Project description and activities

Disbursement

For the disbursement of funds not channeled through the RNB, the PCU will open and operate a Special Account in United States dollars in the Central Bank of Rwanda (BNR). Upon request by Government’s designated signatories, IFAD will deposit USD 1 000 000 into the Special Account. All expenditure below USD 20 000 will be settled from the Special account. Withdrawals from the loan account may be made against statement of expenditures (SOEs) for categories of expenditures that will be jointly determined by GOR, IFAD and the CI.

In accordance with project policy outlined at the end of Chapter VII, disbursement of project funds will be done on certain conditions. With respect to the tea development component, the Loan Agreement will specify that only funds required to undertake (a) the distribution of the Nshili Tea estate to smallholders, and (b) the establishment, organisation and training of the primary cooperative societies among the beneficiaries of the distribution of the individual plantation, will be disbursed initially. The effective implementation of the distribution, and the establishment of the primary societies of assignees with full legal personality, will trigger disbursement of funds to support other project activities under the component, in both Nshili and Mushubi districts. There would be no similar condition applied to the other project components, except for the general rule that funds for constructing coffee and tea processing facilities will only be disbursed to the CPMCCs supported by the project, upon satisfactory establishment of such cooperative companies including the ownership of their equity capital by the primary societies of smallholder coffee growers.

The Loan Agreement will provide for a Subsidiary Agreement with the Rwanda National Bank to handle the funds allocated to the coffee and tea processing and marketing enterprises, and to channel funds to participating Rwanda financial institutions for the coffee and tea smallholder credit scheme, and to lend to SMEs and farmer associations for the new cash crops development. Funds released under the project to extend short term loans and overdraft facilities to CPMCCs, and the NTC, and primary societies, irrespective of the size of individual lending, are subject to the participating financial institutions to co-finance 25% of the loans with their own resources.

There will also be a Subsidiary Agreement with the Rwanda Development Bank concerning the operational coordination of all the financial operations funded by the project.

Disbursement of funds to establish the CPMCCs and the NTC, and the credit lines for smallholder credit and new cash crop project financing, will be directly disbursed by IFAD to the BNR, responding to a request for disbursement from the BNR to IFAD. In the case of the CPMCCs and the NTC such request would be accompanied by the documentation concerned, showing the list and juridical status of the would-be shareholders, the feasibility study, and the company financing arrangement proposed by the RDB and approved by the BNR. IFAD will review the proposal and issue the non-objection directly to the BNR, along with the transfer of the funds. In the case of credit lines to the Rwanda financial institutions participating in the other credit operations envisaged by the project, a similar procedure will apply for any specific proposal made by individual financial institutions wishing to utilize project funds and to co finance the operation, approved by the BNR.

View table: Disbursement Accounts by Financiers

Accounts, reports and audits. The Financial Controller of the PCU will be responsible for keeping the project accounts in accordance with established international practices. She/He will produce by biannual and annual financial reports. Project records accounts and financial statements for each financial year shall be audited by independent auditors acceptable to IFAD in accordance with appropriate auditing principles. The auditor shall provide to IFAD not later than six months after the end of each year, certified copies of the project financial statements and the audit report for the year. The external auditors will provide separate opinion on the utilisation of the SOEs and of the Special and Project Accounts. The SOE submitted by the service providers for payment by the PCU will be controlled by the PCU Financial Controller, and verified by the financial management team, within PIFU. In addition, the RDB will provide quarterly financial reports of its operations under the project, and annual financial statements of the commercial enterprises funded by the project, such statements being audited by external auditors acceptable to IFAD.