[Federal Register Volume 71, Number 48 (Monday, March 13, 2006)]
[Notices]
[Pages 12934-12986]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-2252]



[[Page 12933]]

-----------------------------------------------------------------------

Part III





Millennium Challenge Corporation





-----------------------------------------------------------------------



Notice of Entering Into a Compact With the Government of the Republic 
of Benin; Notice

  Federal Register / Vol. 71, No. 48 / Monday, March 13, 2006 / 
Notices  

[[Page 12934]]


-----------------------------------------------------------------------

MILLENNIUM CHALLENGE CORPORATION

[MCC FR 06-05]


Notice of Entering Into a Compact With the Government of the 
Republic of Benin

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: In accordance with Section 610(b)(2) of the Millennium 
Challenge Act of 2003 (Pub. L. 108-199, Division D), the Millennium 
Challenge Corporation (MCC) is publishing a summary and the complete 
text of the Millennium Challenge Compact between the United States of 
America, acting through the Millennium Challenge Corporation, and the 
Government of the Republic of Benin. Representatives of the United 
States Government and the Government of the Republic of Benin executed 
the Compact documents on February 22, 2006.

    Dated: March 6, 2006.
Jon A. Dyck,
Vice President & General Counsel, Millennium Challenge Corporation.

Summary of Millennium Challenge Compact With the Government of the 
Republic of Benin

I. Introduction

    Situated in West Africa, between Nigeria and Togo in the Gulf of 
Guinea, Benin is a very poor country with a population of nearly seven 
million, a third of which live in poverty. Progress in development is 
attributed to reforms initiated in the early 1990s as Benin 
transitioned from a Marxist-Leninist state towards a pluralistic 
democracy and market economy.
    Despite growth rates averaging 5 percent per year in the past 
decade, rapid population growth has offset much of these gains and 
poverty remains widespread. Per capita income in Benin remains below 
the sub-Sahara African average and rural poverty has increased in 
recent years. Benin's economy is narrowly dependent on cotton 
production, subsistence agriculture and regional trade through the Port 
of Cotonou. Key impediments to sustainable economic growth and poverty 
reduction are a poor investment climate and a lack of dynamic private 
sector activity. These are hindered by land insecurity, lack of access 
to capital, an inefficient judicial system, and an increasingly 
uncompetitive Port of Cotonou.
    The five year, approximately $307 million Millennium Challenge 
Compact with the Government of Benin (GOB) aims to increase investment 
and private sector activity in Benin. The program to be funded under 
the Compact (Program) seeks to remove key constraints to growth and 
supports improvements in physical and institutional infrastructures. 
The projects included in the Program reinforce each other and MCC 
estimates they will together contribute to an economic rate of return 
(ERR) of 24 percent.

II. Program Overview and Budget

    Benin's MCA Program is a series of strategic investments designed 
to improve core physical and institutional infrastructure and increase 
investment and private sector activity. The Program comprises four 
Projects: ``Access to Land,'' ``Access to Financial Services,'' 
``Access to Justice,'' and ``Access to Markets.''
    1. Access to Land (``Land Project'') (approximately $36 million): 
Investment climate studies list land access among the top constraints 
to business development in Benin. This Project aims to create secure 
land tenure for the poor and non-poor alike and to create effective, 
transparent governance of land and property issues. MCC anticipates 
this Project will reduce the time and cost to obtain a title, reduce 
the number of land disputes, and increase the perception of land 
security.
    2. Access to Financial Services (``Financial Services Project'') 
(approximately $20 million): Due to the high cost or unavailability of 
credit and other financial services, small businesses in Benin are 
unable to expand production and employment. This Project aims to 
improve the ability of micro, small and medium-sized enterprises 
(MSMEs) to respond to opportunities by expanding access to financial 
services. The Project is designed to expand the financial services 
provided to MSMEs, improve supervision of microfinance institutions 
(MFIs), increase MFI operational self-sufficiency, decrease MFI 
portfolio at risk, and increase the number of loans guaranteed with 
land titles.
    3. Access to Justice (``Justice Project'') (approximately $34 
million): A major obstacle to investment and economic growth in Benin 
is the inefficiency of the judicial system. Only 8 percent of 
commercial cases filed are resolved within a year. Benin was recently 
rated by the World Bank as among the most difficult places in the world 
to enforce a contract. This Project aims to strengthen the 
institutional environment for business and investment in Benin by 
improving the ability of the judicial system to resolve claims. The 
Project is expected to increase the number of cases resolved per year 
by the Courts of First Instance, increase the number of cases handled 
by the Arbitration Center, and increase the number of registered 
enterprises.
    4. Access to Markets (``Markets Project'') (approximately $169 
million): The importance of the Port of Cotonou to Benin's economy has 
been increasing, while its competitiveness has been steadily 
decreasing. This Project is designed to promote access to markets by 
improving Port operations and infrastructure. Specifically, it aims to 
improve Port performance and security, expand capacity, and reduce 
costs. MCC anticipates the Project will reduce delays at the Port and 
increase the volume of imports and exports.
    The following table outlines the estimated MCC contribution to the 
Program by year and category for term of the Compact.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Timeline
                                                    -----------------------------------------------------------------------------------------------  Total
                    Description                        Compact YI      Compact  YI     Compact  Y2     Compact  Y3     Compact  Y4     Compact  Y5    ($US
                                                        ($US mil)       ($US mil)       ($US mil)       ($US mil)       ($US mil)       ($US mil)     mil)
--------------------------------------------------------------------------------------------------------------------------------------------------- -------
Access to Land.....................................            4.56           10.43            8.55            7.37            5.11           36.02
Access to Financial Services.......................            3.15            5.42            5.41            4.71            0.96           19.65
Access to Justice..................................            3.83            7.85            9.06            6.97            6.56           34.27
Access to Markets..................................            9.45           30.13           66.29           62.36            1.22          169.45
Program Administration & Audits....................            8.21            7.61            7.75            7.73            7.83           39.13
Monitoring & Evaluation............................            3.19            1.69            1.24            1.24            1.42            8.78
                                                    ----------------------------------------------------------------------------------------------------
    Estimated Total................................           32.39           63.13           98.30           90.38           23.10          307.30
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 12935]]

III. Impact

    The Program is expected to impact up to five million beneficiaries 
and lift an estimated 250,000 Beninese out of poverty by the year 2015. 
Specifically, the Land Project is expected to assist an estimated 
115,000 rural and urban households with more secure and useful tenure; 
contribute to a 50 percent reduction in court cases related to land 
disputes; and result in a 10 percent increase in investment in rural 
land and a 20 percent increase in investment in urban property. The 
Financial Services Project is expected to expand financial services to 
MSMEs by nearly $60 million (a multiple of three times the Project's 
funding), thereby increasing MSME value added and incomes of the poor 
that own, are employed by, or do business with those enterprises. The 
Justice Project is anticipated to benefit approximately 2.38 million 
Beninese by bringing courts closer to rural populations and making them 
more responsive and effective. Finally, a more efficient Port will 
contribute to importer and exporter value-added by reducing 
transportation costs and increasing the level of Port operations. It is 
likely that the anticipated reduction in shipping costs will be passed 
on to wholesalers and traders, and ultimately be reflected in lower 
consumer prices. Additional added value in jobs from fish processing 
and Port operations are expected from improvements in several 
infrastructure components.

IV. Program Management

    GOB will create a legal entity (MCA-Benin) to manage and oversee 
the implementation of the Program. This entity will be comprised of an 
eleven-member Board of Directors and a management team. The Board of 
Directors will make certain strategic decisions and recommendations, 
provide oversight of the Program implementation and ensure the success 
of the Program. MCA-Benin's management will be responsible for the 
implementation of the Program, including contracting, program 
management, certain financial management functions, and coordination of 
monitoring and evaluation. In addition, an eight-member Advisory 
Council will be established to provide recommendations and feedback to 
the MCA-Benin Board of Directors.
    Independent fiscal and procurement agents, selected through 
international competitive search processes, will be engaged to provide 
fiscal management and procurement services respectively.

Other Highlights

    A. Consultative Process: This Program has undergone one of the most 
robust consultative processes to date in an MCA-eligible country. 
Benin's proposal is the product of a genuine, meaningful and 
participatory consultative process. Guided by the Poverty Reduction 
Strategy Paper (PRSP), GOB's consultative process included a wide 
cross-section of private sector and civil society groups in the 
formulation of Benin's MCA priorities. Benin held several consultative 
meetings with representatives from various stakeholder groups as well 
as radio and television events to broadly present the outlines of the 
proposal and garner feedback from intended beneficiaries. The 
consultative process was guided by the Benin National Committee (BNC), 
whose members were elected or delegated by their respective 
constituencies. Representation on the BNC includes six representatives 
of GOB, three representatives of civil society, three representatives 
of the Chamber of Commerce, three representatives of national labor 
unions, two representatives of the Agricultural Chamber, and one 
representative of artisan associations.
    B. Government Commitment and Effectiveness: The Program has 
received considerable attention during the Compact development process. 
GOB allocated $680,000 for the preparation of the proposal and has 
committed as part of the Compact to contribute an additional 5 billion 
CFA ($9.2 million) to the Program during the Compact Term. One fourth 
of this contribution has already been included in the national budget 
for 2006 and will be available immediately following Compact signing. 
GOB has also expressed its commitment to the Program by its willingness 
to condition key activities upon requirements for institutional change 
and policy reform.
    C. Sustainability: Sustainability will be ensured through training, 
capacity building, policy reforms and institutional changes. The Land 
and Justice Projects contain core training, information and education 
campaigns that will build public knowledge on land and justice issues, 
respectively. A key objective of the Financial Services Project is to 
enhance the sustainability of existing commercial actors that service 
MSMEs. Beneficiaries of the Challenge Facility can be expected to 
continue to implement improvements in financial technologies and 
institutional capacities after Program support ends. The Markets 
Project includes greater private management of operations, more 
efficient land usage, and streamlining of customs processing.
    D. Environment and Social Impacts: The Land and Financial Services 
Projects are expected to have few or no adverse environmental and 
social impacts. They have been placed in screening category ``C'' under 
the MCC Environmental Guidelines. The Land Project is anticipated to 
have positive social effects as well as to foster land stewardship. The 
Financial Services Project will incorporate training, technical 
assistance, and services, where appropriate, on strategies to avoid 
environmental and social risks and enhance the sustained impact of 
access to financial services. Both of these projects have specific 
commitments to take into account gender concerns.
    The Justice Project has the potential for modest, adverse 
environmental and social impacts because of construction of a legal 
information center and courthouses. The Justice Project has been placed 
in screening category ``B'' under the MCC Environmental Guidelines. A 
framework environmental and social assessment will be required to 
screen sites once they are proposed and provide guidance for site-
specific Environmental Management Plans (EMPs) and Resettlement Action 
Plans (RAPs) consistent with international best practices. To enhance 
the social impacts of this project, outreach will be designed to 
incorporate gender considerations as well as access by vulnerable 
segments of society.
    The Markets Project has been placed in screening category ``A'' 
under the MCC Environmental Guidelines and will require a comprehensive 
Environmental and Social Impact Assessment (ESIA), conducted in phases. 
As a critical first step, technical, environmental, engineering and 
economic studies are required to evaluate alternatives and select the 
preferred design to reduce sedimentation of the harbor access and not 
adversely impact coastal erosion east of the Port; studies must also 
analyze disposal of potentially contaminated dredged material, for the 
selected alternative and new wharf construction. Based on these 
studies, an ESIA and EMP will be required to address impacts of 
increased Port activity and new infrastructure and compliance with 
international marine conventions. An ESIA (combined or separate, 
according to schedule needs) will be required for landside 
improvements, including an environmental audit of the existing 
operations, an Environmental Management Plan/System, and an

[[Page 12936]]

overall EMP. Verification is required to determine if economic or 
physical displacement will occur and a RAP is needed.
    E. Donor Coordination: MCC's investment would position the United 
States Government as the largest bi-lateral donor to the country. Other 
major donors to Benin are the Netherlands, Denmark, France, Belgium and 
Germany.
    GOB and MCC have convened various discussions and meetings with 
donor partners to ensure complementarity. The German development 
agency, Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ), 
financed a pilot phase of the Rural Land Plans upon which sections of 
GOB's proposal are based. A recent International Finance Corporation 
Foreign Investment Advisory Service (FIAS) investigation of the 
investment climate in Benin will recommend a reform agenda very similar 
to what is proposed for MCC funding. A number of multilateral and 
bilateral donors, including the World Bank, France, Denmark, and the 
Netherlands, have been involved in activities and studies aimed at 
improving the performance of the Port of Cotonou.

Millennium Challenge Compact Between the United States of America 
Acting Through the Millennium Challenge Corporation and the Government 
of the Republic of Benin

Table of Contents

Article I. Purpose and Term
    Section 1.1 Objectives
    Section 1.2 Projects
    Section 1.3 Entry into Force; Compact Term
Article II. Funding and Resources
    Section 2.1 MCC Funding
    Section 2.2 Government Resources
    Section 2.3 Limitation on the Use or Treatment of MCC Funding
    Section 2.4 Incorporation; Notice; Clarification
    Section 2.5 Refunds: Violation
    Section 2.6 Bilateral Agreement
Article III. Implementation
    Section 3.1 Implementation Framework
    Section 3.2 Government Responsibilities
    Section 3.3 Government Deliveries
    Section 3.4 Government Assurances
    Section 3.5 Implementation Letters; Supplemental Agreements
    Section 3.6 Procurement; Awards of Assistance
    Section 3.7 Policy Performance; Policy Reforms
    Section 3.8 Records and Information; Access; Audits; Reviews
    Section 3.9 Insurance; Performance Guarantees
    Section 3.10 Domestic Requirements
    Section 3.11 No Conflict
    Section 3.12 Reports
Article IV. Conditions Precedent; Deliveries
    Section 4.1 Conditions Prior to the Entry into Force and 
Deliveries
    Section 4.2 Conditions Precedent to MCC Disbursements or Re-
Disbursements
Article V. Final Clauses
    Section 5.1 Communications
    Section 5.2 Representatives
    Section 5.3 Amendments
    Section 5.4 Termination; Suspension
    Section 5.5 Privileges and Immunities
    Section 5.6 Attachments
    Section 5.7 Inconsistencies
    Section 5.8 Indemnification
    Section 5.9 Headings
    Section 5.10 Interpretation; Definitions
    Section 5.11 Signatures
    Section 5.12 Designation
    Section 5.13 Survival
    Section 5.14 Consultation
    Section 5.15 MCC Status
    Section 5.16 Language
    Section 5.17 Publicity; Information and Marking
Exhibit A: Definitions
Exhibit B: List of Certain Supplemental Agreements
Schedule 2.1(a)(iii): Description of Compact Implementation Funding
Annex I: Program Description
    Schedule 1: Land Project
    Schedule 2: Financial Services Project
    Schedule 3: Justice Project
    Schedule 4: Markets Project
Annex II: Summary of Multi-Year Financial Plan
Annex III: Description of the M&E Plan

Millennium Challenge Compact

    This Millennium Challenge Compact (the ``Compact'') is made between 
the United States of America, acting through the Millennium Challenge 
Corporation, a United States Government corporation (``MCC''), and the 
Government of the Republic of Benin (the ``Government'') (referred to 
herein individually as a ``Party'' and collectively, the ``Parties''). 
A compendium of capitalized terms defined herein is included, for 
convenience only, in Exhibit A attached hereto.

Recitals

    Whereas, MCC, acting through its Board of Directors, has selected 
the Republic of Benin as eligible to present to MCC a proposal for the 
use of Millennium Challenge Account (``MCA'') assistance to help 
facilitate the advance of economic growth and poverty reduction in 
Benin;
    Whereas, the Government has carried out a consultative process with 
the country's private sector and civil society to outline the country's 
priorities for the use of MCA assistance and developed a proposal, 
which final proposal was submitted to MCC on September 5, 2005 (the 
``Proposal'');
    Whereas, the Proposal focused on, among other things, improving 
core physical and institutional infrastructure to increase investment 
and private sector activity;
    Whereas, MCC has evaluated the Proposal and related documents to 
determine whether the Proposal is consistent with core MCA principles 
and includes proposed activities and projects that will advance the 
progress of Benin towards achieving economic growth and poverty 
reduction; and
    Whereas, based on MCC's evaluation of the Proposal and related 
documents and subsequent discussions and negotiations between the 
Parties, the Government and MCC determined to enter into this Compact 
to implement a program using MCC Funding to advance Benin's progress 
towards economic growth and poverty reduction (the ``Program'');
    Now, Therefore, in consideration of the foregoing and the mutual 
covenants and agreements set forth herein, the Parties hereby agree as 
follows:

Article I. Purpose and Term

    Section 1.1 Objectives. The overall objective of this Compact is to 
increase investment and private sector activity in Benin (``Program 
Objective''), which is key to advancing the goal of economic growth and 
poverty reduction in Benin (the ``Compact Goal''). The Parties have 
identified the following project-level objectives (each, a ``Project 
Objective'' and together, the ``Project Objectives'') of this Compact 
to advance the Program Objective and Compact Goal, each of which is 
described in more detail in the Annexes attached hereto:
    (a) Strengthen property rights and investment (the ``Land 
Objective'');
    (b) Expand access to financial services (the ``Financial Services 
Objective'');
    (c) Improve ability of the justice system to enforce contracts and 
reconcile claims (the ``Justice Objective''); and
    (d) Improve access to markets through improvements to the Port of 
Cotonou (``Markets Objective'').
    The Government expects to achieve, and shall use its best efforts 
to ensure the achievement of, the Compact Goal, Program Objective and 
Project Objectives during the Compact Term. The Program Objective and 
the individual Project Objectives collectively referred to herein as 
``Objectives'' and each individually as an ``Objective.''
    Section 1.2 Projects. The Annexes attached hereto describe the 
specific projects and the policy reforms and other activities related 
thereto (each, a ``Project'') that the Government will carry out, or 
cause to be carried out, in

[[Page 12937]]

furtherance of this Compact to achieve the Objectives and the Compact 
Goal.
    Section 1.3 Entry into Force; Compact Term. This Compact shall 
enter into force on the date of the last letter in an exchange of 
letters between the Principal Representatives of each Party confirming 
that each Party has completed its domestic requirements for entry into 
force of this Compact (including as set forth in Section 3.10) and that 
all conditions set forth in Section 4.1 have been satisfied by the 
Government and MCC (the ``Entry into Force''). This Compact shall 
remain in force for five (5) years from the Entry into Force, unless 
earlier terminated in accordance with Section 5.4 (the ``Compact 
Term'').

Article II. Funding and Resources

    Section 2.1 MCC Funding.
    (a) MCC's Contribution. MCC hereby grants to the Government, 
subject to the terms and conditions of this Compact, an amount not to 
exceed Three Hundred Seven Million Two Hundred and Ninety Eight 
Thousand and Forty United States Dollars (USD $307,298,040) (``MCC 
Funding'') during the Compact Term to enable the Government to 
implement the Program and achieve the Objectives.
    (i) Subject to Sections 2.1(a)(ii), 2.2(b) and 5.4(b), the 
allocation of the MCC Funding within the Program and among and within 
the Projects shall be as generally described in Annex II or as 
otherwise agreed upon by the Parties from time to time.
    (ii) If at any time MCC determines that a condition precedent to an 
MCC Disbursement has not been satisfied, MCC may, upon written notice 
to the Government, reduce the total amount of MCC Funding by an amount 
equal to the amount estimated in the applicable Detailed Financial Plan 
for the Program, Project or Project Activity or sub-activity for which 
such condition precedent has not been met. Upon the expiration or 
termination of this Compact, (A) any amounts of MCC Funding not 
disbursed by MCC to the Government shall be automatically released from 
any obligation in connection with this Compact and (B) any amounts of 
MCC Funding disbursed by MCC to the Government as provided in Section 
2.1(b)(i), but not re-disbursed as provided in Section 2.1(b)(ii) or 
otherwise incurred as permitted pursuant to Section 5.4(e) prior to the 
expiration or termination of this Compact, shall be returned to MCC in 
accordance with Section 2.5(a)(ii).
    (iii) Notwithstanding any other provision of this Compact and 
pursuant to the authority of Section 609(g) of the Millennium Challenge 
Act of 2003, as amended (the ``Act''), upon the conclusion of this 
Compact (and without regard to the satisfaction of all of the 
conditions for Entry into Force required under Section 1.3), MCC shall 
make available One Million Five Hundred Thirty Six Thousand Four 
Hundred and Ninety United States Dollars (USD $1,536,490) (``Compact 
Implementation Funding'') to facilitate certain aspects of Compact 
implementation as described in Schedule 2.1(a)(iii) attached hereto; 
provided, such Compact Implementation Funding shall be subject to (A) 
the limitations on the use or treatment of MCC Funding set forth in 
Section 2.3, as if such provision were in full force and effect, and 
(B) any other requirements for, and limitations on the use of, such 
Compact Implementation Funding as may be required by MCC in writing; 
provided, further, that any Compact Implementation Funding granted in 
accordance with this Section 2.1(a)(iii) shall be included in, and not 
additional to, the total amount of MCC Funding; and provided further, 
any obligation to provide such Compact Implementation Funding shall 
expire upon the expiration or termination of this Compact or five (5) 
years from the conclusion of this Compact, whichever occurs sooner. 
Notwithstanding anything to the contrary in this Compact, this Section 
2.1(a)(iii) shall provisionally apply prior to Entry into Force.
    (b) Disbursements.
    (i) Disbursements of MCC Funding. MCC shall from time to time make 
disbursements of MCC Funding (each such disbursement, an ``MCC 
Disbursement'') to a Permitted Account or through such other mechanism 
agreed by the Parties under and in accordance with the procedures and 
requirements set forth in Annex I, the Disbursement Agreement or as 
otherwise provided in any other relevant Supplemental Agreement.
    (ii) Re-Disbursements of MCC Funding. The release of MCC Funding 
from a Permitted Account (each such release, a ``Re-Disbursement''), 
shall be made in accordance with the procedures and requirements set 
forth in Annex I, the Disbursement Agreement or as otherwise provided 
in any other relevant Supplemental Agreement.
    (c) Interest. Unless the Parties agree otherwise in writing, any 
interest or other earnings on MCC Funding that accrue (collectively, 
``Accrued Interest'') shall be held in a Permitted Account and accrue 
in accordance with the requirements for the accrual and treatment of 
Accrued Interest as specified in Annex I or any relevant Supplemental 
Agreement. On a quarterly basis and upon the termination or expiration 
of this Compact, the Government shall return, or ensure the return of, 
all Accrued Interest to any United States Government account designated 
by MCC.
    (d) Conversion; Exchange Rate. The Government shall ensure that all 
MCC Funding that is held in the Permitted Account(s) shall be 
denominated in the currency of the United States of America (``United 
States Dollars'') prior to Re-Disbursement; provided, that a certain 
portion of MCC Funding may be transferred to a Local Account and may be 
held in such Local Account in the currency of the Republic of Benin 
prior to Re-Disbursement in accordance with the requirements of Annex I 
and any relevant Supplemental Agreement. To the extent that any amount 
of MCC Funding held in United States Dollars must be converted into the 
currency of the Republic of Benin for any purpose, including for any 
Re-Disbursement or any transfer of MCC Funding into a Local Account, 
the Government shall ensure that such amount is converted consistent 
with Annex I, including the rate and manner set forth in Annex I, and 
the requirements of the Disbursement Agreement or any other 
Supplemental Agreement between the Parties.
    (e) Guidance. From time to time, MCC may provide guidance to the 
Government through Implementation Letters on the frequency, form and 
content of requests for MCC Disbursements and Re-Disbursements or any 
other matter relating to MCC Funding. The Government shall apply such 
guidance in implementing this Compact.
    Section 2.2 Government Resources.
    (a) The Government shall provide or cause to be provided such 
Government funds and other resources, including any Government 
contributions set out forth on Annex II attached hereto, and shall take 
or cause to be taken such actions, including obtaining all necessary 
approvals and consents, as are specified in this Compact or in any 
Supplemental Agreement to which the Government is a party or as are 
otherwise necessary and appropriate to effectively carry out the 
Government Responsibilities or other responsibilities or obligations of 
the Government under or in furtherance of this Compact during the 
Compact Term and through the completion of any post-Compact Term 
activities, audits or other responsibilities. The Government shall 
submit to the Parliament on an annual basis the amount of the upcoming 
year's

[[Page 12938]]

Government contribution for inclusion in the applicable finance law of 
Benin and such amount shall be committed in the national budget for 
that year for purposes of the Program, such contribution to be 
allocated within and in furtherance of the Program as agreed by the 
Parties. The Government shall disburse funds on a quarterly basis from 
this committed amount into an account, held at a bank acceptable to 
MCC, designated solely for this purpose.
    (b) If at any time during the Compact Term, the Government 
materially reallocates or reduces the allocation in its national budget 
or any other Beninese governmental authority at a departmental, 
municipal, regional or other jurisdictional level materially 
reallocates or reduces the allocation of its respective budget of the 
normal and expected resources that the Government or such other 
governmental authority, as applicable, would have otherwise received or 
budgeted, from external or domestic sources, for the activities 
contemplated herein, the Government shall notify MCC in writing within 
fifteen (15) days of such reallocation or reduction, such notification 
to contain information regarding the amount of the reallocation or 
reduction, the affected activities, and an explanation for the 
reallocation or reduction. In the event that MCC independently 
determines, upon review of the executed national annual budget that 
such a material reallocation or reduction of resources has occurred, 
MCC shall notify the Government and, following such notification, the 
Government shall provide a written explanation for such reallocation or 
reduction and MCC may (i) reduce, in its sole discretion, the total 
amount of MCC Funding or any MCC Disbursement by an amount equal to the 
amount estimated in the applicable Detailed Financial Plan for the 
activity for which funds were reduced or reallocated or (ii) otherwise 
suspend or terminate MCC Funding in accordance with Section 5.4(b).
    (c) The Government shall use its best efforts to ensure that all 
MCC Funding is fully reflected and accounted for in the annual budget 
of the Republic of Benin on a multi-year basis.
    Section 2.3 Limitations on the Use or Treatment of MCC Funding.
    (a) Abortions and Involuntary Sterilizations. The Government shall 
ensure that MCC Funding shall not be used to undertake, fund or 
otherwise support any activity that is subject to prohibitions on use 
of funds contained in (i) paragraphs (1) through (3) of section 104(f) 
of the Foreign Assistance Act of 1961 (22 U.S.C. 2151b(f)(1)-(3), a 
United States statute, which prohibitions shall apply to the same 
extent and in the same manner as such prohibitions apply to funds made 
available to carry out Part I of such Act; or (ii) any provision of law 
comparable to the eleventh and fourteenth provisos under the heading 
``Child Survival and Health Programs Fund'' of division E of Public Law 
108-7 (117 Stat. 162), a United States statute.
    (b) United States Job Loss or Displacement of Production. The 
Government shall ensure that MCC Funding shall not be used to 
undertake, fund or otherwise support any activity that is likely to 
cause a substantial loss of United States jobs or a substantial 
displacement of United States production, including:
    (i) Providing financial incentives to relocate a substantial number 
of United States jobs or cause a substantial displacement of production 
outside the United States;
    (ii) Supporting investment promotion missions or other travel to 
the United States with the intention of inducing United States firms to 
relocate a substantial number of United States jobs or a substantial 
amount of production outside the United States;
    (iii) Conducting feasibility studies, research services, studies, 
travel to or from the United States, or providing insurance or 
technical and management assistance, with the intention of inducing 
United States firms to relocate a substantial number of United States 
jobs or cause a substantial displacement of production outside the 
United States;
    (iv) Advertising in the United States to encourage United States 
firms to relocate a substantial number of United States jobs or cause a 
substantial displacement of production outside the United States;
    (v) Training workers for firms that intend to relocate a 
substantial number of United States jobs or cause a substantial 
displacement of production outside the United States;
    (vi) Supporting a United States office of an organization that 
offers incentives for United States firms to relocate a substantial 
number of United States jobs or cause a substantial displacement of 
production outside the United States; or
    (vii) Providing general budget support for an organization that 
engages in any activity prohibited above.
    (c) Military Assistance and Training. The Government shall ensure 
that MCC Funding shall not be used to undertake, fund or otherwise 
support the purchase or use of goods or services for military purposes, 
including military training, or to provide any assistance to the 
military, police, militia, national guard or other quasi-military 
organization or unit.
    (d) Prohibition of Assistance Relating to Environmental, Health or 
Safety Hazards. The Government shall ensure that MCC Funding shall not 
be used to undertake, fund or otherwise support any activity that is 
likely to cause a significant environmental, health, or safety hazard. 
Unless MCC and the Government agree otherwise in writing, the 
Government shall ensure that activities undertaken, funded or otherwise 
supported in whole or in part (directly or indirectly) by MCC Funding 
comply with environmental guidelines delivered by MCC to the Government 
or posted by MCC on its Web site or otherwise publicly made available, 
as such guidelines may be amended from time to time (the 
``Environmental Guidelines''), including any definition of ``likely to 
cause a significant environmental, health, or safety hazard'' as may be 
set forth in such Environmental Guidelines.
    (e) Taxation.
    (i) Taxes. The Government shall ensure that the Program, any 
Program Assets, MCC Funding and Accrued Interest shall be free from any 
taxes imposed under the laws currently or hereafter in effect in the 
Republic of Benin during the Compact Term. This exemption shall apply 
to any use of any Program Asset, MCC Funding and Accrued Interest, 
including any Exempt Uses, and to any work performed under or 
activities undertaken in furtherance of this Compact by any person or 
entity (including contractors and grantees) funded by MCC Funding, and 
shall apply to all taxes, tariffs, duties, and other levies (each a 
``Tax'' and collectively, ``Taxes''), including:
    (1) To the extent attributable to MCC Funding, income taxes and 
other taxes on profit or businesses imposed on organizations or 
entities, other than nationals of the Republic of Benin, receiving MCC 
Funding, including taxes on the acquisition, ownership, rental, 
disposition or other use of real or personal property, taxes on 
investment or deposit requirements and currency controls in the 
Republic of Benin, or any other tax, duty, charge or fee of whatever 
nature, except fees for specific services rendered; for purposes of 
this Section 2.3(e), the term ``national'' refers to organizations 
established under the laws currently or hereafter in effect in the 
Republic of Benin, other than MCA-Benin or any other entity established 
solely for purposes of managing or overseeing the implementation of the 
Program or any wholly-owned subsidiaries, divisions, or Affiliates of 
entities not registered or established under the laws currently or 
hereafter in effect in the Republic of Benin;

[[Page 12939]]

    (2) Customs duties, tariffs, import and export taxes, or other 
levies on the importation, use and re-exportation of goods, services, 
or the personal belongings and effects, including personally-owned 
automobiles, for Program use or the personal use of individuals who are 
neither citizens nor permanent residents of the Republic of Benin and 
who are present in the Republic of Benin for purposes of carrying out 
the Program or their family members, including all charges based on the 
value of such imported goods;
    (3) Taxes on the income or personal property of all individuals who 
are neither citizens nor permanent residents of the Republic of Benin, 
including income and social security taxes of all types and all taxes 
on the personal property owned by such individuals, to the extent such 
income or property are attributable to MCC Funding; and
    (4) Taxes or duties levied on the last transaction for the purchase 
of goods or services funded by MCC Funding, including sales taxes, 
tourism taxes, value-added taxes (VAT), or other similar charges. The 
term ``last transaction'' refers to the last transaction by which the 
goods or services were purchased for use in the activities funded by 
MCC Funding.
    (ii) This Section 2.3(e) shall apply, but is not limited to (A) any 
transaction, service, activity, contract, grant or other implementing 
agreement funded in whole or in part by MCC Funding; (B) any supplies, 
equipment, materials, property or other goods (referred to herein 
collectively as ``goods'') or funds introduced into, acquired in, used 
or disposed of in, or imported into or exported from, the Republic of 
Benin by MCC, or by any person or entity (including contractors and 
grantees) as part of, or in conjunction with, MCC Funding or the 
Program; (C) any contractor, grantee, or other organization carrying 
out activities funded in whole or in part by MCC Funding; and (D) any 
employee of such organizations (the uses set forth in clauses (A) 
through (D) are collectively referred to herein as ``Exempt Uses'').
    (iii) If a Tax has been levied and paid contrary to the 
requirements of this Section 2.3(e), whether inadvertently, due to the 
impracticality of implementation of this provision with respect to 
certain types or amounts of taxes, or otherwise, the Government shall 
refund promptly to MCC to an account designated by MCC the amount of 
such Tax in the currency of the Republic of Benin, within thirty (30) 
days (or such other period as may be agreed in writing by the Parties) 
after the Government is notified in writing of such levy and tax 
payment, in accordance with procedures agreed by the Parties, whether 
by MCC or otherwise; provided, however, the Government shall apply 
national funds to satisfy its obligations under this paragraph and no 
MCC Funding, Accrued Interest, or any assets, goods, or property (real, 
tangible, or intangible) purchased or financed in whole or in part 
(directly or indirectly) by MCC Funding (``Program Assets'') may be 
applied by the Government in satisfaction of its obligations under this 
paragraph.
    (iv) The Parties shall memorialize in a mutually acceptable 
Supplemental Agreement or Implementation Letter or other suitable 
document the mechanisms for implementing this Section 2.3(e), including 
(A) a formula for determining refunds for Taxes paid, the amount of 
which is not susceptible to precise determination, (B) a mechanism for 
ensuring the tax-free importation, use, and re-exportation of goods, 
services, or the personal belongings of individuals (including all 
Providers) described in paragraph (i)(2) of this Section 2.3(e), (C) a 
requirement for the provision by the Government of a tax-exemption 
certificate which expressly includes, inter alia, the thirty (30) day 
refund requirement of Section 2.3(e)(iii), and (D) any other 
appropriate Government action to facilitate the administration of this 
Section 2.3(e).
    (f) Alteration. The Government shall ensure that no MCC Funding, 
Accrued Interest nor Program Assets shall be subject to any 
impoundment, rescission, sequestration or any provision of law now or 
hereafter in effect in the Republic of Benin that would have the effect 
of requiring or allowing any impoundment, rescission or sequestration 
of any MCC Funding, Accrued Interest or Program Asset.
    (g) Liens or Encumbrances. The Government shall ensure that no MCC 
Funding, Accrued Interest, or Program Assets shall be subject to any 
lien, attachment, enforcement of judgment, pledge, or encumbrance of 
any kind (each a ``Lien''), except with the prior approval of MCC in 
accordance with Section 3(c) of Annex I, and in the event of the 
imposition of any Lien not so approved, the Government shall promptly 
seek the release of such Lien and if required by final non-appealable 
order, shall pay any amounts owed to obtain such release; provided, 
however, the Government shall apply national funds to satisfy its 
obligations under this Section 2.3(g) and no MCC Funding, Accrued 
Interest, or Program Assets may be applied by the Government in 
satisfaction of its obligations under this Section 2.3(g).
    (h) Other Limitations. The Government shall ensure that the use or 
treatment of MCC Funding, Accrued Interest, and Program Assets shall be 
subject to and in conformity with such other limitations (i) as 
required by the applicable law of the United States of America now or 
hereafter in effect during the Compact Term, (ii) as advisable under or 
required by applicable United States Government policies now or 
hereafter in effect during the Compact Term, or (iii) to which the 
Parties may otherwise agree in writing.
    (i) Utilization of Goods, Services and Works. The Government shall 
ensure that any Program Assets, services, facilities or works funded in 
whole or in part (directly or indirectly) by MCC Funding, unless 
otherwise agreed by the Parties in writing, shall be used solely in 
furtherance of this Compact.
    (j) Notification of Applicable Laws and Policies. MCC shall notify 
the Government of any applicable United States law or policy affecting 
the use or treatment of MCC Funding, whether or not specifically 
identified in this Section 2.3, and shall provide to the Government a 
copy of the text of any such applicable law and a written explanation 
of any such applicable policy.
    Section 2.4 Incorporation; Notice; Clarification.
    (a) The Government shall include, or ensure the inclusion of, all 
of the requirements set forth in Section 2.3 in all Supplemental 
Agreements to which MCC is not a party and shall use its best efforts 
to ensure that no such Supplemental Agreement is implemented in 
violation of the prohibitions set forth in Section 2.3.
    (b) The Government shall ensure notification of all of the 
requirements set forth in Section 2.3 to any Provider and all relevant 
officers, directors, employees, agents, representatives, Affiliates, 
contractors, sub-contractors, grantees and sub-grantees of any 
Provider. The term ``Provider'' shall mean (i) MCA-Benin and any 
Government Affiliate or Permitted Designee involved in any activities 
in furtherance of this Compact or (ii) any third party who receives at 
least USD $50,000 in the aggregate of MCC Funding (other than employees 
of MCA-Benin) during the Compact Term or such other amount as the 
Parties may agree in writing, whether directly from MCC, indirectly 
through Re-Disbursements, or otherwise.
    (c) In the event the Government or any Provider requires 
clarification from

[[Page 12940]]

MCC as to whether an activity contemplated to be undertaken in 
furtherance of this Compact violates or may violate any provision of 
Section 2.3, the Government shall notify, or ensure that such Provider 
notifies, MCC in writing and provide in such notification a detailed 
description of the activity in question. In such event, the Government 
shall not proceed, and shall use its best efforts to ensure that no 
relevant Provider proceeds, with such activity, and the Government 
shall ensure that no Re-Disbursements shall be made for such activity, 
until MCC advises the Government or such Provider in writing that the 
activity is permissible.
    Section 2.5 Refunds; Violation.
    (a) Notwithstanding the availability to MCC, or exercise by MCC of, 
any other remedies, including under international law, this Compact, or 
any Supplemental Agreement:
    (i) If any amount of MCC Funding or Accrued Interest, or any 
Program Asset, is used for any purpose prohibited under this Article II 
or otherwise in violation of any of the terms and conditions of this 
Compact, any guidance in any Implementation Letter, or any Supplemental 
Agreement between the Parties, MCC may, upon written notice, require 
the Government to repay promptly to MCC to an account designated by MCC 
or to others as MCC may direct the amount of such misused MCC Funding 
or Accrued Interest, or the cash equivalent of the value of any misused 
Program Asset, in United States Dollars, plus any interest that accrued 
or would have accrued thereon, within thirty (30) days after the 
Government is notified, whether by MCC or other duly authorized 
representative of the United States Government, of such prohibited use; 
provided, however, the Government shall apply national funds to satisfy 
its obligations under this Section 2.5(a)(i) and no MCC Funding, 
Accrued Interest, nor Program Assets may be applied by the Government 
in satisfaction of its obligations under this Section 2.5(a)(i); and
    (ii) If all or any portion of this Compact is terminated or 
suspended and upon the expiration of this Compact, the Government 
shall, subject to the requirements of Sections 5.4(e) and 5.4(f), 
refund, or ensure the refund, to MCC to such account(s) designated by 
MCC the amount of any MCC Funding, plus any Accrued Interest, promptly, 
but in no event later than thirty (30) days after the Government 
receives MCC's request for such refund; provided, that if this Compact 
is terminated or suspended in part, MCC may request a refund for only 
the amount of MCC Funding, plus any Accrued Interest, then allocated to 
the terminated or suspended portion; provided, further, that any refund 
of MCC Funding or Accrued Interest shall be to such account(s) as 
designated by MCC.
    (b) Notwithstanding any other provision in this Compact or any 
other agreement to the contrary, MCC's right under this Section 2.5 for 
a refund shall continue during the Compact Term and for a period of (i) 
five (5) years thereafter or (ii) one (1) year after MCC receives 
actual knowledge of such violation, whichever is later.
    (c) If MCC determines that any activity or failure to act violates, 
or may violate, any Section in this Article II, MCC may refuse any 
further MCC Disbursements for or conditioned upon such activity, and 
may take any action to prevent any Re-Disbursement related to such 
activity.
    Section 2.6 Bilateral Agreement. All MCC Funding shall be 
considered United States assistance under the Economic, Technical and 
Related Assistance Agreement by and between the Government of the 
United States of America and the Government of the Republic of Benin, 
dated May 27, 1961, as amended from time to time (the ``Bilateral 
Agreement''). If there are conflicts or inconsistencies between any 
parts of this Compact and the Bilateral Agreement, as either may be 
amended from time to time, the provisions of this Compact shall prevail 
over those of the Bilateral Agreement.

Article III. Implementation

    Section 3.1 Implementation Framework. This Compact shall be 
implemented by the Parties in accordance with this Article III and as 
further specified in the Annexes and in relevant Supplemental 
Agreements.
    Section 3.2 Government Responsibilities.
    (a) The Government shall have principal responsibility for 
oversight and management of the implementation of the Program (i) in 
accordance with the terms and conditions specified in this Compact and 
relevant Supplemental Agreements, (ii) in accordance with all 
applicable laws then in effect in Benin, and (iii) in a timely and 
cost-effective manner and in conformity with sound technical, financial 
and management practices (collectively, the ``Government 
Responsibilities''). Unless otherwise expressly provided, any reference 
to the Government Responsibilities or any other responsibilities or 
obligations of the Government herein shall be deemed to apply to any 
Government Affiliate and any of their respective directors, officers, 
employees, contractors, sub-contractors, grantees, sub-grantees, agents 
or representatives.
    (b) The Government shall ensure that no person or entity shall 
participate in the selection, award, administration, or oversight of a 
contract, grant or other benefit or transaction funded in whole or in 
part (directly or indirectly) by MCC Funding, in which (i) the entity, 
the person, members of the person's immediate family or household or 
his or her business partners, or organizations controlled by or 
substantially involving such person or entity, has or have a direct or 
indirect financial or other interest or (ii) the person or entity is 
negotiating or has any arrangement concerning prospective employment, 
unless such person or entity has first disclosed in writing to the 
Government the conflict of interest and, following such disclosure, the 
Parties agree in writing to proceed notwithstanding such conflict. The 
Government shall ensure that no person or entity involved in the 
selection, award, administration, oversight or implementation of any 
contract, grant or other benefit or transaction funded in whole or in 
part (directly or indirectly) by MCC Funding shall solicit or accept 
from or offer to a third party or seek or be promised directly or 
indirectly for itself or for another person or entity any gift, 
gratuity, favor or benefit, other than items of de minimis value and 
otherwise consistent with such guidance as MCC may provide from time to 
time.
    (c) The Government shall not designate any person or entity, 
including any Government Affiliate, to implement, in whole or in part, 
this Compact or any Supplemental Agreement between the Parties 
(including any Government Responsibilities or any other 
responsibilities or obligations of the Government under this Compact or 
any Supplemental Agreement between the Parties) or to exercise any 
rights of the Government under this Compact or any Supplemental 
Agreement between the Parties, except as expressly provided herein or 
with the prior written consent of MCC; provided, however, the 
Government may designate MCA-Benin or, with the prior written consent 
of MCC, such other mutually acceptable persons or entities, (each, a 
``Permitted Designee'') to implement some or all of the Government 
Responsibilities or any other responsibilities or obligations of the 
Government or to exercise any rights of the Government under this 
Compact or any Supplemental Agreement between the Parties each in 
accordance with the terms and conditions set forth

[[Page 12941]]

in this Compact or such Supplemental Agreement (referred to herein 
collectively as ``Designated Rights and Responsibilities''). 
Notwithstanding any provision herein or any other agreement to the 
contrary, no such designation shall relieve the Government of such 
Designated Rights and Responsibilities, for which the Government shall 
retain ultimate responsibility. In the event that the Government 
designates any person or entity, including any Government Affiliate, to 
implement any portion of the Government Responsibilities or other 
responsibilities or obligations of the Government, or to exercise any 
rights of the Government under this Compact or any Supplemental 
Agreement between the Parties, in accordance with this Section 3.2(c), 
then the Government shall (i) cause such person or entity to perform 
such Designated Rights and Responsibilities in the same manner and to 
the full extent to which the Government is obligated to perform such 
Designated Rights and Responsibilities, (ii) ensure that such person or 
entity does not assign, delegate or contract (or otherwise transfer) 
any of such Designated Rights and Responsibilities to any person or 
entity and (iii) cause such person or entity to certify to MCC in 
writing that it will so perform such Designated Rights and 
Responsibilities and will not assign, delegate, or contract (or 
otherwise transfer) any of such Designated Rights and Responsibilities 
to any person or entity without the prior written consent of MCC.
    (d) The Government shall, upon a request from MCC, execute, or 
ensure the execution of, an assignment to MCC of any cause of action 
which may accrue to the benefit of the Government, a Government 
Affiliate or any Permitted Designee, including MCA-Benin, in connection 
with or arising out of any activities funded in whole or in part 
(directly or indirectly) by MCC Funding.
    (e) The Government shall ensure that (i) no decision of MCA-Benin 
is modified, supplemented, unduly influenced or rescinded by any 
governmental authority, except by a non-appealable judicial decision, 
and (ii) the authority of MCA-Benin shall not be expanded, restricted, 
or otherwise modified, except in accordance with this Compact, the 
Governance Agreement, the Governing Documents or any other Supplemental 
Agreement between the Parties.
    (f) The Government shall ensure that all persons and individuals 
that enter into agreements to provide goods, services or works under 
the Program or in furtherance of this Compact shall do so in accordance 
with the Procurement Guidelines and shall obtain all necessary 
immigration, business and other permits, licenses, consents and 
approvals to enable them and their personnel to fully perform under 
such agreements.
    Section 3.3 Government Deliveries. The Government shall proceed, 
and cause others to proceed, in a timely manner to deliver to MCC all 
reports, notices, certificates, documents or other deliveries required 
to be delivered by the Government under this Compact or any 
Supplemental Agreement between the Parties, in form and substance as 
set forth in this Compact or in any such Supplemental Agreement.
    Section 3.4 Government Assurances. The Government hereby provides 
the following assurances to MCC that as of the date this Compact is 
signed:
    (a) The information contained in the Proposal and any agreement, 
report, statement, communication, document or otherwise delivered or 
otherwise communicated to MCC by or on behalf of the Government on or 
after the date of the submission of the Proposal (i) are true, correct 
and complete in all material respects and (ii) do not omit any fact 
known to the Government that if disclosed would (A) alter in any 
material respect the information delivered, (B) likely have a material 
adverse effect on the Government's ability to effectively implement, or 
ensure the effective implementation of, the Program or any Project or 
to otherwise carry out its responsibilities or obligations under or in 
furtherance of this Compact, or (C) have likely adversely affected 
MCC's determination to enter into this Compact or any Supplemental 
Agreement between the Parties.
    (b) Unless otherwise disclosed in writing to MCC, the MCC Funding 
made available hereunder is in addition to the normal and expected 
resources that the Government usually receives or budgets for the 
activities contemplated herein from external or domestic sources.
    (c) This Compact does not conflict and will not conflict with any 
international agreement or obligation to which the Government is a 
party or by which it is bound.
    (d) No payments have been (i) received by any official of the 
Government or any other government body in connection with the 
procurement of goods, services or works to be undertaken or funded in 
whole or in part (directly or indirectly) by MCC Funding, except fees, 
taxes, or similar payments legally established in the Republic of Benin 
(subject to Section 2.3(e)) and consistent with the applicable 
requirement of Beninese law or (ii) made to any third party, in 
connection with or in furtherance of this Compact, in violation of the 
United States Foreign Corrupt Practices Act of 1977, as amended (15 
U.S.C. 78a et seq.).
    Section 3.5 Implementation Letters; Supplemental Agreements.
    (a) MCC may, from time to time, issue one or more letters to 
furnish additional information or guidance to assist the Government in 
the implementation of this Compact (each, an ``Implementation 
Letter''). The Government shall apply such guidance in implementing 
this Compact.
    (b) The details of any funding, implementing and other arrangements 
in furtherance of this Compact may be memorialized in one or more 
agreements between (A) the Government (or any Government Affiliate or 
Permitted Designee) and MCC, (B) MCC and/or the Government (or any 
Government Affiliate or Permitted Designee) and any third party, 
including any of the Providers or Permitted Designee or (C) any third 
parties where neither MCC nor the Government is a party, before, on or 
after the Entry into Force (each, a ``Supplemental Agreement''). The 
Government shall deliver, or cause to be delivered, to MCC within five 
(5) days of its execution a copy of any Supplemental Agreement to which 
MCC is not a party.
    Section 3.6 Procurement; Awards of Assistance.
    (a) The Government shall ensure that the procurement of all goods, 
services and works by the Government or any Provider in furtherance of 
this Compact shall be consistent with the procurement guidelines (the 
``Procurement Guidelines'') reflected in a Supplemental Agreement 
between the Government (and/or a mutually acceptable Government 
Affiliate or MCA-Benin) and MCC (the ``Procurement Agreement''), which 
Procurement Guidelines shall include the following requirements:
    (i) Internationally accepted procurement rules with open, fair and 
competitive procedures are used in a transparent manner to solicit, 
award and administer contracts, grants, and other agreements and to 
procure goods, services and works;
    (ii) Solicitations for goods, services, and works shall be based 
upon a clear and accurate description of the goods, services or works 
to be acquired;
    (iii) Contracts shall be awarded only to qualified and capable 
contractors that have the capability and willingness to perform the 
contracts in accordance with the terms and conditions of the

[[Page 12942]]

applicable contracts and on a cost effective and timely basis; and
    (iv) No more than a commercially reasonable price, as determined, 
for example, by a comparison of price quotations and market prices, 
shall be paid to procure goods, services, and works.
    (b) The Government shall maintain, and shall use its best efforts 
to ensure that all Providers maintain, records regarding the receipt 
and use of goods, services and works acquired in furtherance of this 
Compact, the nature and extent of solicitations of prospective 
suppliers of goods, services and works acquired in furtherance of this 
Compact, and the basis of award of contracts, grants and other 
agreements in furtherance of this Compact.
    (c) The Government shall use its best efforts to ensure that 
information, including solicitations, regarding procurement, grant and 
other agreement actions funded (or to be funded) in whole or in part 
(directly or indirectly) by MCC Funding shall be made publicly 
available in the manner outlined in the Procurement Guidelines or in 
any other manner agreed upon by the Parties in writing.
    (d) The Government shall ensure that no goods, services or works 
may be funded in whole or in part (directly or indirectly) by MCC 
Funding which are procured pursuant to orders or contracts firmly 
placed or entered into prior to the Entry into Force, except as the 
Parties may otherwise agree in writing.
    (e) The Government shall ensure that MCA-Benin and any other 
Permitted Designee follows, and uses its best efforts to ensure that 
all Providers follow, the Procurement Guidelines in procuring 
(including soliciting) goods, services and works and in awarding and 
administering contracts, grants and other agreements in furtherance of 
this Compact, and shall furnish MCC evidence of the adoption of the 
Procurement Guidelines by MCA-Benin no later than the time specified in 
the Disbursement Agreement.
    (f) The Government shall include, or ensure the inclusion of, the 
requirements of this Section 3.6 into all Supplemental Agreements 
between the Government, any Government Affiliate or Permitted Designee 
or any of their respective directors, officers, employees, Affiliates, 
contractors, sub-contractors, grantees, sub-grantees, representatives 
or agents, on the one hand, and a Provider, on the other hand.
    Section 3.7 Policy Performance; Policy Reforms. In addition to the 
specific policy and legal reform commitments identified in Annex I and 
the Schedules thereto, the Government shall seek to maintain and to 
improve its level of performance under the policy criteria identified 
in Section 607 of the Act, and the MCA selection criteria and 
methodology published by MCC pursuant to Section 607 of the Act from 
time to time (``MCA Eligibility Criteria'').
    Section 3.8 Records and Information; Access; Audits; Reviews.
    (a) Reports and Information. The Government shall furnish to MCC, 
and shall use its best efforts to ensure that all Providers and any 
other third party receiving MCC Funding, as appropriate, furnish to the 
Government (and the Government shall provide to MCC), any records and 
other information required to be maintained under this Section 3.8 and 
such other information, documents and reports as may be necessary or 
appropriate for the Government to effectively carry out its obligations 
under this Compact, including under Section 3.12.
    (b) Government Books and Records. The Government shall maintain, 
and shall use its best efforts to ensure that all Providers maintain, 
accounting books, records, documents and other evidence relating to 
this Compact adequate to show, to the satisfaction of MCC, without 
limitation, the use of all MCC Funding, including all costs incurred by 
the Government and the Providers in furtherance of this Compact, the 
receipt, acceptance and use of goods, services and works acquired in 
furtherance of this Compact by the Government and the Providers, 
agreed-upon cost sharing requirements, the nature and extent of 
solicitations of prospective suppliers of goods, services and works 
acquired by the Government and the Providers in furtherance of this 
Compact, the basis of award of Government and other contracts and 
orders in furtherance of this Compact, the overall progress of the 
implementation of the Program, and any documents required by this 
Compact or any Supplemental Agreement between the Parties or reasonably 
requested by MCC upon reasonable notice (``Compact Records''). The 
Government shall maintain, and shall use its best efforts to ensure 
that all Covered Providers maintain, Compact Records in accordance with 
generally accepted accounting principles prevailing in the United 
States, or at the Government's option and with the prior written 
approval by MCC, other accounting principles, such as those (1) 
prescribed by the International Accounting Standards Committee (an 
affiliate of the International Federation of Accountants) or (2) then 
prevailing in Benin. Compact Records shall be maintained for at least 
five (5) years after the end of the Compact Term or for such longer 
period, if any, required to resolve any litigation, claims or audit 
findings or any statutory requirements.
    (c) Access. Upon the request of MCC, the Government, at all 
reasonable times, shall permit, or cause to be permitted, authorized 
representatives of MCC, the Inspector General, the United States 
Government Accountability Office, any auditor responsible for an audit 
contemplated herein or otherwise conducted in furtherance of this 
Compact, and any agents or representatives engaged by MCC or a 
Permitted Designee to conduct any assessment, review or evaluation of 
the Program, at all reasonable times the opportunity to audit, review, 
evaluate or inspect activities funded in whole or in part (directly or 
indirectly) by MCC Funding or undertaken in connection with the 
Program, the utilization of goods and services purchased or funded in 
whole or in part (directly or indirectly) by MCC Funding, and Compact 
Records, including of the Government or any Provider, relating to 
activities funded or undertaken in furtherance of, or otherwise 
relating to, this Compact, and shall use its best efforts to ensure 
access by MCC, the Inspector General, the United States Government 
Accountability Office or relevant auditor, reviewer or evaluator or 
their respective representatives or agents to all relevant directors, 
officers, employees, Affiliates, contractors, representatives and 
agents of the Government or any Provider.
    (d) Audits.
    (i) Government Audits. The Government shall, on at least an annual 
basis and as the Parties may otherwise agree in writing, conduct, or 
cause to be conducted, financial audits of all MCC Disbursements and 
Re-Disbursements during the year since the Entry into Force or since 
the prior anniversary of the Entry into Force in accordance with the 
following terms, except as the Parties may otherwise agree in writing. 
As requested by MCC in writing, the Government shall use, or cause to 
be used, or select or cause to be selected, an auditor named on the 
approved list of auditors in accordance with the ``Guidelines for 
Financial Audits Contracted by Foreign Recipients'' (the ``Audit 
Guidelines'') issued by the Inspector General of the United States 
Agency for International Development (the ``Inspector General''), and 
as approved by MCC, to conduct such annual audits. Such audits shall be 
performed in accordance with such Audit Guidelines and be subject to 
quality assurance oversight by the

[[Page 12943]]

Inspector General in accordance with such Audit Guidelines. An audit 
shall be completed and delivered to MCC no later than 90 days after the 
first period to be audited and no later than 90 days after each 
anniversary of the Entry into Force thereafter, or such other period as 
the Parties may otherwise agree in writing.
    (ii) Audits of U.S. Entities. The Government shall ensure that 
Supplemental Agreements between the Government or any Provider, on the 
one hand, and a United States non-profit organization, on the other 
hand, state that the United States organization is subject to the 
applicable audit requirements contained in OMB Circular A-133, 
notwithstanding any other provision of this Compact to the contrary. 
The Government shall ensure that Supplemental Agreements between the 
Government or any Provider, on the one hand, and a United States for-
profit Covered Provider, on the other hand, state that the United 
States organization is subject to audit by the cognizant United States 
Government agency, unless the Government and MCC agree otherwise in 
writing.
    (iii) Audit Plan. The Government shall submit, or cause to be 
submitted, to MCC no later than 20 days prior to the date of its 
adoption a plan, in accordance with the Audit Guidelines, for the audit 
of the expenditures of any Covered Providers, which audit plan, in the 
form and substance as approved by MCC, the Government shall adopt, or 
cause to be adopted, no later than sixty (60) days prior to the end of 
the first period to be audited (such plan, the ``Audit Plan'').
    (iv) Covered Provider. A ``Covered Provider'' is (A) a non-United 
States Provider that receives (other than pursuant to a direct contract 
or agreement with MCC) USD $300,000 or more of MCC Funding in any MCA-
Benin fiscal year or any other non-United States person or entity that 
receives, directly or indirectly, USD $300,000 or more of MCC Funding 
from any Provider in such fiscal year or (B) any United States Provider 
that receives (other than pursuant to a direct contract or agreement 
with MCC) USD $500,000 or more of MCC Funding in any MCA-Benin fiscal 
year or any other United States person or entity that receives, 
directly or indirectly, USD $500,000 or more of MCC Funding from any 
Provider in such fiscal year.
    (v) Corrective Actions. The Government shall use its best efforts 
to ensure that Covered Providers take, where necessary, appropriate and 
timely corrective actions in response to audits, consider whether a 
Covered Provider's audit necessitates adjustment of its own records, 
and require each such Covered Provider to permit independent auditors 
to have access to its records and financial statements as necessary.
    (vi) Audit Reports. The Government shall furnish, or use its best 
efforts to cause to be furnished, to MCC an audit report in a form 
satisfactory to MCC for each audit required by this Section 3.8, other 
than audits arranged for by MCC, no later than 90 days after the end of 
the period under audit, or such other time as may be agreed by the 
Parties from time to time.
    (vii) Other Providers. For Providers who receive MCC Funding under 
this Compact pursuant to direct contracts or agreements with MCC, MCC 
shall include appropriate audit requirements in such contracts or 
agreements and shall, on behalf of the Government, unless otherwise 
agreed by the Parties, conduct the follow-up activities with regard to 
the audit reports furnished pursuant to such requirements.
    (viii) Audit by MCC. MCC retains the right to perform, or cause to 
be performed, the audits required under this Section 3.8 by utilizing 
MCC Funding or other resources available to MCC for this purpose, and 
to audit, conduct a financial review, or otherwise ensure 
accountability of any Provider or any other third party receiving MCC 
Funding, regardless of the requirements of this Section 3.8.
    (e) Application to Providers. The Government shall include, or 
ensure the inclusion of, at a minimum, the requirements of:
    (i) Paragraphs (a), (b), (c), (d)(ii), (d)(iii), (d)(v), (d)(vi), 
and (d)(viii) of this Section 3.8 into all Supplemental Agreements 
between the Government, any Government Affiliate, any Permitted 
Designee or any of their respective directors, officers, employees, 
Affiliates, contractors, sub-contractors, grantees, sub-grantees, 
representatives or agents (each, a ``Government Party''), on the one 
hand, and a Covered Provider that is not a non-profit organization 
domiciled in the United States, on the other hand;
    (ii) Paragraphs (a), (b), (c), (d)(ii), and (d)(viii) of this 
Section 3.8 into all Supplemental Agreements between a Government Party 
and a Provider that does not meet the definition of a Covered Provider; 
and
    (iii) Paragraphs (a), (b), (c), (d)(ii), (d)(v) and (d)(viii) of 
this Section 3.8 into all Supplemental Agreements between a Government 
Party and a Covered Provider that is a non-profit organization 
domiciled in the United States.
    (f) Reviews or Evaluations. The Government shall conduct, or cause 
to be conducted, such performance reviews, data quality reviews, 
environmental and social audits, or program evaluations during the 
Compact Term or otherwise and in accordance with the M&E Plan or as 
otherwise agreed in writing by the Parties.
    (g) Cost of Audits, Reviews or Evaluations. MCC Funding may be used 
to fund the costs of any Audits, reviews or evaluations required under 
this Compact, including as reflected on Exhibit A to Annex II, and in 
no event shall the Government be responsible for the costs of any such 
Audits, reviews or evaluations from financial sources other than MCC 
Funding.
    Section 3.9 Insurance; Performance Guarantees. The Government 
shall, to MCC's satisfaction, insure or cause to be insured all Program 
Assets and shall obtain or cause to be obtained such other appropriate 
insurance and other protections to cover against risks or liabilities 
associated with the operations of the Program, including by requiring 
Providers to obtain adequate insurance and post adequate performance 
bonds or other guarantees. MCA-Benin or the Implementing Entity, as 
applicable, shall be named as the payee on any such insurance and the 
beneficiary of any such guarantee, including performance bonds. MCC, 
and to the extent it is not named as the insured party, MCA-Benin shall 
be named as additional insureds on any such insurance or other 
guarantee, to the extent permissible under applicable laws. The 
Government shall ensure that any proceeds from claims paid under such 
insurance or any other form of guarantee shall be used to replace or 
repair any loss of Program Assets or to pursue the procurement of the 
covered goods, services, works, or otherwise; provided, however, at 
MCC's election, such proceeds shall be deposited in a Permitted Account 
as designated by MCA-Benin and acceptable to MCC or as otherwise 
directed by MCC. To the extent MCA-Benin is held liable under any 
indemnification or other similar provision of any agreement between 
MCA-Benin, on the one hand, and any other Provider or other third 
party, on the other hand, the Government shall pay in full on behalf of 
MCA-Benin any such obligation; provided, further, the Government shall 
apply national funds to satisfy its obligations under this Section 3.9 
and no MCC Funding, Accrued Interest, or Program Asset may be applied 
by the Government in satisfaction of its obligations under this Section 
3.9.

[[Page 12944]]

    Section 3.10 Domestic Requirements. The Government shall proceed in 
a timely manner to seek ratification of this Compact, as necessary or 
required by the laws of the Republic of Benin, or similar domestic 
requirement, in order that (i) this Compact shall be given the status 
of an international agreement, (ii) this Compact shall take precedence 
and prevail over the domestic laws of Benin now or hereafter in effect 
and (iii) each of the provisions of this Compact is valid, binding and 
in full force and effect under Beninese law. The Government shall 
initiate such process promptly after the conclusion of this Compact. 
Notwithstanding anything to the contrary in this Compact, this Section 
3.10 shall provisionally apply prior to Entry into Force.
    Section 3.11 No Conflict. The Government shall undertake not to 
enter into any agreement in conflict with this Compact or any 
Supplemental Agreement during the Compact Term.
    Section 3.12 Reports. The Government shall provide, or cause to be 
provided, to MCC at least on each anniversary of the Entry into Force 
(or such other anniversary agreed by the Parties in writing) and 
otherwise within thirty (30) days of any written request by MCC, or as 
otherwise agreed in writing by the Parties, the following information:
    (a) The name of each entity to which MCC Funding has been provided;
    (b) The amount of MCC Funding provided to such entity;
    (c) A description of the Program and each Project funded in 
furtherance of this Compact, including:
    (i) A statement of whether the Program or any Project was solicited 
or unsolicited; and
    (ii) A detailed description of the objectives and measures for 
results of the Program or Project;
    (d) The progress made by Benin toward achieving the Compact Goal 
and Objectives;
    (e) A description of the extent to which MCC Funding has been 
effective in helping Benin to achieve the Compact Goal and Objectives;
    (f) A description of the coordination of MCC Funding with other 
United States foreign assistance and other related trade policies;
    (g) A description of the coordination of MCC Funding with 
assistance provided by other donor countries;
    (h) Any report, document or filing that the Government, any 
Government Affiliate or any Permitted Designee submits to any 
government body in connection with this Compact;
    (i) Any report or document required to be delivered to MCC under 
the Environmental Guidelines, any Audit Plan, or any component of the 
Implementation Plan; and
    (j) Any other report, document or information requested by MCC or 
required by this Compact or any Supplemental Agreement between the 
Parties.

Article IV. Conditions Precedent; Deliveries

    Section 4.1 Conditions Prior to the Entry into Force and 
Deliveries. As conditions precedent to the Entry into Force, the 
Parties shall satisfy the conditions set forth in this Section 4.1.
    (a) The Government (or a mutually acceptable Government Affiliate) 
and MCC shall execute a Disbursement Agreement, which agreement shall 
be in full force and effect as of the Entry into Force.
    (b) (i) The Government shall deliver one or more of the 
Supplemental Agreements or other document identified on Exhibit B 
attached hereto, which agreements or other documents shall be fully 
executed by the parties thereto and in full force and effect, or (ii) 
the Government (or a mutually acceptable Government Affiliate) and MCC 
execute one or more term sheets that set forth the material and 
principal terms and conditions that will be included in any such 
Supplemental Agreement or document that has not been entered into or 
effective as of the Entry into Force (the ``Supplemental Agreement Term 
Sheets'').
    (c) The Government (or a mutually acceptable Government Affiliate) 
and MCC shall execute a Procurement Agreement, which agreement shall be 
in full force and effect as of the Entry into Force.
    (d) The Government shall deliver a written statement as to the 
incumbency and specimen signature of the Principal Representative and 
each Additional Representative of the Government executing any document 
under this Compact, such written statement to be signed by a duly 
authorized official of the Government other than the Principal 
Representative or any such Additional Representative.
    (e) The Government shall deliver a certificate signed and dated by 
the Principal Representative of the Government, or such other duly 
authorized representative of the Government acceptable to MCC, that:
    (i) Certifies the Government has completed all of its domestic 
requirements for (1) this Compact to be given the status of an 
international agreement, (2) this Compact to take precedence and 
prevail over the domestic laws of Benin now or hereafter in effect and 
(3) each of the provisions of this Compact to be valid, binding and in 
full force and effect under Beninese law; and
    (ii) Attaches thereto, and certifies that such attachments are, 
true, correct and complete copies of all decrees, legislation, 
regulations or other governmental documents relating to its domestic 
requirements for this Compact to enter into force and the satisfaction 
of Section 3.10, which MCC may post on its Web site or otherwise make 
publicly available.
    (f) MCC shall deliver a written statement as to the incumbency and 
specimen signature of the Principal Representative and each Additional 
Representative of MCC executing any document under this Compact such 
written statement to be signed by a duly authorized official of MCC 
other than the Principal Representative or any such Additional 
Representative.
    (g) The Government has not engaged subsequent to the conclusion of 
this Compact in any action or omission inconsistent with the MCA 
Eligibility Criteria, as determined by MCC in its sole discretion.
    Section 4.2 Conditions Precedent to MCC Disbursements or Re-
Disbursements. Prior to, and as condition precedent to, any MCC 
Disbursement or Re-Disbursement, the Government shall satisfy, or 
ensure the satisfaction of, all applicable conditions precedent in the 
Disbursement Agreement.

Article V. Final Clauses

    Section 5.1 Communications. Unless otherwise expressly stated in 
this Compact or otherwise agreed in writing by the Parties, any notice, 
certificate, request, report, document or other communication required, 
permitted, or submitted by either Party to the other under this Compact 
shall be (a) in writing, (b) in English and (c) deemed duly given: (i) 
Upon personal delivery to the Party to be notified; (ii) when sent by 
confirmed facsimile or electronic mail, if sent during normal business 
hours of the recipient Party, if not, then on the next business day; or 
(iii) three (3) business days after deposit with an internationally 
recognized overnight courier, specifying next day delivery, with 
written verification of receipt to the Party to be notified at the 
address indicated below, or at such other address as such Party may 
designate:
    To MCC: Millennium Challenge Corporation, Attention: Vice President 
of Operations (with a copy to the Vice President and General Counsel), 
875

[[Page 12945]]

Fifteenth Street, NW., Washington, DC 20005, United States of America, 
Facsimile: (202) 521-3700, Phone: (202) 521-3600, e-mail: 
[email protected] (Vice President of Operations); 
[email protected] (Vice President and General Counsel).
    To the Government: Ministry of Finance and Economy, Attention: 
Minister of Finance and Economy, Route de l'Aeroport, P.O. Box 302, 
Cotonou, Republic of Benin, Facsimile: 229 21 30 18 51, Phone: 229 21 
30 69 38.
    With a copy to: Office of the Head of State, Attention: Chief of 
Staff, Presidence de la Republique, Avenue de la Marina, Cotonou, 
Republic of Benin, Facsimile: 229 21 30 00 90, Phone: 229 21 30 06 36, 
MCA-Benin (to be formed), Attention: National Coordinator, Immeuble 
Espace Dina, 6th Floor, Boulevard Saint Michel, Cotonou, Republic of 
Benin, Facsimile: 229 21 32 83 22, Phone: 229 21 32 83 19, e-mail: 
[email protected].
    Notwithstanding the foregoing, any audit report delivered pursuant 
to Section 3.8, if delivered by facsimile or electronic mail, shall be 
followed by an original in overnight express mail. This Section 5.1 
shall not apply to the exchange of letters contemplated in Section 1.3 
or any amendments under Section 5.3.
    Section 5.2 Representatives. Unless otherwise agreed in writing by 
the Parties, for all purposes relevant to this Compact, the Government 
shall be represented by the individual holding the position of, or 
acting as, Minister of Finance and Economy of the Republic of Benin, 
and MCC shall be represented by the individual holding the position of, 
or acting as, Vice President for Operations (each, a ``Principal 
Representative''), each of whom, by written notice to the other Party, 
may designate one or more additional representatives (each, an 
``Additional Representative'') for all purposes other than signing 
amendments to this Compact. The names of the Principal Representative 
and any Additional Representative of each of the Parties shall be 
provided, with specimen signatures, to the other Party, and the Parties 
may accept as duly authorized any instrument signed by such 
representatives relating to the implementation of this Compact, until 
receipt of written notice of revocation of their authority. A Party may 
change its Principal Representative to a new representative of 
equivalent or higher rank upon written notice to the other Party, which 
notice shall include the specimen signature of the new Principal 
Representative.
    Section 5.3 Amendments. The Parties may amend this Compact only by 
a written agreement signed by the Principal Representatives of the 
Parties and subject to the respective domestic approval requirements to 
which this Compact was subject.
    Section 5.4 Termination; Suspension.
    (a) Subject to Section 2.5, either Party may terminate this Compact 
in its entirety by giving the other Party thirty (30) days' written 
notice.
    (b) Notwithstanding any other provision of this Compact, including 
Section 2.1, or any Supplemental Agreement between the Parties, subject 
to Section 2.5, MCC may suspend or terminate this Compact or MCC 
Funding, in whole or in part, and any obligation or sub-obligation 
related thereto, upon giving the Government written notice, if MCC 
determines, in its sole discretion, that:
    (i) Any use or proposed use of MCC Funding or Program Assets or 
continued implementation of the Compact would be in violation of 
applicable law or United States Government policy, whether now or 
hereafter in effect;
    (ii) The Government, any Provider, or any other third party 
receiving MCC Funding or using Program Assets is engaged in activities 
that are contrary to the national security interests of the United 
States;
    (iii) The Government or any Permitted Designee has committed an act 
or omission or an event has occurred that would render the Republic of 
Benin ineligible to receive United States economic assistance under 
Part I of the Foreign Assistance Act of 1961, as amended (22 U.S.C. 
2151 et seq.), by reason of the application of any provision of the 
Foreign Assistance Act of 1961 or any other provision of law;
    (iv) The Government or any Permitted Designee has engaged in a 
pattern of actions or omissions inconsistent with the MCA Eligibility 
Criteria, or there has occurred a significant decline in the 
performance of the Republic of Benin on one or more of the eligibility 
indicators contained therein;
    (v) The Government or any Provider has materially breached one or 
more of its assurances or any covenants, obligations or 
responsibilities under this Compact or any Supplemental Agreement;
    (vi) An audit, review, report or any other document delivered in 
furtherance of the Compact or any Supplemental Agreement or any other 
evidence reveals that actual expenditures for the Program or any 
Project or Project Activity were greater than the projected expenditure 
for such activities identified in the applicable Detailed Financial 
Plan or are projected to be greater than projected expenditures for 
such activities;
    (vii) If the Government (A) materially reallocates or reduces the 
allocation in its national budget or any other Government budget of the 
normal and expected resources that the Government would have otherwise 
received or budgeted, from external or domestic sources, for the 
activities contemplated herein, (B) fails to contribute or provide the 
amount, level, type and quality of resources required to effectively 
carry out the Government Responsibilities or any other responsibilities 
or obligations of the Government under or in furtherance of this 
Compact, or (C) fails to pay any of its obligations as required under 
this Compact or any Supplemental Agreement, including such obligations 
which shall be paid solely out of national funds;
    (viii) If the Government, any Provider, or any other third party 
receiving MCC Funding or using Program Assets, or any of their 
respective directors, officers, employees, Affiliates, contractors, 
sub-contractors, grantee, sub-grantee, representatives or agents, is 
found to have been convicted of a narcotics offense or to have been 
engaged in drug trafficking;
    (ix) Any MCC Funding or Program Assets are applied, directly or 
indirectly, to the provision of resources and support to, individuals 
and organizations associated with terrorism, sex trafficking or 
prostitution;
    (x) An event or condition of any character has occurred that: (A) 
Materially and adversely affects, or is likely to materially and 
adversely affect, the ability of the Government or any other party to 
effectively implement, or ensure the effective implementation of, the 
Program or any Project or to otherwise carry out its responsibilities 
or obligations under or in furtherance of this Compact or any 
Supplemental Agreement or to perform its obligations under or in 
furtherance of this Compact or any Supplemental Agreement or to 
exercise its rights thereunder; (B) makes it improbable that the 
Objectives will be achieved during the Compact Term; (C) materially and 
adversely affects the Program Assets or any Permitted Account or (D) 
constitutes misconduct injurious to MCC, or constitutes a fraud or a 
felony, by the Government, any Government Affiliate, Permitted Designee 
or Provider, or any officer, director, employee, agent, representative, 
Affiliate, contractor,

[[Page 12946]]

grantee, subcontractor or sub-grantee of any of the foregoing;
    (xi) The Government or any Permitted Designee or Provider has taken 
any action or omission or engaged in any activity in violation of, or 
inconsistent with, the requirements of this Compact or any Supplemental 
Agreement to which the Government or any Permitted Designee or Provider 
is a party;
    (xii) There has occurred a failure to meet a condition precedent or 
series of conditions precedent or any other requirements or conditions 
in connection with MCC Disbursement as set out in and in accordance 
with any Supplemental Agreement between the Parties; or
    (xiii) Any MCC Funding, Accrued Interest or Program Asset becomes 
subject to a Lien without the prior approval of MCC, and the Government 
fails to obtain the release of such Lien (at its own expense and not 
with MCC Funding, Accrued Interest, or Program Assets) within thirty 
(30) days after the imposition of such Lien.
    (c) MCC may reinstate any suspended or terminated MCC Funding under 
this Compact or any Supplemental Agreement if MCC determines, in its 
sole discretion, that the Government or other relevant party has 
demonstrated a commitment to correcting each condition for which MCC 
Funding was suspended or terminated.
    (d) The authority to suspend or terminate this Compact or any MCC 
Funding under this Section 5.4 includes the authority to suspend or 
terminate any obligations or sub-obligations relating to MCC Funding 
under any Supplemental Agreement without any liability to MCC 
whatsoever.
    (e) All MCC Disbursements and Re-Disbursements shall cease upon 
expiration, suspension, or termination of this Compact; provided, 
however, (i) reasonable expenditures for goods, services and works that 
are properly incurred under or in furtherance of this Compact before 
expiration, suspension or termination of this Compact and (ii) 
reasonable expenditures for goods and services (including certain 
administrative expenses) properly incurred within one hundred and 
twenty (120) days after the expiration, suspension or termination of 
the Compact in connection with the winding up of the Program may be 
paid from MCC Funding, provided that in the case of clauses (i) and 
(ii) the request for such payment is (A) properly submitted within 
ninety (90) days after the expiration, suspension or termination of the 
Compact and (B) subject to the prior written consent of MCC.
    (f) Other than payments permitted pursuant to Section 5.4(e), in 
the event of the suspension or termination of this Compact or any 
Supplemental Agreement, in whole or in part, the Party, at MCC's sole 
discretion, shall suspend, for the period of the suspension, or 
terminate, or ensure the suspension or termination of, as applicable, 
any obligation or sub-obligation of the Parties to provide financial or 
other resources under this Compact or any Supplemental Agreement, or to 
the suspended or terminated portion of this Compact or such 
Supplemental Agreement, as applicable. In the event of such suspension 
or termination, the Government shall use its best efforts to suspend or 
terminate, or ensure the suspension or termination of, as applicable, 
all such noncancelable commitments related to the suspended or 
terminated MCC Funding. Any portion of this Compact or any such 
Supplemental Agreement that is not suspended or terminated shall remain 
in full force and effect.
    (g) Upon the full or partial suspension or termination of this 
Compact or any MCC Funding, MCC may, at its expense, direct that title 
to Program Assets be transferred to MCC if such Program Assets are in a 
deliverable state; provided, for any Program Asset(s) partially 
purchased or funded (directly or indirectly) by MCC Funding, the 
Government shall reimburse to a United States Government account 
designated by MCC the cash equivalent of the portion of the value of 
such Program Asset(s), such value as determined by MCC.
    (h) Prior to the expiration of this Compact or upon termination of 
this Compact, the Parties shall consult in good faith with a view to 
reaching an agreement in writing on (i) the post-Compact Term treatment 
of MCA-Benin, (ii) the process for ensuring the refunds of MCC 
Disbursements that have not yet been released from a Permitted Account 
through a valid Re-Disbursement or otherwise committed in accordance 
with Section 5.4(e), or (iii) any other matter related to the winding 
up of the Program and this Compact.
    Section 5.5 Privileges and Immunities. MCC is an agency of the 
Government of the United States of America and its personnel assigned 
to the Republic of Benin will be notified pursuant to the Vienna 
Convention on Diplomatic Relations as members of the mission of the 
Embassy of the United States of America. The Government shall ensure 
that any personnel of MCC so notified, including individuals detailed 
to or contracted by MCC, and the members of the families of such 
personnel, while such personnel are performing duties in the Republic 
of Benin, shall enjoy the privileges and immunities that are enjoyed by 
a member of the United States Foreign Service, or the family of a 
member of the United States Foreign Service so notified, as 
appropriate, of comparable rank and salary of such personnel, if such 
personnel or the members of the families of such personnel are not a 
national of, or permanently resident in, the Republic of Benin.
    Section 5.6 Attachments. Any annex, schedule, exhibit, table, 
appendix or other attachment expressly attached hereto (collectively, 
the ``Attachments'') is incorporated herein by reference and shall 
constitute an integral part of this Compact.
    Section 5.7 Inconsistencies.
    (a) Conflicts or inconsistencies between any parts of this Compact 
shall be resolved by applying the following descending order of 
precedence:
    (i) Articles I through V and
    (ii) Any Attachments.
    (b) In the event of any conflict or inconsistency between this 
Compact and any Supplemental Agreement between the Parties, the terms 
of this Compact shall prevail. In the event of any conflict or 
inconsistency between any Supplemental Agreement between the Parties 
and any other Supplemental Agreement, the terms of the Supplemental 
Agreement between the Parties shall prevail. In the event of any 
conflict or inconsistency between Supplemental Agreements between any 
parties, the terms of a more recently executed Supplemental Agreement 
between such parties shall take precedence over a previously executed 
Supplemental Agreement between such parties. In the event of any 
inconsistency between a Supplemental Agreement between the Parties and 
any component of the Implementation Plan, the terms of the relevant 
Supplemental Agreement shall prevail.
    Section 5.8 Indemnification. The Government shall indemnify and 
hold MCC and any MCC officer, director, employee, Affiliate, 
contractor, agent or representative (each of MCC and any such persons, 
an ``MCC Indemnified Party'') harmless from and against, and shall 
compensate, reimburse and pay such MCC Indemnified Party for, any 
liability or other damages which (i) are directly or indirectly 
suffered or incurred by such MCC Indemnified Party, or to which any MCC 
Indemnified Party may otherwise become subject, regardless of whether 
or not such damages relate to any third-party claim, and (ii) arise 
from or as a result of the

[[Page 12947]]

negligence or willful misconduct of the Government, any Government 
Affiliate, MCA-Benin or any Permitted Designee, directly or indirectly 
connected with, any activities (including acts or omissions) undertaken 
in furtherance of this Compact; provided, however, the Government shall 
apply national funds to satisfy its obligations under this Section 5.8 
and no MCC Funding, Accrued Interest, or Program Asset may be applied 
by the Government in satisfaction of its obligations under this Section 
5.8.
    Section 5.9 Headings. The Section and Subsection headings used in 
this Compact are included for convenience only and are not to be 
considered in construing or interpreting this Compact.
    Section 5.10 Interpretation; Definitions.
    (a) Any reference to the term ``including'' in this Compact shall 
be deemed to mean ``including without limitation'' except as expressly 
provided otherwise.
    (b) Any reference to activities undertaken ``in furtherance of this 
Compact'' or similar language shall include activities undertaken by 
the Government, any Government Affiliate, any Permitted Designee, any 
Provider or any other third party receiving MCC Funding involved in 
carrying out the purposes of this Compact or any Supplemental 
Agreement, including their respective directors, officers, employees, 
Affiliates, contractors, sub-contractors, grantees, sub-grantees, 
representatives or agents, whether pursuant to the terms of this 
Compact, any Supplemental Agreement or otherwise.
    (c) References to ``day'' or ``days'' shall be calendar days unless 
provided otherwise.
    (d) The term ``United States Government'' shall, for the purposes 
of this Compact, mean any branch, agency, bureau, government 
corporation, government chartered entity or other body of the Federal 
government of the United States.
    (e) The term ``Affiliate'' of a party is a person or entity that 
controls, is controlled by, or is under the same control as the party 
in question, whether by ownership or by voting, financial or other 
power or means of influence.
    (f) The term ``Government Affiliate'' is an Affiliate, ministry, 
bureau, department, agency, government corporation or any other entity 
chartered or established by the Government.
    (g) References to any Affiliate or Government Affiliate herein 
shall include any of their respective directors, officers, employees, 
affiliates, contractors, sub-contractors, grantees, sub-grantees, 
representatives, and agents.
    (h) Any references to ``Supplemental Agreement between the 
Parties'' shall mean any agreement between MCC on the one hand, and the 
Government or any Government Affiliate or Permitted Designee on the 
other hand.
    (i) A compendium of capitalized terms defined herein is included, 
for convenience only, in Exhibit A attached hereto.
    Section 5.11 Signatures. A signature to this Compact or an 
amendment to this Compact pursuant to Section 5.3 shall be delivered 
only as an original signature. With respect to all other signatures, a 
signature delivered by facsimile or electronic mail in accordance with 
Section 5.1 shall be deemed an original signature, and the Parties 
hereby waive any objection to such signature or to the validity of the 
underlying document, certificate, notice, instrument or agreement on 
the basis of the signature's legal effect, validity or enforceability 
solely because it is in facsimile or electronic form; without limiting 
the foregoing, a signature on an audit report or a signature evidencing 
any modification identified in Sections 2(b) and (4)(a)(iv) of Annex I, 
Section 4 of Annex II or Section 5(c) Annex III shall be followed by an 
original in overnight express mail. Such signature shall be accepted by 
the receiving Party as an original signature and shall be binding on 
the Party delivering such signature.
    Section 5.12 Designation. MCC may designate any Affiliate, agent, 
or representative to implement, in whole or in part, its obligations, 
and exercise any of its rights, under this Compact or any Supplemental 
Agreement between the Parties. MCC shall inform the Government of any 
such designation.
    Section 5.13 Survival. Any Government Responsibilities, covenants, 
or obligations or other responsibilities to be performed by the 
Government after the Compact Term shall survive the termination or 
expiration of this Compact and expire in accordance with their 
respective terms. Notwithstanding the termination or expiration of this 
Compact, the following provisions shall remain in force: Sections 2.2, 
2.3, 2.5, 3.2, 3.3, 3.4, 3.5, 3.8, 3.9 (for one year), 3.12, 5.1, 5.2, 
5.4(d), 5.4(e) (for one hundred and twenty days), 5.4(f), 5.4(g), 
5.4(h), 5.5, 5.6, 5.7, 5.8, 5.9, 5.10, 5.11, 5.12, this Section 5.13, 
5.14, and 5.15.
    Section 5.14 Consultation. Either Party may, at any time, request 
consultations relating to the interpretation or implementation of this 
Compact or any Supplemental Agreement between the Parties. Such 
consultations shall begin at the earliest possible date. The request 
for consultations shall designate a representative for the requesting 
Party with the authority to enter consultations and the other Party 
shall endeavor to designate a representative of equal or comparable 
rank. If such representatives are unable to resolve the matter within 
20 days from the commencement of the consultations then each Party 
shall forward the consultation to the Principal Representative or such 
other representative of comparable or higher rank. The consultations 
shall last no longer than 45 days from date of commencement. If the 
matter is not resolved within such time period, either Party may 
terminate this Compact pursuant to Section 5.4(a). The Parties shall 
enter any such consultations guided by the principle of achieving the 
Compact Goal in a timely and cost-effective manner and by the 
principles of international law. Any dispute arising under or related 
to this Compact shall be determined exclusively through the 
consultation mechanism set forth in this Section 5.14.
    Section 5.15 MCC Status. MCC is a United States government 
corporation acting on behalf of the United States Government in the 
implementation of this Compact. As such, MCC has no liability under 
this Compact, is immune from any action or proceeding arising under or 
relating to this Compact and the Government hereby waives and releases 
all claims related to any such liability. In matters arising under or 
relating to this Compact, MCC is not subject to the jurisdiction of the 
courts or other body of Benin or any other jurisdiction and all 
disputes arising under or relating to this Compact shall be determined 
in accordance with Section 5.14.
    Section 5.16 Language. This Compact is prepared in English and in 
the event of any ambiguity or conflict between this official English 
version and any other version translated into any language for the 
convenience of the Parties, this official English version shall 
prevail.
    Section 5.17 Publicity; Information and Marking. The Government 
shall give appropriate publicity to this Compact as a program to which 
the United States, through MCC, has contributed, including by posting 
this Compact, and any amendments thereto, on the Web site operated by 
MCA-Benin (``MCA-Benin Website''), identifying Program activity sites, 
and marking Program Assets; provided, any announcement, press release 
or

[[Page 12948]]

statement regarding MCC or the fact that MCC is funding the Program or 
any other publicity materials referencing MCC, including the publicity 
described in this Section 5.17, shall be subject to prior approval by 
MCC and shall be consistent with any instructions provided by MCC from 
time to time in relevant Implementation Letters. Upon the termination 
or expiration of this Compact, MCC may request the removal of, and the 
Government shall, upon such request, remove, or cause the removal of, 
any such markings and any references to MCC in any publicity materials 
or on the MCA-Benin Website. MCC may post this Compact, and any 
amendments thereto, on the Web site of MCC. MCC shall have the right to 
use any information or data provided in any report or document provided 
to MCC for the purpose of satisfying MCC reporting requirements or in 
any other manner.
    In Witness Whereof, the undersigned, duly authorized by their 
respective governments, have signed this Compact this 22nd day of 
February, 2006 and this Compact shall enter into force in accordance 
with Section 1.3.
    Done at Washington, DC in English.
    For the United States of America, acting through the Millennium 
Challenge Corporation, Name: John J. Danilovich, Title: Chief Executive 
Officer.
    For the Government of the Republic of Benin, Name: Cosme Sehlin, 
Title: Minister of Finance and Economy.

Exhibit A--Definitions

    The following compendium of capitalized terms that are used herein 
is provided for the convenience of the reader. To the extent that there 
is a conflict or inconsistency between the definitions in this Exhibit 
A and the definitions elsewhere in the text of this Compact, the 
definition elsewhere in this Compact shall prevail over the definition 
in this Exhibit A.
    2006 Baseline Data Survey shall have the meaning set forth in 
Section 2(a)(i) of Annex III.
    Accrued Interest is any interest or other earnings on MCC Funding 
that accrues as specified in Section 2.1(c).
    Act means the Millennium Challenge Act of 2003, as amended.
    Additional Representative is a representative as may be designated 
by a Principal Representative, by written notice, for all purposes 
other than signing amendments to this Compact.
    ADR means alternative dispute resolution.
    AFD means the Agence Fran[ccedil]aise de D[eacute]veloppement.
    Advisory Council shall have the meaning set forth in Section 
3(e)(i) of Annex I.
    Affiliate means the affiliate of a party, which is a person or 
entity that controls, is controlled by, or is under the same control as 
the party in question, whether by ownership or by voting, financial or 
other power or means of influence. References to Affiliate herein shall 
include any of their respective directors, officers, employees, 
affiliates, contractors, sub-contractors, grantees, sub-grantees, 
representatives, and agents.
    Arbitration Center Activity is the Project Activity related to 
expansion of the arbitration center under the Justice Project described 
in Section 2(a) of Schedule 3 to Annex I.
    Attachments are any annex, schedule, exhibit, table, appendix or 
other attachment expressly attached to this Compact.
    Audit Guidelines means the ``Guidelines for Financial Audits 
Contracted by Foreign Recipients'' issued by the Inspector General of 
the United States Agency for International Development.
    Audit Plan means a plan, in accordance with the Audit Guidelines, 
for the audit of the expenditures of any Covered Providers, which audit 
plan, in the form and substance as approved by MCC, the Government 
shall adopt, or cause to be adopted, no later than sixty (60) days 
prior to the end of the first period to be audited.
    Auditor means the auditor(s) as defined in, and engaged pursuant 
to, Section 3(h) of Annex I and as required by Section 3.8(d) of the 
Compact.
    Auditor/Reviewer Agreement is an agreement between MCA-Benin and 
each Auditor or Reviewer, in form and substance satisfactory to MCC, 
that sets forth the roles and responsibilities of the Auditor or 
Reviewer with respect to the audit, review or evaluation, including 
access rights, required form and content of the applicable audit, 
review or evaluation and other terms and conditions such as payment of 
the Auditor or Reviewer.
    Bank(s) means each individually and collectively, any bank holding 
an account referenced in Section 4(d) of Annex I.
    Bank Agreement means an agreement between MCA-Benin and a Bank, 
satisfactory to MCC, that sets forth the signatory authority, access 
rights, anti-money laundering and anti-terrorist financing provisions, 
and other terms related to the Permitted Account.
    BDS means business development services.
    Beneficiaries means the intended beneficiaries identified in 
accordance with Annex I.
    Bilateral Agreement means the Economic, Technical and Related 
Assistance Agreement by and between the Government of the United States 
of America and the Government of the Republic of Benin, dated May 27, 
1961, as amended from time to time.
    BNC means Benin National Committee.
    Board means the independent board of directors of MCA-Benin to 
oversee MCA-Benin's responsibilities and obligations under this 
Compact.
    BOC means the fish/seafood inspection handling facility at the 
Port.
    Business Registration Activity is the Project Activity related to 
the business registration center under the Justice Project described in 
Section 2(b) of Schedule 3 to Annex I.
    CAMeC means the Centre d'Arbitrage, Mediation et Conciliation.
    Capacity Building Activity is the Project Activity related to 
financial institution and borrower capacity building under the 
Financial Services Project described in Section 2(a) of Schedule 2 of 
Annex I.
    Cellule means the Cellule de Microfinance.
    Chair means the Chair of the Board of Directors.
    Challenge Facility means a financial innovation and expansion 
challenge facility or FINECF described in Section 2(a) of Schedule 2 to 
Annex I.
    Chamber means the Chamber of Commerce.
    Civil Member(s) means the representatives for the positions 
identified in Sections 3(d)(ii)(2)(A)(vii)-(xi) of Annex I designated 
to serve as voting members on the Board for a one-year period.
    Compact means the Millennium Challenge Compact made between the 
United States of America, acting through the Millennium Challenge 
Corporation, and the Government of the Republic of Benin.
    Compact Goal means advancing economic growth and poverty reduction 
in Benin.
    Compact Goal Indicator(s) means the Indicators that will measure 
the results for the overall Program on the intended Beneficiaries, as 
set out in the table at Section 2(a)(i) of Annex III.
    Compact Implementation Funding shall have the meaning set forth in 
Section 2.1(a)(iii).
    Compact Records shall have the meaning set forth in Section 3.8(b).
    Compact Reports are any documents or reports delivered to MCC in 
satisfaction of the Government's

[[Page 12949]]

reporting requirements under this Compact or any Supplemental Agreement 
between the Parties.
    Compact Term means the term for which this Compact shall remain in 
force, which shall be the five (5) year period from the Entry into 
Force, unless earlier terminated in accordance with Section 5.4.
    Component shall have the meaning set forth in Section 2(a)(ii)(7) 
in Schedule 2 of Annex I.
    Courts Activity is the Project Activity related to improved 
services of courts under the Justice Project described in Section 2(c) 
of Schedule 1 to Annex I.
    Covered Provider shall have the meaning set forth in Section 
3.8(d)(iv).
    Designated Rights and Responsibilities shall have the meaning set 
forth in Section 3.2(c).
    Detailed Financial Plan means the financial plans that specify 
respectively the annual and quarterly detailed budget and projected 
cash requirements for the Program (including monitoring and evaluation 
and administrative costs) and each Project, projected both on a 
commitment and cash requirement basis.
    Disbursement Agreement is a Supplemental Agreement that MCC, the 
Government (or a mutually acceptable Government Affiliate and MCA-Benin 
shall enter into that (i) further specifies the terms and conditions of 
any MCC Disbursements and Re-Disbursements, (ii) is in a form and 
substance mutually satisfactory to the Parties, and (iii) is signed by 
the Principal Representative of each Party (or in the case of the 
Government, the principal representative of the applicable Government 
Affiliate) and of MCA-Benin.
    EMICoV means Benin's national household living standards 
measurement survey (L'Enquete Modulaire Integree sur les Conditions de 
Vie).
    EMPs means Environmental Management Plans.
    Entry into Force shall have the meaning set forth in Section 1.3.
    Environmental Guidelines means the environmental guidelines 
delivered by MCC to the Government or posted by MCC on its website or 
otherwise publicly made available, as such guidelines may be amended 
from time to time.
    ESI Officer means the Environmental and Social Assessment Director, 
an Officer of MCA-Benin.
    ESIAs means environmental and social impact assessments.
    EU means the European Union.
    Evaluation Component means the component of the M&E Plan that 
specifies a methodology, process and timeline for the evaluation of 
planned, ongoing, or completed Project Activities to determine their 
impact and likely sustainability.
    Exempt Uses shall have the meaning set forth in Section 2.3(e)(ii).
    Facility Manager means the qualified independent management entity 
or entities that shall manage and implement the Challenge Facility.
    Final Evaluation shall have the meaning set forth in Section 3(a) 
of Annex III.
    Financial Advisory Committee is a stakeholders group that will 
provide feedback and input to the Financial Services Project Division.
    Financial Enabling Environment Activity is the Project Activity 
related to financial enabling environment under the Financial Services 
Project described in Section 2(b) of Schedule 2 to Annex I.
    Financial Plan means collectively, the Multi-Year Financial Plan, 
each Detailed Financial Plan, and each amendment, supplement or other 
change thereto.
    Financial Plan Annex means Annex II of this Compact, which 
summarizes the Multi-Year Financial Plan for the Program.
    Financial Services Objective is a Project Objective of this Compact 
and means to expand access to financial services.
    Financial Services Project is the Access to Financial Services 
Project, and the Project described in Schedule 2 to Annex I, that the 
Parties intend to implement in furtherance of the Financial Services 
Objective.
    FINECF means a financial innovation and expansion challenge 
facility or the Challenge Facility described in Section 2(a) of 
Schedule 2 of Annex I.
    Fiscal Accountability Plan shall have the meaning set forth in 
Section 4(c) of Annex I.
    Fiscal Agent shall have the mean set forth in Section 3(g) of Annex 
I.
    Fiscal Agent Agreement is an agreement between MCA-Benin and each 
Fiscal Agent, in form and substance satisfactory to MCC, that sets 
forth the roles and responsibilities of the Fiscal Agent and other 
appropriate terms and conditions, such as payment of the Fiscal Agent. 
``goods'' refers to any supplies, equipment, materials, property or 
other goods.
    Governing Document means any decree, legislation, regulation, 
contractual arrangement (including a governance agreement by and among 
the Government (or a mutually acceptable Government Affiliate), MCA-
Benin and MCC), or other charter document establishing or governing 
MCA-Benin.
    Government means the Government of the Republic of Benin.
    Government Affiliate is an Affiliate, ministry, bureau, department, 
agency, government, corporation or any other entity chartered or 
established by the Government. References to Government Affiliate shall 
include any of their respective directors, officers, employees, 
affiliates, contractors, sub-contractors, grantees, sub-grantees, 
representatives, and agents.
    Government Members are the government members identified in Section 
3(d)(ii)(2)(A)(i)-(vi) of Annex I serving as voting members on the 
Board, and any replacements thereof in accordance with Section 
3(d)(ii)(2)(A) of Annex I.
    Government Party means the Government, any Government Affiliate, 
any Permitted Designee or any of their respective directors, officers, 
employees, Affiliates, contractors, sub-contractors, grantees, sub-
grantees, representatives or agents.
    Government Responsibilities shall have the meaning set forth in 
Section 3.2(a).
    GTZ means Deutsche Gessellschaft Fur Technische Zusammenarbeit, 
GmbH.
    IEC means information, education and communication campaign.
    IEC Activity is the Project Activity related to information, 
education, and communication Project Activity under the Land Project 
described in Section 2(d) of Schedule 1 of Annex I.
    IFC means the International Finance Corporation.
    Implementation Letter is a letter that may be issued by MCC from 
time to time to furnish additional information or guidance to assist 
the Government in the implementation of this Compact.
    Implementation Plan is a detailed plan for the implementation of 
the Program and each Project, which will be memorialized in one or more 
documents and shall consist of: (i) A Multi-Year Financial Plan; (ii) 
Detailed Financial Plans; (iii) Fiscal Accountability Plan; (iv) 
Procurement Plan; (v) Program and Project Work Plans; and (vi) M&E 
Plan.
    Implementing Entity means a Government Affiliate, nongovernmental 
organization or other public- or private-sector entity or persons to 
which MCA-Benin may provide MCC funding, directly or indirectly, 
through an Outside Project Manager, to implement and carry out the 
Projects or any other activities to be carried out in furtherance of 
this Compact.
    Implementing Entity Agreement is an agreement between MCA-Benin (or 
the

[[Page 12950]]

appropriate Outside Project Manager) and an Implementing Entity, in 
form and substance satisfactory to MCC, that sets forth the roles and 
responsibilities of such Implementing Entity and other appropriate 
terms and conditions, such as payment of the Implementing Entity.
    Indicators shall mean the quantitative, objective and reliable data 
that the M&E Plan will use to measure the results of the Program.
    Initial Technical Studies means the initial technical studies 
(engineering pre-feasibilty, environmental and economic) related to the 
Markets Project described in Section 2(a) of Schedule 4 of Annex I.
    Inspector General means the Inspector General of the United States 
Agency for International Development.
    ISPS means the International Ship and Port Security Code.
    Justice Advisory Committee is a stakeholders group that will 
provide feedback and input to the Justice Project Division.
    Justice Objective is a Project Objective of this Compact and means 
to improve the ability of the judicial system to enforce contracts and 
resolve claims.
    Justice Project is the Access to Justice Project, and the Project 
described in Schedule 3 of Annex I, that the Parties intend to 
implement in furtherance of the Justice Objective.
    Land Objective is a Project Objective of this Compact and means to 
strengthen property rights and investment.
    Land Project is the Access to Land Project, and the Project 
described in Schedule 1 to Annex I, that the Parties intend to 
implement in furtherance of the Land Project Objective.
    Land Project Steering Group is a stakeholders group that will 
provide feedback and input to the Land Project Division.
    Lien means any lien, attachment, enforcement of judgment, pledge, 
or encumbrance of any kind.
    Local Account is an interest-bearing local currency of Benin bank 
account at a commercial bank, subject to MCC approval, to which the 
Fiscal Agent may authorize transfer from any U.S. Dollar Permitted 
Account for the purpose of making Re-Disbursements payable in local 
currency.
    M&E Annex means Annex III of this Compact, which generally 
describes the components of the M&E Plan for the Program.
    M&E Plan means the plan to measure and evaluate progress toward 
achievement of the Compact Goal and Objectives of this Compact.
    Management means the management team or national program 
coordination team of MCA-Benin to have overall management 
responsibility for the implementation of this Compact.
    Markets Objective is a Project Objective of this Compact and means 
to improve the Port of Cotonou.
    Markets Project is the Access to Markets Project, and the Project 
described in Schedule 4 of Annex I, that the Parties intend to 
implement in furtherance of the Markets Objective.
    Material Agreement shall have the meaning set forth in 
Section3(c)(i)(5) of Annex I.
    Material Re-Disbursement means any Re-Disbursement that requires 
MCC approval under applicable law, the Procurement Agreement, any 
Governing Document, or any Supplemental Agreement.
    Material Terms of Reference means any terms of reference for the 
procurement of goods, services or works that requires MCC approval 
under applicable law, the Procurement Agreement, any Governing 
Document, or any Supplemental Agreement.
    MCA means the Millennium Challenge Account.
    MCA-Benin shall have the meaning set forth in Section 3(b) of Annex 
I and as is further described in Section 3(d) of Annex I.
    MCA-Benin Website means the website operated by MCA-Benin.
    MCA Eligibility Criteria means the MCA selection criteria and 
methodology published by MCC pursuant to Section 607 of the Act from 
time to time.
    MCA National Coordinator means the National Coordinator of the 
Millennium Challenge Account under the Benin National Committee, as 
described in Section 1(b) of Annex I.
    MCC means the Millennium Challenge Corporation.
    MCC Disbursement means the disbursement of MCC Funding by MCC from 
time to time to a Permitted Account or through such other mechanism 
agreed by the Parties as defined in and in accordance with Section 
2.1(b)(i).
    MCC Disbursement Request means the applicable request that the 
Government and MCA-Benin will jointly submit for an MCC Disbursement as 
may be specified in the Disbursement Agreement.
    MCC Funding shall have the meaning set forth in Section 2.1(a).
    MCC Indemnified Party means MCC and any MCC officer, director, 
employee, Affiliate, contractor, agent or representative.
    MCC Representative is a representative designated by MCC to serve 
as an Observer on the Board.
    MFIs means micro-finance institutions.
    Monitoring Component means the component of the M&E Plan that 
specifies how the implementation of the Program and progress toward the 
Compact Goal and Objectives will be monitored.
    MSMEs means micro and small- and medium-scale enterprises.
    Multi-Year Financial Plan means the multi-year financial plan for 
the Program and for each Project, which is summarized in Annex II to 
this Compact.
    Multi-Year Financial Plan Summary means a multi-year Financial plan 
summary attached to this Compact as Exhibit A of Annex II.
    ``national'' means, for purposes of Section 2.3(e), organizations 
established under the laws currently or hereafter in effect in the 
Republic of Benin, other than MCA-Benin or any other entity established 
solely for purposes of managing or overseeing the implementation of the 
Program or any wholly-owned subsidiaries, divisions, or Affiliates of 
entities not registered or established under the laws currently or 
hereafter in effect in the Republic of Benin.
    National Coordinator means the National Coordinator of MCA-Benin as 
defined in Section 3(c)(i) of Annex I.
    NGOs means non-governmental organizations.
    Objective(s) are the Program Objective together with the following 
project-level objectives of this Compact that have been identified by 
the Parties, each of which is (i) key to advancing the Compact Goal and 
(ii) described in more detail in the Annexes attached hereto: (a) the 
Land Objective, (b) the Financial Services Objective (c) the Justice 
Objective and (d) the Markets Objective.
    Objective Indicator means the Indicator for each Objective that 
will measure the ultimate result for each of the individual Projects. A 
table of Objective Indicator definitions is set forth at Section 
2(a)(ii) of Annex III.
    Observer(s) means the non-voting members of the Board as identified 
in Section 3(d)(ii)(2)(B) of Annex I.
    Officers shall have the meaning set forth in 3(d)(iii)(3) of Annex 
I.
    OHADA means Organization for the Harmonization of Business Law in 
Africa.
    Outcome Indicator means the Indicator in the M&E Plan that will 
measure the intermediate results achieved under each of the Project 
Activities in order to provide early measures of progress towards the 
accomplishment of the Project Objective. A table of Outcome Indicator 
definitions is set forth at Section 2(a)(ii) of Annex III.

[[Page 12951]]

    Output Indicator means the Indicator in the M&E Plan to measure the 
direct outputs of the Project Activities.
    Outside Project Manager means the qualified persons or entities 
engaged by Management, on behalf of MCA-Benin, to serve as outside 
project managers in accordance with Section 3(d)(iii)(5) of Annex I.
    PAC means the Port Autonome de Cotonou.
    Panel shall have the meaning set forth in Section 2(a)(ii)(3) of 
Schedule 2 to Annex I.
    Parties means the United States of America, acting through MCC, and 
the Government.
    Party means (i) the United States of America, acting through MCC or 
(ii) the Government.
    Permitted Account(s) shall have the meaning set forth in Section 
4(d) of Annex I.
    Permitted Designee shall have the meaning set forth in Section 
3.2(c).
    PFR means Plan Foncier Rural.
    Pledge means any pledge of any MCC Funding or any Program Assets, 
or any guarantee directly or indirectly of any indebtedness.
    Policy Activity is the Project Activity related to policy and legal 
reform under the Land Project described in Section 2(a) of Schedule 1 
of Annex I.
    Port means the Port of Cotonou.
    Port Advisory Committee is a stakeholders group representing the 
Markets Project beneficiaries that will provide feedback and input to 
the Markets Project Division.
    Port Institutional Activity means the port institutional and 
systems improvements Project Activity of the Markets Project as 
described in Section 2(b) of Schedule 4 to Annex I.
    Port Security and Landside Improvements Activity means the port 
security and landside improvements Project Activity of the Markets 
Project as described in Section 2(c) of Schedule 4 to Annex I.
    Principal Representative means (i) for the Government, the 
individual holding the position of, or acting as the Minister of State 
in Charge of Planning and Development of the Republic of Benin, and 
(ii) for MCC, the individual holding the position of, or acting as, the 
Vice President for Operations.
    Procedural Code shall have the meaning set forth in Section 
2(c)(v)(1) of Schedule 3 to Annex I.
    Procurement Agent shall have the meaning set forth in Section 3(i) 
of Annex I.
    Procurement Agent Agreement is an agreement between MCA-Benin and 
each Procurement Agent, in form and substance satisfactory to MCC, that 
sets forth the roles and responsibilities of the Procurement Agent with 
respect to the conduct, monitoring, and review of procurements and 
other appropriate terms and conditions, such as payment of the 
Procurement Agent.
    Procurement Agreement is a Supplemental Agreement between the 
Government (and/or a mutually accepted Government Affiliate or MCA-
Benin) and MCC, which includes the Procurement Guidelines, and governs 
the procurement of all goods, services and works by the Government or 
any Provider in furtherance of this Compact.
    Procurement Guidelines shall have the meaning set forth in Section 
3.6(a).
    Procurement Plan means a procurement plan adopted by MCA-Benin as 
set forth in Section 3(i) of Annex I.
    Program means a program, to be implemented under this Compact, 
using MCC Funding to advance Benin's progress towards economic growth 
and poverty reduction.
    Program Annex means Annex I to this Compact, which generally 
describes the Program that MCC Funding will support in Benin during the 
Compact Term and the results to be achieved from the investment of MCC 
Funding.
    Program Assets means (i) MCC Funding, (ii) Accrued Interest, or 
(iii) any assets, goods, or property (real, tangible, or intangible) 
purchased or financed in whole or in part by MCC Funding.
    Program Objective means the overall objective of the Program to 
which the Project Objectives contribute and means to increase 
investment and private sector activity in Benin, which is key to 
advancing the Compact Goal.
    Project(s) are the specific projects and the policy reforms, and 
other activities related thereto that the Government will carry out, or 
cause to be carried out in furtherance of this Compact to achieve the 
Objectives and the Compact Goal, specifically the Land Project, the 
Financial Services Project, the Justice Project and the Markets 
Project.
    Project Activity means the activities that will be undertaken in 
furtherance of each Project.
    Project Director shall have the meaning set forth in Section 
3(d)(iii)(3) of Annex I.
    Project Division means the divisions that manage the implementation 
of each Project.
    Project Objective(s) means the project-level objectives that will 
advance the Program Objective and Compact Goal, each of which is 
described in more detail in the Annexes of this Compact.
    Proposal is the proposal for use of MCA assistance submitted to 
MCC, as revised, by the Government on September 5, 2005.
    Provider shall have the meaning set forth in Section 2.4(b).
    PRSP means the Poverty Reduction Strategy Paper.
    RAPs means Resettlement Action Plans.
    Re-Disbursement is the release of MCC Funding from a Permitted 
Account.
    Registration Activity is the Project Activity related to achieving 
formal property rights under the Land Project described in Section 2(b) 
of Schedule 1 of Annex I.
    Reviewer shall have the meaning set forth in Section 3(h) of Annex 
I.
    Services and Information Activity is the Project Activity related 
to improving land registration services and land information management 
under the Land Project described in Section 2(c) of Schedule 1 of Annex 
I.
    Special Account means a single, completely separate U.S. Dollar 
interest-bearing account at a commercial bank, acceptable to MCC, to 
receive MCC Disbursements.
    Studies Activity means the feasibility studies and assessments 
Project Activity of the Markets Project described in Section 2(a) of 
Schedule 4 to Annex I.
    Supplemental Agreement shall have the meaning set forth in Section 
3.5(b).
    Supplemental Agreement between the Parties means any agreement 
between MCC on the one hand, and the Government or any Government 
Affiliate or Permitted Designee on the other hand.
    Supplemental Agreement Term Sheets means one or more term sheets 
that the Government (or mutually acceptable Government Affiliate) and 
MCC shall execute that set forth the material and principal terms and 
conditions of each of the Supplemental Agreements identified in Exhibit 
B attached hereto.
    Support Strategy Activity is the Project Activity related to 
strategy and programmatic coordination under the Land Project described 
in Section 2(e) of Schedule 1 of Annex I.
    Target means each Indicator will have one or more targets that 
quantifies the result and the expected time by which that result will 
be achieved.
    Tax(es) shall have the meaning set forth in Section 2.3(e)(i).
    TEU means twenty-foot equivalent unit, in Euro.
    TPI shall have the meaning set forth in Section 2(c)(v) of Schedule 
3 to Annex I.
    United States Dollars (USD) means the currency of the United States 
of America.

[[Page 12952]]

    United States Government shall mean any branch, agency, bureau, 
government corporation, government chartered entity or other body of 
the Federal government of the United States.
    WAEMU means the West African Economic and Monetary Union.
    Waterside Improvements Activity means the waterside improvements 
Project Activity described in Section 2(d) of Schedule 4 to Annex I.
    Work Plans means work plans for the overall administration of the 
Program and for each Project.

Exhibit B--List of Certain Supplemental Agreements

    1. Governing Document Principles.
    2. Fiscal Agent Agreement.
    3. Procurement Agent Agreement.
    4. Form of Implementing Entity Agreement.
    5. Form of Bank Agreement.

Schedule 2.1(a)(iii)--Description of Compact Implementation Funding

Compact Implementation Funding

    The Compact Implementation Funding provided pursuant to Section 
2.1(a)(iii) shall support the following activities and expenditures in 
an amount not to exceed the amounts specified below:
    (a) Conduct some or all Initial Technical Studies as described in 
Section 2(a)(i) of Schedule 4 of Annex I, in an amount not to exceed 
USD $800,000.\a\*
---------------------------------------------------------------------------

    \a\* Notwithstanding the amount specified for this activity or 
payment, the total amount of funds disbursed in accordance with 
Section 2.1(a)(iii) shall not exceed the amount set forth in Section 
2.1(a)(iii).
---------------------------------------------------------------------------

    (b) Conduct the activities related to the 2006 Baseline Data Survey 
as described in Section 2(a)(i) of Annex III, including: communication 
and transportation of survey staff, supervision and quality assurance, 
and data management, in an amount not to exceed USD $600,000.*
    (c) Conduct fiscal and procurement administration activities, in an 
amount not to exceed USD $500,000.*
    (d) Payments for reasonable and normal staff salaries and 
administrative expenses of MCA-Benin (or mutually acceptable Government 
Affiliate) such as rent, computers, and other information technology 
equipment, in an amount not to exceed USD $500,000.*

Annex I--Program Description

    This Annex I to the Compact (the ``Program Annex'') generally 
describes the Program that MCC Funding will support in Benin during the 
Compact Term and the results to be achieved from the investment of MCC 
Funding. Prior to any MCC Disbursement or Re-Disbursement, including 
for the Projects described herein, MCC, the Government (or a mutually 
acceptable Government Affiliate) and MCA-Benin shall enter into a 
Supplemental Agreement that (i) further specifies the terms and 
conditions of such MCC Disbursements and Re-Disbursements, (ii) is in a 
form and substance mutually satisfactory to the Parties, and (iii) is 
signed by the Principal Representative of each Party (or in the case of 
the Government, the principal representative of the applicable 
Government Affiliate) and of MCA-Benin (the ``Disbursement 
Agreement''). Except as specifically provided herein, the Parties may 
amend this Program Annex only by written agreement signed by the 
Principal Representative of each Party. Each capitalized term in this 
Program Annex shall have the same meaning given such term elsewhere in 
this Compact. Unless otherwise expressly stated, each Section reference 
herein is to the relevant Section of the main body of the Compact.
1. Background and Benin Development Strategy; Consultative Process
(a) Background and Benin Development Strategy
    Situated in West Africa, between Nigeria and Togo in the Gulf of 
Guinea, Benin is a small and very poor country with a population of 
nearly seven million, a third of which live in poverty. Progress in 
development is largely a result of reforms initiated in the early 1990s 
as Benin transitioned from a Marxist-Leninist state towards a 
pluralistic democracy and market economy.
    Despite growth rates averaging 5% per year in the past decade, per 
capita income in Benin remains below the sub-Sahara African average and 
rural poverty has increased in recent years. Private sector activity 
and broad-based investment that would lead to sustainable growth and 
poverty reduction are hindered by land insecurity, lack of access to 
capital, an inefficient judicial system, and an uncompetitive Port of 
Cotonou.
    The Program is a series of strategic investments designed to 
increase investment and private sector activity by improving core 
physical and institutional infrastructure. The objectives of the 
Compact are fully consistent with, and directly support, the priority 
areas identified by the Government in the Poverty Reduction Strategy 
Paper (``PRSP''). Benin's PRSP was developed in 2002 with broad 
participation from Beninese society. Its development plan is based on 
four pillars: (i) Strengthening the macroeconomic framework over the 
medium-term; (ii) developing human capital and environmental 
management; (iii) strengthening good governance and institutional 
capacity; and (iv) promoting employment and strengthening the ability 
of the poor to participate in decision-making and production processes. 
The Program is focused primarily on supporting the fourth pillar of the 
PRSP.
(b) Consultative Process
    The Proposal was the product of a genuine, meaningful and 
participatory consultative process. By decree, the Government 
designated the National Coordinator of the Millennium Challenge Account 
(``MCA National Coordinator''), empowered the Benin National Committee 
(``BNC'') to oversee the Proposal development and charged a Technical 
Team with shaping the Proposal. The MCA National Coordinator sought the 
participation of various stakeholders through workshops, meetings, and 
radio and television events. Initially a vision for the Program was 
presented to representatives from the government (both central and 
municipal), the private sector, civil society, labor unions, artisans, 
and the agricultural sector. Among these groups, members were elected 
or delegated by their respective constituencies to form the BNC. This 
MCA working group consists of six government Ministers, three Chamber 
of Commerce representatives, three civil society representatives 
(elected), three labor union representatives, two representatives of 
the Agricultural Chamber (elected), and one representative of the 
artisan community. Included in the working group are two women, the 
Vice President of the Chamber of Commerce and another who was elected 
by NGOs promoting women's rights.
    Working sessions were held based on the PRSP to discuss the major 
constraints to growth. Several iterations of the Proposal's projects 
were vetted by a broad audience through nationally broadcast radio 
programs to garner feedback from the targeted beneficiaries. In 
September the MCA National Coordinator convened a stakeholder meeting 
in which mayors from all 77 communes, and representatives of 
microfinance institutions, the donor community and the central 
government gathered to discuss the land tenure, and financial services 
components of the Proposal. Continuing consultation

[[Page 12953]]

throughout the proposal development process has resulted in widespread 
endorsement by potential beneficiaries. On-going consultations with 
stakeholders and beneficiaries are planned during the Compact Term, 
including at the Project-level.
    Following MCC's review of the Proposal and discussions and 
negotiations of the Parties, the Parties have identified certain 
mutually acceptable components of the Proposal and other components 
developed through the discussions of the Parties that together shall 
constitute the Program. The Program is fully consistent with, and 
directly supports PRSP, in particular the promoting employment and 
strengthening the ability of the poor to participate in decision-making 
and production processes as noted above.
2. Overview
    (a) Program Objectives. The Program Goal and Objectives of the 
Compact are expected to have a substantial impact on increasing 
economic growth and reducing poverty in Benin. The Program will 
accelerate economic growth and reduce poverty by removing constraints 
to investment in key sectors of the Beninese economy. The Program aims 
to increase investment and private sector activity by improving key 
institutional and physical infrastructures through four Projects: 
Access to Land, Access to Financial Services, Access to Justice, and 
Access to Markets. Respectively, the Projects will address: Insecure 
land tenure rights; insufficient access to financial services for 
micro, small and medium-enterprises (MSMEs); an inefficient and under-
equipped judicial system; and the degrading competitiveness of the 
Port. The Projects are complementary and support each other. The Land 
Project and Financial Services Project will enhance the use of land 
titles as collateral for loans or refinancing. The Justice Project will 
support this relationship by increasing the confidence in the judicial 
system to enforce contracts and collateral interests. The Markets 
Project will increase the flow of goods through the Port of Cotonou. In 
turn, improvements to the physical infrastructure will enhance the 
success of Projects focusing on the institutional environment. The 
sequencing and geographic selection criteria for activities undertaken 
in Projects will be influenced by each of the other Projects.
    (b) Projects. The Parties have identified, for each Objective, 
Projects that the Government will implement, or cause to be 
implemented, using MCC Funding. Each Project is described in the 
Schedules to this Program Annex. The Schedules to this Program Annex 
identify the activities that will be undertaken in furtherance of each 
Project (each, a ``Project Activity'') as well as the various 
activities within a Project Activity. Notwithstanding anything to the 
contrary in this Compact, the Parties may agree to modify, amend, 
terminate or suspend these Projects or to create a new project by 
written agreement signed by the Principal Representative of each Party 
without amending this Compact; provided, however, any such modification 
or amendment of a Project or creation of a new project is (i) 
consistent with the Objectives; (ii) does not cause the amount of MCC 
Funding to exceed the aggregate amount specified in Section 2.1(a) of 
this Compact; (iii) does not cause the Government's responsibilities or 
contribution of resources to be less than specified in Section 2.2 of 
this Compact or elsewhere in this Compact; and (iv) does not extend the 
Compact Term. Certain Project Activities of the Program such as the 
policy reforms, the extension of financial services and court services, 
and improvements to the Port, will have an impact at the national 
level. The Land Project will be undertaken in targeted geographic areas 
of Benin, which are yet to be determined, but will be selected based on 
the criteria set forth in the applicable Schedule.
    (c) Beneficiaries. The intended beneficiaries of each Project are 
described in the respective Schedule to this Program Annex and Annex 
III to the extent identified as of the date hereof. The intended 
beneficiaries shall be identified more precisely during the initial 
phases of implementation of the Program. The Government shall provide 
to MCC information on the population of the areas in which the Projects 
will be active, disaggregated by gender, income level and age. The 
Parties shall agree upon the description of the intended beneficiaries 
and the Parties will make publicly available a more detailed 
description of the intended beneficiaries of the Program, including 
publishing such description on the MCA-Benin Website. For each Project, 
the Government shall ensure that MCA-Benin presents to the Advisory 
Council (i) a detailed description of the intended beneficiaries and 
(ii) the methodology used to determine the intended beneficiaries 
within sixty (60) days after the commencement of the Project 
implementation and completion of the analysis of the intended 
beneficiaries therein, disaggregated, to the maximum extent 
practicable, by income level, gender, and age. The Land Project is 
expected to assist an estimated 115,000 rural and urban households with 
more secure and useful tenure, contribute to a 50% reduction in court 
cases related to land disputes, and result in a 10% increase in 
investment in rural land and a 20% increase in investment in urban 
property. The Financial Services Project is expected to increase MSME 
value added and incomes of the poor that own, are employed by, or do 
business with those enterprises. The expected result is that by the end 
of the Compact Term, financial services to MSMEs will have expanded by 
nearly $60 million, which represents a multiple of three times the 
Project's funding. A more efficient Port will contribute to importer 
and exporter value-added through reducing transportation costs. 
Moreover, because Benin's road transport industry is relatively 
competitive, it is likely that the anticipated reduction in shipping 
costs will be passed on to wholesalers and traders, and ultimately be 
reflected in consumer prices. The Justice Project is expected to 
benefit land occupants, title holders, businesses and legal 
professionals in the jurisdictions where the Project will be active.
    Overall, the Program is expected to impact an estimated five 
million beneficiaries and raise one quarter of a million Beninese out 
of poverty by 2015.
    (d) Civil Society. Civil Society shall participate in overseeing 
the implementation of the program through its representation on the 
Board of Directors and the Advisory Council (which will include 
representatives from non-governmental organizations and private sector 
entities), as provided in Section 3(d) and Section 3(e), respectively, 
of this Program Annex. Stakeholders will be able to weigh in by a Land 
Project steering group and discussion groups for studies, the White 
Paper, and related legislative drafting. The Financial Services Project 
and the Markets Project will also incorporate the input of Stakeholders 
in advisory committees comprising non-governmental organizations and 
private sector entities. Finally, members of civil society may be 
recipients of training, technical assistance, or other public awareness 
programs that are integral to the Projects. In addition, the Work Plans 
or Procurement Plans for each Project shall note the extent to which 
civil society will have a role in the implementation of or 
participation in a particular Project or Project Activity.
    (e) Monitoring and Evaluation (``M&E''). Annex III of this Compact 
generally describes the plan to measure

[[Page 12954]]

and evaluate progress toward achievement of the Compact Goal and 
Objectives of this Compact (the ``M&E Plan''). As outlined in the 
Disbursement Agreement and other Supplemental Agreements, continued 
disbursement of MCC Funding under this Compact (whether as MCC 
Disbursements and Re-Disbursements) shall be contingent, among other 
things, on successful achievement of targets set forth in the M&E Plan.
3. Implementation Framework
    The implementation framework and the plan for ensuring adequate 
governance, oversight, management, monitoring, evaluation and fiscal 
accountability for the use of MCC Funding is summarized below and in 
the Schedules attached to this Program Annex, or as may otherwise be 
agreed in writing by the Parties.
    (a) General. The elements of the implementation framework will be 
further described in relevant Supplemental Agreements and in a detailed 
plan for the implementation of the Program and each Project, which will 
be memorialized in one or more documents and shall consist of a Multi-
Year Financial Plan, Detailed Financial Plans, a Fiscal Accountability 
Plan, a Procurement Plan, Program and Project Work Plans, and an M&E 
Plan (the ``Implementation Plan''). MCA-Benin shall adopt each 
component of the Implementation Plan in accordance with the 
requirements and timeframe as may be specified in this Program Annex, 
the Disbursement Agreement or as may otherwise be agreed by the Parties 
from time to time. MCA-Benin may amend the Implementation Plan or any 
component thereof without amending this Compact, provided any material 
amendment of the Implementation Plan or any component thereof has been 
approved by MCC and is otherwise consistent with the requirements of 
this Compact and any relevant Supplemental Agreement between the 
Parties. By such time as may be specified in the Disbursement Agreement 
or as may otherwise be agreed by the Parties from time to time, MCA-
Benin shall adopt one or more work plans for the overall administration 
of the Program and for each Project (collectively, the ``Work Plans''). 
The Work Plan(s) shall set forth the details of each activity to be 
undertaken or funded by MCC Funding as well as the allocation of roles 
and responsibilities for specific Project activities, or other 
programmatic guidelines, performance requirements, targets, or other 
expectations for a Project.
    (b) Government.
    (i) The Government shall promptly take all necessary and 
appropriate actions to carry out the Government Responsibilities and 
other obligations or responsibilities of the Government under and in 
furtherance of this Compact, including undertaking or pursuing such 
legal, legislative or regulatory actions or procedural changes and 
contractual arrangements as may be necessary or appropriate to achieve 
the Objectives, to successfully implement the Program, to designate any 
rights or responsibilities to any Permitted Designee, and to establish 
a legal entity, in a form mutually agreeable to the Parties, the form, 
structure and other features of such legal entity to be determined and 
agreed upon by the Parties on or before the time specified in the 
Disbursement Agreement (``MCA-Benin''), which shall be a Permitted 
Designee and shall be responsible for the oversight and management of 
the implementation of this Compact on behalf of the Government. The 
Government shall promptly deliver to MCC certified copies of any 
documents, orders, decrees, laws or regulations evidencing such legal, 
legislative, regulatory, procedural, contractual or other actions.
    (ii) The Government shall ensure that MCA-Benin is duly authorized 
and organized, sufficiently staffed and empowered to fully carry out 
the Designated Rights and Responsibilities. Without limiting the 
generality of the preceding sentence, MCA-Benin shall be organized, and 
have such roles and responsibilities, as described in Section 3(d) of 
this Program Annex and as provided in any Governing Documents; 
provided, however, the Government or another Permitted Designee may, 
subject to MCC approval, carry out any of the roles and 
responsibilities designated to be carried out by MCA-Benin and 
described in Section 3(d) of this Program Annex or elsewhere in this 
Program Annex, any Governing Document, or any other Supplemental 
Agreement prior to and during the initial period of the establishment 
and staffing and operational formation of MCA-Benin, but in no event 
longer than the earlier of (1) the formation and convening of 
organizational meetings of the Steering Committee, formation and 
operational establishment of MCA-Benin (including the selection and 
engagement of Officers and key employees), and engagement of the 
Officers and (2) six months from the Entry into Force, unless otherwise 
agreed by the Parties in writing.
    (iii) Various ministries, bureaus and agencies of the Government 
may serve as Implementing Entities.
    (c) MCC.
    (i) Notwithstanding Section 3.1 of this Compact or any provision in 
this Program Annex to the contrary, and except as may be otherwise 
agreed upon by the Parties from time to time, MCC must approve in 
writing each of the following transactions, activities, agreements and 
documents prior to the execution or carrying out of such transaction, 
activity, agreement or document and prior to MCC Disbursements or Re-
Disbursements in connection therewith:
    (1) MCC Disbursements;
    (2) Each Detailed Financial Plan, and any amendments thereto;
    (3) The Multi-Year Financial Plan and any amendments and annual 
supplements thereto;
    (4) Any Audit Plan;
    (5) Agreements (i) between the Government and MCA-Benin, (ii) 
between the Government, a Government Affiliate, MCA-Benin or any other 
Permitted Designee on the one hand, and any Provider or Affiliate of a 
Provider, on the other hand, which require such MCC approval under 
applicable law, the Procurement Agreement, any Governing Document, or 
any other Supplemental Agreement or (iii) in which the Government, a 
Government Affiliate, MCA-Benin or any other Permitted Designee 
appoints, hires, or engages any of the following in furtherance of this 
Compact:
    (A) Auditor;
    (B) Reviewer;
    (C) Fiscal Agent;
    (D) Procurement Agent;
    (E) Each Bank;
    (F) Outside Project Manager;
    (G) Implementing Entity; and
    (H) Board of Directors member, Observer, Officer, and other key 
employee of MCA-Benin (including any compensation for such person).

(Any agreement described in clause (i) through (iii) of this Section 
3(c)(i)(5) and any amendments and supplements thereto, each, a 
``Material Agreement'');
    (6) Any modification, termination or suspension of a Material 
Agreement, or any action that would have the effect of such a 
modification, termination or suspension of a Material Agreement;
    (7) Any agreement that is (A) not at arm's length or (B) with a 
party related to the Government or MCA-Benin or any of their respective 
Affiliates;
    (8) Any Re-Disbursement (each, a ``Material Re-Disbursement'') that 
requires such MCC approval under applicable law, the Procurement

[[Page 12955]]

Agreement, any Governing Document, or any Supplemental Agreement;
    (9) Any terms of reference (each, a ``Material Terms of 
Reference'') for the procurement of goods, services or works that 
requires such MCC approval under applicable law, the Procurement 
Agreement, any Governing Document, or any Supplemental Agreement;
    (10) The Implementation Plan, including each component plan 
thereto, and any material amendments and supplements to the 
Implementation Plan or any component thereto;
    (11) Any pledge of any MCC Funding or any Program Assets or any 
guarantee directly or indirectly of any indebtedness (each, a 
``Pledge'');
    (12) Any decree, legislation, regulation, contractual arrangement 
(including a governance agreement by and among the Government (or a 
mutually acceptable Government Affiliate), MCA-Benin and MCC), or other 
charter document establishing or governing MCA-Benin (``Governing 
Document'');
    (13) Any disposition (in whole or in part), liquidation, 
dissolution, winding up, reorganization or other change of (A) MCA-
Benin, including any revocation or modification of or supplement to any 
Governing Document related thereto, or (B) any subsidiary or Affiliate 
of MCA-Benin;
    (14) Any change in character or location of any Permitted Account;
    (15) Formation or acquisition of any subsidiary (direct or 
indirect) or other Affiliate of MCA-Benin;
    (16) Any (A) change of a Board of Directors member, Observer, 
Officer or other key employee or contractor of MCA-Benin, or change in 
the composition of the Board of Directors of MCA-Benin, including 
approval of the nominee for Chair, (B) filling of any vacant seat of 
the Chair, Board of Directors member, or an Observer or vacant position 
of an Officer, key employee or contractor of MCA-Benin, (C) filling of 
the seats designated as representatives nominated by the Advisory 
Council, if any, to the Board of Directors, and (D) filling any vacant 
seat on the Advisory Council;
    (17) The management information system to be developed and 
maintained by the Management of MCA-Benin, and any material 
modifications to such system;
    (18) Any decision to amend, supplement, replace, terminate, or 
otherwise change any of the foregoing; and
    (19) Any other activity, agreement, document or transaction 
requiring the approval of MCC in this Compact, applicable law, any 
Governing Document, the Procurement Agreement, the Disbursement 
Agreement, or any other Supplemental Agreement between the Parties. The 
Chair of the Board of Directors (the ``Chair'') and/or the National 
Coordinator of MCA-Benin (the ``National Coordinator'') or other 
designated Officer, as provided in applicable Governing Document, shall 
certify any documents or reports delivered to MCC in satisfaction of 
the Government's reporting requirements under this Compact or any 
Supplemental Agreement between the Parties (the ``Compact Reports'').
    (ii) MCC shall have the authority to exercise its approval rights 
set forth in this Section 3(c) in its sole discretion and independent 
of any participation or position taken by the MCC Representative at a 
meeting of the Board of Directors. MCC retains the right to revoke its 
approval of any matter, agreement, or action if MCC concludes, in its 
sole discretion, that its approval was issued on the basis of 
incomplete, inaccurate or misleading information furnished by the 
Government, MCA-Benin, or any Government Affiliate or Permitted 
Designee. Notwithstanding any provision in this Compact or any 
Supplemental Agreement to the contrary, the exercise by MCC of its 
approval rights under this Compact or any Supplemental Agreement shall 
not (1) diminish or otherwise affect the Government Responsibilities or 
any other obligations or responsibilities of the Government under this 
Compact or any Supplemental Agreement, (2) transfer any such 
obligations or responsibilities of the Government, or (3) otherwise 
subject MCC to any liability.
    (d) MCA-Benin.
    (i) General. Unless otherwise agreed by the Parties in writing, 
MCA-Benin shall, as a Permitted Designee, be responsible for the 
oversight and management of the implementation of this Compact. MCA-
Benin shall be governed by applicable law and any Governing Documents, 
each such Governing Document to be in a form and substance satisfactory 
to MCC and effective on or before the time specified in the 
Disbursement Agreement, and based on the following principles:
    (1) The Government shall ensure that MCA-Benin shall not assign, 
delegate or contract any of the Designated Rights and Responsibilities 
without the prior written consent of the Government and MCC. MCA-Benin 
shall not establish any Affiliates or subsidiaries (direct or indirect) 
without the prior written consent of the Government and MCC.
    (2) Unless otherwise agreed by the Parties in writing, MCA-Benin 
shall consist of (a) an independent board of directors (the ``Board'') 
to oversee MCA-Benin's responsibilities and obligations under this 
Compact (including any Designated Rights and Responsibilities) and (b) 
a management team or national program coordination team 
(``Management'') to have overall management responsibility for the 
implementation of this Compact.
    (ii) Board.
    (1) Formation. The Government shall ensure that the Board shall be 
formed, constituted, governed and operated in accordance with the terms 
and conditions set forth in the applicable Governing Document and any 
other relevant Supplemental Agreement.
    (2) Composition. Unless otherwise agreed by the Parties in writing, 
the Board shall consist of at least nine (9) and no more than eleven 
(11) voting members, one of whom shall be appointed as the Chair as 
provided in applicable law, any Governing Document and subject to MCC 
approval, and the non-voting observers identified below.
    (A) The Board shall initially be composed of eleven voting members 
as follows, provided that the Government members identified in 
subsections (i)--(vi) below (the ``Government Members'') may be 
replaced by another government official of comparable rank from a 
ministry or other government body relevant to the Program activities, 
subject to approval by the Government and MCC (such replacement to be 
referred to thereafter as a Government Member):
    (i) Chief of Staff of the Office of the Presidency of the Republic 
of Benin;
    (ii) Chief of Staff of the Ministry of Economy and Finance;
    (iii) Chief of Staff of the Ministry of Planning and Development;
    (iv) Chief of Staff of the Ministry of Agriculture;
    (v) Chief of Staff of the Ministry of Public Works and 
Transportation;
    (vi) Chief of Staff of the Ministry of the Environment, Housing and 
Urban Planning;
    (vii) Representative from civil society (selected following a 
national assembly of the non-governmental organizations and civil 
society and based upon selection criteria to be agreed by the Parties, 
including the capacity and expertise of the individual to hold such 
position);
    (viii) President of the Chamber of Commerce and Industry;
    (ix) The Chairman of the Chamber of Agriculture;
    (x) Representative from the Mayors' Council (which shall be the 
public official holding the relevant office as

[[Page 12956]]

such office is selected following a national assembly of the mayors 
throughout Benin); and
    (xi) A member of the Board of the National Assembly as designated 
by the National Assembly.
    (B) The non-voting observers (each, an ``Observer'') shall be:
    (i) A representative designated by MCC (the ``MCC 
Representative'');
    (ii) A representative from the Advisory Council; and
    (iii) Representatives-elect for Civil Members (defined below), who 
will be non-voting observers for a one-year period.
    (C) Each Government Member position shall be filled by the 
individual, during the Compact Term, holding the office identified and 
such individuals shall serve in their capacity as the applicable 
Government official and not in their personal capacity; in the event 
that such member is unable to participate in a meeting of the Board 
such member's principal deputy may participate in the member's stead.
    (D) The positions identified in Section 3(d)(ii)(2)(A)(vii)-(xi) of 
this Program Annex shall be each individually referred to as a ``Civil 
Member'' and collectively as ``Civil Members.'' Each Civil Member 
position shall be filled by the individual, during the Compact Term, 
holding the office or position identified in, or selected pursuant to, 
Section 3(d)(ii)(2)(A)(viii)--(xi) and such individuals shall serve in 
their capacity as the incumbent in such office or position and not in 
their personal capacity; in the event that such member is unable to 
participate in a meeting of the Board such member's principal deputy 
may participate in the member's stead, provided, however, any action 
shall be taken only by a proxy signed by the Civil Member. The Civil 
Member identified in Section 3(d)(ii)(2)(A)(vii) shall serve in their 
personal capacity and if such member is unable to participate in a 
meeting of the Board, such member may only send a substitute as 
permitted in the applicable Governing Document, provided, any action 
shall be taken only by a proxy signed by the Civil Member. The term of 
each Civil Member's appointment to the Board shall be thirty (30) 
months; other than the Civil Member identified in Section 
3(d)(2)(ii)(A)(viii) and (ix) which position shall be filled by the 
individual holding such position during the Compact Term; provided, 
further if the Civil Member designated pursuant to Section 
3(d)(ii)(2)(A)(xi) resigns or is removed from the Board of the National 
Assembly, the National Assembly shall designate another member of the 
Board of the National Assembly to fill this seat on the Board.
    (E) The voting members identified in Section 3(d)(ii)(2)(A) by 
majority vote may alter the size of the Board in accordance with the 
applicable Governing Document, so long as the total does not exceed 
eleven members; in the event that such action is taken, any change in 
the composition of the voting seats shall be subject to the approval of 
the Government and MCC.
    (F) Subject to the Governing Documents, the Parties contemplate 
that the Chief of Staff of the Office of the Presidency shall initially 
fill the seat of Chair.
    (G) Each Observer shall have rights to attend all meetings of the 
Board, participate in the discussions of the Board, and receive all 
information and documents provided to the Board, together with any 
other rights of access to records, employees or facilities as would be 
granted to a member of the Board under any Governing Document.
    (H) The voting members identified in Section 3(d)(ii)(2)(A) shall 
exercise their duties solely in accordance with the best interests of 
MCA-Benin and the Program and its Objectives and may not undertake any 
action that is contrary to those interests or would result in personal 
gain or a conflict of interest.
    (3) Roles and Responsibilities.
    (A) The Board shall oversee the Management, the overall 
implementation of the Program, and the performance of the Designated 
Rights and Responsibilities.
    (B) Certain actions may be taken and certain agreements, documents 
or instruments executed and delivered, as the case may be, by MCA-Benin 
only upon the approval and authorization of the Board provided under 
applicable law or as set forth in any Governing Document, including 
each MCC Disbursement Request, selection or termination of certain 
Providers, any component of the Implementation Plan, certain Re-
Disbursements and certain terms of reference.
    (C) The Chair shall certify the approval by the Board of all 
Compact Reports or any other documents or reports from time to time 
delivered to MCC by MCA-Benin (whether or not such documents or reports 
are required to be delivered to MCC), and that such documents or 
reports are true, correct and complete.
    (D) Without limiting the generality of the Designated Rights and 
Responsibilities that the Government may designate to MCA-Benin, and 
subject to MCC's contractual rights of approval as set forth in Section 
3(c) of this Program Annex or elsewhere in this Compact or any relevant 
Supplemental Agreement, the Board shall have the exclusive authority as 
between the Board and the Management for all actions defined for the 
Board in any Governing Document and which are expressly designated 
therein as responsibilities that cannot be delegated further.
    (4) Indemnification of Civil Members; Observers; and Officers. The 
Government shall ensure, at the Government's sole cost and expense, 
that appropriate insurance is obtained and appropriate indemnifications 
and other protections are provided, acceptable to MCC and to the 
fullest extent permitted under the laws of the Republic of Benin, to 
ensure that (A) as Civil Members and Observers shall not be held 
personally liable for the actions or omissions of the Board or MCA-
Benin and (B) as Officers shall not be held personally liable for the 
actions or omissions of the Board, MCA-Benin or actions or omissions of 
the Officer so long as properly within the scope of Officer's 
authority. Pursuant to Section 5.5 and Section 5.8 of this Compact, the 
Government and MCA-Benin shall hold harmless the MCC Representative for 
any liability or action arising out of the MCC Representative's role as 
a non-voting observer on the Board. The Government hereby waives and 
releases all claims related to any such liability and acknowledges that 
the MCC Representative has no fiduciary duty to MCA-Benin. In matters 
arising under or relating to the Compact, the MCC Representative is not 
subject to the jurisdiction of the courts or any other body of Benin. 
MCA-Benin shall provide a written waiver and acknowledgement that no 
fiduciary duty to MCA-Benin is owed by the MCC Representative.
    (iii) Management. Unless otherwise agreed in writing by the 
Parties, the Management shall report, through the National Coordinator 
or other Officer as designated in any Governing Document, directly to 
the Board and shall have the composition, roles and responsibilities 
described below and set forth more particularly in any Governing 
Document.
    (1) Appointment of the National Coordinator. The National 
Coordinator of MCA-Benin shall be selected by the Board and hired after 
an open and competitive recruitment and selection process, which 
appointment shall be subject to MCC approval. Such appointment shall be 
further evidenced by such document as the Parties may agree.
    (2) Appointment of Other Officers. Unless otherwise specified in 
any

[[Page 12957]]

Governing Document, the other Officers of MCA-Benin shall be selected 
and hired by the National Coordinator after an open and competitive 
recruitment and selection process, which appointment shall be subject 
to the approval of the Board and MCC.
    (3) Composition. The Government shall ensure that the Management 
shall be composed of qualified experts from the public or private 
sectors, including such offices and staff as may be necessary to carry 
out effectively its responsibilities, each with such powers and 
responsibilities as set forth in any Governing Document, and from time 
to time in any Supplemental Agreement between the Parties, including 
without limitation the following: (i) National Coordinator; (ii) 
Administration and Finance Director; (iii) Monitoring and Evaluation 
Director; (iv) Land Project Director, Financial Services Project 
Director, Justice Project Director and Markets Project Director (each 
a, ``Project Director''); (v) Environmental and Social Assessment 
Director; (vi) Legal Counsel and (vii) Procurement Director (the 
persons holding the positions in sub-clauses (i) through (vii) and such 
other offices as may be created and designated in accordance with any 
Governing Document and any other Supplemental Agreement between the 
Parties, shall be collectively referred to as ``Officers''). In 
addition, MCA-Benin will have an implementation staff in each of the 
Project divisions as described below and administrative or other 
assistants and staff in other divisions as appropriate and budgeted in 
the Detailed Financial Plan and provided for in the applicable Work 
Plan or other Implementation Plan component, and as otherwise agreed by 
MCC. The Administration and Finance Division and the Procurement 
Division shall have separate authorizations, duties and 
responsibilities and each shall report directly only to the National 
Coordinator and the Board. The Parties contemplate that for purposes of 
the initial period of operations, and in no event longer than six 
months, MCA-Benin may appoint an acting National Coordinator, subject 
to the approval of MCC; provided, following such period, the Board 
shall ratify the actions of such acting National Coordinator and the 
Board shall select a permanent National Coordinator through a 
competitive selection process and subject to MCC approval in accordance 
with this Annex I. The divisions that manage the implementation of each 
Project (``Project Division'') shall have the following general 
organizational structure, or such other structure as may be agreed by 
the Parties in writing and specified in the applicable Governing 
Document:
    (A) Land Project Division. In addition to the Project Director, 
there shall be (i) a Senior Land Administration Advisor for period to 
be specified in the Work Plan, (ii) a National Land Policy Reform 
Coordinator, and (iii) up to two Activity Implementation Managers. The 
Land Project Division will also receive feedback and input from a 
stakeholders group (the ``Land Project Steering Group''), the 
composition and formation of which shall be specified in the applicable 
Governing Document or Implementation Plan.
    (B) Financial Services Project Division. In addition to the Project 
Director, there shall be (i) an Enabling Environment Activity 
Coordinator and (ii) a Capacity Building Activity Coordinator. The 
Financial Services Project Division will also receive feedback and 
input from a stakeholders group (the ``Financial Advisory Committee''), 
the composition and formation of which shall be specified in the 
applicable Governing Document or Implementation Plan.
    (C) Justice Project Division. In addition to the Project Director, 
there shall be a Justice Project Coordinator. The Justice Project 
Division will also receive feedback and input from a stakeholders group 
(the ``Justice Advisory Committee''), the composition and formation of 
which shall be specified in the applicable Governing Document or 
Implementation Plan component.
    (D) Markets Project Division. The Markets Project Division will 
also receive feedback and input from a stakeholders group representing 
the Markets Project beneficiaries (the ``Port Advisory Committee''), 
the composition and formation of which shall be specified in the 
applicable Governing Document or Implementation Plan.
    (4) Roles and Responsibilities.
    (A) Management shall assist the Board in overseeing the 
implementation of the Program and shall have principal responsibility 
(subject to the direction and oversight of the Board and subject to 
MCC's contractual rights of approval as set forth in Section 3(c) of 
this Program Annex or elsewhere in this Compact or any relevant 
Supplemental Agreement) for the overall management of the 
implementation of the Program.
    (B) Without limiting the foregoing general responsibilities or the 
generality of Designated Rights and Responsibilities that the 
Government may designate MCA-Benin, Management shall develop the 
components of the Implementation Plan, oversee the implementation of 
the Projects, manage and coordinate monitoring and evaluation, maintain 
internal accounting records, conduct and oversee certain procurements, 
and such other responsibilities as set out in the applicable Governing 
Document or delegated to Management by the Board from time to time.
    (C) Appropriate Officers as designated in the Governing Documents 
shall have the authority to contract on behalf of MCA-Benin under any 
procurement under the Program undertaken in accordance with the 
Procurement Agreement and Procurement Guidelines.
    (D) Management shall have the obligation and right to approve 
certain actions and documents or agreements, including certain Re-
Disbursements, MCC Disbursement Requests, Compact Reports, certain 
human resources decisions and other certain actions, as provided in the 
applicable Governing Document.
    (5) Additional Resources. Management, on behalf of MCA-Benin, shall 
have the authority to engage qualified persons or entities to serve as 
outside project managers (each, an ``Outside Project Manager'') in the 
event that it is advisable to do so for the proper and efficient day-
to-day management of a Project; provided, however, that the appointment 
or engagement of any Outside Project Manager, after a competitive 
selection process, shall be subject to approval by the Board and MCC 
prior to such appointment or engagement. Upon Board approval, 
Management, on behalf of MCA-Benin, may delegate, assign, or contract 
to the Outside Project Managers such duties and responsibilities as it 
deems appropriate with respect to the management of the Implementing 
Entities and the implementation of the specific Projects or Project 
Activities, subject to Section 3.2(c) of the Compact; provided, 
however, that the Management and the relevant Project Manager shall 
remain accountable for those duties and responsibilities and all 
reports delivered by the Outside Project Manager. Independent of any 
request from Management, the Board may determine that it is advisable 
for MCA-Benin to engage one or more Outside Project Managers and the 
Board may direct Management to commence and conduct the competitive 
selection process for such Outside Project Manager. Upon a finding by 
the Board that Management has not responded to such a Board directive, 
the Board may direct the Procurement Agent to commence and conduct the 
competitive selection process for one or more Outside Project Managers.

[[Page 12958]]

    (e) Advisory Council.
    (i) Formation and Composition. The Government shall ensure the 
establishment of an advisory council with both governmental, private 
sector and non-governmental representatives (the ``Advisory Council'') 
consisting of at least eight (8) and no more than eleven (11) members, 
unless otherwise agreed by the Parties, and comprised of the following 
members: (A) Chief of Staff of the Ministry of Foreign Affairs and 
African Integration; (B) Chief of Staff of the Ministry of Industry and 
Commerce; (C) Chief of Staff of the Ministry of the Interior, Security, 
and Decentralization; (D) Chief of Staff of the Ministry of Justice; 
(E) a representative from the Private Sector (selected following a 
national assembly of the private sector); (F) a representative from the 
labor unions (selected following a national assembly of the labor 
unions); (G) a representative from the regional organizations (selected 
following a national assembly of the regional organizations); and (H) a 
representative from the National Artisan Federation (selected following 
a national assembly of the National Artisan Federation). 
Representatives described in (E) through (H) shall be selected and 
vacancies filled in accordance with the manner and criteria set forth 
in the applicable Governing Document, subject to MCC approval. 
Following the selection of the representatives described in (E) through 
(H), the results of the selection shall be posted on the MCA-Benin 
Website and published in the local newspaper. The Government shall take 
all action necessary and appropriate actions to ensure the Advisory is 
established consistent with this Section 3(e) and as otherwise 
specified in the Governing Document or otherwise agreed in writing by 
the Parties. The composition of the Advisory Council may be adjusted by 
agreement of the Parties from time to time to ensure, among other 
things, a cross-section representative of the intended beneficiaries. 
The number of members of the Advisory Council may be increased, but in 
no event more than eleven (11), upon the majority vote of the then 
existing members and the vacancies created by such increase shall be 
filled by the majority vote of the then existing members, subject to 
the approval of the Government and MCC.
    (1) Each member position identified in Sections 3(e)(i) of this 
Program Annex shall be filled by the individual, during the Compact 
Term, holding the office identified and such individuals shall serve in 
their capacity as the applicable Government official and not in their 
personal capacity. In the event that such member is unable to 
participate in a meeting of the Advisory Council such member's 
principal deputy may participate in the member's stead.
    (2) In the event of a vacancy in positions identified in Sections 
3(e)(i) (E) through (H) such vacancy to be filled by nomination of the 
organization or group for whom such seat is designated and in the same 
manner as described in Section 3(e)(i) for the initial designation and 
as otherwise set forth in the applicable Governing Document.
    (ii) Role. The Advisory Council shall be a mechanism to provide 
representatives of the private sector, civil society and local and 
regional governments the opportunity to provide advice and input to 
MCA-Benin regarding the implementation of the Compact. During quarterly 
meetings of the Advisory Council, Management shall present an update on 
the implementation of this Compact and progress towards achievement of 
the Objectives. The Advisory Council will have an opportunity to 
regularly provide to the Board, via the Chair, its views or 
recommendations on the performance and progress on the Projects and 
Project Activities, components of the Implementation Plan, procurement, 
financial management or such other issues as may be presented from time 
to time to the Advisory Council or as otherwise raised by the Advisory 
Council. Management shall provide copies of the M&E Plan and related 
reports to the Advisory Council simultaneously with the transmittal to 
the Advisory Council of such documents and reports. The Board may, in 
response to the Advisory Council, require Management to provide such 
other information and documents as the Board deems advisable and 
subject to appropriate treatment of the information by the Advisory 
Council and its members.
    (iii) Meetings. The Advisory Council shall hold quarterly meetings 
of the full Advisory Council as well as such other periodic meetings of 
the Advisory Council or subcommittees thereof designated along 
sectoral, regional, or other lines, as may be necessary or appropriate 
from time to time.
    (iv) Board Observer. The Advisory Council shall nominate, by 
majority decision, one individual, either from the Advisory Council or 
otherwise, to serve as an Observer to the Board for a one-year term. 
The Advisory Council shall rotate its representative each year. Any 
vacancy of the Observer seat designated for the Advisory Council shall 
be filled by the Advisory Council in same manner as it would the annual 
nomination.
    (v) Accessibility; Transparency. Advisory Council members will be 
accessible to the beneficiaries they represent to receive the 
beneficiaries' comments or suggestions regarding the Program. The 
minutes of all meetings of the Advisory Council meetings and any 
subcommittees shall be made public on the MCA-Benin Website in a timely 
manner.
    (f) Implementing Entities. Subject to the terms and conditions of 
this Compact and any other Supplemental Agreement between the Parties, 
MCA-Benin may provide MCC Funding, directly or indirectly through an 
Outside Project Manager, to one or more Government Affiliates or to one 
or more nongovernmental organizations or other public- or private-
sector entities or persons to implement and carry out the Projects or 
any other activities to be carried out in furtherance of this Compact 
(each, an ``Implementing Entity''). The Government shall ensure that 
MCA-Benin (or the appropriate Outside Project Manager) enters into an 
agreement with each Implementing Entity, in form and substance 
satisfactory to MCC, that sets forth the roles and responsibilities of 
such Implementing Entity and other appropriate terms and conditions, 
such as payment of the Implementing Entity (the ``Implementing Entity 
Agreement''). An Implementing Entity shall report directly to the 
relevant Project Manager or Outside Project Manager, as designated in 
the applicable Implementing Entity Agreement or as otherwise agreed by 
the Parties. The Implementing Entities shall be either (i) pre-
determined ministries, bureaus or agencies of the Government based on 
their sector expertise with respect to certain activities or (ii) 
government bodies, businesses, micro-finance institutions (``MFIs'') 
and/or non-governmental organizations, vendors and contractors selected 
according to a the Procurement Guidelines.
    (g) Fiscal Agent. The Government shall ensure that MCA-Benin 
engages one fiscal agent following an international competitive process 
(a ``Fiscal Agent'') who shall be responsible for, among other things: 
(i) Assisting MCA-Benin in preparing the Fiscal Accountability Plan, 
(ii) ensuring and certifying that Re-Disbursements are properly 
authorized and documented in accordance with established control 
procedures set forth in the Disbursement Agreement, the Fiscal Agent 
Agreement and other relevant Supplemental Agreements; (iii) Re-
Disbursing from, cash management and

[[Page 12959]]

account reconciliation of a Bank Account established and maintained by 
the Fiscal Agent for the purpose of instructing Bank to make Re-
Disbursements from a Permitted Account (to which Fiscal Agent has sole 
signature authority), following applicable certification by the Fiscal 
Agent; (iv) providing applicable certifications for MCC Disbursement 
Requests; (v) maintaining and retaining proper accounting, records and 
document disaster recovery system of all MCC Funded financial 
transactions and certain other accounting functions; (vi) producing 
reports on MCC Disbursements and Re-Disbursements (including any 
requests therefore) in accordance with established procedures set forth 
in the Disbursement Agreement, the Fiscal Agent Agreement, the Fiscal 
Accountability Plan, or any other relevant Supplemental Agreements, 
(vii) preparing budget development procedures and the Compact 
implementation budget, (viii) managing funds control, (ix) inventory 
control, and (x) internal management of the Fiscal Agent operations. 
Upon the written request of MCC, the Government shall ensure that MCA-
Benin terminates the Fiscal Agent, without any liability to MCC, and 
the Government shall ensure that MCA-Benin engages a new Fiscal Agent, 
subject to the approval by the Board and MCC. The Government shall 
ensure that MCA-Benin enters into an agreement with each Fiscal Agent, 
in form and substance satisfactory to MCC, that sets forth the roles 
and responsibilities of the Fiscal Agent and other appropriate terms 
and conditions, such as payment of the Fiscal Agent (each, a ``Fiscal 
Agent Agreement''), such Fiscal Agent Agreement shall not be terminated 
until MCA-Benin has engaged a successor Fiscal Agent or as otherwise 
agreed by MCC in writing.
    (h) Auditors and Reviewers. The Government shall ensure that MCA-
Benin carries out the Government's audit responsibilities as provided 
in Sections 3.8(d), (e) and (f) of this Compact, including engaging one 
or more auditors (each, an ``Auditor'') required by Section 3.8(d) of 
this Compact. As requested by MCC in writing from time to time, the 
Government shall ensure that MCA-Benin also engages (i) an independent 
reviewer to conduct reviews of performance and compliance under this 
Compact pursuant to Section 3.8(f) of this Compact, which reviewer 
shall have the capacity to (A) conduct general reviews of performance 
or compliance, (B) conduct environmental audits, (C) conduct data 
quality assessments in accordance with the M&E Plan, as described more 
fully in Annex III, and/or (ii) an independent evaluator to assess 
performance as required under the M&E Plan (each, a ``Reviewer''). MCA-
Benin shall select the Auditor(s) or Reviewers in accordance with any 
Governing Document or other relevant Supplemental Agreement. The 
Government shall ensure that MCA-Benin enters into an agreement with 
each Auditor or Reviewer, in form and substance satisfactory to MCC, 
that sets forth the roles and responsibilities of the Auditor or 
Reviewer with respect to the audit, review or evaluation, including 
access rights, required form and content of the applicable audit, 
review or evaluation and other appropriate terms and conditions such as 
payment of the Auditor or Reviewer (the ``Auditor/Reviewer 
Agreement''). In the case of a financial audit required by Section 
3.8(f) of the Compact, such Auditor/Reviewer Agreement shall be 
effective no later than 120 days prior to the end of the relevant 
fiscal year or other period to be audited; provided, however, if MCC 
requires concurrent audits of financial information or reviews of 
performance and compliance under this Compact, then such Auditor/
Reviewer Agreement shall be effective no later than the date agreed by 
the Parties in writing.
    (i) Procurement Agent. The Government shall ensure that MCA-Benin 
engages one or more procurement agents through international 
competitive process (each, a ``Procurement Agent'') to carry out and/or 
certify specified procurement activities in furtherance of this Compact 
on behalf of the Government, MCA-Benin, the Project Manager or 
Implementing Entity. The roles and responsibilities of such Procurement 
Agent and the criteria for selection of a Procurement Agent shall be as 
set forth in the applicable Implementation Letter or Supplemental 
Agreement. The Government shall ensure that MCA-Benin enters into an 
agreement with the Procurement Agent, in form and substance 
satisfactory to MCC, that sets forth the roles and responsibilities of 
the Procurement Agent with respect to the conduct, monitoring and 
review of procurements and other appropriate terms and conditions, such 
as payment of the Procurement Agent (the ``Procurement Agent 
Agreement''). Any Procurement Agent shall adhere to the procurement 
standards set forth in the Procurement Agreement and Procurement 
Guidelines and ensure procurements are consistent with the procurement 
plan adopted by MCA-Benin pursuant to the Procurement Agreement (the 
``Procurement Plan'').
4. Finances and Fiscal Accountability
    (a) Financial Plans.
    (i) Multi-Year Financial Plan. The multi-year financial plan for 
the Program and for each Project (the ``Multi-Year Financial Plan'') is 
summarized in Annex II to this Compact.
    (ii) Detailed Financial Plan. During the Compact Term, the 
Government shall ensure that MCA-Benin timely delivers to MCC financial 
plans that specify respectively the annual and quarterly detailed 
budget and projected cash requirements for the Program (including 
monitoring and evaluation and administrative costs) and each Project, 
projected both on a commitment and cash requirement basis (each a 
``Detailed Financial Plan''). Each Detailed Financial Plan shall be 
delivered by such time as specified in the Disbursement Agreement or as 
may otherwise be agreed by the Parties. The Multi-Year Financial Plan 
and each Detailed Financial Plan and each amendment, supplement or 
other change thereto are collectively, the ``Financial Plan.''
    (iii) Expenditures. No financial commitment involving MCC Funding 
shall be made, no obligation of MCC Funding shall be incurred, and no 
Re-Disbursement shall be made or MCC Disbursement Request submitted for 
any activity or expenditure, unless the expense is provided for in the 
Detailed Financial Plan and unless uncommitted funds exist in the 
balance of the Detailed Financial Plan for the relevant period or 
unless the Parties otherwise agree in writing.
    (iv) Modifications to Multi-Year Financial Plan or Detailed 
Financial Plan. Notwithstanding anything to the contrary in this 
Compact, MCA-Benin may amend or supplement the Multi-Year Financial 
Plan, or any component thereof or any Detailed Financial Plan without 
amending this Compact, provided any material amendment or supplement 
has been approved by MCC and is otherwise consistent with the 
requirements of this Compact including Section 4 of Annex II and any 
relevant Supplemental Agreement between the Parties; provided, however, 
MCA-Benin may modify the Detailed Financial Plan to reallocate MCC 
Funding without MCC prior approval to the extent that in the aggregate 
during the Compact Term the:
    (1) Reallocation of funds within a Project would not reduce or 
increase any line item in the Detailed Financial Plan for a Project 
Activity more than the

[[Page 12960]]

lesser of 10% of such relevant line item in the Detailed Financial Plan 
or USD $2,000,000, taking into account any modifications made pursuant 
to paragraph (B) such that any modifications made pursuant to (A) and 
(B) in the aggregate shall not exceed USD $2,000,000;
    (2) Re-allocation of funds within a Project Activity would not 
reduce or increase any line item in the Detailed Financial Plan for a 
sub-activity more than the lesser of 10% of the relevant line item in 
the Detailed Financial Plan or USD $2,000,000 taking into account any 
modifications made pursuant to paragraph (A) such that any 
modifications made pursuant to (A) and (B) in the aggregate shall not 
exceed USD $2,000,000;
    (3) Re-allocation of funds between Projects would not reduce or 
increase any line item in the Detailed Financial Plan for a Project 
Activity more than the lesser of 10% of the relevant line item in the 
Detailed Financial Plan or USD $500,000;
    (4) Re-allocation of funds within Monitoring and Evaluation 
category of the Detailed Financial Plan would not reduce or increase 
more than the lesser of 10% of the relevant line item in the Detailed 
Financial Plan for the M&E activity or USD $500,000; or
    (5) Re-allocation of funds within Program Administration category 
of the Detailed Financial Plan would not reduce or increase more than 
the lesser of 10% of the relevant line item in the Detailed Financial 
Plan for the Program Administration expense category or USD $500,000.
    With respect to any modification pursuant to subparagraphs (1)-(5) 
above, such modification (A) shall be consistent with the Objectives 
and the Implementation Plan; (B) shall not materially adversely impact 
the applicable Project, Project Activity, sub-activity, M&E activity or 
Program administration activity; (C) shall not cause the amount of MCC 
Funding to exceed the aggregate amount specified in Section 2.1(a) of 
this Compact; and (D) shall not cause the Government's obligations or 
responsibilities or overall contribution of resources to be less than 
as specified in Section 2.2(a) of this Compact, this Annex I or 
elsewhere in this Compact; provided, further, that MCA-Benin shall 
promptly deliver to MCC any such modified Detailed Financial Plan, 
together with a modified Multi-Year Financial Plan to reflect the 
corresponding modifications, and further reflected in the Detailed 
Financial Plan submitted with the MCC Disbursement Request at the next 
Disbursement Period.
    (b) Disbursement and Re-Disbursement. The Disbursement Agreement 
(and disbursement schedules thereto), as amended from time to time, 
shall specify the terms, conditions and procedures on which MCC 
Disbursements and Re-Disbursements shall be made. The obligation of MCC 
to make MCC Disbursements or approve Re-Disbursements is subject to the 
fulfillment, waiver or deferral of any such terms and conditions. The 
Government and MCA-Benin shall jointly submit the applicable request 
for an MCC Disbursement (the ``MCC Disbursement Request'') as may be 
specified in the Disbursement Agreement. MCC will make MCC 
Disbursements in tranches to a Permitted Account from time to time as 
provided in the Disbursement Agreement or as may otherwise be agreed by 
the Parties, subject to Program requirements and performance by the 
Government, MCA-Benin and other relevant parties in furtherance of this 
Compact. Re-Disbursements will be made from time to time based on 
requests by an authorized representative of the appropriate party 
designated for the size and type of Re-Disbursement in accordance with 
any Governing Document and Disbursement Agreement; provided, however, 
unless otherwise agreed by the Parties in writing, no Re-Disbursement 
shall be made unless and until the written approvals specified herein 
or in any Governing Document and Disbursement Agreement for such Re-
Disbursement have been obtained and delivered to the Fiscal Agent.
    (c) Fiscal Accountability Plan. By such time as specified in the 
Disbursement Agreement or as otherwise agreed by the Parties, MCA-Benin 
shall adopt as part of the Implementation Plan a fiscal accountability 
plan that identifies the principles, mechanisms and procedures to 
ensure appropriate fiscal accountability for the use of MCC Funding 
provided under this Compact, including the process to ensure that open, 
fair, and competitive procedures will be used in a transparent manner 
in the administration of grants or cooperative agreements and the 
procurement of goods and services for the accomplishment of the 
Objectives (the ``Fiscal Accountability Plan''). The Fiscal 
Accountability Plan shall set forth, among other things, requirements 
with respect to the following matters: (i) Re-Disbursement, cash 
management and account reconciliation; (ii) funds control and 
documentation; (iii) accounting standards and systems; (iv) content and 
timing of reports; (v) preparing budget development procedures and the 
Compact implementation budget; (vi) policies concerning records, 
document disaster recovery and public availability of all financial 
information; (vii) procurement and contracting practices, including 
timely payment to vendors; (viii) inventory control; (ix) the role of 
independent auditors; (x) the roles of fiscal agents and procurement 
agents; (xi) separation of duties and internal controls; and (xii) 
certifications, powers, authorities and delegations.
    (d) Permitted Accounts. The Government shall establish, or cause to 
be established, such accounts (each, a ``Permitted Account,'' and 
collectively ``Permitted Accounts'') as may be agreed by the Parties in 
writing from time to time, including:
    (i) A single, completely separate U.S. Dollar interest-bearing 
account (the ``Special Account'') at a commercial bank, subject to MCC 
approval, that is procured through a competitive process;
    (ii) If necessary, an interest-bearing local currency of Benin 
account (the ``Local Account'') at a commercial bank, subject to MCC 
approval, that is procured through a competitive process to which the 
Fiscal Agent may authorize transfer from any U.S. Dollar Permitted 
Account for the purpose of making Re-Disbursements payable in local 
currency; and
    (iii) Such other interest-bearing accounts to receive MCC 
Disbursements in such banks as the Parties mutually agree upon in 
writing.
    No other funds shall be commingled in a Permitted Account other 
than MCC Funding and Accrued Interest thereon. All MCC Funding held in 
an interest-bearing Permitted Account shall earn interest at a rate of 
no less than such amount as the Parties may agree in the respective 
Bank Agreement or otherwise. MCC shall have the right, among other 
things, to view any Permitted Account statements and activity directly 
on-line, where feasible, or at such other frequency as the Parties may 
otherwise agree. By such time as shall be specified in the Disbursement 
Agreement or as otherwise agreed by the Parties, the Government shall 
ensure that MCA-Benin enters into an agreement with each Bank, 
respectively, satisfactory to MCC, that sets forth the signatory 
authority, access rights, anti-money laundering and anti-terrorist 
financing provisions, and other terms related to the Permitted Account, 
respectively (each, a ``Bank Agreement''). For purposes of this 
Compact, the banks holding an account referenced in Sections 4(d) of 
this Program Annex are each a ``Bank'' and

[[Page 12961]]

are collectively referred to as the ``Banks.''
    (e) Currency Exchange. The Bank shall convert MCC Funding to the 
currency of Benin at a rate to which the parties to the Bank Agreement 
mutually agree with the Bank in the Bank Agreement, subject to MCC 
approval.
5. Transparency; Accountability
    Transparency and accountability to MCC and to the beneficiaries are 
important aspects of the Program and Projects. Without limiting the 
generality of the foregoing, in an effort to achieve the goals of 
transparency and accountability, the Government shall ensure that MCA-
Benin:
    (a) Establishes an e-mail suggestion box as well as a means for 
other written comments that interested persons may use to communicate 
ideas, suggestions or feedback to MCA-Benin.
    (b) Considers as a factor in its decision-making the 
recommendations of the Board, particularly in MCA-Benin's deliberations 
over pending key Management decisions and key Board decisions as shall 
be specified in the relevant Governing Document.
    (c) Develops and maintains the MCA-Benin Web site in a timely, 
accurate and appropriately comprehensive manner, such MCA-Benin Web 
site to include postings of information and documents in English and 
French.
    (d) Posts on the MCA-Benin Website and otherwise makes publicly 
available via appropriate mediums (including radio and print) in the 
appropriate language the following documents or information from time 
to time:
    (i) All minutes of the meetings of the Advisory Council and the 
meetings of the Board; provided, however, in certain instances of 
sensitivity and solely as specified and in accordance with the 
Governing Documents meeting minutes may be maintained solely in the 
corporate records of MCA-Benin without public release;
    (ii) The M&E Plan, as amended from time to time, along with 
periodic reports on Program performance;
    (iii) Such financial information as may be required by this Compact 
or as may otherwise be agreed from time to time by the Parties;
    (iv) All Compact Reports;
    (v) All audit reports by an Auditor and any periodic reports or 
evaluations by a Reviewer;
    (vi) All relevant Environmental Impact Assessments and supporting 
documents, and such other environmental documentation as MCC may 
request;
    (vii) A copy of the Disbursement Agreement, as amended from time to 
time;
    (viii) A copy of any documents related to the formation, 
organization and governance of MCA-Benin including any Governing 
Documents, together with any amendments thereto;
    (ix) A copy of the Procurement Agreement (including Procurement 
Guidelines), as amended from time to time and any procurement policies 
or procedures and standard documents; and
    (x) A copy of information derived from each Procurement Plan, as 
specified in the Procurement Agreement, and all bid requests and 
awarded contracts.

Schedule 1 to Annex I--Access to Land Project

    This Schedule 1 generally describes and summarizes the key elements 
of an Access to Land Project (the ``Land Project'') that the Parties 
intend to implement in furtherance of the Land Project Objective. 
Additional details regarding the implementation of the Land Project 
will be included in the Implementation Plan and in relevant 
Supplemental Agreements.
1. Background
    Insecure access to land is a determinant of poverty and a major 
barrier to income growth in Benin as reflected in the Government's 
Action Plan and the Poverty Reduction Strategy Document. Investment 
climate studies list land access among the top constraints to business 
development in Benin. Therefore, the Government's Access to Land 
proposal was met with strong civil society support. Inclusion of the 
Land Project in the Program reflects an understanding of the importance 
of sound property rights to overall economic growth and to the owners 
and users of land across Benin.
    Currently, the title registration system is expensive, slow, and 
complex. For a small urban land parcel, titling and registration costs 
approximately $1,400 and can take up to two years to complete. As a 
result, only 1% of households hold a formal title to their land and a 
majority of the rural population relies on oral customary land rights. 
In urban areas, individuals occupy land under a weak administrative 
permit while enterprises occupy state land by concession. Land disputes 
are prevalent and are estimated to comprise more than 70% of all civil 
court cases in Benin. Women are often disadvantaged under current 
practices while investors are unable to acquire sites with confidence. 
Public investment in infrastructure is hindered by the lack of land use 
planning and adequate property tax administration. The lack of 
registered land rights also limits access to credit, particularly since 
Benin adheres to agreements under the Organization for Harmonization of 
Business Law in Africa (``OHADA'') requiring land titles as a basis for 
pledging real property as collateral.
    The Government is committed to changing this scenario. The 
Government has demonstrated a commitment to adopting improved laws, 
regulations, administrative processes and techniques to meet its 
ambitious land policy vision. It has already undertaken important legal 
reforms and experimented with new approaches to formalizing property 
rights. The Government's view of the importance of converting to 
titles, albeit in a progressive, voluntary approach, will be promoted 
and ways to make the process easier will be identified through this 
Project. With MCA support, a new land policy framework will be 
developed and over 100,000 households will attain registered land 
rights. The Land Project will serve both rural and urban areas and will 
lead to: significantly reduced time and costs to obtain titles and 
record transfers; fewer land disputes; and increased sense of land 
security. These improvements should, in turn, motivate investment and 
contribute, along with other Projects, to income growth.
2. Summary of Projects and Activities in Project and Expected Results
    The Land Project is designed to establish secure access to land and 
efficient land administration services. MCC Funding will support the 
following Project Activities:
     Policy and Legal Reform: To enable sustainable, efficient 
land registration services, gender equity, land dispute resolution and 
expanded use of land as collateral, MCC Funding will support legal, 
regulatory, administrative and informational reforms within a national 
land policy framework encompassing both rural and urban land.
     Achieving Formal Property Rights to Land: To provide 
citizens with more secure and useful records of their land rights, MCC 
Funding will support conversion of 30,000 occupancy permits to land 
titles in urban areas and formally document land rights to 300 rural 
villages directly benefiting around 85,000 households with certificates 
or titles.
     Improve Land Registration Services and Land Information 
Management: To reduce time and costs to register land and expand access 
to land information for public and private uses, MCC

[[Page 12962]]

Funding will be used to upgrade and decentralize title registration 
services in twenty four communes and introduce map-based land 
information systems in twelve of these communes.
     Information, Education and Communication: To create broad 
awareness of land policy reform, especially among more vulnerable 
groups, in order to help citizens understand, protect and use their 
land rights.
     Support Land Program Coordination: To strengthen the 
capacity to manage the reform process and to encourage active 
participation of key stakeholder representatives, support policy and 
program coordination advisors, convene a Project steering group, and 
establish working groups for particular studies.
    The M&E Plan (described in Annex III) will set forth anticipated 
results and, where appropriate, regular benchmarks that may be used to 
monitor implementation progress. Performance against these benchmarks 
and the overall impact of the Land Project will be assessed and 
reported at the intervals to be specified in the M&E Plan or as 
otherwise agreed by the Parties from time to time. The Parties expect 
that additional indicators will be identified during the implementation 
of the Land Project. The expected results from, and the key benchmarks 
to measure progress on the Project, Project Activities and sub-
activities undertaken or funded under the Land Project are set forth in 
Annex III.
    Estimated amounts of MCC Funding for each Project Activity for the 
Land Project are identified in Annex II of this Compact. Conditions 
precedent to each Land Project Activity and sequencing of these Project 
Activities shall be set forth in the Disbursement Agreement or other 
relevant Supplemental Agreements or component of the Implementation 
Plan.
    The following summarizes the Land Project Activities:
    (a) Project Activity: Policy and Legal Reform (the ``Policy 
Activity'').
    Building from the Government's commitment to land reform, under 
this Policy Activity, MCC funds will support three-stages to establish 
a more cohesive, functional land policy. The three stages are analysis, 
policy formulation and legal reform. This Policy Activity is national 
in scope and will address both urban and rural issues. MCA-Benin shall 
take account of the relevant outputs of the Policy Activity, as 
described below, in the full Implementation Plan (to be adopted 
following the completion of the relevant assessments in this Policy 
Activity). It is also anticipated that the Policy Activity will affect 
the implementation strategy to be used for certain other Land Project 
activities or sub-activities.
    Detailed assessments of a series of topics will be produced by 
commissioned experts working in consultation with key stakeholder 
representatives. As a result, decision-makers will be better informed 
of best options for detailing the legal, administrative and technical 
solutions needed to achieve secure land rights and efficient land 
access. Based on the assessment process, a Land Policy White Paper will 
be prepared to guide public and private actors regarding the reform 
process. Endorsement from senior Government of Benin officials, 
including all relevant Ministers will be sought by MCA-Benin. The 
Policy Activity will also support drafting of a National Land Policy 
Decree, drafting of any needed legislation and/or amendments, and, 
finally, the compilation of land laws into a new Land Code to reinforce 
cohesiveness.
    MCC Funding will support the following activities:
    (i) Conduct of assessments that will inform policy decisions and 
Land Project implementation strategies. The assessments will further 
clarify issues and provide recommendations for refining the reform 
strategy. Efficiency, affordability, sustainability, gender equity, and 
the ability to manage the reform process with minimum risk will be 
considered. The assessments listed below will be conducted by experts 
and MCA-Benin will convene working groups of stakeholder 
representatives that will consult on the terms of reference for and the 
preparation of the assessments described below. MCA-Benin shall ensure 
that the results of these assessments are incorporated as relevant in 
the complete and final Work Plans for the activities described in 
Sections 2(b)-(d) of this Schedule 1. The assessments shall include the 
following topics, unless otherwise agreed by the Parties:
    (1) A review of current practice and proposed reforms related to 
the administrative structure and functions of national, regional and 
local agencies involved in implementation of land policy; clarify roles 
and responsibilities and propose an approach to achieve greater 
operational efficiency and coherence;
    (2) A review of the processes for titling (conversion) and 
registration to identify specific bottlenecks to an accelerated, 
quality implementation pace, including a review of technical norms, 
administrative procedures, evidences accepted and proofs required to 
participate; taxes, fees and budget parameters; and the technical 
specifications of the certification processes (particularly of the Plan 
Foncier Rural ``PFR''); make recommendations for changes to make the 
process more affordable and/or efficient and its results more 
sustainable;
    (3) An assessment of the number and types of land conflicts 
encountered in the past under rural and urban pilot activities and how/
if these conflicts have been resolved; recommend a strategy for 
strengthening the capacity to resolve land conflicts under formal and 
informal means;
    (4) An analysis of how to effectively improve women's access to 
land and the security of their tenure; propose a gender strategy on 
policy, legal, administrative, and/or project implementation measures 
and provide guidelines for its implementation;
    (5) Following the completion of the assessment described in 
paragraph (1) above, compare technology options to meet information 
management needs at national, regional and local levels including 
mapping data, registration data, land market information and land use 
planning; compare initial investment costs as well as implied 
operational and maintenance costs and capacity to sustain the systems; 
and
    (6) An analysis of the operational modalities for the communes in 
implementing the proposed new rural land law and related financing 
needs; make recommendations for the content for the regulations to this 
law.
    (ii) Development, formalization and dissemination of a new land 
policy framework for Benin, that draws on the assessments conducted 
under the sub-activity described in Section 2(a)(i) above:
    (1) Draft and promote a Land Policy White Paper covering rural and 
urban land and addressing the findings of the assessments conducted 
under sub-activity described in Section 2(a)(i); seek its immediate 
endorsement by relevant senior Government of Benin officials for use in 
implementation of Projects and also a legislative mandate for 
compliance with its key provisions;
    (2) Upon completion of sub-activity described in Section 2(a)(i) 
above, prepare a new procedural manual for the transformation of urban 
and rural certificates into land titles;
    (3) Review of relevant current law and proposed legislation 
compared to the requirements of the Land Policy White Paper;
    (4) Based on the conclusions reached in paragraph 3 of this Section 
2(a)(ii), support the drafting of new or amended laws and regulations 
as called for such

[[Page 12963]]

that the resulting body of land legislation removes disincentives to 
register land rights and transactions, facilitates compliance with 
relevant agreements under OHADA; and safeguards vulnerable populations 
to the extent feasible from risks and undue tax burdens;
    (5) Following completion of the sub-activity described in paragraph 
(4) of this Section 2(a)(ii), support the preparation of a draft 
unified Land Code for submission to Parliament; and
    (6) Conduct public consultation on and dissemination of the new 
legislation and procedures.
    (b) Project Activity: Achieving Formal Property Rights (the 
``Registration Activity''). By providing roughly 115,000 citizens with 
more secure and useful property rights, this Registration Activity will 
demonstrate the effectiveness of Benin's new policy and approaches. 
Support will be provided for the conversion of urban housing land use 
permits into land titles in selected neighborhoods primarily in 
Cotonou, Parakou and Porto Novo. In roughly 300 selected rural 
villages, the recording of rural land rights through written land plans 
and certificates of customary ownership will be undertaken using an 
existing methodology. Additionally, converting rural land certificates 
to land titles will also be facilitated for beneficiaries that choose 
to participate. To facilitate progress in the Government's title 
conversion approach, the Registration Activity will support mapping and 
related technology improvements and will help communities to identify 
and resolve any case-specific issues that could arise during tenure 
formalization.
    Specifically, MCC Funding will support the following:
    (i) Expansion of formal registration of land rights in urban areas. 
Based on lessons learned in a pilot project recently conducted by the 
Government, improve and continue the process of transforming urban 
housing land permits to titles in selected neighborhoods in Cotonou, 
Parakou, Porto Novo and possibly other cities. For each neighborhood 
selected:
    (1) Investigation of the current status of land tenure and records 
and take measures to organize data and prepare the areas for the 
conversion process;
    (2) Organization and engagement of the community as active and 
informed participants in the conversion process; and
    (3) Measurement and mapping individual parcels, conduct public 
review of parcel maps to gain agreement among community members on the 
boundaries indicated on the maps, and issuance of registered land 
titles (incorporating recommendations of the relevant assessments 
conducted under sub-activity described in Section 2(a)(i)).
    (ii) Expansion of formal land rights in rural areas. Consistent 
with existing standards and guidelines, expand the creation of rural 
land plans, land tenure certificates and local land management 
capacity:
    (1) For each rural commune meeting the site selection criteria and 
chosen by MCA-Benin for participation, (A) conduct of information 
campaigns, (B) assessment of the socio-economic and land tenure 
conditions of villages in the area and (C) prepare village profiles 
including documentation of any location-specific land tenure terms and 
norms;
    (2) Based on the conclusions reached in paragraph (1) above and the 
application of the more general site selection criteria to the villages 
within each commune, final selection of villages for implementing the 
PFR process;
    (3) For selected villages, production of land use and tenure maps 
(the PFR) using a participatory method and submission of the plan for 
public review and comment; and
    (4) Based on the PFR, issuance of rural land use certificates and 
facilitation of formal, written records of subordinate land rights such 
as tenancies using improved approaches (e.g., standard lease template).
    (iii) Facilitation of voluntary, ``on-demand'' conversion of rural 
land certificates into land titles. Conversion of rural land 
certificates to land titles through an efficient, affordable process. 
Priority will be given to villages that already have a PFR in place.
    (iv) Improvements in capacity for mapping and surveying. To 
facilitate more rapid registration of land rights and to establish 
databases that support land information services e.g., for planning and 
fiscal purposes and for land market research, support the following 
actions, incorporating as relevant recommendations from sub-activity 
described in Section 2(a)(i):
    (1) Creation of up-to-date digital imagery of Benin's land 
resources;
    (2) Creation of regional scale maps for selected areas of the 
country indicating major topographic features and infrastructure 
systems, such regional scale maps will be an important tool to the 
production of an integrated set of parcel maps generated through the 
process of property rights formalization; and
    (3) Following the completion of the design strategy described in 
Section 2(d)(iii), training for public and private professionals in use 
of digital imagery and in improved surveying and mapping techniques.
    (v) Improvement of local capacity to adapt to changing land tenure 
and use patterns and to resolve case-specific issues that might arise 
during the implementation of land tenure reforms by:
    (1) Supporting communes in rural areas to develop improved social 
programs and planning for the specific needs of landless peasants and 
migrants;
    (2) Supporting the provision of paralegal, informational and other 
advisory services related to land access and tenure security to 
citizens who otherwise would not have access to such services;
    (3) Improvement of the capacity of citizens, local authorities and 
tribunals to resolve disputes related to land tenure;
    (4) Establishment of transitional measures, in urban areas, to 
protect the rights of land occupants with certificates who delay or 
opt-out of the conversion process; and
    (5) In a few pilot sites, introduction of the use of parcel layout 
plans in irregularly developed neighborhoods as a step prior to the 
permit-title conversion process (any site in which such plans would 
call for resettlement of persons to sites outside the neighborhood 
prior to the conversion of permits to titles may not be selected for 
participation).
    The activities contemplated under this Registration Activity may 
begin with preparatory activities such as those described in Sections 
2(b)(i)(1) and (2), 2(b)(ii)(1) and (2), and 2(b)(v) above under a 
provisional work plan; provided, however, full implementation will 
require a complete and final work plan which adopts, to MCC's 
satisfaction, the recommendations and findings of the relevant reports 
produced under the Project Activity described in Section 2(a)(i).
    (c) Project Activity: Improve Land Registration Services and Land 
Information Management (the ``Services and Information Activity'').
    To launch the process of moving Benin's land registration system 
services to the local level, new offices of the national property 
registry will be established (i.e., deconcentration) , and, select 
communes will be supported as authority is transferred to them to 
manage their land (i.e., decentralization). This Activity will help 
design, equip and adequately staff new local registry offices. Communes 
should be chosen from among those in which implementation of the 
Registration Activity will occur, unless

[[Page 12964]]

otherwise agreed in writing with MCC. Some communes will also 
experiment with a cadastre or parcel-based registration system that may 
include additional land information used for planning and fiscal 
purposes. Finally, the Services and Information Activity will help make 
reliable land market information (e.g., recent sales and prices) 
available for use by households, investors and public offices.
    Pending completion of the relevant studies in Policy Activity and 
incorporation of the recommendations into implementation plans, MCC 
Funding will support the design and implementation of more accessible, 
efficient, reliable land registration and information services. The 
implementation strategy for each sub-activity described below in 
paragraphs (i), (ii) and (iii) shall promote, to the extent 
practicable, the harmonization of national, regional, and communal land 
data and uses including the mapping and certificate lists generated 
during the PFR process.
    Specifically, MCC Funding will support:
    (i) Deconcentration of the National Land Registration Services.
    (1) The establishment of regional offices in Benin's 12 prefectures 
and communal service offices in 24 selected communes; and
    (2) In the offices established pursuant to paragraph (1) of this 
Section 2(c)(i), replacement of the manual system of document 
administration with an automated, digital records management system and 
training of land registry office staff in the operation of these 
systems.
    (ii) Decentralization of Land Administration.
    (1) Assist in development of capacity of approximately 50 communes 
for land administration, such assistance to include training, 
acquisition of equipment and transitional operational support; and
    (2) Design and implementation of a pilot parcel-based or cadastre-
registration system in 12 of the communes where MCC Funding will 
support decentralization; this sub-activity will support a more 
comprehensive, systematic approach to the establishment of a cadastre 
may be demonstrated in three of these twelve communes (one rural, one 
urban and one peri-urban).
    (iii) Design and establishment of an electronic national land 
market data system.
    (iv) Provision of technical assistance, training (consistent with 
the design strategy completed pursuant to Section 2(d)(iii)) and in 
relation to the capacity to manage and to quality control the land 
information systems established in (i) and (ii) of this Section 2(c).
    (d) Project Activity: Information, Education and Communication 
(``IEC'') (the ``IEC Activity'').
    MCA-Benin has an opportunity to promote good governance through 
appropriate transparency and consultation on the Project throughout the 
Compact Term. Moreover, informed and widespread participation in 
planning, dispute resolution and decision-making are necessary for an 
effective system of land registration. The IEC Activity will ensure 
citizens have a clear understanding of their rights and 
responsibilities, and are able to participate fully in the new 
processes of planning, land securitization and dispute resolution.
    Specifically, MCC Funding will support IEC campaigns throughout the 
Compact Term to include but not limited to the following topics (other 
topics for these campaigns may be implemented, subject to MCC 
approval):
    (i) Creation of broad awareness and understanding of the changing 
land policy regime and how it affects the rights of citizens; new 
processes and services; gender considerations, and, land markets and 
access to credit.
    (ii) Conduct of specific public notice and awareness of each 
activity and sub-activity and of the results relevant to particular 
groups or communities.
    (iii) Design of a training strategy precedent to implementation of 
any training in the Registration Activity or Services and Information 
Activity.
    (e) Project Activity: Support Strategy and Programmatic 
Coordination (the ``Support Strategy Activity'').
    This Project Activity will ensure coordination across the various 
Project Activities and sub-Activities of the Land Project, across 
agencies involved in the land policy reform process, and facilitate 
ongoing consultation with stakeholder groups. In the near term, this is 
critical to the Project effectiveness in undertaking a comprehensive 
and diverse set of reform actions. By the end of the Compact Term, the 
MCA-Benin Access to Land Project division could be transformed into a 
national coordination unit to lead the completion of the reform 
implementation process over a longer time period.
    Specifically, in addition to an overall Land Project Director and 
the ordinary Project-related operating expenses, MCC Funding will 
support:
    (i) Complement MCA-Benin management staff with a group of 
professionals dedicated to ``change management and coordination,'' 
namely a National Land Policy Reform Coordinator and a long term policy 
advisor familiar with international best practice in land 
administration. Among their roles are, potentially, to (A) lead the 
process of incorporation of the results of the Policy Activity into 
practice by both project implementing partners and more generally, in 
Benin; (B) provide guidance on policy and implementation oversight 
issues to senior Government officials and MCA-Benin management; (C) 
facilitate linkages with the Financial Services Project activities as 
relevant; (D) engage other donors in Project specific coordination; 
and, (E) respond to beneficiary requests and queries.
    (ii) Establishment (including rules regarding selection, 
composition, roles and frequency of meetings) and convening of a 
Steering Group for periodic consultations on the implementation of the 
Land Project e.g., the development of annual work plans, key terms of 
reference, draft reports and otherwise as appropriate; including key 
stakeholder representatives, at least one person from each of the MCA-
Benin Finance Services Project and the Justice Project divisions, and a 
gender expert.
    (iii) Convening of discussion groups for each of the assessments in 
Section (2)(a)(i) and for the White Paper and corresponding legal 
reform work.
    (iv) Selection of sites for activities undertaken under this 
Project. Sites shall be chosen by applying selection criteria developed 
by MCA-Benin, subject to MCC approval, in a fair and transparent 
manner. MCA-Benin will publicize, including posting on the MCA-Benin 
Website, both the criteria for selection and the actual sites chosen, 
giving a brief justification for each site. These criteria will ensure 
that sites have the following characteristics, among others: 
representation of the North, South and Central regions of Benin; sites 
that exhibit both poverty and near-term economic opportunity e.g., 
urbanizing areas, high-value crop production sites, and places where 
market participation is expanding; willingness to comply with Benin's 
Family Code; site of activity under the Financial Services Project and 
the Justice Project; and location within the scope of the decentralized 
registry and land information systems to be established under Services 
and Information Activity set forth in Section 2(c) of this Schedule 1. 
These characteristics will be strategic to choosing sites that will 
more readily experience near-term, economically meaningful results 
including for the poor and women. The completion of this site selection 
shall be a condition

[[Page 12965]]

precedent to certain activities under this Project.
    (v) Strengthening of the National Land Commission for the 
transformation of urban land permits to titles by providing the 
resources and guidance to enhance the quality and quantity of work it 
can perform.
3. Beneficiaries
    The Land Project will encourage investment in urban and rural land. 
A new policy framework will enable a progressive transition between 
customary and administrative land management to markets and a title 
registration system. With lower transactions costs and fewer disputes, 
the climate for investment, productivity and finance will be improved. 
The Land Project will strengthen women's land rights under the law and, 
more importantly, work to ensure the new family code is practiced 
widely. In Cotonou, Porto-Novo and Parakou, the three main cities in 
Benin, up to 30,000 properties currently under administrative 
certificates will have titles. In twenty-four selected rural communes, 
as many as 83,000 families in 300 villages will receive a certificate, 
which can be subsequently turned into a land title. Other rural land 
users, without full ownership rights, will also have recorded 
agreements. Accurate land rights information will benefit potential 
local and international investors, including Benin's diaspora. For 
example, reliable and cost-effective inquiries of local records will be 
possible before entering leases or purchasing land. Finally, there will 
be better capacity for local planning and tax administration which will 
benefit local municipalities and civil society.
    Roughly 115,000 rural and urban households will have more secure 
and useful tenure, affordable access to reliable land related 
information and services; a 50% reduction in court cases related to 
land disputes is targeted, and a modest 10% to 20% investment response 
is expected to boost income earning opportunities.
4. Donor Coordination; Private Sector; Role of Civil Society
    In rural Benin, both Deutsche Gesellschaft fur Technische 
Zusammenarbeit (``GTZ'') GmbH (German) and Agence Francaise de 
Developpement (``AFD'') (French) have supported successful land use 
pilot projects under the Program for Natural Resources Conservation and 
Management. A first phase of these pilot projects has recently ended 
and both donors have expressed interested in continuing this work. The 
approach has been standardized and guidelines established which will be 
used in implementation of this Project.
    In urban areas the Government recently completed a pilot titling 
project that had positive but limited results. The limited results were 
due to substantial titling fees, a reluctance to being the initial 
participant (``first adopter''), insufficient public outreach, and 
administrative problems relating to certificates previously pledged as 
collateral. These limitations were identified in the Proposal and will 
be further addressed in the Implementation Plan for the Registration 
Activity.
    The ``Transformation of Assets into Usable Capital in the Least 
Developed Countries'' project initiated by the International Land 
Coalition has chosen Benin as a pilot country. Under this International 
Land Coalition initiative, the UNDP will support a stakeholder analysis 
that could be used to refine the relevant components of the Project 
Activity Implementation Plans. The Foreign Investors Advisory Service 
of the International Finance Corporation (``IFC'') will soon complete a 
study of land access and investment. Their preliminary recommendations 
are generally consistent with this Project, with some sub-activities 
herein having been derived from it.
    Private professionals, e.g., surveyors, are currently called on by 
the government to implement tasks within the formalization process. To 
the extent feasible, the Land Project will promote out-sourcing and 
development of private sector services related to land registration and 
land markets. Among the key stakeholders that will guide the project 
implementation planning and participate in the studies undertaken 
pursuant to the Policy Activity, are bankers and businessmen and civil 
society organizations, e.g., women's groups. These are the end-users of 
the improved formal property registration system and their perspectives 
will provide much-needed insight into final definition of land policy 
and of the most practical approaches to implementation.
5. U.S. Agency for International Development
    No USAID projects focus specifically on land access and security in 
Benin. However, MCA-Benin will continue to dialogue with USAID to 
identify areas in which it can complement or coordinate with e.g., 
women's legal aid.
6. Sustainability
    One of the prime concerns that will underlie the series of 
evaluations conducted in the Policy Activity is the need to ensure that 
investments can be sustained and that near-term results translate into 
long'term sustainable change. The Government has set ambitious targets 
for decreasing costs of land titling and registration and will be 
considering further rationalizing fee structures. The final choice of 
technical solutions for information management and for supporting the 
process of formalizing land tenure will be chosen on a best-value for 
cost in the specific context of Benin. The extensive consultation, 
information dissemination and training embedded across all the Project 
Activities will reinforce consensus and make it more likely that people 
can take advantage of the new land policy framework. The review of the 
law will identify and address disincentives to keep land records formal 
over time. All together, these features lend themselves to 
sustainability.
7. Policy; Legal Reform; and Procedural Changes
    The Parties have identified the following policy, legal and 
regulatory reforms and actions that the Government shall pursue in 
support, and to reach the full benefits, of the Land Project, the 
satisfactory implementation of which will be conditions precedent to 
certain MCC Disbursements as provided in the Disbursement Agreement:
    (a) Undertake policy, legal and/or procedural changes as called for 
in the final approved assessment reports produced under the Policy 
Activity: to simplify, streamline and make affordable all processes 
related to formal registration of land rights;
    (b) Endorse a Land Policy White Paper produced in conjunction with 
this Project; issue a National Land Policy Decree endorsing its vision, 
adopt a law requiring compliance with it and pass a unified Land Code 
to consolidate the body of law that affects land rights;
    (c) Reform laws, regulations and administrative processes as needed 
to remove constraints to the use of land as collateral;
    (d) Undertake measures to improve the enforcement of Benin's Family 
Code, Rural Code, and other legislation, as identified in the gender 
strategy undertaken pursuant to the Policy Activity, which give and 
protect women's rights to land; and
    (e) Undertake measures to ensure the property taxes do not 
discourage registration of land transactions and that safeguard against 
undue tax burdens.
8. Proposals
    Under the Land Project, public solicitations for proposals are

[[Page 12966]]

anticipated to procure goods and services, as needed, to implement all 
Land Project Activities. MCA-Benin will develop, subject to MCC 
approval, a process for consideration of both such proposals. While 
competitive procurement will be the norm for this Land Project, MCA-
Benin may also consider, using a process developed subject to MCC 
approval, any unsolicited proposals it might receive. Under Strategy 
Support Activity of this Land Project, a Land Project Steering Group 
and several working groups will be comprised to guide implementation 
planning and implementation of the assessments to be conducted under 
the Policy Activity. MCA-Benin will determine the number and types of 
participants in these groups. A public call for expressions of interest 
to participate will be made and candidates will be selected by a panel 
comprised of MCA-Benin's Land Project Director, Finance Project 
Director and one other person to be determined by MCA-Benin with MCC 
approval. The composition of this panel shall be made publicly 
available as will be their final selection for any particular group.
    This Land Project also involves selection of particular communes, 
villages or urban neighborhoods to participate in Project Activities 
described in Sections 2(b) and (c) of this Schedule 1. As described in 
Sections 2(b) and (c), selection criteria for identifying communes, 
villages or urban neighborhoods to participate and a method to apply 
these will be developed by MCA-Benin, subject to MCC approval. The 
criteria, method and final selections (including justifications) will 
be made known to the public. In addition, MCA-Benin will incorporate 
into the method for applying the selection criteria a process for 
consideration of unsolicited offers of participation by particular 
communes, villages or urban neighborhoods.

Schedule 2 to Annex I--Access to Financial Services Project

    This Schedule 2 generally describes and summarizes the key elements 
of the Access to Financial Services Project (the ``Financial Services 
Project'') that the Parties intend to implement in furtherance of the 
Financial Services Objective. Additional details regarding the 
implementation of the Financial Services Project will be included in 
the Implementation Plan and in relevant Supplemental Agreements.
1. Background
    Benin has a shallow financial sector that provides limited services 
to micro and small- and medium-scale enterprises (one or more of such 
categories of enterprises, ``MSMEs''), particularly those that are 
involved directly or indirectly in the production of goods in Benin. 
For example, the banking sector, while possessing significant 
liquidity, has focused much of its credit services on short-term 
financings and on larger companies, such as multinationals with 
branches in Benin. Savings services in Benin have had limited 
penetration, with only a small fraction of the population owning a bank 
account. Although the microfinance sector is relatively vibrant in 
Benin, it faces significant challenges, including the weak 
institutional capacity of many MFIs and the need for additional 
monitoring and supervision. Moreover, much of the financial sector has 
focused on urban areas and on short-term commerce rather than long-term 
production.
    The following factors contribute to the limited scope of financial 
services to MSMEs:
     High transaction costs, especially in rural areas;
     Lack of reliable information on clients;
     Lack of creditworthiness of many borrowers;
     Limited resources and capacity of some of the financial 
intermediaries; and
     Perceived risk of clients, in part due to lack of 
sufficient collateral (such as title) and the inability of lenders to 
effectively enforce debts or sell collateral upon default, and price 
and yield risks inherent in agriculture.
    These factors constrain the growth of MSMEs in Benin. The high cost 
or unavailability of credit and other financial services, including 
savings, limits the capacity of small businesses in Benin to expand 
production and employment, to respond to business opportunities and to 
manage risk. Accordingly, alleviating these constraints, and creating a 
broader and deeper financial sector, should increase incomes of the 
poor that own, are employed by, or do business with MSMEs.
2. Summary of Projects and Activities in Project and Expected Results
    The Financial Services Project is designed to improve the ability 
of MSMEs, particularly those directly or indirectly involved in 
production in Benin, to access financial services that will help them 
improve the sustainability of their businesses.
     The Financial Services Project includes the following two 
Project Activities:
     Financial Institution and Borrower Capacity Building 
Activity: This Project Activity aims to (a) improve the capacity of 
financial institutions to expand existing or establish new services for 
MSMEs and (b) improve the capacity of MSMEs to access and use expanded 
financial services productively by improving their creditworthiness; 
and
     Financial Enabling Environment Activity: This Project 
Activity will undertake to identify and support legal and policy 
changes that are needed to facilitate the expansion of the financial 
sector in Benin.
    The M&E Plan (described in Annex III) will set forth anticipated 
results and, where appropriate, regular benchmarks that may be used to 
monitor implementation progress. Performance against these benchmarks 
and the overall impact of Financial Services Project will be assessed 
and reported at the intervals to be specified in the M&E Plan or as 
otherwise agreed by the Parties from time to time. The Parties expect 
that additional indicators will be identified during the implementation 
of the Financial Services Project. The expected results from, and the 
key benchmarks to measure progress on, the Project, Project Activities 
and sub-activities undertaken or funded under the Financial Services 
Project are set forth in Annex III.
    Estimated amounts of MCC Funding for each Project Activity for the 
Financial Services Project are identified in Annex II of this Compact. 
Conditions precedent to each Financial Services Project Activity and 
sequencing of these Project Activities shall be set forth in the 
Disbursement Agreement or other relevant Supplemental Agreements or 
applicable component of the Implementation Plan.
    The following summarizes the Financial Services Project Activities:
    (a) Project Activity: Financial Institution and Borrower Capacity 
Building (the ``Capacity Building Activity'')
    The overall goal of this Project Activity is to broaden and deepen 
the financial sector in Benin by improving both the supply of and 
demand for financial services. It is intended to build the capacity of 
financial institutions, as well as to improve MSMEs' creditworthiness 
and ability to use financial services productively.
    This Project Activity involves two sub-activities:
     Demand and feasibility assessments; and
     A financial innovation and expansion challenge facility 
(``FINECF'' or the ``Challenge Facility'').

[[Page 12967]]

    (i) Demand and Feasibility Assessments. This sub-activity is 
intended to help shape the criteria and guidelines for the Challenge 
Facility described in Section 2(a)(ii), and to build on existing 
studies and improve the quality of information available to potential 
applicants. Satisfactory completion of these studies, and dissemination 
of the key findings, shall therefore be conditions precedent to the 
Challenge Facility. The below studies shall be conducted by an expert 
or experts retained after an international competitive procurement; 
terms of reference and procurement for these studies shall be subject 
to MCC approval. The results of the studies may be further divided or 
combined into one or more reports, so long as they cover the topics 
mentioned below or such other topics as the Parties may agree in 
writing. MCC and MCA-Benin shall consider cost structures where public 
and private costs for the studies are shared, with the private portion 
to expand over time.
    MCC Funding, together with potential parallel or co-financing from 
other sources, shall support the following:
    (1) Conduct of demand study for services to MSMEs. This will study 
the demand for innovative and expanded financial services (especially 
credit and savings) that may be provided to MSMEs by MFIs, banks and 
other financial institutions. To the extent practical, the study will 
assess demand particularly among MSMEs involved in production in Benin 
and in areas where Land Project is likely to be active.
    (2) Conduct of economic feasibility and cost assessment. An 
economic feasibility and cost assessment will determine the 
effectiveness of certain MFI investments in technologies that have the 
potential to reduce operating costs, increase the scale of operations 
and expand services to MSMEs in previously underserved regions and 
sectors. The technologies that may be explored and identified include, 
without limitation, smart cards, e-payment systems, management 
information systems, and biometric technology. To the extent practical, 
these studies will focus on MFIs operating in areas where the Land 
Project is likely to be active.
    (3) Conduct of demand study for business development services. This 
will study the demand for, and capacity within Benin to supply, 
business development services (``BDS'') to MSMEs involved in 
agricultural and non-agricultural sectors. In order to determine 
capacity to supply such services, the study will investigate 
specialized BDS providers, MFIs and agricultural and rural 
organizations. To the extent practical, these studies will focus on BDS 
in areas where the Land Project is likely to be active.
    (4) Conduct of follow-up research and studies or assessments, as 
needed during the Compact Term, in the areas covered by the studies and 
assessments, set forth in paragraphs (1)-(3) of this sub-activity or 
other similar types of studies.
    (ii) Financial Innovation and Expansion Challenge Facility. MCC 
Funding shall support a demand-driven and competitive mechanism that 
will co-fund with participants technical assistance and capacity 
building for both financial institutions and MSMEs. This mechanism 
requires potential beneficiaries to compete for support based on 
transparent criteria and to contribute a significant portion of the 
project costs. These elements help ensure that resources are directed 
to the most motivated institutions and to the most promising projects. 
MCC Funding shall finance up to 66% of the cost of selected projects 
with the share funded by MCC Funding decreasing over time (this is a 
cap, and in some cases the program criteria may set a lower percentage 
of support by MCC Funding). Operating costs shall not be eligible for 
support and the remainder of a project's costs must be provided by 
private enterprises (which may include NGOs). The Challenge Facility 
shall emphasize and encourage support for local service providers.
    A qualified independent management entity or entities shall manage 
and implement the Challenge Facility (the ``Facility Manager''), 
acceptable to MCC and MCA-Benin, selected after a competitive tender. 
Funding for the Challenge Facility shall be conditioned upon: (a) 
Feasibility and demand studies having been satisfactorily concluded; 
(b) terms of reference and procurement of Facility Manager being 
satisfactory to MCC and (c) operating guidelines and criteria for each 
Component of Challenge Facility having been developed in form and 
substance satisfactory to MCC. The Challenge Facility itself will not 
be making debt or equity investments or issuing guarantees to 
recipients of support; however, its support, it is expected, will 
enable institutions to better mobilize that capital from others.
    MCC Funding will support the following activities, to be undertaken 
in the manner described:
    (1) Identification of viable applicants. The Facility Manager shall 
filter expressions of interest and identify viable applicants for the 
three facility components described below in paragraph (7).
    (2) Provision of guidance to applicants and development of 
operating manual. The Facility Manager will provide guidance to 
applicants throughout the application procedure; including guiding 
viable applicants through the process of preparing a brief concept note 
for review, and ultimately providing assistance with development of the 
full application. Challenge Facility funds shall assist (where 
appropriate, based on need) in the development of applications that 
submit a concept note with significant potential. The Facility Manager 
shall develop a policy as part of the operating manual that will 
identify criteria for this assistance.
    (3) Review of applications and selection of funding awards. 
Following submission of applications, an independent panel (the 
``Panel'') shall review applications and make awards based on selection 
criteria described below and subject to MCC approval. MCA-Benin shall 
post on the MCA-Benin Website the names and descriptions of 
applications that receive awards, including amounts of awards.
    (4) Development of award criteria. The Facility Manager shall 
develop (A) award criteria consistent with paragraph (6) below and (B) 
an operating procedures manual, each subject to MCC and MCA-Benin 
approval. In developing the award criteria, efforts shall be made to 
support activities that extend financial services to places outside 
Cotonou where the Land Project is (or is likely to be) active. Awards, 
if practical, will be awarded in kind rather than in cash, where 
technical assistance or equipment or services are required. Unless 
otherwise agreed by the Parties, the Facility Manager shall be 
responsible for selecting the provider through a competitive tender, in 
accordance with the procurement guidelines that govern the Compact.
    (5) Support of donor coordination related to the Project Activity. 
The Facility Manager, to the extent practical, shall support capacity 
building activities that leverage other donor support or enable the 
beneficiary to attract financing from other sources (for example, 
enabling an MFI to attract long-term financing from a bank or enabling 
an MSME to obtain a loan). MCA-Benin and the Facility Manager shall 
seek to coordinate with other donors to ensure that the MCA assistance 
is as effective as possible.
    (6) Development of criteria for support by the Challenge Facility. 
The selection criteria for funding under the Components shall be 
determined by the

[[Page 12968]]

Facility Manager, subject to approval by MCC and MCA-Benin. The Parties 
anticipate that the criteria will include (without limitation) the 
following categories:
    (A) Market demand (there must be a demonstrated need for the 
project);
    (B) Impact (the project must be expected to contribute, directly or 
indirectly, to improved incomes and opportunities for a substantial 
number of poor people; the applicant's commitment to gender issues will 
be a positive factor);
    (C) Effectiveness (the project's impact must be expected to exceed 
its costs);
    (D) Implementation Capacity (applicants must have the capacity to 
implement the project successfully);
    (E) Demonstration effect (the project must be unlikely to be 
undertaken without the requested financial support. In particular, 
projects suggested by for-profit entities, while permitted, shall be 
scrutinized. In addition, pilot projects shall be preferred over 
projects that involve larger, untested ideas);
    (F) Commitment (applicants must show their commitment through the 
share of project funding they are willing to contribute);
    (G) Sustainability (the project must be expected to lead to the 
improved financial sustainability of funding recipients, and the impact 
of the project must be expected to extend beyond the termination of 
funding);
    (H) Timing (the financial support of the project must be completed 
prior to the termination of the proposed Program);
    (I) Limitations on Use of Funding (the proposed project must comply 
with the limitations on use and treatment of MCC Funding as set forth 
in Section 2.3 of this Compact); and
    (J) Other (the Facility Manager shall develop such other selection 
criteria for Components, including any criteria unique to particular 
Component).
    MCA-Benin shall post on the MCA-Benin Website the selection 
criteria developed by the Facility Manager, as approved by MCC and MCA-
Benin.
    (7) Implementation of Challenge Facility Projects. Unless otherwise 
agreed by the Parties, there shall be the following three sub-
facilities (each a ``Component'' and each described more fully below) 
and to be funded equally; provided, however, there may be changes in 
allocations between the Components, subject to MCC approval:
     The Innovation Component;
     The Institutional Strengthening Component; and
     The MSME Business Development Component.
    Support under each Component is expected to range from $25,000 to 
$250,000 per institution. Applications can come from individual 
institutions or groups of up to ten institutions with one institution 
taking the lead. Where the total project cost exceeds $500,000, the 
application shall be subject to heightened review and additional 
selection criteria. A call for applications shall be made up to twice 
per year, and the guidelines and criteria will be clearly communicated. 
Applications must be supported by a sound business plan by one of the 
eligible parties. In the event MCA-Benin receives any unsolicited 
written applications or proposals and such proposals have not been 
otherwise submitted to the Facility Manager through the call for 
applications, MCA-Benin shall forward such applications to the Facility 
Manager. The Facility Manager will evaluate such unsolicited 
applications in the same manner as those received through the call and 
identify viable applications in accordance with paragraph (1) above.
    (A) The Innovation Component shall support financial institutions 
(non-banks and banks) that expand their product offering to MSMEs in 
previously underserved regions and sectors or introduce innovative 
technologies that lead to economies of scale and reduced operating 
costs and risks. For example, funding may be used to support 
investments in technology, management information or communications 
services, or to provide technical assistance and staff training to 
assist with the design, implementation and marketing of new financial 
products or services.
    (B) The Institutional Strengthening Component shall seek to 
strengthen the capacity of selected microfinance institutions in Benin 
by improving internal controls, transparency, management, and ability 
to access additional stable financial resources from commercial banks 
and investors at reduced costs. As a result, MFIs shall be able to 
provide better quality and cheaper products and services to MSMEs. This 
Component shall fund technical assistance and grants for equipment or 
supplies to build capacity within MFIs that significantly serve MSMEs. 
Unless otherwise agreed by the Parties, 10% of grants under this 
Component shall go to each of the following:
    (i) Promotion of transparency and good governance at MFIs, such as 
external audits and ratings and internal controls.
    (ii) Improvement of management/analysis of long-term credit 
extended by MFIs with national or regional scope.
    (iii) Training or other mechanisms to improve the ability of MFI 
management to access long-term financing and other stable resources.
    (iv) Assistance with compliance with regulatory requirements.
    (v) Evaluations of, and technical assistance to improve, operating 
capacity and efficiency of MFIs.
    (C) The MSME Business Development Component shall support business 
development services for agricultural and non-agricultural MSMEs. The 
objective is to improve access to finance by improving the MSMEs' 
creditworthiness and ability to use financial services productively. 
This Component may include the following types of funding:
    (i) Funding to financial institutions, such as MFIs: Assistance 
designed to improve financial literacy and business management 
(including through improved marketing, internal controls and 
accounting), as well as to improve the ability of borrowers to complete 
credit applications and access credit.
    (ii) Funding to rural networks and organizations (such as co-ops 
and associations): Training and technology to agricultural and rural 
networks and organizations that present plans to build the 
creditworthiness and productivity of their MSME members.
    (iii) Funding to specialized BDS providers: Training and technology 
to assist local specialized business development service providers in 
improving their capacity to provide sustainable services.
    (8) Monitoring of progress of the Challenge Facility projects. 
Funding agreements with entities receiving benefits shall include 
annual performance benchmarks to indicate progress in meeting 
objectives, with the form of such agreements subject to the approval of 
MCA-Benin and MCC and will be specified as conditions to certain Re-
Disbursements for the selected Challenge Facility project. In the case 
of the Institutional Strengthening Component, this might include items 
such as capitalization and other financial reporting requirements. In 
the case of the Innovation Component, this might include items such as 
increased amount of services, number of new clients for all services 
and number of new credit clients. Failure to meet these benchmarks may 
lead to termination of project support and in some cases a requirement 
that the entity repay a portion of the assistance received. Repaid 
funds shall be used as grant funding to finance other activities under 
the Challenge Facility.
    (9) Conduct of information, education, and communications campaign. 
To

[[Page 12969]]

improve the quality and responsiveness of proposals, a portion of the 
MCC Funding for FINECF shall be used to support market information 
campaigns. The campaigns shall inform potential applicants about 
FINECF's objectives and guidelines for targeted technical assistance 
and grants. Where appropriate, certain trainings, technical assistance, 
and services will be provided through FINECF to incorporate information 
on strategies for avoiding environmental and social risks, using 
environmental and social review criteria and enhancing the 
sustainability of loans.
    (b) Project Activity: Financial Enabling Environment Activity (the 
``Financial Enabling Environment Activity'').
    The objective of the Financial Enabling Environment Activity is to 
identify and support legal and policy changes that are needed to 
facilitate the deepening and expansion of the financial sector in 
Benin.
    The Financial Enabling Environment Activity consists of the 
following sub-activities:
     Strengthening of Microfinance Supervision: Support for 
Cellule de Microfinance (``Cellule''), microfinance supervisory 
authority in the Ministry of Finance, and for audits of microfinance 
institutions.
     Multi-stakeholder forums: Conduct of electronic and/or 
physical forums to discuss potential improvements to laws and policies 
relating to an expanded financial sector and use of land titles as 
collateral.
     Improvement of regulatory environment: Support for 
financial sector regulatory changes by funding the analysis of and 
advocacy for such changes.
     Credit Bureau capacity building: Building the capacity of 
the MFI credit information bureau so that it can track the payment 
history of borrowers more accurately.
     Land titles as collateral: Provision of support to assist 
ability of financial institutions to use land titles as collateral in 
loans or refinancings.
    MCC Funding will support the following activities:
    (i) Strengthening of Microfinance Supervision.
    (1) Build capacity of the Ministry of Finance and Economy's Cellule 
de Microfinance, which currently serves as the supervisory authority 
for microfinance in Benin, by providing support in areas such as 
technical assistance, training, and acquisition of software and 
equipment. The goal of this support is to improve the supervision, 
transparency and governance of MFIs in Benin. MCC Funding will not be 
used for salaries of Cellule staff. This sub-activity will improve the 
capacity of the Cellule to increase its monitoring and licensing 
activities and use resources more effectively;
    (2) Improvement of rules and procedures for microfinance. An 
outside advisor shall be engaged to work with the Cellule to improve 
rules and procedures in Benin regarding microfinance, and improve the 
efficiency and effectiveness of the Cellule. It is intended that the 
advisor shall come for approximately two weeks a quarter, at least for 
the first year, with limited follow-up visits thereafter; and
    (3) Conduct of audits of microfinance institutions, with the goal 
of further strengthening the supervision of MFIs in Benin. Institutions 
to be audited will be recommended by the Cellule, with the criteria for 
selection submitted to MCC for approval. Funding for audits will be 
conditioned on the development by the Ministry of Finance and Economy 
of a plan, approved by MCC, for the sustainability of the conduct of 
audits beyond the Compact Term.
    (ii) Multi-stakeholder forums.
    (1) Design workshops and electronic forums to promote the 
discussion and exchange of ideas on policies and strategies for 
expanding access to financial services. Where relevant, implementers of 
other Projects in this Program (especially Land Project and Justice 
Project) will also have representatives involved in the design and 
implementation of these forums; and
    (2) Conduct of workshops and electronic forums designed under 
paragraph (1) above. Topics for these forums shall be approved by MCC 
and MCA-Benin and are expected to include, for example (1) actions and 
initiatives needed to ensure successful use of land titles as 
collateral for loans (with the participation of the implementers of the 
Land Project, including the MCA-Benin Land Project division); and (2) 
legal and regulatory hurdles, at the national and regional level, to 
development and implementation of expanded financial services and new 
products. The Government, including the Ministry of Finance, shall 
participate in these forums and respond to reasonable issues raised 
therein. The presentations to and results or feedback generated from 
these forums shall be posted on the MCA-Benin Web site.
    (iii) Improvement of regulatory environment. Following completion 
of initial multi-stakeholder forums convened pursuant to paragraph (ii) 
above, MCC Funding shall support analysis of, and advocacy for, changes 
in West African regional and Benin national regulations of the 
financial sector that are intended to expand access to financial 
services prudently. On an annual basis, areas of focus for these 
regulatory changes shall be agreed upon between MCC and MCA-Benin, and 
are expected to include the priority reforms identified in the multi-
stakeholder forums described above. Other stakeholders may, at this 
stage, present to MCA-Benin unsolicited proposals for interventions or 
activities that were not identified in the multi-stakeholder forums. In 
implementing these activities, MCA-Benin shall coordinate with other 
development organizations and government agencies involved in the 
financial sector in Benin and in West Africa.
    MCC Funding will support the following:
    (1) Technical assistance in identifying areas of regulatory reform; 
and
    (2) Drafting of regulations and/or policy papers, and other 
acceptable advocacy and consensus building mechanisms in areas of 
regulatory focus approved by MCC and MCA-Benin of the areas of focus.
    (iv) Credit bureau capacity building. To build the capacity of the 
Consortium Alafia (a microfinance trade association) credit information 
bureau, MCC Funding will support the following:
    (1) Conduct of studies to assess demand, feasibility and cost-
effectiveness of the recommended improvements; and
    (2) Improvements to Consortium Alafia (a microfinance trade 
association) credit information bureau, following completion of the 
studies conducted pursuant to paragraph (1) above and subject to 
agreement between MCC and MCA-Benin that: there is sufficient demand, 
that the feasibility has been demonstrated, and that the proposed costs 
are acceptable. This activity will build capacity of the credit 
information bureau to track information and more precisely identify 
customers in a credit information database, including not just negative 
(i.e., missed payment) information, but also positive (i.e., satisfied 
payment) information of clients. The activity may also link the credit 
bureau database with databases that include bank customer data.
    (v) Land titles as collateral for loans. This sub-activity will 
provide technical assistance and other capacity building for financial 
institutions, particularly MFIs, to support their ability to make 
title-based-loans or refinance portfolios of loans secured by land 
titles. The financial institutions to receive this

[[Page 12970]]

assistance shall be selected based on criteria developed by MCA-Benin, 
subject to MCC approval. It is expected that these financial 
institutions shall be located or serve areas covered by the Land 
Project. MCA-Benin shall post on the MCA-Benin Web site the selection 
criteria.
    The activities MCC Funding will support under this sub-activity are 
expected to include, without limitation:
    (1) Technical assistance to MFIs to improve credit management and 
assessment for secured loans and to assist them in using portfolios of 
secured loans as collateral for MFI financing obtained from banks;
    (2) Development of standardized forms; and
    (3) Installation of mechanisms of collaboration between financial 
institutions and land authorities to facilitate and accelerate the 
treatment of the files of application for credit.
3. Beneficiaries
    The principal beneficiaries of the Financial Services Project are 
expected to be people who own, are employed by, or do business with 
MSMEs in Benin. Particular efforts shall be made to reach MSMEs in 
traditionally underserved areas of the country, as well as in areas 
where the Land Project is likely to be active.
    The urban and rural poor will benefit directly, due to their (or 
the MSME with whom they do business or are employed) gaining access to 
a broader and more effective menu of financial products and services. 
They will also benefit indirectly, because financial sector deepening 
has been shown to lead to economic growth and disproportionately 
benefit the poor. The Financial Services Project, in particular, will 
benefit poor women. When managed effectively, microfinance has 
significant economic and social benefits for women, and by 
strengthening the microfinance sector in Benin, this Project will 
extend these benefits to a larger percent of the population. Showing 
commitment to gender issues will be weighted positively in the criteria 
for allocating funding in FINECF.
4. Donor Coordination; Private Sector; Role of Civil Society
    Donor Coordination: The Financial Services Project complements the 
activities of other donors. The World Bank, United Nations Development 
Program, African Development Bank, and several bilateral donors have 
been active in MFI and other financial sector activities. The demand-
driven nature of the FINECF and the requirement for applicants to 
demonstrate the need for funding should enhance rather than duplicate 
donor efforts. In addition, policy and regulatory initiatives funded 
under this Project will be designed to complement and support the 
efforts of other donors that are leading similar initiatives at the 
regional level.
    Private Sector: MSMEs are a particular focus of this project, and 
an assessment of their financial services needs will help drive the 
focus of the Challenge Facility and efforts to support policy and legal 
reforms.
    Civil Society: The multi-stakeholder forums are designed to solicit 
suggestions from a wide range of voices in society to improve the 
regulatory and policy environment. In addition, a number of the 
recipients of FINECF funding are likely to be local NGOs.
5. U.S. Agency for International Development
    USAID was consulted during the design of the Project, and their 
input will be solicited throughout the implementation and monitoring of 
the Financial Services Project. This Project will benefit from the 
lessons learned from USAID's main microfinance project which is nearing 
the end of its term. To the extent applicable, this Project will be 
coordinated with ongoing and future agricultural and other programs 
focused on increasing the breadth and quality of demand for financial 
services.
6. Sustainability
    The Financial Services Project is not intended to create a new, 
sustainable institution or financial mechanism. Rather, it is intended 
to enhance the success of existing commercial actors that service MSMEs 
and make them more sustainable. Beneficiary institutions of the 
Challenge Facility, for example, can be expected to continue to 
implement improvements in financial technologies and institutional 
capacities after Program support ends, since participating institutions 
are required to present sustainable, economically viable, plans for 
assistance and demonstrate their financial commitment to the project. 
Moreover, by demonstrating best practices, the Project will also 
encourage other financial institutions or business development service 
providers to follow the innovations of participating institutions.
    Support for portions of the Financial Enabling Environment Activity 
shall be conditioned on Benin having presented and developed a funding 
and sustainability plan for the microfinance supervisory authority in 
the Ministry of Finance that is satisfactory to MCC; such plan may 
include mechanism for funding via national funds and private funds and 
adjustments in staffing.
7. Policy; Legal Reform; and Procedural Changes
    The Parties have identified the following policy, legal and 
regulatory reforms and actions that the Government shall pursue in 
support, and to reach the full benefits, of the Financial Services 
Project, the satisfactory implementation of which will be conditions 
precedent to certain MCC Disbursements as provided in the Disbursement 
Agreement:
    (a) The implementers of the Financial Services Project, including 
the MCA-Benin Financial Services Project division, shall participate in 
the development of the Land Policy White Paper through representation 
on the Land Project Steering Committee and in the relevant working 
group(s). The Government shall commit to adopt the reforms consistent 
with this Land Policy White Paper that are necessary to ensure 
effective use of land titles as collateral for loans and to enable 
financial institutions to effectively enforce their collateral interest 
in such title;
    (b) The Government shall develop a funding and sustainability plan 
for the Cellule that shows appropriate use of MCC Funding and is 
satisfactory to MCC, including a commitment to finance significantly 
increased and adequate staffing for the Cellule as soon as practical 
through the budget, fees, or another sustainable mechanism. The amount 
funded by this sustainable funding mechanism must grow over time and 
eventually replace the MCC Funding. This commitment must be in form and 
substance acceptable to MCC. In addition, the Government shall commit 
to working with the outside advisor to the Cellule funded under the 
Compact and adopting reasonable reforms suggested by advisor;
    (c) The Government shall develop and seek MCC approval of a funding 
and sustainability plan for the implementation of regular audits of 
microfinance institutions, as well as of a plan for selection of these 
institutions;
    (d) Support for improvements to the credit bureau for microfinance 
shall be conditioned upon the results of a study (or studies) of 
feasibility and demand (with procurement approved by MCC). An 
implementation plan and detailed budget for improvements, based on the 
results of the feasibility and demand study (or studies), shall be 
submitted to MCC for approval;
    (e) The National Policy for Microfinance shall be adopted in form 
and substance satisfactory to MCC; and

[[Page 12971]]

    (f) The Government shall develop and advocate for, and use its best 
efforts to adopt and implement, those reasonable legal and regulatory 
reforms, if any, that are identified by the multi-stakeholder forums in 
the Financial Enabling Environment Activity as necessary to expand, 
significantly and sustainably, financial services offered to MSMEs. A 
yearly report, including a summary of the forums and a resulting work 
plan, shall be submitted to MCC for approval.
8. Proposals
    Mechanisms for consideration of solicited and unsolicited Challenge 
Facility applications shall be as described above in Section 2(a)(ii).
    Mechanisms for consideration of solicited and unsolicited proposals 
for regulatory reforms shall be as described above in Section 2(b)(ii).
    In addition, as appropriate, MCA-Benin will develop, subject to MCC 
approval, a process for consideration of solicited and unsolicited 
proposals. With respect to solicited proposals, the evaluation process 
will include, consistent as appropriate with the Procurement 
Guidelines, the issuance of a published request for proposals with 
specific identified evaluation criteria and peer reviewers.

Schedule 3 to Annex I--Access to Justice

    This Schedule 3 generally describes the key elements of an Access 
to Justice Project (the ``Justice Project'') that the Parties intend to 
implement. Additional details regarding the implementation of the 
Access to Justice Project will be included in the Implementation Plan 
and in relevant Supplemental Agreements.
1. Background
    A major obstacle to Benin's economic growth is the inadequate 
physical and institutional infrastructure of the judicial system. The 
judicial system and courthouses serving Benin at independence in 1960 
are largely the same system and courthouses that serves Benin now. 
Archaic laws, few and insufficiently trained judges, insufficient 
administrative capacity, and poor access to legal information combine 
with few and old courthouses to deny access to justice to many 
Beninese. If individuals or businesses dare to proceed into the maze of 
the courts, expense, delays (it takes an average of 570 days to enforce 
a contract), and the risk of corruption mean that justice is a highly 
uncertain result. Business decisions are skewed, and business expansion 
is stifled by the reality of slow, costly and uncertain justice.
    Throughout West Africa alternative dispute resolution (``ADR'') is 
becoming an increasingly viable means to resolve commercial disputes. 
As part of Benin's obligations under OHADA, the Centre d'Arbitrage, 
Mediation et Conciliation (``CAMeC'') has been formed within the 
Chamber of Commerce and Industry in Cotonou. It has not yet begun to 
conduct arbitrations or other ADR activities.
    The Chamber of Commerce (the ``Chamber'') has initiated and is 
managing a successful program in business registration that this 
Justice Project will build upon. Rather than a lengthy corporate 
registration proceeding through many offices in many agencies, the 
Chamber has developed a service that has already reduced the average 
time for the registration of companies from over three months to ten 
days by centrally managing the process of corporate registrations. The 
Business Registration Center is based in Cotonou with small satellite 
offices in Porto-Novo, Abomey, and Parakou.
    The Government has already begun an extensive process of legal 
reform: hiring additional new judges and court personnel, improving 
court administration, and building new courthouses. In addition, other 
donors have already made commitments to the improvement of Benin's 
judicial infrastructure. The Inspection General service provides 
supervision for the courts. It assures that courts are all performing 
with uniform quality, provides guidance to new judges, and initiates 
investigations when improper behavior by court personnel is reported. 
MCC's contribution will fit with Benin's ongoing legal reform plans and 
complement the work of other donors. A notable failure of the current 
judicial system is the lack of access to legal information and the 
absence of a central location for legal information--whether it is the 
decisions of courts, the laws of Benin, or legal texts, either in paper 
or electronic form. Greater knowledge of the laws and courts of Benin 
for large numbers of people will lead to greater certainty in 
commercial transactions, reduced demand for courts in minor disputes, 
and less fear of the judicial system for more serious disputes. 
Informed public awareness of legal and judicial issues is critical to 
public confidence in the judicial system. For this reason, the 
Government proposed the creation of a Legal Information Center.
    This Project also aims at assisting litigants in Benin currently 
suffering from case backlogs and litigants or potential litigants who 
live great distances from current courts. New courts will be built, to 
an established modern design, beginning late in year two of the Justice 
Project. Training of current judges and other court personnel will 
begin in year one of the Justice Project. A financing facility to 
support legal aid to assist poorer litigants will also be established. 
The construction of the courts will be linked to growth and training of 
new judges; as noted Section 6 below, the Government of Benin will hire 
new judges and other personnel on an appropriate schedule to staff the 
new courts and to allow for training prior to their assignment to the 
courts. Finally, the Justice Project will increase the likelihood of 
success of both the Land Project and Financial Services Project by 
increasing speed and likelihood of contract enforcement.
2. Summary of Project Activities
    The overall objective of the Justice Project is to improve the 
investment climate by increasing the confidence in the judicial system 
to enforce contracts. In response to the conditions noted above, this 
Project has three main components:
     Support the expansion of the Center of Arbitration, 
Mediation and Conciliation at the Chamber of Commerce;
     Improvement of the Registration Center (Guichet Unique); 
and
     Improved services of courts including capacity building 
and training for judges, court personnel, legal aid, and Inspection 
General service; creation of a legal information center; development of 
a public awareness campaign; and the construction of new courthouses.
    The following summarizes the contemplated Justice Project 
Activities. The M&E Plan (described in Annex III) will set forth 
anticipated results and, where appropriate, regular benchmarks that may 
be used to monitor implementation progress. Performance against the 
benchmarks and the overall impact of the Justice Project will be 
assessed and reported at the intervals to be specified in the M&E Plan 
or as otherwise agreed by the Parties from time to time. The Parties 
expect that additional benchmarks will be identified during the 
implementation of the Justice Project. Estimated amounts of MCC Funding 
for each Project Activity for the Justice Project are identified in 
Annex II of this Compact. Conditions precedent to each Project Activity 
and sequencing of the Project Activities shall be set forth in the 
Disbursement Agreement, other relevant

[[Page 12972]]

Supplemental Agreements, or component of the Implementation Plan.
    (a) Project Activity: Expansion of the Arbitration Center 
(``Arbitration Center Activity'').
    Increased access to ADR will reduce the burden on courts, reduce 
the cost of dispute resolution, and allow for faster resolution of 
commercial disputes. Companies and individuals engaging in commercial 
activities are the expected beneficiaries for this Project Activity. 
Increased economic activity and a growing number of entrants to 
commercial activity are expected results, supporting the Program 
Objective. This Project Activity will facilitate a plan to fully launch 
operations of CAMeC involves capacity building, public outreach, and 
budgetary support (e.g., staff costs).
    MCC Funding will support the following activities:
    (i) Training for arbitrators and CAMeC staff in arbitration 
procedures and ADR and arbitration management.
    (ii) Development of institutional management and operational 
procedures.
    (iii) Promotion of public outreach, including production of 
training and publicity materials and maintaining of Web site with 
relevant documents and information.
    (iv) Support for staff salaries at the CAMeC; provided, however, 
MCC Funding will gradually phase out over the Compact Term as an 
incentive for CAMeC to promote a commercially viable pricing structure 
for provision of and access to services of the Arbitration Center and 
to ensure sustainability of the activity after the Compact Term.
    (v) Acquisition of new equipment and some additional rented space 
for CAMeC as increased caseload warrants.
    (b) Project Activity: Business Registration Center (Guichet Unique) 
(``Business Registration Activity'').
    The Business Registration Project Activity is intended to greatly 
reduce the steps required to register a company. This Project Activity 
will track the reduction of registration time year by year, from the 
current average of twenty days. MCC support will strengthen current 
operations in Cotonou, Porto-Novo, Abomey and Parakou and support 
opening new satellite offices in Natitingou and Lokossa. Investment in 
existing and new offices will further speed, simplify and reduce the 
cost of corporate registration, and make this service available to more 
enterprises. It is expected that these improvements will encourage the 
formation of companies, boost employment in the formal sector and 
increase incomes.
    MCC Funding will support the following activities:
    (i) Evaluation of the performance of existing offices to identify 
necessary improvements and assist with design of new offices and 
services of the Business Registration Center.
    (ii) Introduction of new services such as a system for registration 
under the Investment Code.
    (iii) Training of new staff in regulations, rules and procedures 
related to formation of companies.
    (iv) Development and maintenance of an electronic database of 
companies in Benin.
    (v) Provision of computers and other office equipment for new 
offices of the Business Registration Center.
    (vi) Conduct of public outreach to business community including 
seminars and publicity or informational materials.
    (c) Project Activity: Improved Services of Courts (``Courts 
Activity'').
    The Courts Activity will allow Benin to move forward its ten year 
plan for improvement of the judiciary by providing basic training, 
court management, guidance, and physical and institutional 
infrastructure.
    MCC Funding will support the following activities:
    (i) Training of judges and court personnel.
    (1) Prior to commencing of activities described in paragraphs (2) 
through (5) below, design of a comprehensive capacity building strategy 
for judges and court personnel;
    (2) Training of both new and current judges in substantive and 
procedural matters, particularly in commercial issues as the laws of 
Benin are modernized and harmonized, under the OHADA process, with the 
rest of francophone West Africa;
    (3) Training of court personnel, including clerks and court 
officials, in modern case management procedures, use of technology, and 
other substantive and procedural matters as the courts modernize;
    (4) Continuing training of current judges and court staff as well 
as training of new hires, particularly on commercial issues. This 
activity will build on training programs already underway supported by 
various European aid agencies; and
    (5) Development of comprehensive training materials and judicial 
bench-books and other documents to support improved functioning of the 
courts and further development of local training capacity, to support 
efforts to institutionalize the capacity building process.
    (ii) Inspection General Service. To improve the efficiency of the 
Inspection General Service and its ability to serve the increased 
number of courts contemplated by Benin's legal reform plan, the work of 
other donors and this Project:
    (1) Training of new and existing personnel of the Inspection 
General Service to improve their ability to supervise the courts, 
advise court staff, and identify unethical behavior; and
    (2) Development of training materials to build Inspection General 
Service capacity.
    (iii) Legal Information Center. The proposed Legal Information 
Center to be located in Cotonou will serve not just as law library, but 
as a center for the disseminating of court decisions, laws, and other 
legal information. The Legal Information Center will be open to the 
public, both physically and electronically. The Legal Information 
Center will: Serve as a central location for case records; convert case 
records and other legal documents to electronic media; provide public 
access to laws and other legal documents; serve as a resource and 
training center for judges, court personnel, and government officials.
    MCC Funding will support the following activities:
    (1) Following the completion of the Category B environmental and 
social assessment framework specified in Section 2(c)(v)(3) and an 
individual EMP or environmental assessment (including an EMP) as 
determined according to the framework and subject to adoption of the 
Procedural Code and other Codes specified in Section 2(c)(v)(1), 
construction and equipment of a new Legal Information Center. Hazardous 
and toxic materials will not be permitted to be used or result as by-
products from construction and operation of the buildings;
    (2) Development of an electronic database of legal information and 
documents; and
    (3) Conduct of a public awareness campaign to demystify law and 
legal proceedings to the broader public. This will involve ``open 
days'' at the courts and the Legal Information Center, publication of 
legal information for non-lawyers, information dissemination via the 
media, and other outreach efforts such as coordination with the 
outreach activities of the CAMeC and Business Registration Center to 
introduce consumers and the broader public to the workings of each 
institution. Media outreach will also be an important aspect to the 
public awareness campaign, along with publication of informational and 
legal materials in French and major local languages, and the 
development of a web-based

[[Page 12973]]

information system based at the Legal Information Center.
    (iv) Legal Aid.
    (1) Support of poorer litigants gaining access to legal services by 
law professionals (lawyers and others) and to information materials 
such as on processes and rights by establishing a fund for this 
purpose. Initial funding will be USD$1,000,000. An additional matching 
amount of up to USD$1,500,000 will be provided from MCC Funding on a 
dollar for dollar basis to match funds provided by non-MCC sources, 
such as other bi-lateral or multilateral donors, foundations or 
corporations; and
    (2) Funding shall be provided to, and services provided by, 
existing non-governmental organizations (``NGOs'') active in Benin, or 
by a not-for-profit entity established in the future to provide these 
services. MCA-Benin shall conduct a competitive selection process to 
determine the best value providers of legal aid services eligible for 
funding. The selection process shall include an evaluation by, among 
others, the Justice Project Manager of proposals by candidate NGO for 
use of funds. Final selection of NGOs and awards shall be subject to 
MCC approval. Funding shall support selected NGOs implement the 
proposed legal aid services.
    (v) New Courthouses.
    This sub-activity, the capstone to the Justice Project, will 
support the creation of new courthouses `` one appellate court in 
Abomey, a region that is currently lacking in appellate court capacity, 
and eight courts of first instance (Tribunaux de Premier Instance) 
(``TPI'') distributed throughout the country. Another key requirement 
for this activity will be that a system for case management is 
developed as described in Section 2(c)(vi) and that support of legal 
aid services is undertaken as described in Section 2(c)(iv), likewise 
in keeping with modern best practices, and implemented prior to 
construction of the courthouses.
    MCC Funding will support the following:
    (1) Evaluation of Codes to be adopted. As condition to MCC 
Disbursements and prior to commencement of construction, a new Code of 
Civil Commercial, Administrative and Social Procedure of Benin 
(``Procedural Code'') and such other codes as may be identified by the 
time specified in the Disbursement Agreement and agreed by the Parties, 
must be passed by the legislature and adopted by the Government. The 
Procedural Code, as passed by the legislature must be in keeping with 
regional best practices, as determined by independent experts;
    (2) Select sites for courthouses. MCA-Benin shall select sites 
based on its identification of viable sites. MCA-Benin shall consider 
input from civil society and other stakeholders, including any 
unsolicited proposals for sites from communities or others. The 
criteria for selection of courthouse locations shall be as follows: (i) 
Population density in surrounding area; (ii) commercial activity in the 
surrounding area; (iii) proximity of proposed court site to underserved 
populations and other courts; (iv) links to other Projects, in 
particular the Land Project and Financial Services Project and (v) 
restrictions on selection of sites that are (A) contaminated with toxic 
or hazardous waste, (B) require major service infrastructure 
improvements (such as new roads, water supply or treatment, 
transmission lines or sewage treatment), or (C) in sensitive locations 
as defined in Appendix C of the Environmental Guidelines;
    (3) Preparation of a Category B environmental and social 
assessment, pursuant to the Environmental Guidelines, for the 
courthouses and the Legal Information Center will be required to 
provide pertinent guidance in the form of a framework document. This 
will allow more rapid and efficient environmental and social assessment 
of the courthouses and the Legal Information Center. This document will 
be used to screen sites, according to MCC Environmental Guidelines, 
focus the content of Environmental Management Plans (``EMPs'') or any 
Resettlement Action Plans (``RAPs''), and provide standard contract/bid 
clauses for impact mitigation during construction and operation. The 
framework document will provide criteria for determining when 
individual environmental and social assessments or solely EMPs of the 
buildings are needed and will incorporate procedures to address 
economic or physical displacement consistent with the World Bank policy 
on Involuntary Resettlement in effect as of the date hereof;
    (4) Subject to completion and satisfactory results of the 
environmental and social assessment framework conducted under paragraph 
(1) above and an individual EMP or environmental and social assessment 
(including an EMP) for each construction, as determined according to 
the framework, construction of courthouses. Construction of four TPI 
and one appellate court can commence as early as the end of year two of 
compact, assuming code modernization, case management, and training 
goals and other conditions precedent have been achieved. Process of 
construction of final four courthouses may commence one year after 
construction starts for first set of TPI, assuming continued 
satisfaction of conditions precedent and other criteria such as case 
management and training. Hazardous and toxic materials will not be 
permitted to be used or result as by-products from construction and 
operation of the buildings; and
    (5) Following the construction undertaken in accordance with 
paragraph (2) above, equip newly constructed courthouses. This includes 
computers, furniture, and other necessary items and systems.
    (vi) Case Management. To the facilitate increasing the speed and 
efficiency of the processing cases through judicial system, MCC Funding 
will support the following:
    (1) Conduct of a survey of current case management system and 
develop recommendations for improvement in case management and will 
include recommendations regarding administrative risks including time 
limits to process cases, procedures for assignment of judges to cases, 
and technology to manage case flow though court system; and
    (2) Development by the courts of improved regulations and more 
effective administrative processes to manage cases and implementation 
of those regulations and processes. Implementation will include 
incorporation of recommendations developed in paragraph (1) above which 
MCA-Benin and MCC deem advisable.
3. Beneficiaries
    The intended beneficiaries of the Justice Project will be ordinary 
citizens as well as MSMEs and other commercial actors. Currently only 
8% of commercial cases received in a given year are treated by the 
system. This case backlog diminishes confidence in the system and 
increases the potential for corruption. Benin was recently rated by the 
World Bank's ``Doing Business in 2006'' as among the most difficult 
countries in the world to do business. By improving the capacity of the 
court system to resolve claims, the Project will benefit all users 
hindered by delays and backlogs. It will also support the benefits of 
the Land Project and Financial Services Project by increasing the 
likelihood of timely and appropriate enforcement of contracts and 
resolution of other disputes. The Legal Information Center is expected 
to reach a large class of beneficiaries including judges, government 
officials, business

[[Page 12974]]

representatives, and the general public. Poorer litigants will benefit 
from the legal aid services.
4. Donor Coordination; Role of Private Sector and Civil Society
    (a) Donors. The Justice Project will benefit significantly from 
lessons learned by the European Union (``EU'') regarding the 
construction and equipping of new courthouses. A current EU project is 
underway to refurbish several existing courthouses and build four new 
TPIs and appellate court. Assuming the Beninese and others are 
satisfied with the design of the courts being built by the EU, the 
Justice Project would follow the same design. Several donors have been 
engaged with projects related to Access to Justice. Bi-lateral 
assistance from France and Belgium has supported re-drafting of codes 
for which MCC will require enactment as conditions precedent to court 
construction. MCC will coordinate with in particular AFD in connection 
with the adoption and development of the Procedural Code as the AFD has 
supported the code redrafting efforts. Their involvement provides some 
comfort that the codes are modern and harmonized, where appropriate, 
with codes of neighboring countries. Neither the World Bank nor the 
African Development Bank have justice sector projects in Benin but both 
are interested in promoting passage of modernized codes as it will 
increase the likelihood and degree of success of other World Bank 
programs. It is anticipated that some of the NGOs supported by the 
legal aid services activity described in Section 2(c)(iv) may funded as 
well by other donors and it is also possible that some of the matching 
funds contemplated with respect to that activity could be provided by 
other bilateral or multilateral donors (as well as private sector or 
other sources).
    (b) Private Sector. It is anticipated that members of the private 
bar and business sector will actively participate in the public 
outreach and other activities of the Business Registration Center, 
Legal Information Center, and the CAMeC.
    (c) Civil Society. Civil society and other stakeholders, including 
communities or municipalities, will have the opportunity to participate 
in courthouse selection process or submit proposals for sites as 
described in Section 2(c)(v)(2).
5. U.S. Agency for International Development
    USAID supports a Women's Legal Rights Initiative in Benin that has 
offered valuable assistance in the development of this Project.
6. Sustainability
    To sustain the Justice Project there will need to be sufficient 
demand for Alternative Dispute Resolution in Benin and satisfaction by 
the Government of key conditions precedent related to of court 
construction, and court design and maintenance. To mitigate the risk of 
insufficient ADR-related demand, market pricing mechanisms will be 
built into the CAMeC support. This will promote development of a fee-
supported ADR system. Initiation of court construction process will be 
set at the end of year two of the Compact Term, which will give the 
Government time to make necessary required Project-related legal 
reforms. Construction and maintenance will also benefit, respectively, 
from EU experience in court construction, and be sustained by the 
increased annual budget of the Ministry of Justice. The Government will 
ensure the sustainability of the Legal Information Center by ensuring 
support for adequate staffing of Legal Information Center during and 
following the Compact Term.
    The key to ensuring environmental and social sustainability of the 
Project is ongoing public consultation. By the time specified in the 
Disbursement Agreement, MCA-Benin shall engage the Environment and 
Social Assessment Director, subject to MCC approval, as described in 
Section 3(d)(iii)(3) of Annex I.
    Environmental and social analyses of the courthouses and the Legal 
Information Center will be conducted as part of the technical survey 
and design to determine the environmental impacts and existence of 
economic and physical displacement. In addition to the analyses, EMPs 
satisfactory to MCC will be developed, implemented and monitored during 
project implementation.
    Disbursement of MCC Funding will be contingent upon issuance of 
environmental licenses, as needed, or any other required permits and 
subject to the environmental and social assessment review described as 
requirements under Sections 2(c)(v)(3) and (4).
7. Policy; Legal Reform; and Procedural Changes
    The Parties have identified the following policy, legal and 
regulatory reforms and actions that the Government shall pursue in 
support, and to reach the full benefits, of the Justice Project, the 
satisfactory implementation of which will be conditions precedent to 
certain MCC Disbursements as provided in the Disbursement Agreement:
    (a) Passage of the new Procedural Code and other codes as 
identified in accordance with Section 2(c)(v)(1). The new Procedural 
Code should include adequate provisions pertaining to the speed with 
which court cases are heard, and the means by which cases proceed 
through the courts;
    (b) Development and implementation of enhanced case management 
techniques and implementation of the case management system developed 
based on recommendations formed pursuant to Section 2(c)(vi), including 
modernized methods of case assignment and case tracking, even though 
not required as part of the Procedural Code;
    (c) Development of CAMeC activities by measures, acceptable to MCC, 
to facilitate the removal of old cases from the TPI to CACeM;
    (d) Undertake, as necessary, steps to support the enforceability of 
arbitral awards;
    (e) As necessary and if evaluation of Business Registration Center 
indicates warranted, undertake improvements in regulations, policies or 
procedures related to business registration and company formation;
    (f) Hire and train new judges and court personnel sufficient to 
staff new courts; and
    (g) Commitment by the Government of budgetary resources to support 
salaries for judges and other court personnel and for the maintenance 
of those courts constructed under this Project.
8. Proposals
    Objective selection criteria for the selection of NGOs to be 
supported by the legal aid sub-activity of the Courts Activity shall be 
as specified in Section 2(c)(iv)(2). Objective selection criteria and 
procedures for determining the locations (towns) of the courthouses to 
be constructed under the Courts Activity shall be as specified in 
Section 2(c)(v)(2).

Schedule 4 to Annex I--Access to Markets Project

    This Schedule 4 generally describes and summarizes the key elements 
of an Access to Markets Project that the Parties intend to implement in 
furtherance of the Markets Objective (the ``Markets Project''). 
Additional details regarding the implementation of the Access to 
Markets Project will be included in the Implementation Plan and in 
relevant Supplemental Agreements.

[[Page 12975]]

1. Background
    Benin's economy is dependent on cotton production, subsistence 
agriculture and an increasingly uncompetitive Port of Cotonou (the 
``Port''). Key impediments to sustainable economic growth are its poor 
investment climate and lack of dynamic private sector activity. Benin 
has long been a strategic trading center and a keystone in the trade 
corridor that links the landlocked countries of the West African 
Economic and Monetary Union (``WAEMU'') with Nigeria, Europe, and the 
Americas. Trade and transport have traditionally made up a large part 
of the nation's economy, and limitations in Benin's transportation 
network have increased costs for raw materials to the country and the 
region. The bottleneck at the Port has impeded access to external 
markets by agricultural and fish/shrimp producers and processors. 
Improved Port facilities will lower production and marketing costs and 
encourage greater agricultural production as well as increased trade 
between Benin and other countries.
    This Project is designed to promote access to markets by 
improvements to the Port of Cotonou, including a fish inspection 
facility. This Project aims to improve Port performance and security, 
expand capacity, and reduce costs. A more efficient Port will 
contribute to importer and exporter value-added through reducing 
transportation costs and improving product quality. Moreover, because 
Benin's road transport industry is relatively competitive, it is likely 
that the anticipated reduction in shipping costs will be passed on to 
wholesalers and traders, and ultimately be reflected in consumer 
prices. Finally, both the Project Activities and the policy or other 
actions the Government will undertake as set forth in Section 6 of this 
Schedule 4 are designed to reduce the potential for corruption at the 
Port.
    Expanding the Port to meet Benin's long-term developmental needs 
will require a significant number of large investments. Due to the 
complexity and scope of the Port expansion plan, not only will it take 
several years to design, build and construct the facilities to meet a 
growing future demand but it will also be necessary to accommodate 
current demands by upgrading existing Port facilities.
2. Summary of Projects and Activities in Project and Expected Results
    The objective of the Markets Project is to improve the Port of 
Cotonou through increasing the efficiency at the Port and volume of 
goods flowing through the Port and reducing vehicle operating costs.
    The Markets Project includes the following Project Activities:
     Studies and Port Institutional Activity: This Project 
Activity will include key feasibility studies, environmental 
assessments and revision of master plan for the Port, as well as the 
computerization and streamlining of customs clearance procedures for 
merchandise, technical assistance and training in information systems 
and Port management, and improvements to legal, fiscal and 
institutional frameworks that govern the sub-activities.
     Port Security and Landside Improvements: This Project 
Activity will address the safety and security aspects of the Port for 
compliance with international safety requirements (conforming to 
International Ship and Port Security Code (``ISPS'') standards). The 
expansion and reconfiguration plan for the Port under this Project 
Activity includes: major improvements to the physical infrastructure 
including the access gates, access road, vehicle access facilities, 
storage areas, and the construction of a compulsory inspection facility 
for fish and seafood products with associated training and technical 
assistance.
     Waterside Improvements: This Project Activity will support 
the construction of a new South wharf to accommodate additional 
containerized merchant marine vessels and a dry bulk conveyor system; 
environmental management improvements; and, an environmentally 
appropriate solution to address sedimentation of the Port's entrance.
    The M&E Plan (described in Annex III) will set forth anticipated 
results and, where appropriate, regular benchmarks that may be used to 
monitor implementation progress. Performance against these benchmarks 
and the overall impact of the Markets Project will be assessed and 
reported at the intervals to be specified in the M&E Plan or as 
otherwise agreed by the Parties from time to time. The Parties expect 
that additional indicators will be identified during the implementation 
of the Markets Project. The expected results from, and the key 
benchmarks to measure progress on the Project, Project Activities and 
sub-activities undertaken or funded under the Markets Project are set 
forth in Annex III.
    Estimated amount of MCC Funding for the Project Activity for this 
Markets Project is identified in Annex II of this Compact. Conditions 
precedent to the Project Activities and sequencing of the Project 
Activities shall be set forth in the Disbursement Agreement or other 
relevant Supplemental Agreements or component of the Implementation 
Plan.
    The following summarizes the Markets Project:
    The Project will address institutional, landside and waterside 
improvements necessary to meet the unmet demand and address resulting 
inefficiencies. Because of the complexity and timing of the sub-
activities, the environmental and social assessment requirements will 
be implemented in a phased manner.
    To support the expansion and improvement of the Port, MCC Funding 
will be used for the following activities:
    (a) Project Activity: Feasibility Studies and Assessments 
(``Studies Activity'').
    (i) Conduct of initial technical studies (engineering pre-
feasibility, environmental and economic) (``Initial Technical 
Studies'') to evaluate in further detail the costs, engineering and 
environmental aspects of the key waterside components of the Markets 
Project. These Initial Technical Studies will:
    (1) Objectively evaluate alternative schemes that address 
sedimentation of the harbor access, including but not limited, to the 
use of other studies and proposals related to erosion control and 
environmental impacts;
    (2) Evaluate the dredging for the new South wharf;
    (3) Perform any additional sampling and testing of sediments 
related to the wharf or other areas to be dredged as part of the harbor 
access;
    (4) Determine needs as well as options for disposal of dredged 
material;
    (5) Evaluate the engineering to the pre-feasibility level; and
    (6) Provide expanded information on costs and benefits.
    Based on the recommendations of the Initial Technical Studies, the 
Government shall select, subject to MCC approval, its preferred option 
that will both reduce sedimentation of the Port access channel and not 
adversely impact coastal erosion and also select, subject to MCC 
approval, disposal of dredged material and other key waterside 
component options.
    (ii) Following the satisfactory completion of the Initial Technical 
Studies, conduct of detailed engineering and economic feasibility 
studies of the entire Markets Project, including studies to ensure 
appropriate scheduling and budgeting have been established. These 
feasibility studies shall include, but not be limited to, studies 
regarding:
    (1) Port container scanning system; and
    (2) A dry port facility at Tori.
    (iii) Following the satisfactory completion of the Initial 
Technical

[[Page 12976]]

Studies, conduct of Environmental and Social Impact Assessments 
(``ESIAs'') for landside improvements described in Section 2(c)(ii), 
fish/seafood inspection and handling facility services described in 
Section 2(c)(iii), and waterside improvements described in Section 
2(d). The ESIAs will address landside and waterside in the following 
manner:
    (1) The ESIA for Port landside rehabilitation/ restructuring shall 
incorporate an Environmental Management Plan/System (based on an audit 
of existing operations as well as the assessment of the proposed 
activities), an overall Environmental Management Plan, language for bid 
solicitations and construction contracts to implement the EMP, and, if 
needed, a Resettlement Action Plan (consistent with World Bank Policy 
on Involuntary Resettlement), all of which shall be subject to MCC 
approval. Port Autonome de Cotonou (``PAC'') shall adopt the EMP/EMS, 
implement the HIV/AIDS awareness program and implement any RAP, prior 
to initiation of construction under the landside improvements activity 
described in Section 2(c)(ii).
    (2) The ESIA for waterside improvements will include an EMP as well 
as language for bid solicitations and construction contracts to 
implement the EMP, all of which shall be subject to MCC approval. Such 
language must cover capital and maintenance dredging and dredged 
material disposal as well as construction work. PAC shall adopt the EMP 
prior to initiation of any construction. The ESIA for the waterside may 
be combined with the ESIA for the landside, if timing of construction 
activity permits.
    (iv) Following the satisfactory completion of the Initial Technical 
Studies and feasibility studies work to be conducted under Section 
2(a)(ii), development of a revised master plan for the Port that 
consolidates the expected improvements, operational environment and 
land use for long term planning purposes which master plan shall be 
completed in conjunction with the feasibility studies work to be 
conducted under Section 2(a)(ii) and which master plan may be updated 
periodically thereafter.
    (b) Project Activity: Port Institutional and Systems Improvements 
(``Port Institutional Activity'').
    (i) Computerization and streamlining of customs clearance 
procedures for merchandise including information technology systems, 
warehouse computer management system, and transit cargo system;
    (ii) Improvements in the legal, fiscal and institutional frameworks 
that govern Port activities including restructuring concession 
agreements with stevedoring companies, conducting independent financial 
audits and project reviews, and implementing with additional 
consultants the existing and new Port rules and regulations based upon 
consultant recommendations for port best practices. PAC and the 
Government will cooperate with the MCA-Benin consultant(s) including 
providing unlimited access to the PAC Director General, Customs 
Department and other PAC related entities for development, 
recommendation and evaluation of potential improvements in PAC and 
Customs Department policies, procedures, rules and regulation; and
    (iii) Training for tug boat and ship pilots for night docking of 
petroleum cargo ships.
    (c) Project Activity: Port Security and Landside Improvements (the 
``Port Security and Landside Improvements Activity'').
    Subject to the satisfactory results of the Studies Activity 
assessments and studies described in Section 2(a), a plan for 
renegotiation of PAC concessions and reallocation of berths and land 
usage satisfactory to MCC, implementation of any RAP, adoption of the 
EMP and implementation of the HIV/AIDS awareness plan, MCC Funding will 
support the following capital improvements and other goods and services 
at the Port:
    (i) Port security. Acquisition and installation of, and training 
associated with, an integrated security system for compliance with ISPS 
standards, including oceanographic monitoring systems, video 
surveillance systems, and radio communications systems.
    (ii) Landside Improvements.
    (1) Front-end engineering and design for major civil and mechanical 
facilities and works, which shall be completed prior to any sub-
activities set forth in this Section 2(c)(ii);
    (2) Port road construction and rehabilitation including upgrading 
and expanding existing Port roads, illumination, and gate system. Other 
works include constructing an east-side gate, rezoning by berth usage, 
land and warehousing to achieve efficient operations;
    (3) Construction of a dry bulk conveyor system leading to storage/
truck loading bins provided by private sector operators;
    (4) North wharf structural improvements including reinforcements to 
wharf substructure (as needed) to accommodate rail mounted gantries and 
mobile cranes;
    (5) Acquisition and implementation of pollution control equipment 
necessary to respond to significant discharges of hazardous materials 
in the Port and other equipment and activities related to the EMP/EMS;
    (6) Installation of fire control and prevention equipment;
    (7) Construction of a compulsory inspection base for fish and 
seafood products and facilities for efficiently off-loading and 
handling product before transport to processing centers, market, or 
ships for export; and
    (8) Technical assistance and training of appropriate regulatory 
agency staff in seafood/fish inspection and safety administration.
    (iii) Fish/seafood inspection and handling facility (``BOC'') 
services.
    (1) Development and adoption of a management plan for the BOC 
including required training and technical assistance program targeted 
at inspectors, other employees, and user associations;
    (2) Adoption of improved design and procedures for BOC including 
mechanized off-loading based on required demand study; and
    (3) Development and implementation of a user fee system to defray 
some operation and maintenance costs of the BOC.
    (d) Project Activity: Waterside Improvements (the ``Waterside 
Improvements Activity''). Upon completion, satisfactory to MCC, of the 
Studies Activity described in Section 2(a) and the execution of PAC 
concessions and reallocation of berths and land usage, each with 
results satisfactory to MCC and subject to adoption of the EMP and 
implementation of the HIV/AIDS awareness plan, MCC Funding will support 
the following waterside improvements:
    (i) Front-end engineering and design for major civil and mechanical 
facilities, works and dredging and dredged material disposal, which 
shall be completed prior to any sub-activities set forth in this 
Section 2(d).
    (ii) New South wharf construction of approximately 595 meters of 
berth space for new terminal operations, and mitigating measures 
associated with dredging and dredged material disposal, in accordance 
with the results of the Initial Technical Studies.
    (iii) Sedimentation control scheme that permits reduction of the 
sedimentation at the Port entrance and does not adversely impact 
coastal erosion, in accordance with the results of the Initial 
Technical Studies.
    (iv) Acquisition of additional tug boat with necessary pilot 
training.

[[Page 12977]]

3. Beneficiaries
    The principal beneficiaries of the Markets Project are expected to 
be Beninese importers, exporters and consumers, including individuals 
and businesses, through improved quality of transportation services and 
fish processing facilities following the upgrades to and expansion of 
the Port. The intended beneficiaries will be identified more precisely, 
and where possible disaggregated by gender, age, location and income 
level during the initial phases of the implementation of the Markets 
Project.
    The principal intended beneficiaries of this Project are 
potentially quite broad. As the economy of Benin is driven by foreign 
trade and that foreign trade is dependent the Port, both consumers of 
imported products and exporters of Beninese products will benefit 
directly or indirectly from efficiency gains in Port operations that 
translate into lower transportation costs of goods or increased 
operating margins for Beninese operators and businesses.
4. Donor Coordination; Private Sector
    (a) Donor Coordination. The World Bank has been working with the 
Government to expand private management at the Port. The Markets 
Project Activities will be coordinated with the study of privatization 
options and competitiveness at the Port that the World Bank expects to 
complete by December 2006. The Danish and Dutch governments have been 
active in supporting analyses of improvements at the Port. The Danish 
and other studies were used to assess the sedimentation and erosion 
control problems. MCC will coordinate with DANIDA (the Danish aid 
agency), the Dutch embassy, the Japanese International Cooperation 
Agency, the World Bank, Islamic Development Bank, African Development 
Bank, Arab Bank for Economic Development in Africa, OPEC Funds, Saudi 
Funds, and the Government to (i) assess and address the erosion and 
port sedimentation problems and (ii) ensure all sub-activities support 
Port improvements to maximize the benefits available of donor 
activities.
    (b) Private Sector. In order to achieve the expected benefits from 
MCC Funding, several improvements at the Port are dependent on private 
sector complementary investments and expanded private sector management 
services associated with the operations of the Port. MCA-Benin will 
work with PAC to coordinate with existing private sector operators at 
the Port, and MCA-Benin and PAC will establish the appropriate private 
sector participation at each stage of the sub-activities including 
renegotiation of existing concession agreements to provide for the 
appropriate investments by the private operators in the Port.
5. U.S. Agency for International Development; U.S. Government Agencies
    MCC will seek to coordinate with USAID during the Compact Term, as 
appropriate, though there is not currently any USAID activity in this 
area. In addition MCC will seek to coordinate with the U.S. Department 
of Homeland Security and U.S. Coast Guard on the Markets Project.
6. Sustainability
    (a) Improvements to the cargo handling operations and the physical 
layout of the Port will improve the financial performance of the Port. 
The introduction of private sector participation in operations is also 
critical to the sustainability of the Markets Project. Part of the 
restructuring of the Port needs to include revenue from the 
concessions, which are now paid to a different Government agency as a 
conduit to the state owned stevedoring company, in order to support 
port services and to increase transparency and Port efficiency.
    (b) Investments by private sector tenants and other users of the 
Port will provide complementary improvements that will contribute to 
the long-term sustainability of the Port's ability to meet market 
demand.
    (c) The Port's financial condition has suffered from declining 
revenues and from increasing labor costs. In addition, its revenues 
have been declining recently due to restrictions on Nigerian import 
policies.
    (d) A rationalized user fee schedule for the BOC will be developed 
as part of a required demand study to help defray some of the 
inspection costs associated with its operation and maintenance.
    (e) Essential to the environmental sustainability of the Markets 
Project is the conduct of the Initial Technical Studies, as well as the 
landside ESIA, the waterside ESIA and the associated EMPs, each as 
described in Section 2(a).
    (f) The key to ensuring environmental and social sustainability of 
the Project is ongoing public consultation. By the time specified in 
the Disbursement Agreement, MCA-Benin shall engage the Environment and 
Social Assessment Director (``ESI Officer''), subject to MCC approval, 
as described in Section 3(d)(iii)(3) Annex I.
7. Policy; Legal Reform; and Procedural Changes
    The Parties have identified the following policy, legal and 
regulatory reforms and actions that the Government shall pursue in 
support, and to reach the full benefits, of the Access to Markets, the 
satisfactory implementation of which will be conditions precedent to 
certain MCC Disbursements as provided in the Disbursement Agreement:
    (a) Renegotiation of existing lease and concession agreements and 
port leases on terms acceptable to MCC that provide for capital 
investment based upon the market demand for Port services; in all 
cases, for any concession within the port right-of-way the PAC shall be 
the grantor and the beneficiary of the income resulting from the 
concession or lease. To the extent not covered in the renegotiation of 
the existing concession agreements, completion of new concession 
agreements for terminal operations of the new South wharf berths shall 
include private capital investments acceptable to MCC based upon the 
demand for Port services;
    (b) The Government and PAC shall agree to enforce maritime-related 
international and regional conventions and agreements to which they are 
signatory, including the MARPOL International Convention for the 
Prevention of Pollution from Ships and the UN Convention on the Law of 
the Sea, and shall also agree to internationally accepted practices, 
such as the London Dumping Convention and Protocol (to which Benin is 
not signatory) for the disposal of dredged material, including 
contaminated material, and the control of pollution in the harbor, its 
entrance and the landside Port operations;
    (c) By the time specified in the Disbursement Agreement, PAC shall 
create and fill the permanent staff position of PAC Environmental 
Manager, whose qualifications, selection and replacement shall be 
acceptable to MCC. The PAC Environmental Manager shall serve as the PAC 
representative concerning the environmental aspects of the Project 
Activities and other environmental management activities of PAC. The 
Government shall ensure that the PAC provides appropriate resources to 
the PAC Environmental Manager as identified by PAC and as recommended 
by MCA-Benin port advisor consultant as provided for in Section 
2(b)(ii) above and the ESI Officer.
    (d) The Government and PAC shall provide a permanent office for the 
MCA-Benin port advisor adjacent to the office

[[Page 12978]]

of the Director General of the PAC. The Government and PAC Board of 
Directors shall facilitate and endorse the assistance by the MCA-Benin 
port advisor to the Director General of the PAC in the implementation 
of private management activities and operational improvements 
associated with the Markets Project;
    (e) Execution of private management or concession agreements 
satisfactory to MCC for the dry bulk conveyor, and the BOC, and other 
new facilities to be constructed at the Port; Satisfactory progress on 
meeting ISPS certification, in particular implementing recommendations 
as specified by MCC in the Disbursement Agreement or otherwise;
    (g) Development and ongoing satisfactory implementation of a 
program to accomplish financial control and other recommendations as 
may be specified by the independent financial auditor contemplated by 
the Markets Project;
    (h) Commitment shall be made by the Government to fund, or 
commitments shall be made by another funding source satisfactory to 
MCC, for amounts in excess of budgeted amount in the financial plan 
including amounts that may be necessary for environmental mitigation 
and remediation. All Beninese environmental and other permits 
(including any necessary or advisable environmental certificates under 
Benin law) shall be issued, valid and in full effect;
    (i) Support the redesign of the BOC to ensure that specifications 
address likely traffic and activity requirements, including equipment 
for mechanical unloading of seafood cargo, and that a demand study is 
completed as specified by MCC;
    (j) Support the design, approval and implementation of a 
rationalized user fee system for the BOC;
    (k) Support the design, approval, and implementation of a capacity 
building training and technical assistance plan for cold chain, product 
quality assurance;
    (l) Satisfactory results from customs and warehouse systems 
implementation reflected in reduced in Port cargo processing time;
    (m) The Government agrees not to institute a container scanning 
system at the Port (1) until after a study of the effectiveness of such 
a scanning system has been completed pursuant to Section 2(a)(i) or (2) 
in the event that MCC determines that the Government proposed scanning 
system would be detrimental to the effectiveness of MCC investments at 
the Port;
    (n) The Government agrees not to institute or continue a tax, levy, 
duty, or other charge or any delivery procedure or requirement at the 
Port or elsewhere since commencement of MCC review on August 1, 2005 of 
the port proposal which may affect the competitiveness of the Port 
without the prior consent of MCC; and
    (o) Completion of the World Bank privatization and competitiveness 
study by the time specified in the Disbursement Agreement, with 
commitments by the PAC and other Government Affiliates to implement 
recommendations as requested by MCC and satisfactory implementation of 
such recommendations.

Annex II--Summary of Multi-Year Financial Plan

    This Annex II to this Compact (the ``Financial Plan Annex'') 
summarizes the Multi-Year Financial Plan for the Program. Each 
capitalized term in this Financial Plan Annex shall have the same 
meaning given such term elsewhere in this Compact.
1. General
    A multi-year financial plan summary (``Multi-Year Financial Plan 
Summary'') is attached hereto as Exhibit A. By such time as specified 
in the Disbursement Agreement, MCA-Benin will adopt, subject to MCC 
approval, a Multi-Year Financial Plan that includes, in addition to the 
multi-year summary of anticipated estimated MCC Funding and the 
Government's contribution of funds and resources, an estimated draw-
down rate for the first year of the Compact Term based on the 
achievement of performance milestones, as appropriate, and the 
satisfaction or waiver of conditions precedent. Each year, at least 30 
days prior to the anniversary of Entry into Force, the Parties shall 
mutually agree in writing to a Detailed Financial Plan for the upcoming 
year of the Program, which shall include a more detailed plan for such 
year, taking into account the status of the Program at such time and 
making any necessary adjustments to the Multi-Year Financial Plan.
2. Implementation and Oversight
    The Multi-Year Financial Plan and each Detailed Financial Plan 
shall be implemented by MCA-Benin, consistent with the approval and 
oversight rights of MCC and the Government as provided in this Compact, 
the Governing Documents and the Disbursement Agreement.\b\
---------------------------------------------------------------------------

    \b\ The role of civil society in the implementation of this 
Compact (including through participants on the Stakeholders' 
Committee and Steering Committee), the responsibilities of the 
Government and MCC in achieving the Compact Goal and Objectives, and 
the process for the identification of beneficiaries are addressed 
elsewhere in this Compact and therefore are not repeated here.
---------------------------------------------------------------------------

3. Estimated Contributions of the Parties
    The Multi-Year Financial Plan Summary identifies the estimated 
annual contribution of MCC Funding for Program administration, 
monitoring and evaluation, and each Project. The Government's 
contribution of resources to Program administration, monitoring and 
evaluation, and each Project shall consist of (a) ``in-kind'' 
contributions in the form of Government Responsibilities and any other 
obligations and responsibilities of the Government identified in this 
Compact, including contributions identified in the notes to the Multi-
Year Financial Plan Summary, (b) such other contributions or amounts as 
identified in notes to the Multi-Year Financial Plan Summary, and (c) 
such other contributions or amounts as may be identified in relevant 
Supplemental Agreements between the Parties or as may otherwise be 
agreed by the Parties; provided, in no event shall the Government's 
contribution of resources be less than the amount, level, type and 
quality of resources required to effectively carry out the Government 
Responsibilities or any other responsibilities or obligations of the 
Government under or in furtherance of this Compact.
4. Modifications
    The Parties recognize that the anticipated distribution of MCC 
Funding between and among the various Program activities and Project 
and Project Activities will likely require adjustment from time to time 
during the Compact Term. In order to preserve flexibility in the 
administration of the Program, in addition to Section 4(a)(iv) of Annex 
I, the Parties may, upon agreement of the Parties in writing and 
without amending this Compact, change the designations and allocations 
of funds between Program administration and a Project, between one 
Project and another Project, between different activities within a 
Project, or between a Project identified as of the Entry into Force and 
a new Project, without amending this Compact; provided, however, that 
such reallocation (a) is consistent with the Objectives, (b) does not 
cause the amount of MCC Funding to exceed the aggregate amount 
specified in Section 2.1(a) of this Compact, and (c) does not cause the 
Government's obligations or responsibilities or overall contribution

[[Page 12979]]

of resources to be less than specified in Section 2.2(a) of this 
Compact, this Annex II or elsewhere in this Compact.
5. Conditions Precedent; Sequencing
    MCC Funding will be disbursed in tranches. The obligation of MCC to 
approve MCC Disbursements and Material Re-Disbursements for the Program 
and each Project is subject to satisfactory progress in achieving the 
Objectives and on the fulfillment or waiver of any conditions precedent 
specified in the Disbursement Agreement for the relevant Program 
activity or Project or Project Activity. The sequencing of Project 
Activities or sub-activities and other aspects of how the Parties 
intend the Projects to be implemented will be set forth in the 
Implementation Plan, including Work Plans for the applicable Project, 
and MCC Disbursements and Re-Disbursements will be disbursed consistent 
with that sequencing.

                                  Exhibit A.--Multi-Year Financial Plan Summary
                                                 [In thousands]
----------------------------------------------------------------------------------------------------------------
              Project                  Year 1       Year 2       Year 3       Year 4       Year 5       Total
----------------------------------------------------------------------------------------------------------------
1. Access to Land:
    (a) Policy Activity...........          520          260          520            0            0        1,300
    (b) Registration Activity.....        3,310        6,550        4,605        4,375        4,320       23,160
    (c) Services and Information            510        3,350        3,205        2,775          620       10,460
     Activity \1\.................
    (d) IEC Activity..............          100          150          100          100           50          500
    (e) Support Strategy Activity.          120          120          120          120          120          600
        Sub-Total.................        4,560       10,430        8,550        7,370        5,110       36,020
----------------------------------------------------------------------------------------------------------------
2. Access to Financial Services:
----------------------------------------------------------------------------------------------------------------
    (a) Capacity Building Activity        1,770        3,570        3,870        3,570          270       13,050
    (b) Financial Enabling                1,380        1,850        1,540        1,140          690        6,600
     Environment Activity.........
        Sub-Total.................        3,150        5,420        5,410        4,710          960       19,650
----------------------------------------------------------------------------------------------------------------
3. Access to Justice Activity:
    (a) Arbitration Center (CAMeC)          400          160          140          180            0          880
    (b) Business Registration               470          830          330          200            0        1,830
     Activity.....................
    (c) Courts Activity \2\ \3\...        2,960        6,860        8,590        6,590        6,560       31,560
        Sub-Total.................        3,830        7,850        9,060        6,970        6,560       34,270
----------------------------------------------------------------------------------------------------------------
4. Access to Markets:
    (a) Studies Activity..........        5,993        2,101            0            0            0        8,094
    (b) Port Institutional                3,251        4,876        1,196          980        1,016       11,319
     Activity.....................
    (c) Port Security and Landside          200       23,154       42,158        8,151          200       73,863
     Improvements Activity \4\....
    (d) Waterside Improvements                0            0       22,939       53,232            0       76,171
     Activity \5\.................
        Sub-Total.................        9,444       30,131       66,293       62,363        1,216      169,447
----------------------------------------------------------------------------------------------------------------
Monitoring and Evaluation.........        3,190        1,690        1,240        1,240        1,420        8,780
        Sub-Total.................        3,190        1,690        1,240        1,240        1,420        8,780
----------------------------------------------------------------------------------------------------------------
Program Administration and
 Control:
    (a) Program Administration \6\        3,395        2,795        2,933        2,919        3,015       15,057
    (b) Fiscal and Procurement        3,398,688    3,398,688    3,398,688    3,398,688    3,398,688   16,993,440
     Agent........................
    (c) Audits....................    1,416,120    1,416,120    1,416,120    1,416,120    1,416,120    7,080,600
                                   -----------------------------------------------------------------------------
        Sub-Total \7\.............    8,209,808    7,609,808    7,747,808    7,733,808    7,829,808   39,131,040
                                   -----------------------------------------------------------------------------
        Total Estimated MCC          32,383,808   63,130,808   98,300,808   90,386,808   23,095,808  307,298,040
         Contribution \8\.........
----------------------------------------------------------------------------------------------------------------
\1\ MCC Disbursements in connection with this Activity shall be conditioned upon, among others, the completion,
  satisfactory to MCC, of the relevant studies in Policy Activity and incorporation of the recommendations into
  implementation plans as appropriate.
\2\ After the first $1 million for the legal aid services sub-activity described in Section 2(c)(iv) of Schedule
  3 to Annex I, any additional MCC Disbursement for this sub-activity shall be conditioned upon the Government
  obtaining matching funds to support the legal aid services program described in Section 2(c)(iv) of Schedule 3
  of Annex I.
\3\ MCC Disbursements in connection with the new courthouses sub-activity described in Section 2(c)(v) of
  Schedule 3 to Annex I, shall be conditioned upon, among others, passage of the Procedural Code and certain
  other codes, which codes should contain adequate provisions in areas as may be specified by MCC in the
  relevant Supplemental Agreement (including with respect to the Procedural Code, provisions pertaining to the
  speed with which court cases are heard, and the means by which cases proceed through the courts).
\4\ MCC Disbursements in connection within the landside improvements sub-activity described in Section 2(c)(ii)
  of Schedule 4 of Annex I shall be conditioned upon, among others, the following: (i) Renegotiation of existing
  concession and lease agreements on terms acceptable to MCC that provide for capital investment based upon the
  demand for Port services, (ii) a contract management program of the dry bulk conveyor system acceptable to
  MCC, (iii) the completion of Initial Technical Studies, (iv) a Government commitment of funding, or
  commitments obtained from another funding source (satisfactory to MCC) for amounts in excess of budgeted
  amount in the Detailed Financial Plan, including amounts that may be necessary for environmental and
  mitigation, and (v) subject to results, satisfactory to MCC, of feasibility studies and ESIA that includes an
  environmental audit and EMP, (vi) redesign of the fish inspection facility, (vii) completion of a World Bank
  privatization and competitiveness study, and (viii) selection of a construction management agent.

[[Page 12980]]

 
\5\ MCC Disbursement in connection with the waterside improvements sub-activity described in Section 2(d) of
  Schedule 4 of Annex I shall be conditioned upon, among others, the following: (i) Satisfactory results of the
  Initial Technical Studies, (ii) demonstration, satisfactory to MCC, of improvements in customs and warehouse
  systems operations, (iii) implementation of recommendations of the independent financial auditor, (iv)
  obtaining environmental permits, (v) a Government commitment of funding, or commitments obtained from another
  funding source (satisfactory to MCC) for amounts in excess of budgeted amount in the Detailed Financial Plan,
  including amounts that may be necessary for environmental and mitigation, (vi) results, satisfactory to MCC,
  of feasibility studies and ESIA that includes an environmental audit and EMP and (vii) the completion of a
  long-term management services agreement for the operation of a Port sedimentation facility (or other harbor
  dredging program, as appropriate) on terms satisfactory to MCC.
\6\ The total administration budget as a percentage of the Program cost is equal to 5.61%.
\7\ The total implementation budget as a percentage of the Program cost is equal to 14.59%.
\8\ Total Government contribution of 5 billion CFA to be included in the annual national budget (1.25 billion
  CFA per year during the first four years of Compact) and to be allocated in a manner agreed upon by the
  Parties in writing.

Annex III--Description of the M&E Plan

    This Annex III to the Compact (the ``M&E Annex'') generally 
describes the components of the Monitoring and Evaluation (M&E) Plan 
for the Benin Program, and how progress toward the Compact Goal will be 
measured. Each capitalized term in this Annex III shall have the same 
meaning given such term elsewhere in this Compact. This Annex 
represents the agreement between the Government of Benin and the MCC on 
the Goals and Objectives of the MCA program and the timeline for 
achieving them.
1. Overview
    Prior to disbursement for any Project (other than administrative 
expenses), the parties shall formulate an M&E Plan that specifies (a) 
how the implementation of the Program and progress toward the Compact 
Goal and Objectives will be monitored (the ``Monitoring Component''), 
(b) a methodology, process and timeline for the evaluation of planned, 
ongoing, or completed Project Activities to determine their impact and 
likely sustainability (the ``Evaluation Component''), and (c) other 
components of the M&E Plan described below. Information regarding the 
Program's performance, including the M&E Plan, and any amendments or 
modifications thereto, as well as periodically-generated reports, will 
be made publicly available on the MCA-Benin Web site and elsewhere. The 
Compact Goal, Objectives and Outcomes of the MCA-Benin Program are 
summarized in the following diagram:
[GRAPHIC] [TIFF OMITTED] TN13MR06.005

2. Monitoring Component
    To monitor progress toward the achievement of the Compact Goal, 
Objectives and Outcomes, the Monitoring Component of the M&E Plan shall 
contain the following elements:
    (a) Indicators. The M&E Plan shall measure the results of the 
Program using quantitative, objective and reliable data 
(``Indicators''). Each Indicator will have one or more targets that 
quantifies the result and the expected time by which that result will 
be achieved (``Target''). The M&E Plan will detail the process for 
measuring and reporting on Indicators at several levels. First, the 
indicators for the Compact Goal (each, a ``Compact Goal Indicator'') 
will measure the results for the overall Program on the intended 
beneficiaries (collectively, the ``Beneficiaries'').
    Second, the indicators for each Objective (each, an ``Objective 
Indicator'') will measure the ultimate

[[Page 12981]]

result for each of the individual Projects. Third, intermediate 
indicators (each, an ``Outcome Indicator'') will measure the 
intermediate results achieved under each of the Project Activities in 
order to provide early measures of progress towards the accomplishment 
of the Project Objective. Further, other indicators will be included in 
the M&E Plan to measure the direct outputs of the Project Activities 
(each, an ``Output Indicator'').
    Benin's national household living standards measurement survey 
(L'Enqu[eacute]te Modulaire Integr[eacute]e sur les Conditions de Vie 
(``EMICoV'') will provide baseline data where identified. MCC Funding 
will support the 2006 baseline survey as well as regular follow-up 
surveys as described in the M&E Plan (``2006 Baseline Data Survey''). 
The Government will also fund a portion of the 2006 baseline survey. 
All EMICoV data will be disaggregated by gender, income and age group 
where appropriate. MCC Funding in connection with the 2006 Baseline 
Data Survey shall support activities such as the following:
     Training of field and data entry staff;
     Conducting pilot test of survey questionnaire;
     Communication and transportation for survey staff;
     Supervision and Quality Assurance; and
     Data Management.
    For all indicators, data collection will be disaggregated by 
gender, income level and age, where appropriate and to the extent 
practicable. For some indicators baseline data was not available as of 
the date of conclusion on the Compact. For such indicators identified 
in the tables that follow, the M&E Plan and Disbursement Agreement will 
specify requirements for baseline data collection that shall be met 
prior to disbursing funds for each Project or Project Activity. Subject 
to prior written approval from MCC, MCA-Benin may modify and add 
Indicators or refine the Targets of existing Indicators.
    (i) Compact Goal Indicators. The M&E Plan shall contain the Compact 
Goal Indicators and their definitions, as listed in the table below. 
The corresponding Targets to be achieved are in the tables that follow.

                         Compact Goal Indicators
------------------------------------------------------------------------
                                                         Definition of
             Purpose                   Indicator           indicator
------------------------------------------------------------------------
Increase household income in      Average annual      Average revenue
 land and finance-targeted areas.  household income    and consumption
                                   in the land and     level per
                                   finance areas.      household land/
                                                       finance areas
                                                       measured through
                                                       the national
                                                       living standards
                                                       measurement
                                                       survey (EMICoV).
Increase value added to MSMEs...  Profits and wages   Additional profits
                                   of MSMEs            and wages of
                                   benefiting from     MSMEs that are
                                   Access to Finance   clients of
                                   capacity building   institutions that
                                   activity.           are beneficiaries
                                                       of the Challenge
                                                       Facility.
Increase value added due to port  Profits and wages   Additional profits
 infrastructure improvements.      of Port users.      and wages of Port
                                                       users.
------------------------------------------------------------------------


                                                                  Compact Goal Targets
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Indicators                  Baseline              Year 1              Year 2              Year 3              Year 4              Year 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average household income in the  TBD \1\............  ...................  ..................  ..................  ..................  Estimated at 7%
 land and finance areas.                                                                                                                increase in
                                                                                                                                        treated areas
                                                                                                                                        compared to
                                                                                                                                        untreated areas
Profits and wages of MSMEs       Zero \2\...........  ...................  ..................  ..................  ..................  USD$5 million.
 benefiting from the Capacity
 Building Activity.
Additional annual profits and    Zero...............  ...................  ..................  ..................  ..................  USD$36
 wages of Port users.                                                                                                                   million.\3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ EMICoV will provide baseline data to be available starting in August 2006. 2004 GNP per capita is estimated at USD$538.
\2\ Benin will estimate current wages and profits of client enterprises of MFIs in the Demand Study at the end of the third quarter, Year 1 of the
  Compact Term.
\3\ Port users include: Ship-owners, firms operating within the port and trucks transporting cargo to and from the Port.

    (ii) Objective and Outcome Indicators. The M&E Plan shall contain 
the Objective and Outcome Indicators and their definitions, as listed 
in the tables below. The corresponding Targets to be achieved are in 
the tables following the definitions.

                    Access to Land Project Indicators
------------------------------------------------------------------------
                                                         Definition of
             Purpose                   Indicator           indicator
------------------------------------------------------------------------
Objective:
    Strengthen property rights    Total value of      Value of
     and increase investment in    additional          investments made
     rural and urban land.         investment in       to rural land
                                   targeted rural      parcels per year;
                                   land parcels.       land investment
                                                       data will come
                                                       from self-
                                                       reported data
                                                       through EMICoV.
                                  Total value of      Value of
                                   additional          investments made
                                   investment in       to urban land
                                   targeted urban      parcels per year;
                                   land parcels.       land investment
                                                       data will come
                                                       from self-
                                                       reported data
                                                       through EMICoV.
Outcomes:

[[Page 12982]]

 
    Reduced time to obtain new    Average time        Average time
     land title.                   required to         associated with
                                   obtain a new land   obtaining land
                                   title.              title,
                                                       disaggregated by
                                                       rural and urban
                                                       areas.\1\
    Reduced costs to obtain new   Average cost        Average cost
     land title.                   required to         associated with
                                   obtain a new land   obtaining land
                                   title.              title,
                                                       disaggregated by
                                                       rural and urban
                                                       areas.\1\
    Perception of land tenure     Percent of          Share of
     security increased.           respondents         respondents
                                   perceiving          perceiving land
                                   greater land        tenure security;
                                   security.           as measured
                                                       through EMICoV.
                                                       Data should be
                                                       disaggregated by
                                                       inhabitants of
                                                       communities
                                                       benefiting from
                                                       the Registration
                                                       Activity and
                                                       those that are
                                                       not.
    Reduction in number of land   Number of land      Total number of
     disputes.                     disputes brought    land disputes
                                   to court.           registered at
                                                       TPIs, per year.
                                  Number of land      Total number of
                                   disputes reported   land disputes
                                   by commune heads.   (not brought to
                                                       formal court) as
                                                       reported by
                                                       commune heads as
                                                       measured through
                                                       EMICoV.
------------------------------------------------------------------------
\1\ Disaggregated time and costs to obtain a land title was not
  available as of the date of conclusion of the Compact. Going forward,
  data will be collected and reported for the rural and urban areas
  separately.


                                                             Access to Land Project Targets
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        Baseline             Year 1              Year 2              Year 3              Year 4              Year 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Objective Level Indicators
 (Metric of Project success
 observable by end of Compact
 Term).
Total value of additional          Zero \1\..........  ..................  ..................  5% increase from    ..................  10% increase from
 investment in targeted rural                                                                   baseline.                               baseline.
 land parcels.
Total value of additional          Zero (Current       ..................  ..................  8% increase from    15% increase from   20% increase from
 investment in targeted urban       level for Cotonou                                           baseline.           baseline.           baseline.
 land parcels.                      only is USD$310
                                    million).
Outcome Level Indicators (Early
 indicators of Project Activities
 impact on Objectives).
Average time required to obtain a  12 months.........  ..................  ..................  10 months.........  ..................  6 months.
 new land title.
Average cost required to obtain a  USD$1,300.........  ..................  ..................  ..................  ..................  USD$180.
 new land title.
Percent of respondents perceiving  TBD \1\...........  ..................  ..................  30% increase from   ..................  50% increase from
 greater land security.                                                                         baseline for                            baseline for
                                                                                                beneficiary                             beneficiary
                                                                                                communes.                               communities.
Number of land disputes brought    8000 \2\..........  ..................  ..................  ..................  ..................  50% reduction in
 to court.                                                                                                                              MCA-targeted
                                                                                                                                        zones.
Number of land disputes reported   TBD \1\...........  ..................  ..................  ..................  ..................  .
 by commune heads.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ EMICoV will provide baseline data to be available starting in August 2006.
\2\ This baseline figure is an estimate. Data will be verified by quarter 3 of Year 1 of the Compact Term.


                  Access to Finance Project Indicators
------------------------------------------------------------------------
                                                         Definition of
             Purpose                   Indicator           Indicator
------------------------------------------------------------------------
Objective:
Expand access to financial        Value of new        Total incremental
 services.                         financial           increase in value
                                   services offered    of new credit
                                   by financial        extended and
                                   institutions.       savings received
                                                       by financial
                                                       institutions
                                                       participating in
                                                       the project.\1\
Outcomes:

[[Page 12983]]

 
Strengthened capacity of select   Average portfolio-  Share of value of
 financial institutions.           at-risk > 30 days   all loans
                                   participating       outstanding that
                                   MFIs.               have one or more
                                                       installments of
                                                       principal past
                                                       due over 30 days.
                                                       Participating
                                                       institutions
                                                       institutions will
                                                       be compared to a
                                                       national average.
                                  Operational self-   Operating revenue/
                                   sufficiency of      (financial
                                   participating       expense + loan
                                   MFIs (%).           loss provision +
                                                       operating
                                                       expense).
                                                       Measures extent
                                                       of cost coverage
                                                       from operating
                                                       revenues.
                                                       Participating
                                                       institutions will
                                                       be compared to
                                                       national average.
                                                       Indicator values
                                                       are illustrative
                                                       of each class/
                                                       cohort's
                                                       performance.
Strengthened monitoring capacity  Number of MFIs      Total number of
 of Supervisory Authority.         supervised by the   micro finance
                                   Microfinance        institutions that
                                   Cellule.            are supervised
                                                       and have received
                                                       recommendations
                                                       from the Ministry
                                                       of Finance
                                                       Supervisory
                                                       Authority.
Improved use of land titles as    Number of new bank  Total number of
 collateral.                       credits             loans guaranteed
                                   guaranteed with     by land titles,
                                   land titles.        per year.
------------------------------------------------------------------------
\1\ Indicator and target will be amended if services other than credit
  and savings are offered.


                                                            Access to Finance Project Targets
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        Baseline             Year 1              Year 2              Year 3              Year 4              Year 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Objective Level Indicators
 (Metric of Project success
 observable by end of Compact
 Term):
    Value of new financial         USD$155 Million in  ..................  ..................  USD$24 Million....  ..................  USD$59 Million.
     services offered by            Credit and USD$73
     financial institutions         Million in
                                    savings.\1\.
    Outcome Level Indicators
     (Early indicators of Project
     Activities impact on
     Objectives):
    Average portfolio-at-risk >    10% \2\...........  ..................  8%................  7%................  6%................  5%
     30 days of participating
     financial institutions.
    Operational self-sufficiency   103% \2\..........  ..................  106%..............  109%..............  ..................  112%
     of participating financial
     institutions.
    Number of MFIs supervised by   27................  ..................  35................  40................  50................  75
     the Microfinance Cellule.
    Number of new bank credits     60................  ..................  ..................  100...............  150...............  200
     guaranteed with land titles.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Current aggregate value of savings and credit offered in system as cited in National Policy for Micro finance.
\2\ These baseline values represent the national average. Once financial institutions are selected, baselines will be recalculated. Targets values are
  average values for cohort/class entering the Program after 2, 3, 4, and 5 years.


                  Access to Justice Project Indicators
------------------------------------------------------------------------
                                                         Definition of
             Purpose                   Indicator           Indicator
------------------------------------------------------------------------
Objective:
Improved ability of justice       Average time        Number of days
 system to enforce contracts and   required to         associated with
 reconcile claims.                 enforce a           filing payment
                                   contract.           dispute in court
                                                       until moment of
                                                       actual payment.
                                  Percent of firms    Percent of
                                   reporting           manufacturing
                                   confidence in the   firms who agree
                                   judicial system.    with statement
                                                       ``I have
                                                       confidence in the
                                                       judicial
                                                       system.''
Outcomes:
Increased efficiency and          Number of cases     Number of cases
 improved services of courts and   processed at        processed at
 the arbitration center.           Arbitration         Chamber of
                                   Center.             Commerce
                                                       Arbitration
                                                       Center, per year.
                                  Percent of all      Share of number of
                                   cases resolved in   cases resolved of
                                   TPI courts per      total cases filed
                                   year.               at all TPIs, per
                                                       year.
                                  Percent of all      Share of number of
                                   cases resolved in   cases resolved of
                                   court of appeals    total cases filed
                                   per year.           at court of
                                                       appeals, per
                                                       year.
Increased access to court system  Average distance    Distance between
                                   required to reach   village and
                                   TPI (km).           jurisdictional
                                                       TPI in
                                                       kilometers.

[[Page 12984]]

 
Improved enterprise registration  Number of           Annual number of
 center.                           enterprises         enterprises
                                   registered          registered with
                                   through the         Chamber of
                                   registration        Commerce Guichet
                                   center.             Unique central or
                                                       satellite
                                                       offices.
                                  Average time        Number of days
                                   required to         associated with
                                   reigster an         registering
                                   enterprise (days).  enterprise with
                                                       Chamber of
                                                       Commerce Guichet
                                                       Unique central or
                                                       satellite
                                                       offices, per
                                                       year.
------------------------------------------------------------------------


                                                            Access to Justice Project Targets
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        Baseline             Year 1              Year 2              Year 3              Year 4              Year 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Objective Level Indicators
 (Metric of Project success
 observable by end of Compact
 Term):
Average time required to enforce   570...............  ..................  ..................  470...............  ..................  370
 a contract (days).
Percent of firms reporting         35%...............  ..................  ..................  47%...............  ..................  60%
 confidence in the judicial
 system.
Outcome Level Baseline Year
 Indicators (Early indicators of
 Project Activities impact on
 Objectives)
Number of cases processed at       0.................  ..................  25................  150...............  200...............  250
 Arbitration Center.
Percent of all cases resolved in   40%...............  ..................  ..................  45%...............  ..................  50%
 TPIs per year.
Percent of all cases resolved in   8%................  12%...............  15%...............  18%...............  21%...............  24%
 court of appeals per year.
Average Distance required to       50................  ..................  ..................  ..................  ..................  34
 reach TPI (km).
Number of enterprises registered   9,600 (total to     ..................  ..................  1,400.............  1,000.............  500
 through the business               2004).
 registration center.
Average time required to register  20................  ..................  ..................  10................  ..................  3
 an enterprise (days).
--------------------------------------------------------------------------------------------------------------------------------------------------------


                  Access to Markets Project Indicators
------------------------------------------------------------------------
                                                         Definition of
             Purpose                   Indicator           indicator
------------------------------------------------------------------------
Objective:
Improve access to markets         Volume of           Total volume of
 through improvements to the       merchandise         exports and
 Port of Cotonou.                  traffic through     imports passing
                                   the PAC (million    through Port of
                                   metric tons).       Cotonou, per year
                                                       in million metric
                                                       tons.
                                  Port surcharges     Surcharge
                                   due to delay.       associated with
                                                       congestion per
                                                       twenty-foot
                                                       equivalent unit
                                                       (``TEU''), in
                                                       Euro.
Outcomes:
Reduced ship wait time..........  Bulk ship carriers  Number of days
                                   waiting times at    bulk carrier must
                                   the Port (days).    wait at anchor
                                                       (before
                                                       proceeding to
                                                       berth) and at
                                                       berth.
Streamlined customs clearance     Average customs     Time associated
 procedures.                       clearance times     with moving
                                   at Port.            merchandise
                                                       through customs
                                                       procedures.
Increased satisfaction with Port  Port user           Share of port
 operations among users.           satisfaction.       users satisfied
                                                       with Port
                                                       operations,
                                                       estimated through
                                                       Port user survey.
Reduced average duration of stay  Average duration    Average duration
 of trucks at Port.                of stay of trucks   of stay trucks at
                                   at Port.            Port.
Increased usage of import/export  Volume of seafood   Total volume of
 facilities of Port among          exports processed   seafood exports
 fishing/seafood businesses.       through BOC         processed through
                                   (tons).             the BOC (tons).
------------------------------------------------------------------------


                                        Access to Markets Project Targets
----------------------------------------------------------------------------------------------------------------
                                      Baseline      Year 1       Year 2       Year 3       Year 4       Year 5
----------------------------------------------------------------------------------------------------------------
Objective Level Indicators (Metric
 of Project success observable by
 end of Compact Term):
    Volume of merchandise traffic           4.1          4.9          5.2          5.6          5.9          6.3
     through the PAC (million
     metric tons).................
    Port surcharges due to delay            125  ...........  ...........  ...........           50           25
     (Euros)......................
Outcomes--Bulk ship carriers                  7  ...........  ...........  ...........            5            3
 waiting times at the Port (days):

[[Page 12985]]

 
    Average customs clearance                 5  ...........  ...........            3  ...........            1
     times at the Port (days).....
    Port user satisfaction........          50%  ...........  ...........          65%          70%          75%
    Average duration of stay of              24  ...........  ...........           18           12            7
     trucks at Port (hours).......
    Volume of seafood exports                 0  ...........  ...........  ...........          250         500
     processed through BOC (tons).
----------------------------------------------------------------------------------------------------------------
 Note: Attainment of most targets in the Markets Project tables in the years specified depends on the successful
  completion of early sub-activities.

    (iii) The final M&E Plan will also include a number of activity-
level (Output) measures that will track progress toward realizing the 
direct outputs of the Projects and Activities. Examples of the 
indicators likely to be included are:
    (1) Number of villages with plan foncier rural (PFRs);
    (2) Number of urban land titles transformed from permis d'habiter 
or living permits in Cotonou, Parakou and Porto Novo;
    (3) Number of clients of financial service providers trained;
    (4) Average cost of registering an enterprise with Chamber of 
Commerce Guichet Unique;
    (5) Number of judicial employees receiving pre-service training; 
and
    (6) Port meeting ISPS standards.
    (b) Beneficiaries. The M&E plan shall describe the beneficiaries of 
the Program in detail, including the expected number of beneficiaries, 
their income, gender and other general demographic characteristics.
    (c) Data Collection and Reporting. The M&E Plan shall establish 
guidelines for data collection and a reporting framework, including a 
schedule of Program reporting and responsible parties. In addition, 
MCA-Benin shall conduct regular assessments of program performance to 
measure progress on the Goals and Objectives and to alert all parties 
to any problems in implementation. These assessments will report actual 
results compared to the Targets on the Indicators referenced in the 
Monitoring Component, explain deviations between these actual results 
and Targets, and describe any planned actions to address performance 
problems. With respect to any data or reports received by MCA-Benin, 
MCA-Benin shall promptly deliver such reports to MCC along with any 
other related documents, as specified in the M&E Plan or as may be 
requested from time to time by MCC, and will make these assessments 
available to the public on their Web site.
    (d) Data Quality Reviews. As determined in the M&E Plan or as 
otherwise requested by MCC, the quality of the data gathered through 
the M&E Plan shall be reviewed to ensure that data reported are as 
reliable, timely and valid as resources will allow. The objective of 
any data quality review will be to verify the quality and the 
consistency of performance data, across different implementation units 
and reporting institutions. Such data quality reviews also will serve 
to identify where consistent levels of quality are not possible, given 
in-country capacity or other constraints.
3. Evaluation Component
    The Program shall be evaluated on the extent to which the 
interventions contribute to the Compact Goal and Objectives. The 
Evaluation Component shall contain the methodology for conducting the 
most rigorous impact evaluations feasible and cost-effective, as well 
as the process and timeline for analyzing data. The Evaluation 
Component shall contain two types of reports: A Final Program 
Evaluation and Project, Project Activity, or Interim Evaluations.
    (a) Final Evaluation. MCC will engage an independent evaluator to 
conduct a program evaluation at the expiration or termination of the 
Program (``Final Evaluation''). The evaluation methodology, timeline, 
data collection, and analysis requirements will be finalized and 
detailed in the M&E Plan. The Final Evaluations must at a minimum (i) 
estimate quantitatively and in a statistically valid way, the causal 
relationship between the Compact Goals (to the extent possible), the 
Objectives and Outcomes; (ii) determine if and analyze the reasons why 
the Compact Goals, Objectives and Outcomes were or were not achieved; 
and (iii) assess the overlapping benefits of the Projects.
    (b) Project or Interim Evaluations. The Evaluation Component in the 
M&E Plan will also describe other individual Project, Project Activity, 
or Interim Evaluations. The evaluation methodology, timeline, data 
collection, and analysis requirements will be finalized and detailed in 
the M&E Plan. Determination of the evaluation methodologies will be 
condition precedent for specified MCC Disbursements.
    (c) Ad Hoc Evaluations or Special Studies. In addition to the 
evaluations described in the M&E Plan, MCC may require ad hoc 
evaluations or special studies prior to the expiration of the Compact 
Term. If MCA-Benin engages an evaluator, the evaluator will be an 
externally contracted independent source subject to the prior written 
approval of MCC for terms of reference and final selection, following a 
tender in accordance with the Procurement Guidelines, and otherwise in 
accordance with any relevant Implementation Letter or Supplemental 
Agreement. The cost of an independent evaluation or special study may 
be paid from MCC Funding. If MCA-Benin requires an ad hoc independent 
evaluation or special study at the request of the Government for any 
reason, including for the purpose of contesting an MCC determination 
with respect to a Project or Project Activity or to seek funding from 
other donors, no MCC Funding or MCA-Benin resources may be applied to 
such evaluation or special study without MCC's prior written approval.
4. Other Components of the M&E Plan
    In addition to the Monitoring and Evaluation Components, the M&E 
Plan shall include the following components for the Program, Projects 
and Project Activities, including, where appropriate, roles and 
responsibilities of the relevant parties and Providers:
    (a) Costs. A detailed annual budget estimate for all components of 
the M&E Plan.
    (b) Assumptions and Risks. Any assumptions and risks external to 
the Program that underlie the accomplishment of the Objectives and 
Outcomes; provided such assumptions and risks shall not excuse 
performance of the Parties, unless otherwise expressly agreed to in 
writing by the Parties.

[[Page 12986]]

5. Implementation of the M&E Plan
    (a) Approval and Implementation. The approval and implementation of 
the M&E Plan, as amended from time to time, shall be in accordance with 
this M&E Annex, and any other relevant Supplemental Agreement. 
Stakeholders' Committee's review of the completed portions of the M&E 
Plan shall be required prior to the expiration of the first year of the 
Program. Review and approval of the M&E Plan shall be completed by time 
specified in the Disbursement Agreement.
    (b) MCC Disbursement and Re-Disbursement for a Project Activity. As 
a condition to each MCC Disbursement or Re-Disbursement there shall be 
satisfactory progress on the M&E Plan for the relevant Project or 
Project Activity, and substantial compliance with the M&E Plan, 
including any reporting requirements. In addition, for certain 
activities, collection of baseline data will be condition precedent for 
specified MCC Disbursements.
    (c) Modifications. Notwithstanding anything to the contrary in the 
Compact, including the requirements of this M&E Annex, the Parties may 
modify or amend the M&E Plan or any component thereof, including those 
elements described herein, without amending the Compact; provided, any 
such modification or amendment of the M&E Plan is reviewed by the 
Stakeholders' Committee and has been approved by MCC in writing and is 
otherwise consistent with the requirements of this Compact and its 
Objectives, and any relevant Supplemental Agreement between the 
Parties.
[FR Doc. 06-2252 Filed 3-10-06; 8:45 am]
BILLING CODE 9210-01-P