Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project in MAI, and shall cause MAI to implement Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project in accordance with the Parts A and B PIP and the Environmental Management Plan. Except as the Association shall otherwise agree, the Borrower may not amend or waive any provision of the Parts A and B PIP or the Environmental Management Plan if, in the opinion of the Association, such amendment or waiver may materially and adversely affect the carrying out Parts A and B of the Project or the achievement of the objectives thereof. 2. For the purpose of ensuring the proper coordination and execution of Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project, the Borrower shall maintain the Steering Committee, with membership and terms of reference satisfactory to the Association. The functions of said Steering Committee shall include, inter alia: (i) overall supervision of the implementation of Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project; (ii) review and approval of the annual work programs budgets and reports for the operation of the PSU; and (iii) review of auditor's reports. 3. For the purpose of ensuring the proper supervision of the execution of Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project, the Borrower shall maintain the PSU throughout the Project's implementation with organization, staffing and terms of reference 5 satisfactory to the Association. The PSU shall be responsible for supervising all procurement, financial management and monitoring and evaluation of Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project." 20. In Section B of Schedule 4 of :he Development Credit Agreement, all references to "Part A and B of the project' are hereby replaced with "Part Al, A2(b) and (c), A4, and Part B (1), (2), (3), 4(a) and (5) of the Project". 21. The Project Monitoring Indicitors in Supplemental Letter No. 2 to the Development Credit Agreement are amended per the Attachment. All the terms and conditions of the Development Credit Agreement that have not been amended hereby shall remain unchanged and in full force and effect. Plase confirm your agreement with the foregoing by signing and dating the confirmation on the enclosed copy of this Letter Agreement and returning it to the Association. Upon receipt by the A!;ociation of this countersigned copy of this Letter Agreement, the Letter Agreement shall become ef 'ective as of the date of countersignatare. Sincerely, INTERNATIONAL DEVELOPMENT ASSOCIATION By: Poonam Gupta Acting Country Director Yemen, Egypt and Djibouti Middle East and North Africa Region AGREED AND CONFIRMED: REPUBLIC OF YEMEN . By:10>. 11fo" smjsAeof Authorized Representative M mister of Planning and International Cooperation 6 Attachment ANNEX 1: Results Framework and Monitoring YEMEN RAINFED AGRICULTURE AND LIVESTOCK PROJECT Project Development Objective (PDO): to enable poor rural producers to improve their production, processing and marketing systems and protect their assets through the development of farmer based systems of seeds management and promoting productive rural development within the project Area and enhance the livestock husbandry and health services for the benefit of poor rural producers nationwide Baseline Cumulative Target Values Original Progress 2012 2013 2014 Responsibility Data Source/ PDO Level Results Indicators UOM' Project To Date Frequency for Data Comments Methodology Start (201X) Collection (2006) 1. Number of kg of improved seeds produced by seed [] Number 0 321,600 400,000 180,000 annually Annual report MAI/PSU producer groups 1 UOM = Unit of Measurement. Credit No. 4220-YEM 2. Number of seed grower I associations with contractual arrangements with public or O Number 0 0 5 5 5 annually Annual report SFD para-public seed certification entities 3. Number of clients per MAI/PSU and One paravet services veterinary paraprofessional in E Number 0 23,800 27,800 41,800 59,800 annually Annual report SFD 200 farmers. nroiect areas 4. Handling capacity of Al Number When MAI/PSU and Mokha quarantine station (0.6 l of M 0.2 0.2 0.2 0.2 0.6 Project report Revised Capacity project end PWP M a year) heads 5. Number of functioning rural Twice a producer groups, associations E Number 0 1,415 1,750 2,400 2,527 Project report SFD year or networks. Equivalent to cash 6. Additional revenue/capital revenue generated by Twice a per beneficiary (groups' YR 16,520 18,000 20,000 20,000 Project report SFD all the groups divided year members) by number of group members Credit No. 4220-YEM 7. Additional area with improved soil conservation and ha 0 - 40 90 140 annually Project report SFD water harvesting Beneficiaries Number Project beneficiaries (group 7,075 8,750 12,000 12,637 annually Project report SFD members), Number Of which female N 3,042 3,762 5,160 5,433 annually Project report SFD (beneficiaries) Intermediate Results and Indicators Baseline Target Values Unit of Original Progress 2012 2013 2014 Responsibility Intermediate Data Source/ Measuremen Project To Date Frequency for Data Comments Results Indicators Methodology t Start (2011) Collection o (200x) Intermediate Result 1: Component 1: Farmer base System of Seed Improvement and Management Credit No. 4220-YEM .-. - -..-Intermediate Resu taid Indicatots 7 Baseline Target Values Unit of Original Progress 2012 2013 2014 Responsibility Intermediate Data Source/ Measuremen Project To Date Frequency for Data Comments Results Indicators Methodology t Start (2011) Collection (200x) 1. Number of landraces Component I stop L-J INUISLMI V I U , ILV IahnaI VIA.ILJIC 11 Il*V characterized and at the end of 2013 conserved. 2. Number of tons of improved seeds SFD and Component I stop l Number 0 321.6 721.6 900 annually Project report produced each MAI/PSU at the end of 2013 year. 3. Number of seed producer groups Number 0 64 70 80 90 annually Project report SFD formed and trained Intermediate Result 2: Component 2: Livestock Husbandry and Health Services Credit No. 4220-YEM -, g e s . :.paig <-..- Intermed aki esuIts ihd IndicatW ! Baseline Target Values Unit of Original Progress 2012 2013 2014 Responsibility Intermediate Data Source/ Measuremen Project To Date Frequency for Data Comments Results Indicators Methodology t Start (2011) Collection (200x) 4. Number of veterinary Iwice a MAI/PSU and paraprofessionals O 0 119 162 247 290 Project report year SFD trained, equipped, and operating. Intermediate Result 3: Component 3: Productive Rural Development 5. Number o f Village Rural Twice a The indicator was E Number 0 230 230 230 230 Project report SFD Producer year achieved Committees Credit No. 4220-YEM IV En trmediate Result'ailfidicatti- - - "*.* Baseline Target Values Unit of Original Progress 2012 2013 2014 Responsibility Intermediate Data Source/ Measuremen Project To Date Frequency for Data Comments Results Indicators Methodology t Start (2011) Collection (200x) created and functioning 1 year after the first sub projects were completed 6. Number of (a) production sub projects, (b) 1,170 (a) 1,650 (a) 1,720 (a) 1,720 (a) 313 (b) 440 (b) 460 (b) 460 (b) Twice a * 92 inter marketing sub Number 0 Project report SFD 78 (c) 110 (c) 115 (c) 115 (c) year community projects and (c) processing sub projects Credit No. 4220-YEM - 4- Intcrmediaie.Resultsiand Indc~ ~ ' ,- Baseline Target Values Unit of Original Progress 2012 2013 2014 Responsibility Intermediate Data Source/ Measuremen Project To Date Frequency for Data Comments Results Indicators Methodology t Start (2011) Collection (200x) 7. Amount of funding disbursed for the 322 M (a) 454 M (a) 799 M (a) 799 M (a) 85 M (b) 121 M (b) 213 M (b) Twice a subprojects: (a) YR 0 213 M (b) Project report SFD 21 M (c) 30 M (c) 53 M (c) year production, (b) 53 M (c) marketing and (c) processing 8. Number of rural Twice a producers [] Number 0 7,961 11,151 20,385 20,385 Project report SFD year involved. 9. Number of * *Saving means these groups producer groups Number 0 504 878 1,428 2,078 annually Project report SFD have money in having savings their account Credit No. 4220-YEM 4Glinterimediate Regultii Indicators . 9 -.. Baseline Target Values Unit of Original Progress 2012 2013 2014 Responsibility Intermediate Data Source/ Measuremen Project To Date Frequency for Data Comments Results Indicators Methodology t Start (2011) Collection (200x) 10. Km of terrace O Km 0 30 70.4 87.4 90 annually Project report SFD wall rehabilitated. 11. Number of water harvesting L Number 0 35 107 1,063 1,100 annually Project report SFD structures rehabilitated. 12. Km of wadi l Km 0 5.2 12.2 15.8 20 annually Project report SFD banks protected 13. Number of has of upper Asaresultof 10& Ha 0 20 20 45 45 annually Project report SFD catchments areas 11 revegetated Credit No. 4220-YEM - _____interm'dike:ResuItsnd I CoW.- 1".* Baseline Target Values Unit of Original Progress 2012 2013 2014 Responsibility Intermediate Data Source/ Measuremen Project To Date Frequency for Data Comments Results Indicators Methodology t Start (2011) Collection (200x) 14. Equivalent person/day jobs Ii0 6,o2u oI,UYu /J,woV annually Vjrus irpuitr generated by these investments