Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698054151631.pdf (Ghana)
CONFIDENTIAL MEMORANDUM TO PARLIAMENT BY MINISTER FOR FINANCE ON A PROPOSED SDR 21.4 MILLION CREDIT (EQUIVALENT OF US$30.0 MILLION) FROM THE THE INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA) OF THE WORLD BANK GROUP TO FINANCE THE PROPOSED FINANCIAL SECTOR DEVELOPMENT PROJECT (FSDP) OCTOBER, 2018 CONFIDENTIAL Table of Contents Parliament Decision Requested Background Project Description Institutional And Implementation Arrangements Stakeholder Consultations Expected Outcomes Environmental and Social Impact Financing Terms Justification For Government Action Conclusion 3 3 3 6 6 7 7 7 8 8 ATTACHMENT: Negotiated Draft Financing Agreement CONFIDENTIAL PARLIAMENT DECISION REQUESTED 1.
Honourable Members of Parliament are respectfully requested to consider and approve a proposed SDR21.4 million (US$30.0 million equivalent) credit secured from the International Development Association (IDA) for the implementation of the Financial Sector Development Project (FSDP) developed out the National Financial Inclusion and Development Strategy.

BACKGROUND 2.

The financial sector in Ghana has grown over the past seven years, but remains bank- dominated.
Although the banking sector appears to be sound on average, it is vulnerable to high and increasing Non-Performing Loans (NPLs) as well as serious liquidity challenges leading to the collapse, merger and acquisition of a number of banks in recent times.

The situation, if not checked, can contribute to the erosion of confidence in the banking and financial sector.

3.

The average Capital Adequacy Ratio (CAR) for the banking sector is 18.2 percent as at April 2018.
This is well above the regulatory minimum of 10 percent and Bank of Ghana's (BoG) recommended level of 13 percent.

4.

There are many formal and informal financial institutions currently playing some key roles in financial inclusion, particularly serving the least included segments of the population.

It is worth noting that a significant number of Specialised Deposit Institutions (SDIs) are not operating in a safe and sound manner and are in violation of prudential norms.
In addition, mobile phone penetration has created opportunities for the expansion of financial services and increased activity by non-financial institutions (such as e-money issuers) in the financial sector.

5.
5.

In view of this, the Government's National Financial Inclusion and Development Strategy (NFIDS 2017-2023), has been developed to ensure financial soundness and stability whiles facilitating the implementation of a series of reforms meant to increase financial inclusion from 58 percent in 2017 to 75 percent by 2023.

4.

Out of this Strategy the Financial Sector Development Project (FSDP) has been crafted to provide a framework for the implementation of a number of reforms in the financial sector.
The primary objective of the FSDP is to support Government's vision of making a broad range of affordable, high quality and formal financial services and products available to Ghanaians, whilst ensuring that these services are provided by sound, responsible, and innovative financial institutions.

PROJECT DESCRIPTION The Project Development Objective (PDO) is to promote financial sector soundness 5. and access to financial services by individuals.
CONFIDENTIAL These are expected to be achieved by upgrading the regulatory framework for SDIs and 6. Credit Unions; building supervisory capacity; promoting market transparency and discipline; upgrading systems used by Rural Community Banks (RCBs), Microfinance Institutions (MFIs), and Credit Unions; increasing access points; linking informal groups with formal financial services providers; and educating as well as protecting consumers of financial services.

7.
7.

Project Components - The Project consists of four (4) main components as follows: i.

Improving financial sector regulatory oversight, market transparency and discipline ($8 million^: This will support BoG and MoP to improve oversight of SDIs, market transparency and discipline.
This component has the following sub components: • Enhancing the capacity of the regulatory and supervisory framework for SDIs (1.5 million); This sub-component will support efforts by BoG's Banking Supervision Department (BSD) and Other Financial Institutions Department (OFISD) to improve the oversight and performance of SDIs, focusing on enhancements to the regulatory and supervisory framework.
These interventions will limit the recurrence of financial distress, while increasing consumers' trust in SDIs and supporting broader financial inclusion.

• Building the capacity of Ghana Co-operative Credit Unions Association (CUA) to supervise Credit Unions ($3.5 million); The Credit Union sector in Ghana has been expanding without effectiv^ regulation and supervision.

This sub-component will build the capacity of CUA's; Supervision Division for effective delivery of its mandate.
It will support the development of robust regulatory framework for effective licensing and supervision, thus contributing to the soundness of Credit Unions.
• Supporting the establishment ofa domestic Credit Rating Agency and the design of a Financial Data Centre (3.0 million): This sub-component will support the establishment of a domestic Credit Rating Agency to facilitate independent ratings of banks, SDIs, and insurance companies as a way to increase market transparency and discipline as well as supplement supervisory oversight while contributing to the development of the capital market.

ii.
ii.

Increasing the outreach of Rural Community Banks (RCBs) and Micro Finance Institutions (MFIs) and linking Village Savings and Loans Associations (VSLAs) to the formal financial sector ($13.0 million).

It has the following sub components: • Upgrading ARB Apex *s systems and ICTplatforms to support the introduction of digital financial services and accommodate banking agent services ($5.0 million).
This sub-component will support upgrading of the e-banking platform and building a shared network of agents to expand the existing branch network of RCBs with improved ICT systems.

-VI i KIA \ CONFIDENTIAL • Upgrading Management Information System (MIS) of Microfmance Institutions (MFI) ($1,0 million): MFIs affiliated with Microfinance Institutions Network (GHAMFIN) use a common cloud based micro-banking application.
This sub-component will support the upgrade of the MFI's shared Management Information System (MIS) and the development of additional applications to support new services and reporting; and train MFIs on the use of the upgraded MIS.

• Linking Village Savings and Loans Associations (VSLA) to formal financial services providers ($4,0 million): Linking VSLAs to formal financial institutions has the potential to increase formal financial inclusion.

This sub-component will support the a).


Establishment of new VSLAs and identify existing ones for incorporation into the linkage initiatives; b).

Training of VSLAs on intemal governance, recordkeeping, budgeting and financial education; c).

Development of linkages with formal financial services providers.

iii.
iii.

Bolstering financial capability and consumer protection ($3,6 million): The objective of this component is to bolster financial capability and consumer protection and contribute to both financial stability and inclusion.
It will finance the following sub-components: • Bolstering financial capability through targeted financial education campaigns ($1,7 million): by supporting the design of targeted financial education campaigns and the upgrade of regulatory capacity and systems for consumer protection; and • Building regulatory capacity and systems for consumer protection ($L9 million): This will strengthen the capacity of BoG, National Insurance Commission (NIC) and Securities and Exchange Commission (SEC) for financial consumer protection, and complaints handling.
iv.

Enhancing the capacity for the implementation and monitoring of financial sector policies and supporting project implementation ($3,4 million): This will support: • Capacity Building of the MoF*s Financial Sector Division (FSD) ($1,7 million): MoF's FSD is mandated to provide policy-based and strategic analysis on Ghana's Financial Sector and oversee the implementation of strategies to strengthen financial intermediation.
This sub-component, among others, will be financing: n Training and exposure of FSD staff on financial inclusion and development issues; n Technical assistance for the design of a financial inclusion website/database for the dissemination of financial inclusion initiatives and information, tracking of financial inclusion indicators, etc.

; n Cost of the production of financial inclusion publications (e.g., reports and periodic CONFIDENTIAL briefs) and organization of events (e.g.
annual financial inclusion conference); and n Advisory services for the completion of a financial inclusion survey and a geospatial mapping of access points as well as development of online databases/visual displays.
Project implementation ($1.7 million) Project implementation will be mainstreamed into the institutional structure of the Ministry of Finance; however, the assessment of the implementation capacity of FSD, Ministry of Finance concluded that additional capacity is required to ensure successful implementation of the Project.

More specifically, the assessment revealed the need to supplement existing capacity through the hiring of a full-time project coordinator and a procurement specialist.
This sub component will finance the consultants' salaries and other related expenses, operational costs, technical assistance for the development of a communication strategy and a citizen engagement approach for the Project as well as the implementation of a monitoring and evaluation system.
Unallocated amount ($2.0 million): This unallocated amount of US$2.0 million, equivalent to 6.7 percent of the project amount, is to cover possible unfavourable budget variances that may arise during the implementation of the project.

INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS 8.

The Ministry of Finance, through the Financial Sector Division (FSD), will have the responsibility for coordinating and managing the project.

9.
9.

A Project Steering Committee (PSC) will be established to oversee the overall implementation of the project.

It is to be chaired by the Minister or a designated Deputy Minister of Finance.
The Committee will include high level representatives of the seven project implementing agencies - ARB Apex Bank, Bank of Ghana, Cooperative Credit Union Association (CUA), MOF, Ghana Micro Finance Institutions Network (GHAMFIN), National Insurance Commission (NIC), Securities and Exchange Commission (SEC), and other relevant stakeholders.

10.

A Project Technical Committee (PTC) will also be established to facilitate project implementation and coordination.
The PTC will be chaired by the Director of the Financial Sector Division of the Ministry of .

Finance and will comprise representatives from the implementing agencies.

11.

The project will be implemented over a five-year period and it is expected to be completed by September 29, 2023.

A mid-term review will be conducted 30 months after project effectiveness.

STAKEHOLDER CONSULTATIONS 12.


The relevant stakeholders consulted during the development of the Strategy as well as the Financial Sector Development Project include the Ministries of Finance; Justice and Attorney General's Department, Bank of Ghana, National Insurance Commission, National Pensions Regulatory Authority, Securities and Exchange Commission, the CONFIDENTIAL Ministry of Education, and Ghana Telecoms Chamber, among others.
The proposed FSDP is therefore the result of extensive consultations within Government entities, financial and private sector stakeholders, consumer groups and Development Partners.

EXPECTED OUTCOMES 13.

The expected benefits of the project will include the following: • Enhanced supervision and coordination among all financial sector regulators.
• Enhanced Specialized Deposit-taking Institutions and Credit Union regulatory and supervisory framework and resolution capacity; • Increased reporting by Credit Unions to Cooperatives Credit Union Association; • Improved quality of Credit Unions' financial information and reduction of the time required to complete onsite examination; • Increased usage of ARB Apex Bank's e-banking platform; • Banking agents established and access points within the rural community and banks network expanded; • Increased number of Village Savings and Loans Associations' access to formal financial services; • Consumer awareness raised; and • Faster handling of financial consumers' complaints by regulators; ENVIRONMENTAL AND SOCIAL IMPACT 14.
The project supports financial sector regulators, to strengthen the regulatory framework and systems for financial stability and inclusion.

Therefore, the project activities are of technical assistance in nature and do not trigger any safeguards policies.

The project is rated as Category C for environmental purposes as no negative environmental impacts are expected.

15.

The project is rated low on social safeguards risks.
Physical works are not envisaged under the project and as such the risk of resettlement and livelihood displacement is minimal or non-existent.

None of the social safeguards policies is triggered.

FINANCING TERMS 16.

The financing of US$30.0 million would be provided as Credit on IDA blend terms as follows: • Grace Period (Moratorium) • Repayment Period • Maximum Commitment Charge {this is waivedfor FYI8) • Service Charge • Interest Charge 5 years 25 years; 0.5% p.a.

0.75% p.a.

1.25% p.a.

17.


The financing has a concessional ity rate of33.23% and covers the full cost of the proposed activities.

However, Government will bear the exchange rate risk (gains/losses).

CONFIDENTIAL jrUSTIFICATIGN FOR GOVERNMENT ACTION 18.

The proposed financing is timely as Govemment prepares to implement NFIDS in line with its policy to develop and prioritize financial sector reforms.
The financial sector reforms aim at increasing access to formal and robust financial products and services by removing risks and similar threats facing the banking and financial sector as well as other barriers that inhibit the extension of products and services to the financially underserved and excluded.

19.

This is expected to create economic opportunities to targeted groups and contribute to poverty reduction.
The Strategy has a development dimension aimed at promoting financial stability and soundness; improving Ghana's financial govemance systems; and protecting consumers of financial products and services.

20.

The rationale is to support the financially underserved and excluded to generate incomes, build assets, manage financial risks, and become economically empowered to contribute significantly to the country's development.

CONCLUSION 21.
CONCLUSION 21.

Considering the benefits expected from the implementation of the proposed FSDP, Members of Parliament are respectfully requested to consider and approve the proposed SDR 21.4 million (equivalent of US$30.0 million) Credit from the Intemational Development Association.

KEN OfSrLATTA MINISTER FOR FINANCE OCTOBBR, 2018 PARLIAMENT OF 61 LIBRARY RF-CElVW In case of replyihe number and dale of this letter should be quoted My Ref.

No QPCA3/3/l91PlS/1 Your Ref.
No.. OF THE PRESIDENT BOX 1627 CCRA ^2-201000/2 ober, 2018 PROPOSED Y-ONE MILLION, F6UR HUEDBED THOUSAND SPECIAL DRaWING RIGHTS (SDR21,400,000) CREDIT (EQUIVALENT OF USD30,000,000) FROM THE INTEPMATIOMAL DEVELOPMENT ASSOCIATION (IDA) OF THE WORLD BARK GROUP TO FIEAMCE THE PROPOSED FINANCIAL SECTOR DEVELOPMENT PROJECT (FSDP) Cabinet at its Forty-second meeting held on Thursday, 18^^ October, 2018 considered a report of the Cabinet Committee on Economic Matters on the above-mentioned Memorandum submitted by the Minister for Finance.
2.

The Memorandum requested Cabinet to consider and approve a proposed Twenty-one million, four hundred thousand Special Drawing Rights (SDR21,400,000) credit (equivalent of Thirty million United States Dollars (USD30,000,000) secured from the International Development Association (IDA) for the implementation of the proposed Financial Sector Development Project (FSDP).

3.

Cabinet approved the Memorandum and recommended same for consideration by Parliament.

4.
4.

I should be grateful if you could take requisite action on the decision by Cabinet.

THE HON.

MINISTER FOR FINANCE MERCY DEBRAH-KARIKARI SECRETARY TO THE CABINET cc: Chief of Staff Secretary to the President Secretary to the Vice President Chairperson, Cabinet Coxmnittee on Economic Matters Hon.
Minister for Parliamentary Affairs CONFroENTIAL NOT FOR CIRCULATION Legal Department CONFroENTIAL DRAFT FINAL NEGOTIATED TEXT (Subject to Change) Nightingale Rukuba-Ngaiza July 27,2018 CREDIT NUMBER -GH Financing Agreement (Financial Sector Development Project) between REPUBLIC OF GHANA and INTERNATIONAL DEVELOPMENT ASSOCIATION CREDIT NUMBER ^-GH FINANCING AGREEMENT AGREEMENT dated as of the Signature Date between REPUBLIC OF GHANA INTERNATIONAL DEVELOPMENT ASSOCIATION ("Recipient") ("Association").
The Recipient and the Association hereby agree as follows: and ARTICLE I — GENERAL CONDITIONS; DEFINITIONS 1.01.

The General Conditions (as defined in the Appendix to this 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 General Conditions or in the Appendix to this Agreement.

ARTICLE n — FINANCING 2.01.


The Association agrees to extend to the Recipient a credit, which is deemed as Concessional Financing for purposes of the General Conditions, in an amount equivalent to twenty one million four hundred thousand Special Drawing Rights (SDR 21,400,000) (variously, "Credit" and "Financing"), to assist in financing the project described in Schedule 1 to this Agreement ("Project").

2.02.
2.02.

The Recipient may withdraw the proceeds of the Financing in accordance with Section III of Schedule 2 to this Agreement.

2.03.

The Maximum Commitment Charge Rate is one-half of one percent (1/2 of 1%) per annum on the Unwithdrawn Financing Balance.

2.04.

The Service Charge is three-fourths of one percent (3/4 of 1%) per annum on the Withdrawn Credit Balance.

2.05.

The Interest Charge is one and a quarter percent (1.25%) per annum on the Withdrawn Credit Balance.

2.06.
2.06.

The Payment Dates are April 1 and October 1 in each year.

2.07.

The principal amount of the Credit shall be repaid in accordance with the repayment schedule set forth in Schedule 3 to this Agreement.

2.08.

The Payment Currency is Dollar.

-2- ARTICLE in — PROJECT 3.01.

The Recipient declares its commitment to the objective of the Project.
T o this end, the Recipient shall cany out the Project in accordance with the provisions of Article V of the General Conditions and Schedule 2 to this Agreement.

ARTICLE IV — EFFECTIVENESS; TERMINATION 4.01.

The Additional Conditions of Effectiveness consist of the following: (a) The Recipient has prepared and adopted a Project Operations Manual satisfactory to the Association.
(b) The Recipient has recruited a project coordinator and procurement specialist with skills, experience, training and under terms of reference satisfactory to the Association.

4.02.

The Effectiveness Deadline is the date ninety (90) days after the Signature Date.

4.03.
4.03.

For purposes of Section 10.05 (b) of the General Conditions, the date on which the obligations of the Recipient under this Agreement (other than those providing for payment obligations) shall terminate is twenty years after the Signature Date.

ARTICLE V-— REPRESENTATIVE; ADDRESSES 5.01.

The Recipient's Representative is its Minister responsible for Finance.

5.02.

For purposes of Section 11.01 of the General Conditions: {a) the Recipient's address is: Ministry of Finance P.O.
BoxMB40 Accra, Ghana; and (b) the Recipient's Electronic Address is: chiefdirector@mofeD.gov.

gh -3- 5.03.

For purposes of Section 11.01 of the General Conditions: (a) The Association's address is: International Development Association 1818 H Street, N.W.

Washington, D.C. 20433 United States of America; and (b) the Association's Electronic Address is: Telex: Facsimile: 248423 (MCI) 1-202-477-6391 AGREED as of the Signature Date.
REPUBLIC OF GHANA By Authorized Representative Name: Title: Date: INTERNATIONAL DEVELOPMENT ASSOCIATION By Authorized Representative Name: Title: Date: -4- SCHEDULE1 Project Description The objective Is to promote financial sector soundness and access to financial services by individuals.
The Project consists of the following parts: Part 1: Improving Financial Sector Regulatory Oversight and Market Transparency and Discipline (a) (b) (c) Enhancing the regulatory and supervisoiy fi-amework and capacity for Specialized Deposit-Taking Institutions (SDIs) and credit unions through provision of technical advisory services and training.

Provision of technical advisory services, goods and training to build the capacity of the Ghana Cooperative Credit Unions Association to supervise credit unions.
Provision of technical advisory services, goods and training for the establishment of a domestic Credit Rating Agency including its structure, implementation arrangements, business model and sustainability, IT architecture and functionality.
Part 2: Increasing the outreach of Rural and Community Banks and Micro- Finance Institutions and linking Village Saving Loan Associations (VSLA) to the formal financial sector (a) Provision of technical advisoiy services for upgrading the ARB Apex Bank's IT systems to support the introduction of digital financial services and accommodate banking agent services; and, providing capacity building and training to staff on the requirements and potential of the new systems.
(b) Provision of technical advisory services and traimng to develop and roll out an agent banking network managed by the ARB Apex Bank to improve consumers' access to formal financial services in the rural areas of the Recipient's territory.

(c) Upgrading the management information system of the MFls to support new services and providing MFls with training on the new system.
-5- (d) Provide technical advisory services and goods to link VSLAs to formal financial services providers so that they can reap the benefits of engaging with the formal financial sector.

Part 3: Bolstering Financial Capability and Consumer Protection (a) Design and implementation of targeted financial education campaigns including systems to monitor progress in implementation.

(b) Building regulatory capacity and systems for consumer protection.
Part 4: Enhancing the capacity for the implementation and monitoring of financial sector policies and supporting project implementation (a) Building the capacity of the Ministry of Finance's Financial Sector Division to carry out its responsibilities through training; provision of t^hnical advisory services on conducting a financial inclusion survey; and establishing a website/database on financial inclusion and disseminating relevant information.
(b) Supporting Project implementation including the recruitment of a project cbordinator and procurement specialist, developing a communication strategy for the project, financing of Operating Costs and implementing a monitoring evaluation system.

SCHEDULE2 Project Execution Section L Implementation Arrangements A.

Institutional Arrangements.

1.

2.


The Recipient's Ministry of Finance, shall through its Financial Sector Division, have overall responsibility for coordinating and managing the Project and providing implementation guidance to all the agencies implementing their respective activities in the Project.
To ensure effective Project implementation, the Recipient shall not later than 30 days after the Effectiveness Date or any other date agreed with the Association, assign and thereafter maintain throughout the implementation of the Project, at least one procurement assistant, financial management specialist and monitoring and evaluation specialist to assist the Project Director and Project Coordinator.

3.
Project Steering Committee (a) The Recipient shall not later than 90 days after the Effectiveness Date or any other date agreed with the Association, establish and thereafter maintain throughout the implementation of the Project, a Project Steering Committee ("PSC") responsible for overseeing Project implementation and ensuring effective coordination and cooperation between the financial sector entities involved in the Project with a composition, mandate, terms of reference and resources satisfactory to the Association.
Without limitation upon the generality of the foregoing, the PSC shall be chaired by the Minister or the Deputy Minister for Finance, and shall include, inter aliOy representatives from ARB Apex Bank, Bank of Ghana, CUA, FSD, GHAMFIN, NIC, SEC and other relevant stakeholders.

(b) The PSC shall meet at least biannually and shall be responsible for providing oversight on Project implementation, including, reviewing annual workplans and budgets and progress made towards achieving the Project's objective.

4.
4.

Technical Committee (a) To promote effective implementation of the Project, the Recipient shall not later than 90 days after the Effectiveness Date or any other date agreed with the Association, establish and thereafter maintain throughout implementation of the Project, a Project Techmcal Committee ("PTC") with a composition, mandate, terms of reference and resources satisfactory -7- to the Association.
The PTC shall be chaired by the Director of FSD or his designee, and shall include, inter alia, representatives or technical focal points, inter alia, from ARB Apex Banl^ Bank of Ghana CUA, FSD, GHAMFIN, NIC, SEC and other relevant stakeholders.
(b) The PTC shall be responsible for, inter alia: (i) providing quality assurance on the technical aspects of the Project including reviewing and discussing quarterly progress reports prepared by the Project Coordinator (ii) addressing any technical or Project implementation challenges and (iii) supporting the overall implementation of the Project.

B.

Other Implementation Arrangements 1.


Project Operations Manual (a) (b) The Recipient shall implement the Project in accordance with a manual (the Project Operations Manual), in form and substance satisfactory to the Association.

The Project Operations Manual may only be amended from time to time in consultation with, and after the Association's prior approval in writing.
In case of any conflict between the terms of the Project Operations Manual and those of this Agreement, the terms of this Agreement shall prevail.

C. Annual Work Plan and Budget.

1.

2.

3.


The Recipient shal 1 prepare and fiimish to the Association not later than November 30 of each Fiscal Year during the implementation of the Project, a work plan and budget containing all activities proposed to be included in the Project during the following Fiscal Year, and a proposed financing plan for expenditures required for such activities, setting forth the proposed amounts and sources of financing therefor.
Bach such proposed work plan and budget shall specify any training activities that may be required under the Project, including: (a) the type of training; (b) the purpose of the training; (c) the personnel to be trained; (d) the institution or individual who will conduct the training; (d) the location and duration of the training; and (f) the cost of the training.
The Recipient shall afford the Association a reasonable opportunity to exchange views with the Recipient on each such proposed work plan and budget and shall thereafter ensure that the Project is implemented with due diligence during said following Fiscal Year in accordance with such work plan and budget as shall have been approved by the Association ("Annual Work Plan and Budget").

miAMEHT OF Gi-IM LIBRARY -8- 4.


The Recipient shall not make or allow to be made any change to the approved Annual Work Plan and Budget without prior .approval in writing by the Association.

^ D. Safeguards 1.
The Recipient shall ensure that: (a) all consultancies related to technical assistance, design and capacity building under the Pyoject, the application of whose results could have environmental, social and health and safety implications, shall only be undertaken pursuant to terms of reference reviewed and found satisfactory by the Association; and (b) such terms of refererice shall require the technical assistance, design and capacity building activities to take into account the requirements of the applicable Association Safeguards Policies and EHS Guidelines.
E. Mid-Term Review 1.
The Recipient shall: I ; (a) (b) (c) carry out not later than thirty-six (36) months from Effectiveness Date a midterm review to assess the overall process in implementation of the Program; j prepare and furnish to the Association, at ieast three (3) months prior to such review, a progress report on the implementation of the Program, of such scope and in such detail as shall be acqeptable to the Association; and review, jointly with the Association, the report referred to in paragraph 1 above and thereafter take all measures required to ensure Ae efficient completion of the Program and the achievement of the objectives thereof, based on the conclusions and recommendations of said report and the Association's views on the matter.
Section II.

Project Monitoring.

Reporrtn^ and Evaluation The Recipient shall furnish to the Association each Project Report not later than forty-five (45) days after the end of each calendar quarter, covering the calendar quarter.

Section HI.

Withdrawal of the Proceeds of Financing A.
General Without limitation upon the provisions of Article II of the General Conditions and in accordance with the Disbursement and Financial Information Letter the -9- Recipient may withdraw the proceeds of the Financing to: (a) finance Eligible Expenditures; and (b) repay the Preparation Advance; in the amount allocated and, if applicable, up to the percentage set forth against each Category of the following table: Category (1) Goods, works, non-consulting services, consulting services and Training (except Part 1(c)) for the Project Amount of the Financing Allocated (expressed in (SDR)) Percentage of Expenditures to be Financed (inclusive of Taxes) 17,950,000 100% (2) Goods, consulting services.
Training and Operating Costs under Part 1(c) of the Project 2,000,000 100% (3) Refund of Preparation Advance 1,450,000 TOTAL AMOUNT 21,400,000 Amount payable pursuant to Section 2.07 (a) of the General Conditions B.

Withdrawal Conditions; Withdrawal Period 1.
Notwithstanding the provisions of Part A above, no withdrawal shall be made for: (a) payments made prior to the Signature Date; and (b) under category (2) unless and until the Recipient has (i) obtained a license for the operation of the Credit Rating Agency (CRA) in accordance with the Recipient's national legal requirements; and (ii) ensured that in those cases where the Recipient, including ministries, departments, agencies, state owned enterprises and regulatory agencies, collectively holds more than 50% of the shares in the CRA, all the Recipient's Government appointed directors are Independent Directors.
2.

The Closing Date is September 30,2023.

-10- SCHEDULE3 Repayment Schedule Date Payment Due On each April 1 and October 1: commencing October 1, 2023, to and including April 1, 2043 commencing October 1, 2043, to and including April 1, 2048.
Principal Amount of the Credit repayable (expressed as a percentage)* 1.65% 3.40% * The percentages represent the percentage of the principal amount of the Credit to be repaid, except as the Association may otherwise specify pursuant to Section 3.05 (b) of the General Conditions.

-11- APPENDEX Section I. Definitions 1.


"Annual Work Plan and Budget" means the work plan and budget prepared annually by the Recipient and approved by the Association in accordance with Section I.C of Schedule 2 to this Agreement; and "Annual Work Plans and Budgets" means more than one Annual Work Plan and Budget.

2.

3.

4.

5.

6.

7.

8.


"Anti-Corruption Guidelines" means, for purposes of paragraph 5 of the Appendix to the General Conditions, the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011 and as of July 1,2016.'
"ARB Apex Bank" means the entity responsible for promoting and overseeing activities of all rural banks; established and operating pursuant to the Compames Act 1963 (Act 179) and the ARB Apex Bank Regulations, 2006 (Legislative Instrument 1825) or its successor.

"Bank of Ghana" or "BoG" means the Recipient's Central Bank or its successor.

"Category" means a category set forth in the table in Section lll.A of Schedule 2 to this Agreement'.
"Cooperative Credit Unions" or "CUAs" means the entity responsible for supervising credit unions on behalf of the Bank of Ghana, established and operating pursuant to the Cooperative Societies Act, 1968 (NLCD 252) or its successor.

"Credit Rating Agency" or "CRA" means a company to be established pursuant to the Companies Act 1963 (Act 179) and to be licensed by the Securities and Exchange Commission to operate a credit rating business or its successor.
"EHS Guidelines" means the World Bank Group Environmental, Health and Safety Guidelines published on www.ifc.org/ehsguidelines.

as said guidelines are updated from time to time.

9.

"FSD" means the Financial Sector Division of the Ministry of Finance.

10.

11.
10.

11.

"General Conditions" means the "International Development Association General Conditions for IDA Financing, Investment Project Financing", dated July 14,2017 "Ghana Microfi nance Institutions Network" or "GHAMFIN" means the Recipient's network of microfinance institutions registered as company limited by -12- 12.

13.

14.

15.

16. guarantee and operating pursuant to the Companies Act 1963 (Act 179) or its successor.
"Independent Director" means a director who: (a) is not a substantial or majority shareholder of the CRA; (b) is not associated with any majority or substantial shareholder of the CRA, whether through business, family or personal relationships, or in any other way; (c) has not been employed by the CRA in an executive capacity within the last three years; (d) has not been a director of the CRA for more than nine years; (e) is not affiliated to an advisor or consultant to the CRA or a member of the CRA's senior management or a significant customer or supplier of the CRA or with a not-for-profit entity that receives significant contributions from the CRA or, (f) has not had any business relationship with the CRA (other than service as a director) within the last five years; (g) is not a significant supplier or customer of the CRA; (h) is not employed by a public company at which an executive officer of the CRA serves as a director; (i) s not a member of the immediate family of any natural person described above; or has not had any of the relationships described above with any affiliate of the CRA ;(j) is free from any other relationship with the CRA which may interfere with his or her capacity to act in an independent manner.
"National Insurance Commission" or "NIC" means the Recipient's insurance sector regulator established under Insurance Law 1989 (PNDC Law 227) and operating pursuant to Insurance Act, 2006 (Act 724) or its successor.
"Operating Costs" means the incremental expenses incurred on account of Project implementation, based on the Annual Work Plans and Budgets approved by the Association pui-suant to Section I.C of Schedule 2 to this Agreement, including office equipment and supplies, office rental space, non-contractual staff, vehicle operation and maintenance, communication costs, office administration costs, utilities, travel and per diem, excluding the salaries of the Recipient's civil servants.
"Preparation Advance" means the advance referred to in Section 2.07 (a) of the General Conditions, granted by the Association to the Recipient pursuant to the letter agreement signed on behalf of the Association on July 12,2018 and on behalf of the Recipient on July 17,2018.
"Project Operations Manual" means the manual referred to in Section I.B.2 of Schedule 2 of this Agreement, to be prepared by the Recipient satisfactory to the Association, describing and setting forth procedures for implementation of the Project and institutional arrangements, consistent with the provisions of this Agreement and with applicable laws and regulations and including, inter alia, timetables of actions required to be carried out under the Project, the respective roles and responsibilities of the agencies involved in the implementation of the Project, staffing, the fiduciary, technical and operational aspects and procedures