[Federal Register Volume 77, Number 34 (Tuesday, February 21, 2012)]
[Notices]
[Pages 9974-9997]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-3832]


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MILLENNIUM CHALLENGE CORPORATION

[MCC FR 12-01]


Notice of Entering Into a Compact With the Republic of Cape Verde

AGENCY: Millennium Challenge Corporation.

ACTION: Notice.

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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 
Republic of Cape Verde. Representatives of the United States Government 
and the Republic of Cape Verde executed the Compact documents on 
February 10, 2012.

    Dated: February 14, 2012.
Melvin F. Williams, Jr.,
VP/General Counsel and Corporate Secretary, Millennium Challenge 
Corporation.

Summary of Millennium Challenge Compact with the Republic of Cape Verde

    The five-year, $66.2 million compact with the Government of Cape 
Verde (the ``GoCV'') is aimed at reducing poverty through economic 
growth (the ``Compact''). To this end, the Compact's two projects are 
intended to increase household incomes in project areas by reforming 
the water and sanitation and land management sectors, both critical 
constraints to economic growth.

1. Project Overview and Activity Descriptions

    To advance the goal of reducing poverty through economic growth, 
the Compact will fund two projects.
    The $41.1 million Water, Sanitation, and Hygiene Project is 
designed to establish a financially sound, transparent, and accountable 
institutional basis for the delivery of water and sanitation services 
to Cape Verdean households and businesses. The $17.3 million Land 
Management for Investment Project is designed to reduce the time 
required to establish secure property rights and to provide conclusive 
land information in areas of near-term high development potential in 
Cape Verde.
Water, Sanitation and Hygiene (WASH) Project
    Cape Verde is an extremely water-scarce country, and relies heavily 
on desalinization of water, which is an expensive and energy-intensive 
process. The WASH sector is characterized by relatively poor levels of 
service, including intermittent water supply. In addition, domestic 
water consumption in Cape Verde is, at approximately 35 liters per day, 
half that of a low-income peer group of countries, and barely above 
subsistence levels; not surprising given that Cape Verde has the 
highest water tariff in Africa and among the highest in the world. The 
poor, and particularly female-headed households, are especially 
vulnerable as only 9% of poor households have access to the networked 
public water supply network. Additionally, Cape Verde is not on track 
to meet its Millennium Development Goal for sanitation. Low levels of 
water supply, combined with a population in which over 50% is without 
any access to improved sanitation services, results in significant 
public health problems, including diarrhea, malaria and dengue.
    The GoCV has worked closely with MCC to develop an ambitious 
performance-based project. Through extensive consultation with civil 
society, private sector and government stakeholders, as well as MCC 
technical assistance, the Cape Verdean team

[[Page 9975]]

identified the core of the problem as policy and institutional 
challenges, in addition to lack of infrastructure. The GoCV therefore 
developed a clear policy and institutional reform action plan for the 
sector, and has already demonstrated political will and reform momentum 
by approving a policy reform paper for the sector, and establishing a 
policy reform commission.
    The $41.1 million project is expected to improve delivery of water 
and sanitation services to Cape Verdean households and firms. The 
approach to improving sector performance relies on a three-pronged 
strategy: (i) Reforming national policy and regulatory institutions; 
(ii) transforming inefficient utilities into autonomous corporate 
entities operating on a commercial basis; and (iii) improving the 
quality and reach of infrastructure in the sector.
    The WASH Project comprises the following three activities:
     National Institutional and Regulatory Reform Activity. 
Institutional and regulatory reform activities at the national level 
are expected to improve planning systems and regulatory processes 
including tariff setting. MCC will support the creation of a new 
National Agency for Water and Sanitation responsible for policy and 
planning of all water resources, domestic water supply, wastewater and 
sanitation. MCC will also strengthen the existing regulatory 
organization to better regulate economic and technical aspects of the 
WASH sector. Finally, the project will build the capacity of the 
environmental directorate to expand its existing environmental 
protection functions to include water and wastewater quality. As part 
of the proposed reform of institutions and regulation, the WASH project 
will provide technical assistance and resources for the integration of 
gender and social analysis and objectives into national policies and 
planning.
     Utility Reform Activity. The objective of this activity is 
to assist highly inefficient municipal utility departments to merge and 
restructure themselves into financially and administratively 
independent corporate entities. Regulatory changes will be required to 
support this transition. Once formed, the new utilities will require 
support and capacity building to improve their planning capacities and 
operating efficiency, and to reduce their high levels of commercial 
losses. MCC efforts will focus on supporting the formation of the 
proposed utility on the island of Santiago, which represents half the 
population of Cape Verde, and will be designed so as to facilitate 
similar utility restructurings elsewhere in the country. The social and 
gender assessment (SGA) work at this level will integrate these 
objectives into policy, planning, human resources and budgets.
     Infrastructure Grant Facility. The proposed compact will 
provide funding for an Infrastructure Grant Facility to fund much 
needed infrastructure capital improvements in the WASH sector while 
also promoting continued national level reform and providing an 
incentive for utilities to accelerate the corporatization process. MCC 
will only release funds into the Infrastructure Grant Facility once 
broad national policy and utility reform conditions precedent have been 
met. The Infrastructure Grant Facility will provide grants to any 
eligible utility, qualifying based on continuous improvement on 
commercialization of utility operations. Project grant applications 
from qualified applicants will be evaluated based on a set of 
transparent financial, economic, technical, implementation, 
environmental, and social criteria. Given the central role that women 
and girls play in water and sanitation at the household level, ensuring 
that infrastructure investments are selected and designed with due 
attention to social and gender considerations and appropriate 
information, education, and communication is critical to meeting the 
ultimate health and economic objectives of the WASH project.
Land Management for Investment Project
    No conclusive source of information about land property exists in 
Cape Verde. Research suggests that up to 92 percent of land rights 
claims in Cape Verde do not have the legal protection that would be 
accorded by proper rights registration. Two different land registries, 
judicial and municipal, each contain partial information about only a 
fraction of the country's land parcels. Additional records systems hold 
information about state-owned land. The information tends to be 
outdated and is often conflicting. No source contains map-based 
information indicating actual location of a parcel of land over which a 
right is claimed. Confusion over ownership and boundaries has resulted 
in unauthorized land sales and the delay or cancellation of public as 
well as private investment projects. Confusion also limits the ability 
of small firms and households to create value and increase incomes 
through investment in their property. When coupled with lengthy 
procedures across a range of institutions, inconclusive information 
also generates time-consuming and costly land rights registration 
processes for all land users, further hampering domestic and foreign 
investment and economic growth. Cape Verde ranks 104 out of 
183 economies in the property registration indicator in the 2011 IFC 
Doing Business report.
    The $17.3 million project is expected to improve Cape Verde's 
investment climate by: (i) Refining the legal, institutional, and 
procedural environment to increase the reliability of land information, 
achieve greater efficiency in land administration transactions, and to 
strengthen protection of land rights; (ii) developing and implementing 
a new land information management system; and (iii) clarifying parcel 
rights and boundaries on targeted islands with high investment 
potential.
    The project supports the GoCV creating a single reliable and easily 
accessible source of land rights and land boundaries information, which 
is expected to strengthen Cape Verde's investment climate for large and 
small investors and to reduce land registration costs for all users. 
The project comprises two activities:
     Legal and Institutional Foundations Activity. This 
activity will work at a national level to support necessary legal 
reform, as well as the creation of a new, common information and 
transaction system for each of the country's core land administration 
institutions. This system is designed to achieve greater efficiency in 
land registration-related transactions and land administration in the 
short term, and more efficient tax administration in the long term.
     Rights and Boundaries Activity. Building on the legal and 
institutional groundwork, the Rights and Boundaries Activity will 
support actual clarification of parcel rights and boundaries in 
targeted islands of high tourism investment potential. This new 
information will be input into the information system, enabling all 
land users to more quickly and conclusively identify land parcel 
boundaries and rights.

2. Compact Budget

------------------------------------------------------------------------
                                                              Budget
                 Projects and activities                    (millions)
------------------------------------------------------------------------
Water, Sanitation, and Hygiene (WASH) Project...........          $41.10
National Institutional and Regulatory Reform Activity...            6.68
Utility Reform Activity.................................           12.07
Infrastructure Grant Facility...........................           22.35
Land Management for Investment Project..................           17.26
Legal and Institutional Foundations Activity............            4.22

[[Page 9976]]

 
Rights and Boundaries Activity..........................           13.04
Monitoring and Evaluation...............................            1.39
Program Administration..................................            6.48
                                                         ---------------
    Total MCC Funding...................................           66.23
GoCV Contribution.......................................            9.93
                                                         ---------------
    Total (including GoCV contribution).................           76.16
------------------------------------------------------------------------

3. Administration

    The Compact includes program administration costs estimated at 
$6.48 million over a five year timeframe, including the costs of 
administration, management, auditing, and fiscal and procurement 
services. In addition, the cost of monitoring and evaluation of the 
Compact is budgeted at $1.39 million.

4. Benefits and Beneficiaries

    The Water, Sanitation and Hygiene Project is expected to yield an 
economic rate of return (ERR) of 13 percent. ERR calculations are an 
estimate, using the best information available at the time. This figure 
represents a potential range of outcomes that account for the 
uncertainty of core parameters. The National Institutional and 
Regulatory Reform Activity and the Utility Reform Activity are expected 
to: (i) Reduce the average cost of water; (ii) reduce commercial 
losses; and (iii) release government resources from unproductive 
subsidization of the sector to productive spending to increase growth. 
The expected ERR for the proposed institutional development activities 
is 15 percent, and the initial beneficiaries are the population of 
Santiago Island, which numbered approximately 278,000 in 2010. With 
GoCV and other donor efforts, the corporatization of utilities is 
expected to extend throughout Cape Verde during or following compact 
completion.
    The second part of the economic analysis considers the cost 
effectiveness of operating the Infrastructure Grant Facility to finance 
infrastructure investments among corporatized utilities. The expected 
ERR for the Infrastructure Grant Facility is 11 percent, with a wide 
variance because of the uncertainty regarding the number and types of 
projects to be financed, and the entities meeting the criteria. Any 
project financed under the facility must meet a minimum ERR of 12 
percent. The analysis estimates that, on average, a population of 
48,000, or just over 10 percent of the current national population, 
would benefit from the operation of the Infrastructure Grant Facility.
    The ERR for the Land Management for Investment Project is expected 
to be 22 percent. Based on estimates of incremental employment 
opportunities, it is estimated that at least 13,000 people would 
benefit from increased tourism development as a consequence of 
improving the process of land registration. This number does not 
include the broader population on the islands, which also is expected 
to benefit from land registration improvements. Based on incremental 
employment beneficiaries (i.e., new jobs created), investment costs are 
relatively high per beneficiary, but the payoffs to the economy in 
terms of the accelerated development of tourism-related employment are 
potentially significant.
    Because tourism is a key economic driver, the projected tourism 
impact was selected as the most quantifiable ERR model with 
demonstrable and observable impact within a short to medium timeframe. 
Other potential benefits at the national level due to the legal and 
institutional change and new information systems, or other benefits to 
the 118,000 people living in the target islands beyond tourism impact, 
are not included in the ERR model, but will be tracked as part of the 
monitoring strategy and impact evaluation.

Millennium Challenge Compact Between the United States of America 
Acting Through the Millennium Challenge Corporation and The Republic of 
Cape Verde

Millennium Challenge Compact

Table of Contents

Article 1. Goal and Objectives
    Section 1.1 Compact Goal
    Section 1.2 Program Objectives
    Section 1.3 Project Objectives
Article 2. Funding and Resources
    Section 2.1 Program Funding
    Section 2.2 Compact Implementation Funding
    Section 2.3 MCC Funding
    Section 2.4 Disbursement
    Section 2.5 Interest
    Section 2.6 Government Resources; Budget
    Section 2.7 Limitations of the Use of MCC Funding
    Section 2.8 Taxes
    Section 2.9 Lower Middle Income Countries
Article 3. Implementation
    Section 3.1 Program Implementation Agreement
    Section 3.2 Government Responsibilities
    Section 3.3 Policy Performance
    Section 3.4 Accuracy of Information
    Section 3.5 Implementation Letters
    Section 3.6 Procurement and Grants
    Section 3.7 Records; Accounting; Covered Providers; Access
    Section 3.8 Audits; Reviews
Article 4. Communications
    Section 4.1 Communications
    Section 4.2 Representatives
    Section 4.3 Signatures
Article 5. Termination; Suspension; Expiration
    Section 5.1 Termination; Suspension
    Section 5.2 Consequences of Termination, Suspension or 
Expiration
    Section 5.3 Refunds; Violation
    Section 5.4 Survival
Article 6. Compact Annexes; Amendments; Governing Law
    Section 6.1 Annexes
    Section 6.2 Amendments
    Section 6.3 Inconsistencies
    Section 6.4 Governing Law
    Section 6.5 Additional Instruments
    Section 6.6 References to MCC Web site
    Section 6.7 References to Laws, Regulations, Policies, and 
Guidelines
    Section 6.8 MCC Status
Article 7. Entry Into Force
    Section 7.1 Domestic Requirements
    Section 7.2 Conditions Precedent to Entry Into Force
    Section 7.3 Date of Entry into Force
    Section 7.4 Compact Term
    Section 7.5 Provisional Application
Annex I: Program Description
Annex II: Multi-Year Financial Plan Summary
Annex III: Description of the Monitoring and Evaluation Plan
Annex IV: Conditions To Disbursement of Compact Implementation 
Funding
Annex V: Definitions

Millennium Challenge Compact

Preamble

    This Millennium Challenge Compact (this ``Compact'') is between the 
United States of America, acting through the Millennium Challenge 
Corporation, a United States government corporation (``MCC''), and the 
Republic of Cape Verde (``Cape Verde''), acting through its government 
(the ``Government'') as represented by the Ministry of Finance and 
Planning. MCC and the Government are referred to in this Compact 
individually as a ``Party'' and collectively as the ``Parties.'' 
Capitalized terms used in this Compact shall have the meanings provided 
in Annex V.
    Recalling that the Parties successfully concluded an initial 
Millennium Challenge Compact that advanced the progress of Cape Verde 
in achieving lasting economic growth and poverty reduction, 
demonstrated the strong partnership between the Parties, and was 
implemented in accordance with MCC's core policies and standards;
    Recognizing that the Parties are committed to the shared goals of 
promoting economic growth and the elimination of extreme poverty in 
Cape Verde and that MCC assistance under this subsequent Compact 
supports Cape Verde's demonstrated commitment to

[[Page 9977]]

strengthening good governance, economic freedom and investments in 
people;
    Recalling that the Government consulted with the private sector and 
civil society of Cape Verde to determine the priorities for the use of 
MCC assistance and developed and submitted to MCC a proposal consistent 
with those priorities; and
    Recognizing that MCC wishes to help Cape Verde implement a program 
to achieve the goal and objectives described herein (as such program 
description and objectives may be amended from time to time in 
accordance with the terms hereof, the ``Program'');
    The Parties hereby agree as follows:

Article 1. Goal and Objectives

Section 1.1 Compact Goal

    The goal of this Compact is to reduce poverty through economic 
growth in Cape Verde (the ``Compact Goal''). MCC's assistance will be 
provided in a manner that strengthens good governance, economic 
freedom, and investments in the people of Cape Verde.

Section 1.2 Program Objectives

    The objectives of the Program are to reduce the costs upon the 
economy of inefficiently provided public services and to remove 
institutional conditions that impede private sector investment (the 
``Program Objectives''). The Program consists of the projects described 
in Annex I (each a ``Project'' and collectively, the ``Projects'').

Section 1.3 Project Objectives

    The objectives of the Projects (each a ``Project Objective'' and 
collectively, the ``Project Objectives'') are as follows:
    (a) The objective of the Water, Sanitation and Hygiene Project is 
to establish a financially sound, transparent, and accountable 
institutional basis for the delivery of water and sanitation services 
to Cape Verdean households and firms by: (i) Reforming national policy 
and regulatory institutions; (ii) transforming inefficient utilities 
into autonomous corporate entities operating on a commercial basis; and 
(iii) improving the quality and reach of infrastructure in the sector; 
and
    (b) The objective of the Land Management for Investment Project is 
to reduce the time required for establishing secure property rights and 
to establish more conclusive land information in areas of near-term, 
high development potential in Cape Verde by: (i) Refining the legal, 
institutional and procedural environment to increase reliability of 
land information, achieve greater efficiency in land administration 
transactions, and strengthen protection of land rights; (ii) developing 
and implementing a new land information management system; and (iii) 
clarifying parcel rights and boundaries on targeted islands with high 
investment potential.

Article 2. Funding and Resources

Section 2.1 Program Funding

    Upon entry into force of this Compact in accordance with Section 
7.3, MCC shall grant to the Government, under the terms of this 
Compact, an amount not to exceed Sixty Two Million Two Hundred Thirty 
Thousand United States Dollars (US$62,230,000) (``Program Funding'') 
for use by the Government to implement the Program. The allocation of 
Program Funding is generally described in Annex II.

Section 2.2 Compact Implementation Funding

    (a) Upon signing of this Compact, MCC shall grant to the 
Government, under the terms of this Compact and in addition to the 
Program Funding described in Section 2.1, an amount not to exceed Four 
Million United States Dollars (US$4,000,000) (``Compact Implementation 
Funding'') under Section 609(g) of the Millennium Challenge Act of 
2003, as amended (the ``Act''), for use by the Government to facilitate 
implementation of the Compact, including for the following purposes:
    (i) Financial management and procurement activities (including 
costs related to agents procured by MCC to provide standby fiscal and 
procurement agent services, if required);
    (ii) Administrative activities (including start-up costs such as 
staff salaries) and administrative support expenses such as rent, 
computers and other information technology or capital equipment;
    (iii) Monitoring and evaluation activities;
    (iv) Feasibility studies; and
    (v) Other activities to facilitate Compact implementation as 
approved by MCC.
    The allocation of Compact Implementation Funding is generally 
described in Annex II.
    (b) Each Disbursement of Compact Implementation Funding is subject 
to satisfaction of the conditions precedent to such disbursement as set 
forth in Annex IV.
    (c) If MCC determines that the full amount of Compact 
Implementation Funding available under Section 2.2(a) exceeds the 
amount that reasonably can be utilized for the purposes set forth in 
Section 2.2(a), MCC, by written notice to the Government, may withdraw 
the excess amount, thereby reducing the amount of the Compact 
Implementation Funding available under Section 2.2(a) (such excess, the 
``Excess CIF Amount''). In such event, the amount of Compact 
Implementation Funding granted to the Government under Section 2.2(a) 
shall be reduced by the Excess CIF Amount, and MCC shall have no 
further obligations with respect to such Excess CIF Amount.
    (d) MCC, at its option by written notice to the Government, may 
elect to grant to the Government an amount equal to all or a portion of 
such Excess CIF Amount as an increase in the Program Funding, and such 
additional Program Funding shall be subject to the terms and conditions 
of this Compact applicable to Program Funding.

Section 2.3 MCC Funding

    Program Funding and Compact Implementation Funding are collectively 
referred to in this Compact as ``MCC Funding,'' and includes any 
refunds or reimbursements of Program Funding or Compact Implementation 
Funding paid by the Government in accordance with this Compact.

Section 2.4 Disbursement

    In accordance with this Compact and the Program Implementation 
Agreement, MCC shall disburse MCC Funding for expenditures incurred in 
furtherance of the Program (each instance, a ``Disbursement''). Subject 
to the satisfaction of all applicable conditions precedent, the 
proceeds of Disbursements shall be made available to the Government, at 
MCC's sole election, by (a) deposit to one or more bank accounts 
established by the Government and acceptable to MCC (each, a 
``Permitted Account'') or (b) direct payment to the relevant provider 
of goods, works or services for the implementation of the Program. MCC 
Funding may be expended only for Program expenditures.

Section 2.5 Interest

    The Government shall pay or transfer to MCC, in accordance with the 
Program Implementation Agreement, any interest or other earnings that 
accrue on MCC Funding prior to such funding being used for a Program 
purpose.

Section 2.6 Government Resources; Budget

    (a) Consistent with Section 609(b)(2) of the Act, the Government 
shall make a contribution towards meeting the

[[Page 9978]]

Program Objectives and Project Objectives of this Compact. Annex II 
describes such contribution in more detail. In addition, the Government 
shall provide all funds and other resources, and shall take all 
actions, that are necessary to carry out the Government's 
responsibilities under this Compact.
    (b) The Government shall use its best efforts to ensure that all 
MCC Funding it receives or is projected to receive in each of its 
fiscal years is fully accounted for in its annual budget for the 
duration of the Program.
    (c) The Government shall not reduce the normal and expected 
resources that it would otherwise receive or budget from sources other 
than MCC for the activities contemplated under this Compact and the 
Program.
    (d) Unless the Government discloses otherwise to MCC in writing, 
MCC Funding shall be in addition to the resources that the Government 
would otherwise receive or budget for the activities contemplated under 
this Compact and the Program.

Section 2.7 Limitations on the Use of MCC Funding

    The Government shall ensure that MCC Funding is not used for any 
purpose that would violate United States law or policy, as specified in 
this Compact or as further notified to the Government in writing or by 
posting from time to time on the MCC Web site at www.mcc.gov (the ``MCC 
Web site''), including but not limited to the following purposes:
    (a) For assistance to, or training of, the military, police, 
militia, national guard or other quasi-military organization or unit;
    (b) For any activity that is likely to cause a substantial loss of 
United States jobs or a substantial displacement of United States 
production;
    (c) To undertake, fund or otherwise support any activity that is 
likely to cause a significant environmental, health, or safety hazard, 
as further described in MCC's environmental and social assessment 
guidelines and any guidance documents issued in connection with the 
guidelines posted from time to time on the MCC Web site or otherwise 
made available to the Government (collectively, the ``MCC Environmental 
Guidelines''); or
    (d) To pay for the performance of abortions as a method of family 
planning or to motivate or coerce any person to practice abortions, to 
pay for the performance of involuntary sterilizations as a method of 
family planning or to coerce or provide any financial incentive to any 
person to undergo sterilizations or to pay for any biomedical research 
which relates, in whole or in part, to methods of, or the performance 
of, abortions or involuntary sterilization as a means of family 
planning.

Section 2.8 Taxes

    (a) Unless the Parties specifically agree otherwise in writing, the 
Government shall ensure that all MCC Funding is free from the payment 
or imposition of any existing or future taxes, duties, levies, 
contributions or other similar charges (but not fees or charges for 
services that are generally applicable in Cape Verde, reasonable in 
amount and imposed on a non-discriminatory basis) (``Taxes'') of or in 
Cape Verde (including any such Taxes imposed by a national, regional, 
local or other governmental or taxing authority of or in Cape Verde). 
Specifically, and without limiting the generality of the foregoing, MCC 
Funding shall be free from the payment of (i) any tariffs, customs 
duties, import taxes, export taxes, and other similar charges on any 
goods, works or services introduced into Cape Verde in connection with 
the Program; (ii) sales tax, value added tax, excise tax, property 
transfer tax, and other similar charges on any transactions involving 
goods, works or services in connection with the Program, (iii) taxes 
and other similar charges on ownership, possession or use of any 
property in connection with the Program, and (iv) taxes and other 
similar charges on income, profits or gross receipts attributable to 
work performed in connection with the Program and related social 
security taxes and other similar charges on all natural or legal 
persons performing work in connection with the Program except (x) 
natural persons who are citizens or permanent residents of Cape Verde, 
(y) social security taxes or other similar charges levied on an 
employer in connection with hiring employees who are citizens or 
permanent residents of Cape Verde, and (z) legal persons formed under 
the laws of Cape Verde (but excluding MCA-Cape Verde II and any other 
entity formed for the purpose of implementing the Government's 
obligations hereunder).
    (b) The mechanisms that the Government shall use to implement the 
tax exemption required by Section 2.8(a) are set forth in the Program 
Implementation Agreement. Such mechanisms may include exemptions from 
the payment of Taxes that have been granted in accordance with 
applicable law, refund or reimbursement of Taxes by the Government to 
MCC, MCA-Cape Verde II or to the taxpayer, or payment by the Government 
to MCA-Cape Verde II or MCC, for the benefit of the Program, of an 
agreed amount representing any collectible Taxes on the items described 
in Section 2.8(a).
    (c) If a Tax has been paid contrary to the requirements of Section 
2.8(a) or the Program Implementation Agreement, the Government shall 
refund promptly to MCC (or to another party as designated by MCC) the 
amount of such Tax in United States dollars or the currency of Cape 
Verde within sixty (60) days (or such other period as may be agreed in 
writing by the Parties) after the Government is notified in writing 
(whether by MCC or MCA-Cape Verde II) that such Tax has been paid.
    (d) No MCC Funding, proceeds thereof or Program Assets may be 
applied by the Government in satisfaction of its obligations under 
Section 2.8(c).

Section 2.9 Lower Middle Income Countries

    Section 606(b) of the Act restricts the amount of assistance that 
MCC may provide to ``lower middle income countries,'' a term that is 
defined in the Act and includes Cape Verde. To the extent that MCC 
determines, in MCC's reasonable discretion, that the amount of Program 
Funding granted to the Government in this Compact may result in a 
violation of Section 606(b) of the Act, MCC, at any time and from time 
to time upon written notice to the Government, may reduce the amount of 
Program Funding, or withhold any Disbursement of Program Funding, to 
avoid or remedy such a violation.

Article 3. Implementation

Section 3.1 Program Implementation Agreement

    The Parties shall enter into an agreement providing further detail 
on the implementation arrangements, fiscal accountability and 
disbursement and use of MCC Funding, among other matters (the ``Program 
Implementation Agreement'' or ``PIA''); and the Government shall 
implement the Program in accordance with this Compact, the PIA, any 
other Supplemental Agreement and any Implementation Letter.

Section 3.2 Government Responsibilities

    (a) The Government has principal responsibility for overseeing and 
managing the implementation of the Program.
    (b) The Government will create and designate Millennium Challenge

[[Page 9979]]

Account--Cape Verde II, as the accountable entity to implement the 
Program and to exercise and perform the Government's right and 
obligation to oversee, manage and implement the Program, including 
without limitation, managing the implementation of Projects and their 
Activities, allocating resources and managing procurements. Such entity 
shall be referred to herein as ``MCA-Cape Verde II,'' and shall have 
the authority to bind the Government with regard to all Program 
activities. The designation contemplated by this Section 3.2(b) shall 
not relieve the Government of any obligations or responsibilities 
hereunder or under any related agreement, for which the Government 
remains fully responsible. MCC hereby acknowledges and consents to the 
designation in this Section 3.2(b).
    (c) The Government shall ensure that any Program Assets or services 
funded in whole or in part (directly or indirectly) by MCC Funding are 
used solely in furtherance of this Compact and the Program unless MCC 
agrees otherwise in writing.
    (d) The Government shall take all necessary or appropriate steps to 
achieve the Program Objectives and the Project Objectives during the 
Compact Term (including, without limiting Section 2.6(a), funding all 
costs that exceed MCC Funding and are required to carry out the terms 
hereof and achieve such objectives, unless MCC agrees otherwise in 
writing).
    (e) The Government shall fully comply with the Program Guidelines, 
as applicable, in its implementation of the Program.
    (f) The Government will grant to MCC a perpetual, irrevocable, 
royalty-free, worldwide, fully paid, assignable right and license to 
practice or have practiced on its behalf (including the right to 
produce, reproduce, publish, repurpose, use, store, modify, or make 
available) any portion or portions of Intellectual Property as MCC sees 
fit in any medium, now known or hereafter developed, for any purpose 
whatsoever.

Section 3.3 Policy Performance

    In addition to undertaking the specific policy, legal and 
regulatory reform commitments identified in Annex I, 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 
selection criteria and methodology used by MCC.

Section 3.4 Accuracy of Information

    The Government assures MCC that, as of the date this Compact is 
signed by the Government, the information provided to MCC by or on 
behalf of the Government in the course of reaching agreement with MCC 
on this Compact is true, correct and complete in all material respects.

Section 3.5 Implementation Letters

    From time to time, MCC may provide guidance to the Government in 
writing on any matters relating to this Compact, MCC Funding or 
implementation of the Program (each, an ``Implementation Letter''). The 
Government shall apply such guidance in implementing the Program. The 
Parties may also issue jointly agreed-upon Implementation Letters to 
confirm and record their mutual understanding on aspects related to the 
implementation of this Compact, the PIA or other related agreements.

Section 3.6 Procurement and Grants

    (a) The Government shall ensure that the procurement of all goods, 
works and services by the Government or any Provider to implement the 
Program shall be consistent with the ``MCC Program Procurement 
Guidelines'' posted from time to time on the MCC Web site (the ``MCC 
Program Procurement Guidelines''). The MCC Program Procurement 
Guidelines include the following requirements, among others:
    (i) Open, fair, and competitive procedures must be used in a 
transparent manner to solicit, award and administer contracts and to 
procure goods, works and services;
    (ii) Solicitations for goods, works, and services must be based 
upon a clear and accurate description of the goods, works and services 
to be acquired;
    (iii) Contracts must be awarded only to qualified contractors that 
have the capability and willingness to perform the contracts in 
accordance with their terms 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, works and services.
    (b) The Government shall ensure that any grant issued to any non-
governmental entity in furtherance of the Program (the ``Grant'') is 
selected, implemented and administered pursuant to open, fair, and 
competitive procedures administered in a transparent manner. In 
furtherance of this requirement, and prior to the issuance of any 
Grant, the Government and MCC shall agree upon written procedures to 
govern the identification of potential recipients, the selection and 
the award of Grants. Such agreed procedures shall be posted on the MCA-
Cape Verde II Web site.

Section 3.7 Records; Accounting; Covered Providers; Access

    (a) Government Books and Records. The Government shall maintain, 
and shall use its best efforts to ensure that all Covered Providers 
maintain, accounting books, records, documents and other evidence 
relating to the Program adequate to show, to MCC's satisfaction, the 
use of all MCC Funding and the implementation and results of the 
Program (``Compact Records''). In addition, the Government shall 
furnish or cause to be furnished to MCC, upon its request, originals or 
copies of such Compact Records.
    (b) Accounting. 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 
MCC's prior written approval, other accounting principles, such as 
those (i) prescribed by the International Accounting Standards Board, 
or (ii) then prevailing in Cape Verde. Compact Records must 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 applicable legal 
requirements.
    (c) Providers and Covered Providers. Unless the Parties agree 
otherwise in writing, a ``Provider'' is (i) any entity of the 
Government that receives or uses MCC Funding or any other Program Asset 
in carrying out activities in furtherance of this Compact or (ii) any 
third party that receives at least US$50,000 in the aggregate of MCC 
Funding (other than as salary or compensation as an employee of an 
entity of the Government) during the Compact Term. A ``Covered 
Provider'' is (i) a non-United States Provider that receives (other 
than pursuant to a direct contract or agreement with MCC) US$300,000 or 
more of MCC Funding in any Government fiscal year or any other non-
United States person or entity that receives, directly or indirectly, 
US$300,000 or more of MCC Funding from any Provider in such fiscal 
year, or (ii) any United States Provider that receives (other than 
pursuant to a direct contract or agreement with MCC) US$500,000 or more 
of MCC Funding in any Government fiscal year or any other United States 
person or entity that receives, directly or indirectly, US$500,000 or 
more of MCC Funding from any Provider in such fiscal year.

[[Page 9980]]

    (d) Access. Upon MCC's request, the Government, at all reasonable 
times, shall permit, or cause to be permitted, authorized 
representatives of MCC, an authorized Inspector General of MCC 
(``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 the Government to conduct any 
assessment, review or evaluation of the Program, the opportunity to 
audit, review, evaluate or inspect facilities, assets and activities 
funded in whole or in part by MCC Funding.

Section 3.8 Audits; Reviews

    (a) Government Audits. The Government shall, on an annual basis (or 
on a more frequent basis if requested by MCC in writing), conduct, or 
cause to be conducted, financial audits of all disbursements of MCC 
Funding covering the period from signing of this Compact until the 
following December 31 and covering each twelve-month period thereafter 
ending December 31, through the end of the Compact Term. In addition, 
upon MCC's request, the Government shall ensure that such audits are 
conducted by an independent auditor approved by MCC and named on the 
list of local auditors approved by the Inspector General or a United 
States-based certified public accounting firm selected in accordance 
with the ``Guidelines for Financial Audits Contracted by MCA'' (the 
``Audit Guidelines'') issued and revised from time to time by the 
Inspector General, which are posted on the MCC Web site. Audits shall 
be performed in accordance with the Audit Guidelines and be subject to 
quality assurance oversight by the Inspector General. Each audit must 
be completed and the audit report delivered to MCC no later than 90 
days after the first period to be audited and no later than 90 days 
after the end of the audit period, or such other period as the Parties 
may otherwise agree in writing.
    (b) Audits of Other Entities. The Government shall ensure that MCC 
financed agreements between the Government or any Provider, on the one 
hand, and (i) a United States nonprofit organization, on the other 
hand, state that the United States nonprofit organization is subject to 
the applicable audit requirements contained in OMB Circular A-133, 
``Audits of States, Local Governments, and Non-Profit Organizations,'' 
issued by the United States Office of Management and Budget; (ii) a 
United States for-profit Covered Provider, on the other hand, state 
that the United States for-profit organization is subject to audit by 
the applicable United States Government agency, unless the Government 
and MCC agree otherwise in writing; and (iii) a non-US Covered 
Provider, on the other hand, state that the non-US Covered Provider is 
subject to audit in accordance with the Audit Guidelines.
    (c) Corrective Actions. The Government shall use its best efforts 
to ensure that each Covered Provider (i) takes, where necessary, 
appropriate and timely corrective actions in response to audits, (ii) 
considers whether the results of the Covered Provider's audit 
necessitates adjustment of the Government's records, and (iii) permits 
independent auditors to have access to its records and financial 
statements as necessary.
    (d) Audit by MCC. MCC shall have the right to arrange for audits of 
the Government's use of MCC Funding.
    (e) 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.

Article 4. Communications

Section 4.1 Communications

    Any document or communication required or submitted by either Party 
to the other under this Compact must be in writing and, except as 
otherwise agreed with MCC, in English. For this purpose, the address of 
each Party is set forth below.
To MCC
    Millennium Challenge Corporation, Attention: Vice President, 
Compact Operations, (with a copy to the Vice President and General 
Counsel), 875 Fifteenth Street NW., Washington, DC 20005, United States 
of America, Telephone: (202) 521-3600, Facsimile: (202) 521-3700, 
Email: [email protected] (Vice President, Compact Operations), 
[email protected] (Vice President and General Counsel).
To the Government
    Ministry of Finance and Planning, Attention: Minister of Finance 
and Planning, (with a copy to the National Director of Planning), 
Avenida Amilcar Cabral, P.O. Box 30, Praia, Cape Verde, 
Telephone: +238 260 7500/1, Facsimile: +238 261 3897.
To MCA-Cape Verde II
    Upon establishment of MCA-Cape Verde II, MCA-Cape Verde II will 
notify the Parties of its contact details.

Section 4.2 Representatives

    For all purposes of this Compact, the Government shall be 
represented by the individual holding the position of, or acting as, 
Minister of Finance and Planning of the Republic of Cape Verde, and MCC 
shall be represented by any of the individuals holding the positions 
of, or acting as, the Vice President or Deputy Vice President for 
Compact Operations (each of the foregoing, a ``Principal 
Representative''). Each Party, 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 Government will designate an Additional 
Representative. A Party may change its Principal Representative to a 
new representative that holds a position of equal or higher authority 
upon written notice to the other Party.

Section 4.3 Signatures

    Signatures to this Compact and to any amendment to this Compact 
shall be original signatures appearing on the same page or in an 
exchange of letters or diplomatic notes. With respect to all documents 
arising out of this Compact (other than the Program Implementation 
Agreement) and amendments thereto, signatures may, as appropriate, be 
delivered by facsimile or electronic mail and in counterparts and shall 
be binding on the Party delivering such signature to the same extent as 
an original signature would be.

Article 5. Termination; Suspension; Expiration

Section 5.1 Termination; Suspension

    (a) Either Party may terminate this Compact without cause in its 
entirety by giving the other Party thirty (30) days' prior written 
notice. MCC may also terminate this Compact or MCC Funding without 
cause in part by giving the Government thirty (30) days' prior written 
notice.
    (b) MCC may, immediately, upon written notice to the Government, 
suspend or terminate this Compact or MCC Funding, in whole or in part, 
and any obligation related thereto, if MCC determines that any 
circumstance identified by MCC, as a basis for suspension or 
termination (whether in writing to the Government or by posting on the 
MCC Web site) has occurred, which circumstances include but are not 
limited to the following:
    (i) The Government fails to comply with its obligations under this 
Compact or any other agreement or arrangement entered into by the 
Government in

[[Page 9981]]

connection with this Compact or the Program;
    (ii) An event or series of events has occurred that makes it 
probable that the Program Objectives or any of the Project Objectives 
shall not be achieved during the Compact Term or that the Government 
shall not be able to perform its obligations under this Compact;
    (iii) A use of MCC Funding or continued implementation of this 
Compact or the Program violates applicable law or United States 
Government policy, whether now or hereafter in effect;
    (iv) The Government or any other person or entity receiving MCC 
Funding or using Program Assets is engaged in activities that are 
contrary to the national security interests of the United States;
    (v) An act has been committed or an omission or an event has 
occurred that would render Cape Verde 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 such act or any other provision of law;
    (vi) The Government has engaged in a pattern of actions 
inconsistent with the criteria used to determine the eligibility of 
Cape Verde for assistance under the Act; and
    (vii) The Government or another person or entity receiving MCC 
Funding or using Program Assets is found to have been convicted of a 
narcotics offense or to have been engaged in drug trafficking.

Section 5.2 Consequences of Termination, Suspension or Expiration

    (a) Upon the suspension or termination, in whole or in part, of 
this Compact or any MCC Funding, or upon the expiration of this 
Compact, the provisions of Section 4.2 of the Program Implementation 
Agreement shall govern the post-suspension, post-termination or post-
expiration treatment of MCC Funding, any related Disbursements and 
Program Assets. Any portion of this Compact, MCC Funding, the Program 
Implementation Agreement or any other Supplemental Agreement that is 
not suspended or terminated shall remain in full force and effect.
    (b) MCC may reinstate any suspended or terminated MCC Funding under 
this Compact if MCC determines that the Government or other relevant 
person or entity has committed to correct each condition for which MCC 
Funding was suspended or terminated.

Section 5.3 Refunds; Violation

    (a) If any MCC Funding, any interest or earnings thereon, or any 
Program Asset is used for any purpose in violation of the terms of this 
Compact, then MCC may require the Government to repay to MCC in United 
States Dollars the value of the misused MCC Funding, interest, 
earnings, or asset, plus interest within thirty (30) days after the 
Government's receipt of MCC's request for repayment. The Government 
shall not use MCC Funding, proceeds thereof or Program Assets to make 
such payment.
    (b) Notwithstanding any other provision in this Compact or any 
other existing agreement to the contrary, MCC's right under Section 
5.3(a) 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.

Section 5.4 Survival

    The Government's responsibilities under this Section and Sections 
2.7, 3.7, 3.8, 5.2, 5.3, and 6.4 shall survive the expiration, 
suspension or termination of this Compact.

Article 6. Compact Annexes; Amendments; Governing Law

Section 6.1 Annexes

    Each annex to this Compact constitutes an integral part hereof, and 
references to ``Annex'' mean an annex to this Compact unless otherwise 
expressly stated.

Section 6.2 Amendments

    (a) The Parties may amend this Compact only by a written agreement 
signed by the Principal Representatives (or such other government 
official designated by the relevant Principal Representative).
    (b) Notwithstanding Section 6.2(a), the Parties may agree in 
writing, signed by the Principal Representatives (or such other 
government official designated by the relevant Principal 
Representative) or any Additional Representative, to modify any Annex 
to (i) suspend, terminate or modify any Project or Activity, or to 
create a new project, (ii) change the allocations of funds as set forth 
in Annex II as of the date hereof (including to allocate funds to a new 
project), (iii) modify the implementation framework described in Annex 
I or (iv) add, delete or waive any condition precedent described in 
Annex IV; provided that, in each case, any such modification (A) is 
consistent in all material respects with the Program Objectives and 
Project Objectives, (B) does not cause the amount of Program Funding to 
exceed the aggregate amount specified in Section 2.1 (as may be 
modified by operation of Section 2.2(d)), (C) does not cause the amount 
of Compact Implementation Funding to exceed the aggregate amount 
specified in Section 2.2(a), (D) does not reduce the Government's 
responsibilities or contribution of resources required under Section 
2.6(a), and (E) does not extend the Compact Term.

Section 6.3 Inconsistencies

    In the event of any conflict or inconsistency between:
    (a) Any Annex and any of Articles 1 through 7, such Articles 1 
through 7, as applicable, shall prevail; or
    (b) this Compact and any other agreement between the Parties 
regarding the Program, this Compact shall prevail.

Section 6.4 Governing Law

    This Compact is an international agreement and as such shall be 
governed by the principles of international law.

Section 6.5 Additional Instruments

    Any reference to activities, obligations or rights undertaken or 
existing under or in furtherance of this Compact or similar language 
shall include activities, obligations and rights undertaken by, or 
existing under or in furtherance of any agreement, document or 
instrument related to this Compact and the Program.

Section 6.6 References to MCC Web Site

    Any reference in this Compact, the PIA or any other agreement 
entered into in connection with this Compact, to a document or 
information available on, or notified by posting on the MCC Web site 
shall be deemed a reference to such document or information as updated 
or substituted on the MCC Web site from time to time.

Section 6.7 References to Laws, Regulations, Policies and Guidelines

    Each reference in this Compact, the PIA or any other agreement 
entered into in connection with this Compact, to a law, regulation, 
policy, guideline or similar document shall be construed as a reference 
to such law, regulation, policy, guideline or similar document as it 
may, from time to time, be amended, revised, replaced, or extended and 
shall include any law, regulation, policy, guideline or similar 
document issued under or otherwise applicable or related to such law, 
regulation, policy, guideline or similar document.

[[Page 9982]]

Section 6.8 MCC Status

    MCC is a United States government corporation acting on behalf of 
the United States Government in the implementation of this Compact. MCC 
and the United States Government assume no liability for any claims or 
loss arising out of activities or omissions under this Compact. The 
Government waives any and all claims against MCC or the United States 
Government or any current or former officer or employee of MCC or the 
United States Government for all loss, damage, injury, or death arising 
out of activities or omissions under this Compact, and agrees that it 
shall not bring any claim or legal proceeding of any kind against any 
of the above entities or persons for any such loss, damage, injury, or 
death. The Government agrees that MCC and the United States Government 
or any current or former officer or employee of MCC or the United 
States Government shall be immune from the jurisdiction of all courts 
and tribunals of Cape Verde for any claim or loss arising out of 
activities or omissions under this Compact.

Article 7. Entry Into Force

Section 7.1 Domestic Requirements

    The Government shall proceed in a timely manner to complete all of 
its domestic requirements for each of the Compact and PIA to enter into 
force as an international agreement.

Section 7.2 Conditions Precedent to Entry Into Force

    Before this Compact enters into force:
    (a) The Program Implementation Agreement must have been signed by 
the parties thereto;
    (b) The Government must have delivered to MCC:
    (i) A letter signed and dated by the Principal Representative of 
the Government, or such other duly authorized representative of the 
Government acceptable to MCC, confirming that the Government has 
completed its domestic requirements for this Compact to enter into 
force and that the other conditions precedent to entry into force in 
this Section 7.2 have been met;
    (ii) A signed legal opinion from the Attorney General of Cape Verde 
(or such other legal representative of the Government acceptable to 
MCC), in form and substance satisfactory to MCC;
    (iii) Complete, certified copies of all decrees, legislation, 
regulations or other governmental documents relating to the 
Government's domestic requirements for this Compact to enter into force 
and the satisfaction of Section 7.1, which MCC may post on its Web site 
or otherwise make publicly available; and
    (c) MCC shall not have determined that after signature of this 
Compact, the Government has engaged in a pattern of actions 
inconsistent with the eligibility criteria for MCC Funding.

Section 7.3 Date of Entry Into Force

    This Compact shall enter into force on the date of the letter from 
MCC to the Government in an exchange of letters confirming that MCC has 
completed its domestic requirements for entry into force of this 
Compact and that the conditions precedent to entry into force in 
Section 7.2 have been met.

Section 7.4 Compact Term

    This Compact shall remain in force for five (5) years after its 
entry into force, unless terminated earlier under Section 5.1 (the 
``Compact Term'').

Section 7.5 Provisional Application

    Upon signature of this Compact, and until this Compact has entered 
into force in accordance with Section 7.3, the Parties shall 
provisionally apply the terms of this Compact; provided that, no MCC 
Funding, other than Compact Implementation Funding, shall be made 
available or disbursed before this Compact enters into force.
    In Witness Whereof, the undersigned, duly authorized by their 
respective governments, have signed this Compact.
    Done at Praia, Cape Verde, this 10th day of February, in the 
English language only.
    For the United States of America, acting through the Millennium 
Challenge Corporation, Name: Daniel W. Yohannes, Title: Chief Executive 
Officer.
    For the Republic of Cape Verde, Name: Cristina Duarte, Title: 
Minister of Finance and Planning.

Annex I Program Description

    This Annex I describes the Program that MCC Funding will support in 
Cape Verde during the Compact Term.

A. Program Overview

1. Background
    Strategically located at the crossroads of mid-Atlantic air and sea 
lanes, Cape Verde continues to exhibit one of Africa's most stable and 
democratic governments. In 2001, Cape Verde embarked on a 
transformation agenda aimed at building a self-sustaining high growth 
economy through policy reforms, private sector led growth, 
infrastructure development, and institutional changes. The Government 
recognizes that in order to alleviate poverty it must continue to 
improve performance and accelerate important reforms.
    The Government and MCC entered into a Millennium Challenge Compact 
in 2005 with the objective of increasing agricultural production, 
improving infrastructure, and developing the private sector. The 
Parties successfully completed the first compact, representing a new 
form of partnership with donors for the country. Based on Cape Verde's 
continued performance on MCC's eligibility criteria and the successful 
implementation of the first compact, the MCC Board selected Cape Verde 
as eligible for a second compact in December 2009.
2. Constraints Analysis and Consultative Process
    In January 2010, the Government assembled a task force under the 
Ministry of Finance and Planning to develop a second compact. The task 
force conducted a constraints analysis and through extensive 
consultation with national and local government stakeholders, civil 
society, and private sector identified both the water and sanitation 
and land sectors as critical constraints to achieving the country's 
economic transformation agenda.
3. Program Objective
    The Compact Goal is to reduce poverty through economic growth in 
Cape Verde. MCC's assistance will be provided in a manner that 
strengthens good governance, economic freedom, and investments in the 
people of Cape Verde. The Program Objectives are to reduce the costs 
upon the economy of inefficiently provided public services and remove 
institutional conditions that impede private sector investment. The 
Program consists of the Water, Sanitation and Hygiene Project and the 
Land Management for Investment Project, as further described in this 
Annex I.

B. Description of Projects

    Set forth below is a description of each of the Projects that the 
Government will implement, or cause to be implemented, using MCC 
Funding to advance the applicable Project Objectives. Specific 
activities that will be undertaken within each Project (each, an 
``Activity''), including sub-activities, are also described.
1. Water, Sanitation and Hygiene Project
(a) Background
    Cape Verde is an extremely water-scarce country and relies heavily 
on desalinization of water, which is an expensive and energy-intensive 
process. The water, sanitation and hygiene

[[Page 9983]]

(``WASH'') sector in Cape Verde is characterized by relatively poor 
levels of service including intermittent water supply. Domestic water 
consumption per capita is approximately 35 liters per day, half that of 
a lower-middle income peer group of countries, and barely above 
subsistence levels. As a result, Cape Verde has one of the highest 
water tariffs in Africa and the world. The poor, and particularly 
female-headed households, are especially vulnerable as only 9 percent 
of poor households have access to the networked public water supply. 
Additionally, Cape Verde is not on track to meet its Millennium 
Development Goal for sanitation. Low levels of water supply, combined 
with a population in which over 50 percent is without any access to 
improved sanitation services, results in significant public health 
problems, including diarrhea, malaria, and dengue.
    The WASH sector is marked by dispersed responsibilities across a 
large number of stakeholders, skewed incentives, a lack of 
institutional accountability, fragmented and overlapping authority, and 
conflicting legislation which impedes good planning and efficient 
operations in the sector. The Government has recently undertaken a 
number of important preliminary steps to improve the legal and 
regulatory framework. However, further significant reform and 
restructuring of the sector are required to ensure that the benefits of 
planned infrastructure improvements can be achieved.
(b) Summary of Project and Activities
    The objective of the Water, Sanitation and Hygiene Project (the 
``WASH Project'') is to install a financially sound, transparent and 
accountable institutional basis for the delivery of water and 
sanitation services to Cape Verdean households and firms by: reforming 
national policy and regulatory institutions; transforming inefficient 
utilities into autonomous corporate entities operating on a commercial 
basis; and improving the quality and reach of infrastructure in the 
sector. The WASH Project is comprised of three Activities as described 
below.
(i) National Institutional and Regulatory Reform Activity
    The Government is committed to undertaking institutional and 
regulatory reform activities at the national level to improve planning 
systems and regulatory processes including tariff setting (the 
``National Institutional and Regulatory Reform Activity''). During the 
Compact Term, the Government will create a new National Agency for 
Water and Sanitation (``ANAS''), which will be responsible for policy 
and planning of all water resources, domestic water supply, wastewater, 
and sanitation. ANAS will be guided by a National Water and Sanitation 
Council (``CNAS''), where core ministries, municipalities, private 
sector and civil society will be represented and will ensure that 
sector policies are aligned with overall government policy direction. 
The Government will also strengthen the existing Economic Regulatory 
Agency (``ARE'') to better regulate economic and technical aspects of 
the WASH sector, including tariff setting. Finally, the General 
Directorate of the Environment (``DGA'') will expand its existing 
functions on environmental protection, to include water and wastewater 
quality. The Government will support the operational costs for the new 
and strengthened agencies with its own resources.
    MCC will support the design and operationalization of the proposed 
institutional changes with MCC Funding for the following three sub-
activities:
    (A) Improve allocation of resources, planning, and coordination. 
This sub-activity aims to improve the allocation of resources mobilized 
for the sector, improve the coordination of sector activities and 
improve sector planning with a clear definition of sector priorities. 
During the project development process and to facilitate implementation 
of this Compact, MCC agreed to support the development of a Strategic 
National Master Plan (``Master Plan'') and strategic environmental and 
social assessment (``SESA'') for the WASH sector. This document will 
serve as the basis for sector planning, resource allocation, and 
investment coordination.
    Under the Compact, MCC Funding will support:
    (1) A review of all relevant legislation, regulations and 
organizational documents pertaining to the establishment and operations 
of CNAS, ANAS and the strengthening of ARE and DGA, which will assist 
the Government in drafting new legislation and regulations for the WASH 
sector;
    (2) Technical assistance, capacity building and training to enable 
ANAS, CNAS, ARE, and DGA to execute their new roles and 
responsibilities;
    (3) Technical assistance and resources for the integration of 
gender and social analysis and objectives into national policies, 
planning, human resources, and budgets, including establishment of a 
social and gender unit in ANAS, as well as the development of 
consultative processes, public information strategies, and 
opportunities for private sector participation; and
    (4) Information, education, and communication (``IEC'') activities 
focused on: (a) Identifying water, sanitation, and hygiene practices 
that should inform national master planning for the sector; (b) 
encouraging public input on new regulations and planning; (c) 
articulating the role of the public in the tariff setting process; and 
(d) creating a culture of paying for services among water and 
sanitation users.
    (B) Support transparent and fair tariff setting. This sub-activity 
will support the move to transparent and fair tariff setting, to better 
reflect the cost of service, and to improve the financial well-being 
and sustainability of utilities. Tariff support will also include 
assistance for the formation of appropriate pro-poor tariff policies. 
Specifically, MCC Funding will assess the current financial state of 
utilities nationally, and on Santiago particularly, with the goal of 
identifying the true cost of the existing systemic sector 
inefficiencies, impacts of these costs and inefficiencies on cost of 
service rates, and tariff and regulatory strategies for transitioning 
to a financially self-sustaining system.
    (C) Improve water quality standards and environmental oversight. 
MCC Funding will support technical assistance to DGA for the 
development of existing functions on environmental protection, with an 
emphasis on potable water and wastewater quality, and to develop new 
water quality and wastewater discharge standards, including appropriate 
wastewater treatment technologies and associated standards for 
wastewater reuse.
(ii) Utility Reform Activity
    The Utility Reform Activity will promote the transition of existing 
service providers to increased financial and administrative autonomy 
and operation based on commercial principles (the ``Utility Reform 
Activity''). MCC will focus its assistance on the Island of Santiago to 
support the formation of a new, multi-municipal utility that covers all 
or most of the island (``Aguas de Santiago''). The Parties expect that 
this Activity will create a blueprint for utilities in other parts of 
the country.
    (A) Encourage corporatization of utilities. MCC Funding will 
support the design and establishment of Aguas de Santiago, including a 
legal review and the preparation of organizational documents, staffing 
requirements, position descriptions, internal policies and operating 
procedures, and a plan for

[[Page 9984]]

recruiting and transitioning staff to the new utility.
    (B) Strengthen management and planning of Aguas de Santiago. MCC 
Funding will support:
    (1) A long-term strategic investment and business plan, capital 
improvement, and business plans for the water and sanitation sector on 
Santiago pursuant to the guidance emerging from the Master Plan and 
SESA. While these plans will be long-term and strategic in nature, they 
will assess the condition of existing water and sanitation systems and 
identify any immediate infrastructure and operational needs. The plans 
will also improve the management of water resources by ensuring an 
integrated approach to infrastructure planning;
    (2) Technical assistance for water sector utility operations and 
management, including technical, financial, commercial, legal, 
environmental, investment planning, procurement, contract management, 
and social and gender practices;
    (3) The acquisition and implementation of, and training on, 
management information systems and identified hardware and software, 
such as GIS, asset management, billing and customer management systems, 
and office equipment;
    (4) IEC campaigns that include outreach by utilities and/or NGOs. 
The objective of the IEC campaigns is to improve communication between 
the utility and its customers, with a focus on developing an 
understanding of the cost of services and culture of payment by users, 
promoting efficient water use and conservation, and other aspects 
necessary to increase impact and sustainability of the reforms; and
    (5) Technical and vocational education and training (``TVET'') to 
the staff of Aguas de Santiago to improve their ability to carry out 
their roles and responsibilities and to any redundant staff to assist 
their transition to new functions and responsibilities in other 
government agencies or in the private sector.
    (C) Reduce commercial losses in Santiago. Non-revenue water 
(``NRW'') at existing municipal water and sanitation entities (known as 
``SAAS'') in Santiago is estimated to be approximately 50 percent. MCC 
Funding will support a NRW study for service providers on Santiago, 
SAAS, the Water Distribution Agency of Praia (``ADA''), and ELECTRA, 
the national electricity utility with responsibility for water 
provision in certain municipalities--in order to provide better 
estimates of the level of losses in each service provider, assess the 
reductions likely achievable through improved commercial and technical 
management practices, and identify potential solutions to improve both 
technical and commercial aspects of NRW management. The study will 
provide a detailed strategy, and identify specific management actions 
and physical investments, for reducing NRW. Support from sub-activity 
(ii)(B) will be provided to improve customer billing databases, asset 
inventories, and other business operational elements that contribute to 
high NRW. Subject to prior approval by MCC, MCC Funding may be used to 
implement priority investments identified in the aforementioned study 
to reduce NRW losses for Aguas de Santiago under this sub-activity; 
these may include but are not limited to instituting demand management 
areas and meter replacement programs.
    MCC Funding for the Utility Reform Activity is subject to the 
following conditions:
    (1) Prior to disbursement of Program Funding for the Utility Reform 
Activity, the SAAS shall have committed to the transition to an 
independently operated and managed Aguas de Santiago in a memorandum of 
understanding among MAHOT and the municipalities or such other document 
acceptable to the Government and MCC; and
    (2) Continued support for the sub-activities described in 
paragraphs (ii)(B) and (ii)(C) above is conditioned on the Government 
ensuring that Aguas de Santiago has sufficient equity contributions, or 
other non-reimbursable funding from its shareholders to support its 
operations and working capital needs, in accordance with the economic 
and financial viability study undertaken in sub-activity (i)(B) above 
and satisfactory to MCC.
(iii) Infrastructure Grant Facility
    In order to promote continued national level reform, incentivize 
and reward utility reform, and improve investment planning, the Parties 
will support the establishment of an Infrastructure Grant Facility (the 
``IGF'') to fund much needed infrastructure and capital improvements in 
the WASH sector.
    MCC will make funds available to the IGF in three tranches as 
national policy and utility reform conditions have been met. The IGF 
will provide grants on a competitive basis to utilities that qualify 
based on continuous improvement on commercialization of operations. 
Grant applications from qualified utilities will be evaluated based on 
a set of transparent financial, economic, technical, operational, 
environmental, and gender and social criteria.
    The IGF will provide grants for three categories of projects: 
Category I--studies and technical assistance; Category II--existing 
network improvements and off-network improvements; and Category III--
network expansion. The categories reflect the level of complexity to 
implement these projects, and utility applicants will be required to 
demonstrate incremental progress towards corporatization to be eligible 
for funding under Categories II and III. Category II and III projects 
will include financial support for IEC and TVET activities connected to 
specific infrastructure projects as identified during the design phase. 
The IGF will have a pool of funds to assist poor and female-headed 
households to overcome barriers to WASH services.
    The eligibility requirements, project selection criteria, and 
operations and management procedures of the IGF, will be set forth in 
an operations manual to be approved by the Government and MCC. The 
Parties expect that the IGF will initially be managed by MCA-Cape Verde 
II with the support of advisory services as the Parties deem necessary 
and eventually transferred to ANAS when it is deemed to have sufficient 
capacity to administer and manage the facility. A technical evaluation 
panel will carry out detailed evaluations, provide technical 
assessments, and score proposed projects. An executive committee of the 
MCA-Cape Verde II Steering Committee will oversee the IGF and approve 
projects that pass established selection criteria and technical 
evaluation. The amount of MCC funds allocated for feasibility studies 
under Category I of the IGF will not exceed 20 percent, unless 
otherwise agreed by MCC. Each grant will also be subject to MCC no 
objection.
    MCC Funding will also support the development of an environmental 
and social management framework for the IGF, acceptable to the 
Government and MCC, to define the guiding environmental and social 
principles and to create procedures that will be included in the 
operations manual for assessing proposals against these objectives.
    As set forth more specifically in the Program Implementation 
Agreement, MCC Funding for the IGF will be made available incrementally 
subject to the achievement of reform milestones.
    (A) Prior to making the first tranche of funding available under 
the IGF: (1) the operations manual for the IGF shall have been approved 
by MCA-Cape Verde II and MCC; and (2) ANAS shall

[[Page 9985]]

have been created and CNAS shall have adopted the Master Plan;
    (B) Prior to making the second tranche of funding available under 
the IGF, Aguas de Santiago shall have been created as an independent, 
corporatized entity that is subject to the regulatory jurisdiction of 
ARE and ARE will have in place a tariff mechanism that is based on 
cost-of-service by rate class and which addresses pro-poor tariffs; and
    (C) Prior to making the third tranche of funding available under 
the IGF, the Government shall make an appropriate matching contribution 
to the IGF as per the agreed Government contribution schedule in the 
Program Implementation Agreement.
(c) Beneficiaries
    The Parties expect that together the National Institutional and 
Regulatory Reform and Utility Reform Activities will initially benefit 
the approximately 278,000 people living on the Island of Santiago, as a 
result of reductions in the average cost of water supply and commercial 
losses by utilities and the incremental growth effect of shifting 
government resources from less productive to more productive spending. 
As utility reform extends throughout the other islands during and after 
the Compact, the entire population of Cape Verde should eventually 
benefit from these Activities.
    The benefits of the IGF will depend on the returns of proposals 
presented for financing. To be selected, each proposal must demonstrate 
an expected economic rate of return of at least 12 percent. Based on 
estimates of potential projects, the Parties expect that the IGF will 
benefit on average a population of 48,000 (approximately 11,000 
households), or just over 10 percent of the population of Cape Verde.
(d) Gender and Social Integration
    The Parties agree to integrate gender and social factors in the 
WASH Project into each of the core Activities. Gender and social 
analyses and objectives are currently largely absent from WASH sector 
policies and planning, despite considerable inequalities in access to 
water and sanitation. MCC Funding will support technical assistance and 
resources for the integration of gender and social analysis and 
objectives into policies, planning, human resources, and budgets, at 
both the national and utility levels.
    Given the central role that women and girls play in water and 
sanitation at the household level, ensuring that infrastructure 
investments are selected and designed with due attention to social and 
gender considerations and appropriate IEC are critical to meeting the 
ultimate impact objectives of the IGF. Social and gender considerations 
will thus be embedded in the project selection criteria for the IGF, 
and the IGF will support IEC activities. Training and employment 
opportunities for women in the WASH sector will also be promoted 
through support for TVET activities at national, utility, and IGF 
levels.
(e) Environmental and Social Assessment
    The National Institutional and Regulatory Reform and the Utility 
Reform Activities have been classified as Category C projects in 
accordance with MCC Environmental Guidelines. These Activities are 
unlikely to have adverse environmental and social impacts. MCC reserves 
the right, however, to require specific environmental and social impact 
studies and mitigation measures. As an initial step, MCC has provided 
pre-Compact funding for a SESA in conjunction with the Master Plan for 
the Island of Santiago. MCC Funding will also support capacity building 
at DGA to strengthen Cape Verde's water quality standards and improve 
environmental oversight.
    The IGF has been classified as a Category D project since specific 
projects and activities will be funded through a facility. Based on the 
potential pipeline of projects, certain activities may potentially 
result in adverse environmental and social impacts, if appropriate 
mitigation measures are not taken. Operational procedures and an 
environmental and social management framework will be established to 
ensure that environmental and social risks and impacts are 
appropriately considered and managed in accordance with the laws and 
regulations in Cape Verde and MCC Environmental Guidelines.
(f) Sustainability
    The National Institutional and Regulatory Reform and Utility Reform 
Activities of the WASH Project are specifically targeted at improving 
the sustainability of the sector by addressing key constraints in the 
policy and regulatory environment and at the operational level. One of 
the challenges to maintaining and sustaining the reform process is 
strong civic engagement. To that end, the Activities include resources 
for broad-based public consultation and engagement but also focus 
efforts on ensuring that women and disadvantaged groups are being 
engaged at the earliest stages of planning all the way through 
construction.
(g) Donor Coordination
    The WASH Project has and will continue to benefit from coordination 
among the Parties and other donors. Whereas in the past the sector has 
been marked by a lack of integration at the Government and donor 
levels, and whereas the Government has made recent strides in setting 
the stage for sector reform and donors have responded by improving 
their internal coordination and their coordination with the Government, 
the Parties acknowledge that in the context of limited resources 
improved government management and coordination with its partners is 
necessary to the successful implementation of the WASH Project. The 
Parties agree that transparency and coordination are essential elements 
of meeting the ambitious reform agenda established by the Government.
2. Land Management for Investment Project
(a) Background
    In Cape Verde, no conclusive source of information about land 
property exists. Two different land registries each contain partial 
information about only a limited share of the country's land parcels. 
Additional records systems hold information about state-owned land. No 
source contains complete map-based information indicating actual 
location of a parcel of land over which a right is claimed. Confusion 
over ownership and boundaries has resulted in unauthorized land sales 
and the delay or cancellation of public as well as private investment 
projects and limits the ability of small firms and households to create 
value and increase incomes through investment in their property. The 
land rights registration process is time-consuming and costly for all 
land users, hampering domestic and foreign investment and economic 
growth. The Government seeks to create a single reliable and more 
easily accessible source of land rights and land boundaries information 
in order to strengthen Cape Verde's investment climate and to reduce 
land rights registration and transaction time and cost.
(b) Summary of Project and Activities
    The objective of the Land Management for Investment Project (the 
``Land Project'') is to reduce the time required for establishing 
secure property rights and to establish more conclusive land 
information in areas of near-term high development potential in Cape 
Verde by: Refining the legal,

[[Page 9986]]

institutional and procedural environment to create conditions for 
increased reliability of land information, greater efficiency in land 
administration transactions, and strengthened protection of land 
rights; developing and implementing a new land information management 
system; and clarifying parcel rights and boundaries on targeted islands 
with high investment potential.
(i) Legal and Institutional Foundations Activity
    The Legal and Institutional Foundations Activity (the ``Foundations 
Activity'') will consist of the two principal sub-activities described 
below.
    (A) Develop legal, institutional, and procedural foundations. Under 
this sub-activity, MCC Funding will support:
    (1) Legal and regulatory analysis, recommendations, and drafting of 
regulatory texts and procedural manuals for improved operations and 
coordination by land administration institutions over the long term;
    (2) Design of legal, regulatory and procedural tools and manuals 
enabling implementation and achievement of the objectives of the Rights 
and Boundaries Activity (described below); and
    (3) Stakeholder workshops and public outreach.
    (B) Develop and install land information and transaction systems. 
Under this sub-activity MCC Funding will support:
    (1) Technical assistance to computerize and link existing 
information about land rights and land parcels held in the paper-based 
Ministry of Justice registry system and in different municipal 
departments;
    (2) Design of a computerized land information system that will be 
used by the Ministry of Justice's Registry and Notary and by municipal 
governments to efficiently manage and access information within their 
area of legal competence;
    (3) System programming work consistent with the new institutional 
and procedural arrangements and data access protocols; and
    (4) Installation of the system, acquisition of relevant hardware 
and software for system operations, training for users, and public 
outreach.
(ii) Rights and Boundaries Activity
    Building on the Foundations Activity, the Rights and Boundaries 
Activity (the ``Rights and Boundaries Activity'') will support actual 
clarification of parcel rights and boundaries in targeted islands with 
high tourism investment potential, including through capacity building 
of key institutions.
    Subject to the satisfaction of the conditions set forth below, MCC 
Funding will support: Communications; outreach and training, including 
on topics of environmental and social risk management and planning and 
geographic information production and management; office-based linking 
of rights and boundary information where data exists; field-based 
clarification of boundaries through map consultation and surveying; 
field-based clarification of rights through consultation of existing 
records and information gathering and consultation with current 
occupants; rights adjudication recommendations made based on 
regulations and procedures agreed as a result of the Foundations 
Activity; public noticing of rights and boundary claims and 
requirements/opportunities for submission of or objection to claims; 
dispute resolution assistance; utilization of a resettlement policy 
framework tool as needed per International Finance Corporation, 
Performance Standard 5; registration of rights that can be adjudicated; 
and inputting of final boundary and rights information into the land 
information and transaction management system created under the 
Foundations Activity.
    The Rights and Boundaries Activity will cover areas of land claimed 
or held as private property, as property of the national government, 
and as property of municipal governments. The Activity will commence as 
a pilot on the island of Sal and be scaled to up to three other target 
islands subject to satisfaction of the conditions below. Should the 
Parties agree that additional funds remain in the Rights and Boundaries 
Activity after completion of Sal and commitment of sufficient funding 
(including adequate contingencies) for the three additional islands, 
the Parties may allocate any remaining funds to implement the Activity 
on other islands, based on criteria to be agreed by MCC and MCA-Cape 
Verde II.
    MCC Funding for fieldwork and fieldwork-related training under this 
Activity is subject to the following conditions:
    (A) Any new or amended laws or regulatory texts (regulations, 
ordinances and directives) determined to be necessary under the 
Foundations Activity, shall have been adopted by the Parliament or the 
relevant Government ministry and be in full force and effect;
    (B) An operations manual for the Rights and Boundaries Activity 
fieldwork satisfactory to MCC, including environmental and social 
safeguards and provisions, shall have been completed and adopted by the 
Ministry of Justice and the Ministry of Environment, Housing and 
Territorial Management through such instrument as the Parties agree is 
required to give full force and effect to such manual; and
    (C) Prior to disbursement of MCC Funding to implement the Activity 
on additional islands, the Government shall have completed the activity 
on Sal island, to a degree satisfactory to MCC, and any modifications 
to the implementation approach for remaining islands agreed shall have 
been agreed among MCC, the Government and MCA-Cape Verde II.
(c) Beneficiaries
    Based on estimates of incremental employment opportunities, the 
Parties expect that at least 3,000 households (approximately 13,000 
people) will benefit from increased tourism development as a 
consequence of project interventions. This number excludes the current 
population on the islands who are expected to benefit from reduced time 
and cost of land registration and more conclusive rights and boundaries 
information. The benefits would be expected to result from cost 
savings, from increased investment in property, and from increased 
property values. Additional benefits and beneficiaries will be 
monitored during the Compact Term.
(d) Environmental and Social Mitigation Measures
    The Land Project has been classified as a Category B project in 
accordance with MCC's Environmental Guidelines. This is based on a 
number of risks and potential impacts, which the Parties expect to 
mitigate through environmental and social (including gender-based) 
approaches integrated into the Land Project. The Parties will integrate 
several safeguards into the Rights and Boundaries Activity in an effort 
to minimize the risk of claimants losing rights given the imprecisions, 
gaps, and potential for overlaps in existing land rights information. 
The outreach activities will support increased public awareness, 
particularly among vulnerable populations, of the types of land rights 
and the procedures and resources available for formalizing those 
rights. The procedures developed under the Foundations Activity and the 
resettlement policy framework will assist stakeholders with dispute 
resolution, with clarifying links between planning and zoning 
requirements and rights and responsibilities of rights holders, and 
with adequate analysis, planning and decision-making in contexts of 
informal occupation or of secondary rights, particularly for vulnerable 
groups.

[[Page 9987]]

    Environmental and social risks related to increased economic 
development induced by the Land Project will be mitigated by public 
consultation and outreach, and by the development of tools for improved 
land administration and for integration of land information. This will 
help relevant institutions better manage land use and land rights over 
the long term. The Parties will evaluate ways in which existing 
environmental and social data, information on legal requirements 
associated with public lands, protected areas, critical habitats, and 
encumbrances can be built into land information systems to aid 
municipal and tourism planning, including integration of social 
safeguards.
(e) Sustainability
    Institutional and financial sustainability is fundamental to 
achieving the results of the Land Project. MCC has provided pre-Compact 
support for detailed analyses of financial sustainability drivers, 
projected revenue flows, and workforce requirements for the land 
information management and transaction systems. The Parties will review 
the findings and recommendations of these studies and agree to modify 
approaches and methodologies as appropriate, to assure that system 
design is commensurate with the Government's capacity to use and 
maintain the system over the long term.
    The Land Project will assure that legal, regulatory, and 
methodological approaches to collecting and maintaining boundary and 
rights information over time are consistent with principles of cost-
effectiveness and equitable access to land administration services.
(f) Donor Coordination
    The Land Project builds from recent investments in the Government's 
land sector initiatives by Spain, the Canary Islands, and the World 
Bank. A portion of the investment from other donors has supported 
specific land sector studies, including one completed by the Institute 
for Liberty and Democracy. Additionally, because the Rights and 
Boundaries Activities is a pilot that can be scaled up and implemented 
throughout the country, the Government is committed to continued donor 
coordination to identify additional funding to support rights and 
boundary clarification on other islands.

C. Implementation Framework

1. Overview
    The implementation framework and the plan for ensuring adequate 
governance, oversight, management, monitoring and evaluation, and 
fiscal accountability for the use of MCC Funding are summarized below. 
MCC and the Government will enter into a Program Implementation 
Agreement, and may enter into such other Supplemental Agreements and 
Implementation Letters in furtherance of this Compact as the Parties 
deem necessary, all of which, together with this Compact, set out the 
rights, responsibilities, duties and other terms relating to the 
implementation of the Program.
2. MCC
    MCC will take all appropriate actions to carry out its 
responsibilities in connection with this Compact and the Program 
Implementation Agreement, including the exercise of its approval rights 
in connection with the implementation of the Program.
3. MCA-Cape Verde II
    In accordance with Section 3.2(b) of this Compact and the Program 
Implementation Agreement, MCA-Cape Verde II will act on the 
Government's behalf to implement the Program and to exercise and 
perform the Government's rights and responsibilities with respect to 
the oversight, management, monitoring and evaluation, and 
implementation of the Program, including, without limitation, managing 
the implementation of Projects and their Activities, allocating 
resources, and managing procurements. The Government will ensure that 
MCA-Cape Verde II takes all appropriate actions to implement the 
Program, including the exercise and performance of the rights and 
responsibilities designated to it by the Government pursuant to this 
Compact and the Program Implementation Agreement. Without limiting the 
foregoing, the Government will also ensure that MCA-Cape Verde II has 
full decision-making autonomy, including, inter alia, the ability, 
without consultation with, or the consent or approval of, any other 
party, to: (i) Enter into contracts in its own name; (ii) sue and be 
sued; (iii) establish Permitted Accounts in a financial institution in 
the name of MCA-Cape Verde II and hold MCC Funding in such accounts; 
(iv) expend MCC Funding; (v) engage a fiscal agent who will act on 
behalf of MCA-Cape Verde II on terms acceptable to MCC; (vi) engage one 
or more procurement agents who will act on behalf of MCA-Cape Verde II, 
on terms acceptable to MCC, to manage the acquisition of the goods, 
works, and services required by MCA-Cape Verde II to implement the 
Program; and (vii) engage one or more auditors to conduct audits of its 
accounts. The Government will take the necessary actions to establish, 
operate, manage and maintain MCA-Cape Verde II, in accordance with the 
applicable conditions precedent to the disbursement of Compact 
Implementation Funding set forth in Annex IV to this Compact.
    The Government will create MCA[hyphen]Cape Verde II as a legally 
established program management unit under the Ministry of Finance. MCA-
Cape Verde II will be formed through a cabinet resolution, which 
resolution will be included in the Program Implementation Agreement. 
MCA-Cape Verde II will be created in accordance with MCC's Guidelines 
for Accountable Entities and Implementation Structures, published on 
the MCC Web site (the ``Governance Guidelines''), and will be in form 
and substance satisfactory to MCC. MCA-Cape Verde II, on behalf of the 
Government, will administer the MCC Funding. MCA-Cape Verde II will 
consist of the following bodies: a steering committee (the ``Steering 
Committee''); a management team (the ``Management Unit''); and two 
stakeholders committees (each a ``Stakeholders Committee'' and, 
collectively, the ``Stakeholders Committees''). As a recipient of MCC 
Funding, MCA-Cape Verde II will be subject to MCC audit requirements. 
MCA-Cape Verde II will be based in Praia, Cape Verde.
(a) Steering Committee
    (i) Composition. The Steering Committee will have ultimate 
responsibility for the oversight, direction, and decisions of 
MCA[hyphen]Cape Verde II, as well as the overall implementation of the 
Program. The Parties expect that the Steering Committee will initially 
be comprised of nine voting members consisting of representatives of 
national and municipal government, civil society and private sector and 
two non[hyphen]voting observers. Membership to the Steering Committee 
is anticipated to include the following voting members: Minister of 
Finance and Planning; Minister of Environment, Housing and Land 
Planning; Minister of Justice; Minister of Rural Development; Chief 
Advisor to the Prime Minister; President of the National Municipalities 
Association; President of the Chamber of Commerce Association; 
President of the Tourism Chamber; and President of the

[[Page 9988]]

Non[hyphen]Governmental Organization Association. The Steering 
Committee will also include the following non-voting observers: a 
representative of the Ministry of External Affairs; and the MCC 
Resident Country Director. The Steering Committee will be chaired by 
the Minister of Finance and Planning.
    (ii) Roles and Responsibilities. The Steering Committee will be 
responsible for the oversight, direction, and decisions of MCA-Cape 
Verde II, as well as the overall implementation of the Program. The 
Steering Committee will hold regular meetings in accordance with the 
Governance Guidelines, at a minimum once per quarter. The specific 
roles of the voting members and non-voting observers will be set forth 
in the MCA-Cape Verde II Regulations. On at least an annual basis or as 
otherwise required by the Government, the Steering Committee will 
report to the Government on the status and progress of the Compact 
regarding implementation, financial matters, procurements, and other 
matters identified by the Government.
(b) Management Unit
    (i) Composition. The Management Unit will be led by a competitively 
selected Managing Director and is expected to be initially comprised of 
the following full-time officers: Managing Director; Administration and 
Finance Director; Economist/Monitoring and Evaluation Manager; Water 
and Sanitation Project Manager; Land Project Manager; Gender & Social 
Manager; Environment Manager; Policy Reform and Institutional 
Development Manager; and Procurement Manager. These key officers will 
be supported by appropriate additional staff to enable the Management 
Unit to execute its roles and responsibilities. Such additional staff 
is expected to include: Procurement Specialist; Administrative and 
Financial Specialist; and Communication Specialist, among others.
    (ii) Roles and Responsibilities. With oversight from the Steering 
Committee, the Management Unit will have the principal responsibility 
for the day-to-day management of the Program, including those roles and 
responsibilities specifically set forth in the Program Implementation 
Agreement. The Management Unit will serve as the principal link between 
MCC and the Government, and will be accountable for the successful 
execution of the Program, each Project, and each Activity.
    (c) Stakeholders Committees
    (i) Composition. Program beneficiaries will be represented by two 
project[hyphen]level Stakeholder Committees composed of representatives 
from relevant ministries, municipalities, private sector and 
non[hyphen]governmental organizations as agreed by the Government and 
MCC. The two Stakeholders Committees will provide input to the Steering 
Committee and the Management Unit on matters that relate to the 
Program, promoting transparency and ongoing consultation.
    (ii) Roles and Responsibilities. Consistent with the Governance 
Guidelines, the Stakeholders Committees will be responsible for 
continuing the consultative process throughout implementation of the 
Program. While the Stakeholders Committees will not have any decision-
making authority, they will be responsible for, inter alia, reviewing, 
at the request of the Steering Committee or the Management Unit, 
certain reports, agreements, and documents related to the 
implementation of the Program in order to provide input to MCA-Cape 
Verde II regarding the implementation of the Program.
4. Environmental and Social Safeguards
    All of the Projects will be implemented in compliance with the MCC 
Environmental Guidelines, the MCC Gender Policy, the MCC Gender 
Integration Guidelines, and the International Finance Corporation's 
Performance Standards. Any involuntary resettlement will be carried out 
in accordance with the IFC Performance Standard 5 on Land Acquisition 
and Involuntary Resettlement in a manner acceptable to MCC. In the case 
of retrenchments and redundancies resulting from the implementation of 
the Projects, the Government will ensure that the Projects comply with 
national labor laws and best practices for managing retrenchment 
according to the IFC Good Practice Note: Managing Retrenchment. The 
Government also will ensure that the Projects comply with all national 
environmental laws and regulations, licenses and permits, except to the 
extent such compliance would be inconsistent with this Compact.
    Specifically, the Government will: cooperate with or complete, as 
the case may be, any ongoing environmental and social impact 
assessments, or if necessary undertake and complete any additional 
environmental and social assessments, environment and social management 
frameworks, environmental and social management plans, environmental 
and social audits, resettlement policy frameworks, and resettlement 
action plans required under the laws of Cape Verde, the MCC 
Environmental Guidelines, the MCC Gender Integration Guidelines, this 
Compact, the Program Implementation Agreement, or any other 
Supplemental Agreement, or as otherwise required by MCC, each in form 
and substance satisfactory to MCC; ensure that Project-specific 
environmental and social management plans are developed and all 
relevant measures contained in such plans are integrated into project 
design, the applicable procurement documents and associated finalized 
contracts, in each case in form and substance satisfactory to MCC; and 
implement to MCC's satisfaction appropriate environmental and social 
mitigation measures identified in such assessments or plans or 
developed to address environmental and social issues identified during 
implementation. Unless MCC agrees otherwise in writing, the Government 
will fund all necessary costs of environmental and social mitigation 
measures (including, without limitation, costs of resettlement) not 
specifically provided for, or that exceed the MCC Funding specifically 
allocated for such costs, in the Detailed Financial Plan for any 
Project.
    To maximize the positive social impacts of the Projects, address 
cross-cutting social and gender issues such as human trafficking, child 
and forced labor, and HIV/AIDS, and to ensure compliance with the MCC 
Gender Policy and MCC Gender Integration Guidelines, MCA-Cape Verde II, 
on behalf of the Government, will develop a comprehensive social and 
gender integration plan which, at a minimum, incorporates the findings 
of a comprehensive gender analysis, identifies approaches for regular, 
meaningful and inclusive consultations with women and other vulnerable/
underrepresented groups, consolidates the findings and recommendations 
of Project-specific social and gender analyses and sets forth 
strategies for incorporating findings of the social and gender analyses 
into final Project designs, as appropriate (``Social and Gender 
Integration Plan''); and ensure, through monitoring and coordination 
during implementation, that final Activity designs, construction tender 
documents, other bidding documents, implementation plans, and M&E plans 
are consistent with and incorporate the outcomes of the social and 
gender analyses and Social and Gender Integration Plan.
5. Implementing Entities
    Subject to the terms and conditions of this Compact, the Program 
Implementation Agreement, and any other related agreement entered into 
in connection with this Compact, the

[[Page 9989]]

Government, through MCA-Cape Verde II, may engage one or more entities 
of the Government to implement or assist in the implementation of any 
Project or Activity (or a component thereof) in furtherance of this 
Compact (each, an ``Implementing Entity''). The appointment of any 
Implementing Entity will be subject to review and approval by MCC. The 
Government will ensure that the roles and responsibilities of each 
Implementing Entity and other appropriate terms are set forth in an 
agreement, in form and substance satisfactory to MCC (each an 
``Implementing Entity Agreement'').
6. Fiscal Agent
    The Ministry of Finance and Planning will be responsible for 
assisting MCA-Cape Verde II with fiscal management and ensuring 
appropriate fiscal accountability of MCC Funding (in such capacity, the 
``Fiscal Agent''). The duties of the Fiscal Agent will include those 
set forth in the Program Implementation Agreement and in such 
agreements or documents as MCA-Cape Verde II enters into with the 
Fiscal Agent, which agreement shall be in form and substance 
satisfactory to MCC. If the Fiscal Agent is not able to perform its 
duties in compliance with MCC standards, MCC may require that MCA-Cape 
Verde II engage a new fiscal agent to carry out those duties.
7. Procurement
    The Parties expect that a dedicated unit within MCA-Cape Verde II 
will conduct and certify specified procurement activities in 
furtherance of this Compact with appropriate staffing and technical 
assistance support acceptable to MCC (in such capacity, the 
``Procurement Agent''). Once the unit is staffed, and prior to entry 
into force of the Compact, MCC will assess capability and performance 
of the MCA-Cape Verde II procurement unit and determine whether 
staffing is adequate and to what extent, if any, external advisory 
support is needed. If MCC determines that the MCA-Cape Verde II 
procurement unit is not able to perform its duties in compliance with 
MCC standards and guidelines, MCC may require that MCA-Cape Verde II 
engage additional external advisory support or an external procurement 
agent to carry out those duties. The roles and responsibilities of the 
Procurement Agent will be set forth in the Program Implementation 
Agreement and in such other agreements as MCA-Cape Verde II enters into 
with each Procurement Agent, which agreement will be in form and 
substance satisfactory to MCC. Each Procurement Agent will adhere to 
the procurement standards set forth in the MCC Program Procurement 
Guidelines and ensure that procurements are consistent with the 
procurement plan adopted by MCA-Cape Verde II pursuant to the Program 
Implementation Agreement, unless MCC otherwise agrees in writing.

Annex II Multi-Year Financial Plan Summary

    This Annex II summarizes the Multi-Year Financial Plan for the 
Program.

1. General

    A multi-year financial plan summary (``Multi-Year Financial Plan 
Summary'') is attached hereto as Exhibit A to this Annex II. By such 
time as specified in the PIA, the Government will adopt, subject to MCC 
approval, a multi-year financial plan that includes, in addition to the 
multi-year summary of estimated MCC Funding and the Government's 
contribution of funds and resources, the annual and quarterly funding 
requirements for the Program (including administrative costs) and for 
each Project, projected both on a commitment and cash requirement 
basis.

2. Government LMIC Contribution

    During the Compact Term, the Government will make contributions of 
at least US$9,934,500 (equal to 15 percent of the amount of MCC Funding 
committed under this Compact), to carry out the Government's 
responsibilities under Section 2.6(a) of this Compact. These 
contributions may include in-kind and financial contributions toward 
meeting the Program and Project Objectives. In connection with this 
obligation, the Government has developed a budget of the contributions 
it anticipates making over the five year term of the Compact. Such 
contributions will be in addition to the Government's spending 
allocated toward the Program and Project Objectives in its budget for 
the year immediately preceding the establishment of this Compact. The 
Government's contribution will be subject to any legal requirements in 
Cape Verde for the budgeting and appropriation of such contribution, 
including approval of the Government's annual budget by its 
legislature. The Parties shall set forth in the Program Implementation 
Agreement or other appropriate Supplemental Agreements certain 
requirements regarding this Government contribution, which requirements 
may be conditions precedent to the Disbursement of MCC Funding.

                                  Exhibit A--Multi-Year Financial Plan Summary
----------------------------------------------------------------------------------------------------------------
                                                 (US$ millions)
-----------------------------------------------------------------------------------------------------------------
                     Projects                        CIF     Year 1   Year 2   Year 3   Year 4   Year 5   Total
----------------------------------------------------------------------------------------------------------------
1. Water, Sanitation and Hygiene Project:
    National Institutional and Regulatory Reform
     Activity....................................
    Utility Reform Activity......................
    Infrastructure Grant Facility................
                                                  --------------------------------------------------------------
        Sub-Total................................     2.25     4.55     9.80    13.35     9.80     1.35    41.10
----------------------------------------------------------------------------------------------------------------
2. Land Management for Investment Project:
    Foundations Activity.........................
    Rights and Boundaries Activity...............
                                                  --------------------------------------------------------------
        Sub-Total................................     1.16     2.70     3.69     2.57     4.56     2.58    17.26
----------------------------------------------------------------------------------------------------------------
3. Monitoring and Evaluation (M&E)
                                                  --------------------------------------------------------------
        Sub-Total................................     0.09     0.22     0.31     0.26     0.30     0.21     1.39
----------------------------------------------------------------------------------------------------------------
4. Program Administration
                                                  --------------------------------------------------------------

[[Page 9990]]

 
    Sub-Total....................................     0.50     1.06     1.12     1.12     1.18     1.50     6.48
                                                  --------------------------------------------------------------
        Grand Total..............................     4.00     8.53    14.92    17.30    15.84     5.64    66.23
----------------------------------------------------------------------------------------------------------------

Annex III Description of Monitoring and Evaluation Plan

    This Annex III generally describes the components of the Monitoring 
and Evaluation Plan (``M&E Plan'') for the Program. The actual content 
and form of the M&E Plan will be agreed to by MCC and the Government in 
accordance with MCC's Policy for Monitoring and Evaluation of Compacts 
and Threshold Programs as posted from time to time on the MCC Web site 
(the ``MCC Policy for Monitoring and Evaluation of Compacts and 
Threshold Programs''). The M&E Plan may be modified as outlined in 
MCC's Policy for Monitoring and Evaluation of Compacts and Threshold 
Programs with MCC approval without requiring an amendment to this Annex 
III.

1. Overview

    MCC and the Government will formulate and agree to, and the 
Government will implement or cause to be implemented, an M&E Plan that 
specifies: (a) How progress toward the Compact Goal, Program Objectives 
and Project Objectives will be monitored (``Monitoring Component''); 
(b) a process and timeline for the monitoring of planned, ongoing, or 
completed Activities to determine their efficiency and effectiveness; 
and (c) a methodology for assessment and rigorous evaluation of the 
outcomes and impact of the Program (``Evaluation Component''). 
Information regarding the Program's performance, including the M&E 
Plan, and any amendments or modifications thereto, as well as progress 
and other reports, will be made publicly available on the Web site of 
MCC, MCA-Cape Verde II and elsewhere.

2. Program Logic

    The M&E Plan will follow a rationale that describes how proposed 
Activities are expected to contribute to the achievement of the Project 
Objectives, Program Objectives and Compact Goal.
    The Compact Goal is to reduce poverty through economic growth in 
Cape Verde. The Program Objectives are to reduce the costs upon the 
economy of inefficiently provided public services and to remove 
institutional conditions that impede private sector investment. The 
Project Objective of the Water, Sanitation and Hygiene Project is to 
establish a financially sound, transparent and accountable 
institutional basis for the delivery of water and sanitation services 
to Cape Verdean households and firms. The outcomes of the Project 
Activities are: (a) Institutions and procedures required for the 
regulation of corporatized utilities providing water and sanitation 
services and operating according to commercial principles; (b) the 
establishment and operation of commercially oriented water utilities; 
(c) improved cost-effectiveness of services; and (d) improved extent, 
quality and reliability of services provided. The Project Objective of 
the Land Management for Investment Project is to reduce the time 
required for establishing secure property rights and to establish more 
conclusive land information in areas of near-term high development 
potential in Cape Verde. The outcomes of the Project Activities are: 
(a) A reduction in the average time required to establish a clear 
property right and to complete other land-related transactions; (b) an 
increase in the reliability of land rights and boundaries information; 
and (c) an increase in the level of development activity on targeted 
islands, resulting in higher levels of employment, in response to 
reductions in lead time to investment. The combined results of the 
Program are expected to contribute to Cape Verde's own poverty-
reduction and economic growth goals as defined in the Cape Verde 
development strategy.

3. Monitoring Component

    To monitor progress toward the achievement of the impact and 
outcomes of the Compact, the Monitoring Component of the M&E Plan will 
identify: (i) The Indicators (as defined below), (ii) the definitions 
of the Indicators, (iii) the sources and methods for data collection, 
(iv) the frequency for data collection, (v) the party or parties 
responsible for collecting and analyzing relevant data, and (vi) the 
timeline for reporting on each Indicator to MCC.
    Further, the Monitoring Component will track changes in the 
selected Indicators for measuring progress towards the achievement of 
the Program Objectives and Project Objectives during the Compact Term. 
MCC also intends to continue monitoring and evaluating the long-term 
impacts of the Compact after Compact expiration. The M&E Plan will 
establish baselines which measure the situation prior to a development 
intervention, against which progress can be assessed or comparisons 
made (each a, ``Baseline''). The Government will collect Baselines on 
the selected Indicators or verify already collected Baselines where 
applicable and as set forth in the M&E Plan. Gender disaggregated data 
and indicators will be developed for the full version of the M&E Plan.
    (a) Compact Indicators. The M&E Plan will measure the results of 
the Program using quantitative, objective and reliable data 
(``Indicators''). Each Indicator will have benchmarks that specify the 
expected value and the expected time by which that result will be 
achieved (``Target''). All Indicators will be disaggregated by gender, 
income level and age, and beneficiary types to the extent practical and 
applicable. Subject to prior written approval from MCC, the Government 
or MCA-Cape Verde II may add Indicators or refine the definitions and 
Targets of existing Indicators.
    (b) Program Goal Indicator. The M&E Plan will contain an indicator 
related to the Compact Goal that seeks to measure the long-term 
sustainable performance of the Water, Sanitation and Hygiene Project 
and Land Management for Investment Project institutions.
    (c) Other Indicators. Indicators are used to measure progress 
toward the expected results throughout the implementation period. 
Different types of indicators are needed at different points in time 
and to trace the Program logic. The M&E Plan will contain the 
indicators listed in Annex III as well as other indicators, including 
``common indicators,'' necessary for MCC management oversight and 
communicating progress towards the achievement of compact results. 
Common Indicators are used by MCC to measure progress across Compacts 
within certain sectors and enable MCC to aggregate results across 
countries for reporting externally to key stakeholders.

[[Page 9991]]

Common indicators may be specified at all indicator levels (process 
milestone, output, outcome, objective, and goal).
    The M&E Plan indicators should be kept to the minimum necessary for 
Program oversight, Project management and for measuring and 
communicating progress toward expected results for planned activities. 
MCA-Cape Verde II may monitor additional indicators at the Activity 
level for their own management and communication purposes but these 
need not be included in the M&E Plan nor reported to MCC, unless 
requested by an MCC sector lead. MCA-Cape Verde II will compile and 
update baselines, pending MCC written approval, for key indicators as 
new data becomes available.
Table 1: Water, Sanitation and Hygiene Project
    The following are Indicators and Targets for the monitoring of the 
Water, Sanitation and Hygiene Project. Common indicators will be 
revised from their Annex III abbreviated form to conform to the MCC 
Common Indicator Guidance in the M&E Plan. Disaggregation by urban/
rural, gender of head of household and other relevant categories will 
be identified in the M&E Plan.

                                                     Table 1--Water, Sanitation and Hygiene Project
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Result                      Indicator                Definition                   Unit                Baseline            Year 5 target
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Objective Level Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reduced household cost of water     Unit cost of all       Total cost to consumer      US$/m\3\.............  TBD.................  TBD \1\
 needs.                              water consumed by      should include tariffs
                                     Santiago households.   paid, connection costs
                                                            (direct and otherwise),
                                                            commercial purchases,
                                                            value of time collecting
                                                            water and household
                                                            coping costs (direct and
                                                            otherwise) due to
                                                            reliability concerns.
                                                            Information will be
                                                            disaggregated, to the
                                                            extent possible, by
                                                            gender head of household
                                                            and income quartiles.
Reduced subsidies to WASH sector..  Value of implicit      TBD.......................  US$..................  TBD.................  TBD \2\
                                     subsidy reduction.
Reduced cost of network water       Average recovery       Cost of operation + 24      US$/m\3\.............  TBD \3\.............  Greater than 15%
 delivery.                           price of water for     hour supply factor +                                                     reduction per year
                                     corporatized           maintenance investment                                                   within two years of
                                     utilities.             (c.f., IB-NET definitions                                                corporatization\4\
                                                            and toolkits).
Increased population served by      Service coverage by    Percentage of national      Percentage...........  TBD\5\..............  50\6\
 corporatized utilities.             corporatized           population served by
                                     utilities.             regulated, corporatized
                                                            utilities.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Activity 1. National Institutional and Regulatory Reform
                                                                Outcome Level Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
Constraints to corporatized water   Satisfactory progress  Evaluation by an            TBD..................  TBD.................  TBD
 utilities reduced.                  against MCC approved   independent assessment
                                     work plan on legal     mechanism.\7\
                                     and regulatory
                                     reforms.
Core functionalities of             Indicators of core     TBD prior to entry into     TBD..................  TBD.................  TBD
 institutions in place.              competencies of ANAS   force in conjunction with
                                     and ARE.               independent assessment
                                                            mechanism.\8\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Activity 2. Utility Reform
                                                                Outcome Level Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sustainable performance of Aguas    Operating cost         Total annual operating      Percentage...........  TBD.................  TBD \9\
 de Santiago.                        coverage.              revenues divided by total
                                                            annual operating costs.
Improved reliability and quality    Client satisfaction    Total number of water and   Percentage...........  TBD\10\.............  TBD
 of network water delivery.          with supply            waste water complaints
                                     reliability; i.e.,     per year expressed as a
                                     continuity of          percentage of the total
                                     service.               number of water and waste
                                                            water connections
                                                            disaggregated by income
                                                            quartile.
                                    Objective measure of   Average hours of service    Hours per day........  TBD.................  TBD \11\
                                     supply reliability;    per day for water and
                                     i.e., continuity of    wastewater supply on
                                     service.               Santiago..

[[Page 9992]]

 
                                    Client satisfaction    Total number of potable     Percentage...........  TBD\12\.............  TBD
                                     with water quality.    water complaints per year
                                                            expressed as a percentage
                                                            of the total number of
                                                            potable water connections
                                                            disaggregated by income
                                                            quartile..
                                    Objective measure of   Fecal coliform counts (and/ Number 100ml (and/or   TBD.................  TBD
                                     water quality.         or residual C12) at the     mg/l).
                                                            water treatment works and
                                                            points of use (IB-NET).
Operational efficiency of Aguas de  Non-revenue water of   Difference between water    Percentage...........  50%\13\.............  40-50% reduction
 Santiago strengthened.              Aguas de Santiago.     supplied and water sold                                                  over baseline
                                                            (i.e. volume of water
                                                            ``lost'') expressed as a
                                                            percentage of net water
                                                            supplied.
                                    Annual budgets and     Published and audited       Number...............  0...................  TBD
                                     independent annual     statements by Aguas de
                                     audits of              Santiago.
                                     participating
                                     Santiago municipal
                                     water utilities
                                     published.
Increased access to improved        Proportion of          Proportion of Santiago      Percentage...........  86\14\..............  TBD \15\
 drinking water source.              population using an    population (households)
                                     improved drinking      using an improved
                                     water source.          drinking water source.
                                                            M&E Plan will include
                                                            disaggregation by income
                                                            quartile and gender of
                                                            head of household..
Increased access to improved        Proportion of          Proportion of Santiago      Percentage...........  41 (on-network).....  TBD \17\
 sanitation.                         population using an    population (households)                           19 (off-network)....
                                     improved sanitation    using an improved
                                     facility.              sanitation facility
                                                            disaggregated by on and
                                                            off network connections.
                                                            M&E Plan will include
                                                            disaggregation by income
                                                            quartile and gender of
                                                            head of household.\16\
Total water consumption...........  Residential water      Average water consumption   Liters per capita per  17.1 (quartile 1)...  TBD \19\
                                     consumption.           in liters per person per    day.                  31.7 (quartile 2)...
                                                            day for Santiago                                  33.0 (quartile 3)...
                                                            households, disaggregated
                                                            by income quartile. The
                                                            M&E Plan will include
                                                            additional disaggregation
                                                            based on the gender of
                                                            head of household.\18\
                                                                                                              62.7 (quartile 4)...
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Activity 3. Infrastructure Grant Facility
                                                                Outcome Level Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Demonstrated performance as         TBD for individual     TBD.......................  TBD..................  TBD.................  TBD
 defined under IGF operations        investments at
 manual.                             signing of grant
                                     agreements.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Targets will be established based on assumptions of decreasing costs for populations served by regulated, corporatized utilities. Baselines and the
  manner of calculation will be established in collaboration with an independent impact evaluation firm, and will use a combination of statistically
  representative surveys.
\2\ Indicator and definition to be determined based on further analysis of best available data sources.
\3\ Baseline and targets will be established based on inputs from an economic viability study to be financed by the Compact, as well as through the
  support of technical assistance consultants.
\4\ Baseline will be established, and targets verified, based on inputs from the economic viability study.
\5\ Electra is the only company regulated by ARE, and currently operates in Praia, Sao Vicente, Boa Vista and Sal. The baseline data will be sourced
  from the 2010 Census or ARE databases, and shall be included in the M&E Plan.
\6\ Target is based on Santiago population as a percent of national population.
\7\ Assessment mechanism and strategy to monitor and evaluate the quality of reform will be outlined in the M&E Plan, and shall be fully developed by
  year 1 of Compact implementation. The assessment mechanisms will include a plan detailing reform milestones based on Compact conditions precedent, IGF
  set-up criteria, and the results of studies performed prior to entry into force, including national legal reform and new institutional environment for
  WASH sector studies.
\8\ Core competency indicators will be determined through a national institutional environment study to be financed by the Compact prior to entry into
  force. It is expected that the core competencies arising from this design study shall be codified in the appropriate legislative reforms.
\9\ Baseline and target will be included in the M&E Plan. Targets will be established using data generated from the economic viability study.
\10\ Results from the 2010 Water and Sanitation Survey collected by the National Statistical Institute (INE) show that 36 percent of head of household
  respondents are either ``very dissatisfied'' (11 percent) or ``dissatisfied'' (25 percent) with the reliability of piped public water in Santiago,
  whereas 46 percent of respondents indicate that they are either ``satisfied'' (41 percent) or ``very satisfied'' (5 percent) with the reliability of
  piped public water in Santiago. M&E Plan will provide income disaggregation for this indicator.

[[Page 9993]]

 
\11\ Non-revenue water study and Santiago infrastructure needs and master plan study, to be financed by the Compact prior to entry into force, will aid
  in establishing baseline(s), annual targets and end-of-Compact targets as necessary. Targets for increased supply reliability will be based on
  estimated reductions of technical losses as opposed to increases in water production.
\12\ Results from the 2010 Water and Sanitation Survey collected by INE show that 38 percent of head of household respondents are either ``very
  dissatisfied'' (18 percent) or ``dissatisfied'' (20 percent) with the potability of piped public water in Santiago, whereas 49 percent of respondents
  indicated that they are either ``satisfied'' (44 percent) or ``very satisfied'' (5 percent) with the potability of piped public water in Santiago. M&E
  Plan will provide income disaggregation of data for this indicator.
\13\ Non-revenue water study financed prior to entry into force will update baseline figure.
\14\ Improved sanitation and improved water sources classifications are based on the Joint Monitoring Program for Water Supply and Sanitation by the
  World Health Organization and UNICEF. Baseline data is sourced from the 2010 Water and Sanitation Survey conducted by the National Statistical
  Institute (INE) financed through 609(g) resources. Improved water source includes ``household connected to the network [public water network,
  different from the sewer network] using a flush to piped sewer system, flush to septic system, borehole or flush or pour over to somewhere else.''
\15\ Water consumption survey will be used to establish baseline for the M&E Plan.
\16\ Improved sanitation and improved water sources classifications are based on the Joint Monitoring Program for Water Supply and Sanitation by the
  World Health Organization and UNICEF. Baseline is derived from the 2010 Water and Sanitation Survey conducted by the National Statistical Institute
  (INE). Improved water source includes ``household connected to the network [public water network, different from the sewer network] using a flush to
  piped sewer system, flush to septic system, borehole or flush or pour over to somewhere else.''
\17\ Target to be determined based on assumptions of ERR model and information collected through immediate needs assessment study and Santiago master
  plan to be conducted prior to entry into force.
\18\ Baseline derived from the 2010 Water and Sanitation Survey collected by INE. Quartile 1 refers to the lowest income group; quartile 4 refers to the
  highest income group.
\19\ Targets for increased household water consumption will be based on estimated reductions of technical losses as opposed to increases in water
  production.

Table 2: Land Management for Investment Project
    The following table describes the key Indicators and Targets for 
the monitoring the Land Management for Investment Project and its 
relevant components, as further described in paragraph 2(e) of Part B 
of Annex I.

                                                     Table 2--Land Management for Investment Project
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Result                      Indicator                Definition                   Unit                Baseline            Year 5 target
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Objective Level Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increased investments.............  Increased tourism      ``Level step increase''     Percentage...........  2011-2015 trend:      Greater than 5%
                                     related development    above trend in total bed                           current projections   level increase
                                     in islands with high   capacity and total bed-                            estimate a capacity   above baseline
                                     investment potential.  nights developed on St.                            of approx. 16,200     trends for both bed
                                                            Vicente, Sal and Boa                               beds, 3.8 million     capacity and bed-
                                                            Vista.\20\                                         bed-nights in         nights
                                                                                                               2016\21\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Outcome Level Indicators
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increase the efficiency and cost-   Time elapsed for       Elapsed time from           Days.................  73 \22\.............  90% reduction over
 effectiveness of land rights        property               initiation to completion                                                 baseline.\23\
 registration and transactions.      transactions.          of a formal property
                                                            transaction,
                                                            disaggregated by island.
                                    Cost for property      Costs to conduct a formal   US$..................  TBD.................  TBD \24\
                                     transactions.          property transaction
                                                            disaggregated by island.
More conclusive rights and          Parcels incorporated   Parcels incorporated are    Number...............  0...................  TBD \25\
 boundary information in islands     into the land          those with boundaries
 of high investment potential.       information system.    identified and conclusive
                                                            rights confirmed or newly
                                                            registered, disaggregated
                                                            by island.
                                    Land rights            Parcels with a land rights  Number...............  0...................  TBD \26\
                                     registered.            newly registered at the
                                                            Ministry of Justice
                                                            disaggregated by island.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\20\ Manner of calculation will be specified in the M&E Plan, in collaboration with an independent impact evaluation firm.
\21\ Data and targets are linked to the economic analysis and economic rate of return analysis for the project.
\22\ Source for baseline is World Bank Doing Business Survey, 2011. The baseline will be updated with more detailed information on time for property
  transactions compiled through project preparatory studies.
\23\ Targets reflect linkages to the economic rate of return analysis. This analysis assumes the target will be achieved by end of Compact year 3.
\24\ Targets will be established in the M&E Plan, and will reflect linkages to the Compact economic analysis.
\25\ Targets shall be established following the completion of the preparatory geo-referencing activities. Information will be sourced from
  administrative records of the Registo Predial.
\26\ Targets shall be established following the completion of the preparatory geo-referencing activities. Information will be sourced from
  administrative records of the Registo Predial.


[[Page 9994]]

     (d) Data Collection and Reporting. The M&E Plan will establish 
guidelines for data collection and reporting, and identify the 
responsible parties. For the Water, Sanitation and Hygiene Project, 
studies that include baseline data financed by the Compact may include: 
municipal non-revenue water studies, a willingness to pay and barriers 
to service studies, financial and tariff-setting studies, and multiple 
municipal utility economic viability studies conducted in all nine 
municipalities on the island of Santiago, in collaboration with 
municipal water utility authorities. The M&E Plan budget will fund 
additional household surveys and qualitative studies as necessary. For 
the Land Management for Investment Project, data may be collected 
through baseline studies financed by the Compact, tourism receipts, 
labor statistics, qualitative studies, and information about parcel 
boundaries and rights refined during the project and held in the 
databases of the Ministry of Justice and municipal governments. Data 
collection will support monitoring of plausible additional benefits 
that may result from project outcomes. Compliance with data collection 
and reporting timelines will be conditions for Disbursements for the 
relevant Activities as set forth in the Program Implementation 
Agreement. The M&E Plan will specify the data collection methodologies, 
procedures, and analysis required for reporting on results at all 
levels. The M&E Plan will describe any interim MCC approvals for data 
collection, analysis, and reporting plans.
    (e) 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 will be periodically reviewed to ensure that data reported 
are valid, reliable, timely, precise and of good integrity. 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 those levels of quality are not possible, given 
the realities of data collection. Impact evaluation consultants will 
provide additional quality assurance oversight.
    (f) Management Information System. The M&E Plan will describe the 
information system that will be used to collect data, store, process 
and deliver information to relevant stakeholders in such a way that the 
Program information collected and verified pursuant to the M&E Plan is 
at all times accessible and useful to those who wish to use it. The 
system development will take into consideration the requirement and 
data needs of the components of the Program, and will be aligned with 
existing MCC systems, other service providers, and ministries.
    (g) Role of MCA-Cape Verde. The monitoring and evaluation of this 
Compact spans two discrete Projects and multiple Activities and sub-
Activities, and will involve a variety of governmental, 
nongovernmental, and private sector institutions. In accordance with 
the designation contemplated by Section 3.2(b) of this Compact, MCA-
Cape Verde II is responsible for implementation of the M&E Plan. MCA-
Cape Verde II will oversee all Compact-related monitoring and 
evaluation activities conducted for each of the Activities, ensuring 
that data from all implementing entities are consistent, accurately 
reported and aggregated into regular performance reports as described 
in the M&E Plan.

4. Evaluation Component

    The Evaluation Component of the M&E Plan may contain up to three 
types of evaluations: impact evaluations; project performance 
evaluations; and special studies. Impact and performance evaluations 
share a common objective of assessing the likely program effects on key 
program outcomes; special studies can be conducted to answer any other 
questions that inform either program implementation, or the design or 
interpretation of the program evaluations. All of these evaluations 
will generally employ both qualitative and quantitative survey methods 
to improve our understanding of study-relevant questions. MCC also 
expects to continue monitoring and evaluating the long-term impacts of 
strategically selected components of MCC Compacts even after Compact 
expiration. If warranted, components of this Compact may be selected 
for these special post-Compact evaluations. As needed, MCA and MCC will 
evaluate the relevance of other areas of research regarding costs and 
benefits, and determine, given budgetary constraints, how best to 
allocate time and other resources to pursue them.
    The Evaluation Component of the M&E Plan will describe the purpose 
of the evaluation, methodology, timeline, required MCC approvals, and 
the process for collection and analysis of data for each evaluation. 
The results of all evaluations will be made publicly available in 
accordance with MCC's Policy for Monitoring and Evaluation of Compacts 
and Threshold Programs.
    (a) Impact/Performance Evaluation. The M&E Plan will include a 
description of the methods to be used to evaluate the impacts of 
project activities and investments on economic outcomes. Where needed, 
these will include plans for integrating the evaluation method into 
Project design. Consultations with stakeholders will help clarify the 
strategies outlined below, and will help to jointly determine which 
approaches have the strongest potential for informative and rigorous 
impact evaluations. The M&E Plan will further outline in detail these 
methodologies. Final impact evaluation strategies are to be included in 
the M&E Plan. All evaluation strategies will incorporate procedures for 
integrating gender and social concerns into its analysis. The following 
is a summary of the potential impact evaluation methodologies.
    (i) Water, Sanitation and Hygiene Project. The evaluation will 
focus on three main themes: independent reviews and, as warranted, 
independent specification and estimation of relevant project ERRs; 
examining the broad institutional benefits of the changes in national 
policies and utility organization and management; and assessing 
household-level impacts of program investments and activities. At the 
household level, the evaluations will focus on the following program 
impacts on household and individual outcomes: household expenditures on 
water purchases and coping mechanisms; imputed value of individual time 
devoted to water gathering and coping; and other household and 
individual costs attributable to the changing water and sanitation 
environment.
    Institutional level impacts such as reduced operating costs or 
losses, and increased commercial efficiency may be evaluated using a 
before-after comparison of utility performance. The consistency of this 
indicator should be assessed using any historical and current high-
frequency indicators, including water supplies, revenue collections, 
operating costs, etc. Estimates of household and individual costs and 
benefits should determine patterns across social, economic and 
demographic groups, including gender analysis.
    (ii) Land Management for Investment Project. The evaluation will 
focus on independent review and, if warranted, re-specification and 
estimation of project ERRs to account for significant changes in value-
added to the economy that might not be adequately approximated in the 
ex ante project analysis. Evaluation of benefits should focus on 
anticipated economic impacts of tourism-related sector investments 
plausibly attributable to the reduced time and other costs of securing 
land

[[Page 9995]]

rights and to more conclusive rights and boundaries information. If 
project improvements also broadly reduce the costs of securing land 
rights and increase the reliability of land information with effects 
across other sectors and regions, other plausible economic benefits 
attributable to these outcomes will also be explored. Estimates of such 
benefits should consider compelling evidence of clearly distinguished 
patterns across sectors, or across social, economic and demographic 
groups, including gender analysis.
    (b) Special Studies. The M&E Plan will include a description of the 
methods to be used for special studies, as necessary, funded through 
this Compact or by MCC. Plans for conducting the special studies will 
be determined jointly between the Government or MCA-Cape Verde II and 
MCC before the approval of the M&E Plan. The M&E Plan will identify and 
make provision for any other special studies, ad hoc evaluations, and 
research that may be needed as part of the monitoring and evaluating of 
this Compact. Either MCC, MCA-Cape Verde II or the Government may 
request special studies or ad hoc evaluations of Activities, or the 
Project as a whole, prior to the expiration of the Compact Term. When 
the Government engages an evaluator, the engagement will be subject to 
the prior written approval of MCC. Contract terms must ensure non-
biased results and the publication of results.
    (c) Request for Ad Hoc Evaluation or Special Studies. If MCA-Cape 
Verde II or the Government require 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 Activity or to seek funding from other donors, 
no MCC funding resources may be applied to such evaluation or special 
study without MCC's prior written approval.

5. Other Components of the M&E Plan

    In addition to the monitoring and evaluation components, the M&E 
Plan will include the following components for the Program, Project and 
Activities, including, where appropriate, roles and responsibilities of 
the relevant parties and providers:
    (a) Costs. A detailed cost estimate for all components of the M&E 
Plan; and
    (b) Assumptions and Risks. Any assumption or risk external to the 
Program that underlies the accomplishment of the Program Objective, 
Project Objective and Activity outcomes and outputs.

6. Approval and Implementation of the M&E Plan

    The approval and implementation of the M&E Plan, as amended from 
time to time, will be in accordance with the Program Implementation 
Agreement, any other relevant Supplemental Agreement and the MCC Policy 
for Monitoring and Evaluation of Compacts and Threshold Programs.

Annex IV Conditions Precedent to Disbursement of Compact Implementation 
Funding

    This Annex IV sets forth the conditions precedent applicable to 
Disbursements of Compact Implementation Funding (each a ``CIF 
Disbursement''). Capitalized terms used in this Annex IV and not 
defined in this Compact will have the respective meanings assigned 
thereto in the Program Implementation Agreement. Upon execution of the 
Program Implementation Agreement, each CIF Disbursement will be subject 
to the terms of the Program Implementation Agreement.

1. Conditions Precedent to Initial CIF Disbursement

    Each of the following must have occurred or been satisfied prior to 
the Initial CIF Disbursement:
    (a) The Government (or MCA-Cape Verde II) has delivered to MCC:
    (i) An interim fiscal accountability plan acceptable to MCC; and
    (ii) A CIF procurement plan acceptable to MCC.

2. Conditions Precedent to Each CIF Disbursement

    Each of the following must have occurred or been satisfied prior to 
each CIF Disbursement:
    (a) The Government (or MCA-Cape Verde II) has delivered to MCC the 
following documents, in form and substance satisfactory to MCC:
    (i) A completed Disbursement Request, together with the applicable 
Periodic Reports, for the applicable Disbursement Period, all in 
accordance with the Reporting Guidelines;
    (ii) A certificate of the Government (or MCA-Cape Verde II), dated 
as of the date of the CIF Disbursement Request, in such form as 
provided by MCC; and
    (iii) If this Compact has entered into force in accordance with 
Article 7, (A) a Fiscal Agent Disbursement Certificate and (B) a 
Procurement Agent Disbursement Certificate;
    (b) If any proceeds of the CIF Disbursement are to be deposited in 
a bank account, MCC has received satisfactory evidence that (i) the 
Bank Agreement has been executed and (ii) the Permitted Accounts have 
been established;
    (c) Appointment of an entity or individual to provide fiscal agent 
services, as approved by MCC, until such time as the Government 
provides to MCC a true and complete copy of a Fiscal Agent Agreement, 
duly executed and in full force and effect, and the fiscal agent 
engaged thereby is mobilized;
    (d) Appointment of an entity or individual to provide procurement 
agent services, as approved by MCC, until such time as the Government 
provides to MCC a true and complete copy of the Procurement Agent 
Agreement, duly executed and in full force and effect, and the 
procurement agent engaged thereby is mobilized; and
    (e) MCC is satisfied, in its sole discretion, that:
    (i) The activities being funded with such CIF Disbursement are 
necessary, advisable or otherwise consistent with the goal of 
facilitating the implementation of the Compact and will not violate any 
applicable law or regulation;
    (ii) No material default or breach of any covenant, obligation or 
responsibility by the Government, MCA-Cape Verde II or any Government 
entity has occurred and is continuing under this Compact or any 
Supplemental Agreement;
    (iii) There has been no violation of, and the use of requested 
funds for the purposes requested will not violate, the limitations on 
use or treatment of MCC Funding set forth in Section 2.7 of this 
Compact or in any applicable law or regulation;
    (iv) Any Taxes paid with MCC Funding through the date ninety (90) 
days prior to the start of the applicable Disbursement Period have been 
reimbursed by the Government in full in accordance with Section 2.8(c) 
of this Compact; and
    (v) The Government has satisfied all of its payment obligations, 
including any insurance, indemnification, tax payments or other 
obligations, and contributed all resources required from it, under this 
Compact and any Supplemental Agreement.

3. For Any CIF Disbursement Occurring After This Compact Has Entered 
Into Force in Accordance With Article 7

    MCC is satisfied, in its sole discretion, that:
    (a) MCC has received copies of any reports due from any technical 
consultants (including environmental auditors engaged by MCA-Cape Verde 
II) for any Activity since the previous Disbursement Request, and all 
such

[[Page 9996]]

reports are in form and substance satisfactory to MCC;
    (b) The Implementation Plan Documents and Fiscal Accountability 
Plan are current and updated and are in form and substance satisfactory 
to MCC, and there has been progress satisfactory to MCC on the 
components of the Implementation Plan for the Projects or any relevant 
Activities related to such CIF Disbursement;
    (c) There has been progress satisfactory to MCC on the M&E Plan and 
Social and Gender Integration Plan for the Program or Project or 
relevant Activity and substantial compliance with the requirements of 
the M&E Plan and Social and Gender Integration Plan (including the 
targets set forth therein and any applicable reporting requirements set 
forth therein for the relevant Disbursement Period);
    (d) There has been no material weakness or significant deficiency 
identified in any financial audit report delivered in accordance with 
this Compact and the Audit Plan, for the prior audit period which is 
not being sufficiently addressed in a corrective action plan 
satisfactory to MCC;
    (e) MCC does not have grounds for concluding that any matter 
certified to it in the related MCA Disbursement Certificate, the Fiscal 
Agent Disbursement Certificate or the Procurement Agent Disbursement 
Certificate is not as certified;
    (f) If any of the officers or key staff of MCA-Cape Verde II have 
been removed or resigned and the position remains vacant, MCA-Cape 
Verde II actively engaged in recruiting a replacement; and
    (g) MCC has not determined, in its sole discretion, that an act, 
omission, condition, or event has occurred that would be the basis for 
MCC to suspend or terminate, in whole or in part, the Compact or MCC 
Funding in accordance with Section 5.1 of this Compact.

Annex V Definitions

    Act has the meaning provided in Section 2.2(a).
    Activity has the meaning provided in Part B of Annex I.
    ADA has the meaning provided in paragraph 1(b)(ii)(C) of Part B 
of Annex I.
    Additional Representative has the meaning provided in Section 
4.2.
    Aguas de Santiago has the meaning provided in paragraph 1(b)(ii) 
of Part B of Annex I.
    ANAS has the meaning provided in paragraph 1(b)(i) of Part B of 
Annex I.
    ARE has the meaning provided in paragraph 1(b)(i) of Part B of 
Annex I.
    Audit Guidelines has the meaning provided in Section 3.8(a).
    Baseline has the meaning provided in paragraph 3 of Annex III.
    Cape Verde means the Republic of Cape Verde.
    CIF Disbursement has the meaning provided in Annex IV.
    CNAS has the meaning provided in paragraph 1(b)(i) of Part B of 
Annex I.
    Compact has the meaning provided in the Preamble.
    Compact Goal has the meaning provided in Section 1.1.
    Compact Implementation Funding has the meaning provided in 
Section 2.2(a).
    Compact Records has the meaning provided in Section 3.7(a).
    Compact Term has the meaning provided in Section 7.4.
    Covered Provider has the meaning provided in Section 3.7(c).
    DGA has the meaning provided in paragraph 1(b)(i) of Part B of 
Annex I.
    Disbursement has the meaning provided in Section 2.4.
    Evaluation Component has the meaning provided in paragraph 1 of 
Annex III.
    Excess CIF Amount has the meaning provided in Section 2.2(c).
    Fiscal Agent has the meaning provided in paragraph 6 of Part C 
of Annex I.
    Foundations Activity has the meaning provided in paragraph 
2(b)(i) of Part B of Annex I.
    Governance Guidelines means MCC's Guidelines for Accountable 
Entities and Implementation Structures, as such may be posted on 
MCC's Web site from time to time.
    Government has the meaning provided in the Preamble.
    Grant has the meaning provided in Section 3.6(b).
    IEC has the meaning provided in paragraph 1(b)(i)(A)(4) of Part 
B of Annex I.
    IGF has the meaning provided in paragraph 1(b)(iii) of Part B of 
Annex I.
    Implementation Letter has the meaning provided in Section 3.5.
    Implementing Entity has the meaning provided in paragraph 5 of 
Part C of Annex I.
    Implementing Entity Agreement has the meaning provided in 
paragraph 5 of Part C of Annex I.
    Indicators has the meaning provided in paragraph 3(a) of Annex 
III.
    Inspector General has the meaning provided in Section 3.7(d).
    Intellectual Property means all registered and unregistered 
trademarks, service marks, logos, names, trade names and all other 
trademark rights; all registered and unregistered copyrights; all 
patents, inventions, shop rights, know how, trade secrets, designs, 
drawings, art work, plans, prints, manuals, computer files, computer 
software, hard copy files, catalogues, specifications, and other 
proprietary technology and similar information; and all 
registrations for, and applications for registration of, any of the 
foregoing, that are financed, in whole or in part, using MCC 
Funding.
    Land Project has the meaning provided in paragraph 2(b) of Part 
B of Annex I.
    M&E Annex has the meaning provided in Annex III.
    M&E Plan has the meaning provided in Annex III.
    Management Unit has the meaning provided in paragraph 3 of Part 
C of Annex I.
    Master Plan has the meaning provided in paragraph 1(b)(i)(A) of 
Part B of Annex I.
    MCA-Cape Verde II has the meaning provided in Section 3.2(b).
    MCC has the meaning provided in the Preamble.
    MCC Environmental Guidelines has the meaning provided in Section 
2.7(c).
    MCC Funding has the meaning provided in Section 2.3.
    MCC Gender Policy means the MCC Gender Policy (including any 
guidance documents issued in connection with the guidelines) posted 
from time to time on the MCC Web site or otherwise made available to 
the Government.
    MCC Policy for Monitoring and Evaluation of Compacts and 
Threshold Programs has the meaning provided in Annex III.
    MCC Program Procurement Guidelines has the meaning provided in 
Section 3.6(a).
    MCC Web site has the meaning provided in Section 2.7.
    Monitoring Component has the meaning provided in paragraph 1 of 
Annex III.
    Multi-Year Financial Plan Summary has the meaning provided in 
paragraph 1 of Annex II.
    National Institutional and Regulatory Reform Activity has the 
meaning provided in paragraph 1(b)(i) of Part B of Annex I.
    NRW has the meaning provided in paragraph 1(b)(ii)(C) of Part B 
of Annex I.
    Party and Parties have the meaning provided in the Preamble.
    Permitted Account has the meaning provided in Section 2.4.
    Principal Representative has the meaning provided in Section 
4.2.
    Procurement Agent has the meaning provided in paragraph 7 of 
Part C of Annex I.
    Program has the meaning provided in the Preamble.
    Program Assets means any assets, goods or property (real, 
tangible or intangible) purchased or financed in whole or in part 
(directly or indirectly) by MCC Funding.
    Program Funding has the meaning provided in Section 2.1.
    Program Guidelines means collectively the Audit Guidelines, the 
MCC Environmental Guidelines, the MCC Gender Policy, the Governance 
Guidelines, the MCC Program Procurement Guidelines, the Reporting 
Guidelines, the MCC Policy for Monitoring and Evaluation of Compacts 
and Threshold Programs, the MCC Cost Principles for Government 
Affiliates Involved in Compact Implementation (including any 
successor to any of the foregoing) and any other guidelines, 
policies or guidance papers relating to the administration of MCC-
funded compact programs and as from time to time published on the 
MCC Web site.
    Program Implementation Agreement and PIA have the meaning 
provided in Section 3.1.
    Program Objectives has the meaning provided in Section 1.2.
    Project(s) has the meaning provided in Section 1.2.
    Project Objective(s) has the meaning provided in Section 1.3.

[[Page 9997]]

    Provider has the meaning provided in Section 3.7(c).
    Reporting Guidelines means the MCC ``Guidance on Quarterly MCA 
Disbursement Request and Reporting Package'' posted by MCC on the 
MCC Web site or otherwise publicly made available.
    Rights and Boundaries Activity has the meaning provided in 
paragraph 2(b)(ii) of Part B of Annex I.
    SAAS has the meaning provided in paragraph 1(b)(ii)(C) of Part B 
of Annex I.
    SESA has the meaning provided in paragraph 1(b)(i)(A) of Part B 
of Annex I.
    Social and Gender Integration Plan has the meaning provided in 
paragraph 3 of Part A of Annex I.
    Steering Committee has the meaning provided in paragraph 3 of 
Part C of Annex I.
    Stakeholders Committee(s) has the meaning provided in paragraph 
3 of Part C of Annex I.
    Supplemental Agreement means any agreement between (a) the 
Government (or any Government affiliate, including MCA-Cape Verde 
II) and MCC (including, but not limited to, the PIA) or (b) MCC and/
or the Government (or any Government affiliate, including MCA-Cape 
Verde II), on the one hand, and any third party, on the other hand, 
including any of the Providers, in each case, setting forth the 
details of any funding, implementing or other arrangements in 
furtherance of this Compact.
    Target has the meaning provided in paragraph 3(a) of Annex III.
    Taxes has the meaning provided in Section 2.8(a).
    TVET has the meaning provided in paragraph 1(b)(ii)(B)(5) of 
Part B of Annex I.
    United States Dollars or US$ means the lawful currency of the 
United States of America.
    Utility Reform Activity has the meaning provided in paragraph 
1(b)(ii) of Part B of Annex I.
    WASH has the meaning provided in paragraph 1(a) of Part B of 
Annex I.
    WASH Project has the meaning provided in paragraph 1(b) of Part 
B of Annex I.

[FR Doc. 2012-3832 Filed 2-17-12; 8:45 am]
BILLING CODE P