(b) be given on the most liberal terms possible for the Community;
(c) be administered under simple and rational procedures;
(d) contribute to the fullest participation of the majority of the population in the benefits of development, as well as support the necessary structural changes;
(e) ensure that technical assistance be provided upon request of the ACP State concerned, be of the highest quality but cost-effective and include arrangements for the rapid training of local replacement personnel;
(f) ensure that resource flows are on a more predictable and continuous basis;
(g) ensure participation by the ACP States in the management and utilization of financial resources and greater and more efficient decentralization of decision-making powers.
Section 2. Scope
Article 187.
Within the framework of this Convention, financial and technical co-operation shall cover:
(a) capital projects;
(b) sectoral programmes;
(c) rehabilitation of projects and programmes;
(d) technical co-operation programmes;
(e) deployment of flexible resources in support of the efforts of grassroots communities.
Article 188.
1. Financial and technical co-operation shall also be provided upon request for sectoral development and import programmes the purpose of which is to contribute to the optimum functioning of the productive sectors of the economy and to help meet basic human needs. Such programmes may include the financing of inputs to the productive system, such as raw materials, spare parts, fertilizers, insecticides and supplies to improve health and education services, but not of current administrative costs.
Such aid shalt back up the measures taken by the ACP States concerned to resolve the problems underlying the serious situation where this is of a structural nature. Its aim shall be to do away progressively with the needs it fulfils.
2. Financial and technical co-operation may cover, for new, ongoing or past projects and programmes, current administrative, maintenance and operating expenses only on the conditions laid down in (a) and (b):
(a) The financing of projects or programmes may cover expenditure incurred in, and strictly limited to, the start-up period, provided that such expenditure, identified in the financing proposal, is considered necessary for setting up, launching and operating the capital projects in question;
(b) managing capital projects and programmes implemented earlier, in order to ensure that full use is made of such projects and programmes;
(c) The least-developed ACP States shall be accorded priority and favourable treatment in the determination and implementation of the back-up and follow-up assistance referred to in (a) and {b).
Article 189.
The funds provided may be used to cover external costs and local expenditure required for the execution of projects and programmes.
Article 190.
1. The projects and programmes may, within the framework of the priorities established by the ACP States and that of regional co-operation, apply inter alia to:
(a) rural development, and in particular the striving for food self-sufficiency and food security;
(b) industrialization, artisanal activities, energy, mining, tourism and economic and social infrastructure;
(c) structural improvement of the productive sectors of the economy;
(d) protection of the environment;
(e) prospecting for, and exploration and exploitation of, natural resources;
(f) training, applied scientific research and applied technology, technological adaptation or innovation and the transfer of technology;
(g) industrial promotion and information;
(h) marketing and sales promotion;
(i) promotion of small and medium-sized national enterprises;
(j) support for local and regional development banks and financing institutions;
(k) microprojects for grassroots development;
(l) transport and communications;
(m) measures for promoting, in the field of air and sea transport, the movement of goods and persons
(n) measures for developing fishing activities;
(o) development and optimum utilization of human resources, special account being taken of the role of women in development;
(p) improvement of social and cultural infrastructure and services and of housing and water supply for the people.
2. These projects and programmes may also concern operations on specific themes, such as:
- drought and desertification control;
- combating the consequences of natural disasters through the introduction of prevention and aid mechanisms in the least-developed, landlocked and island ACP States;
- control of major endemic diseases and epidemics;
- hygiene and primary health care;
- control of endemic livestock diseases;
- measures to save energy;
- operations in general which are long-term and thus extend beyond any specific time-scale.
Article 191.
1. The following shall be eligible for financial and technical co-operation :
(a) ACP States;
(b) regional or inter-state bodies to which one or more ACP States belong and which are authorized by the said States;
(c) joint bodies set up by the Community and the ACP States and authorized by those States to attain certain specific objectives, notably in the spheres of agricultural, industrial and trade co-operation.
2. The following shall also be eligible for financial and technical co-operation, subject to the agreement of the ACP State or States concerned, in respect of projects and programmes approved by the latter:
(a) public or semi-public agencies of the ACP States, and in particular their national or regional financial institutions and development banks;
(b) local communities and private bodies working in the countries concerned for their economic, social and cultural development;
(c) enterprises carrying out their activities in accordance with industrial and business management methods and formed as companies or firms of an ACP State within the meaning of Article 253;
(d) groups of producers that are nationals of the ACP States;
(e) award holders and trainees.
Section 3. Responsibilities of the ACP States and the Community
Article 192.
1. Operations financed by the Community shall be implemented by the ACP States and the Community in close co-operation, the concept of equality between the partners being recognized.
2. The ACP States shall be responsible for:
(a) defining the objectives and priorities on which the indicative programmes shall be based:
(b) choosing the projects and programmes which they decide to put forward for Community financing;
(c) preparing and presenting to the Community the dossiers of projects and programmes;
(d) preparing, negotiating and concluding contracts;
(e) implementing projects and programmes financed by the Community;
(f) managing and maintaining operations carried out in the context of financial and technical co-operation.
3. The ACP States and the Community shall bear joint res- ponsibility for:
(a) establishing within the joint institutions, the general guidelines for financial and technical co-operation;
(b) adopting the indicative programmes of Community aid;
(c) appraising projects and programmes, and examining the extent to which they fit the objectives and priorities and comply with the provisions of this Convention;
(d) taking the necessary implementing measures to ensure equality of conditions for participation in invitations to tender and contracts;
(e) evaluating the effects and results of projects and programmes completed or underway;
(f) ensuring that the projects and programmes financed by the Community are executed in accordance with the arrangements decided upon and with the provisions of this Convention.
4. The Community shall be responsible for taking financing decisions on projects and programmes.
Article 193.
1. The Council of Ministers shall examine at least once a year whether the objectives of financial and technical co-operation are being attained and shall examine the general and specific problems resulting from the implementation of that co-operation. This examination shall also cover regional co-operation and measures in favour of least-developed, landlocked and island ACP States.
2. To this end, an ACP-EEC Committee shall be set up within the Council of Ministers to:
(a) collect information on existing procedures relating to the implementation of financial and technical co-operation and give any necessary clarification on these procedures;
(b) examine, at the request of the Community or the ACP States and on the basis of concrete examples, any general or specific problems arising from the implementation of such financial and technical co-operation;
(c) examine any problems in connection with the implementation of the timetables of commitments, execution and payments as provided for in Articles 216(2) and 220(2), with a view to facilitating the removal of any difficulties and bottlenecks discovered at different levels;
(d) ensure that the objectives and principles of financial and technical co-operation are attained;
(e) help establish general guidelines for financial and technical co-operation in accordance with the provisions of this Convention;
(f) prepare and submit to the Council of Ministers results of evaluation of projects and programmes;
(g) submit to the Council of Ministers any suggestions likely to improve or expedite the implementation of financial and technical co-operation;
(h) follow up and implement guidelines and resolutions adopted by the Council of Ministers on financial and technical co-operation;
(i) perform other tasks entrusted to it by the Council of Ministers.
3. The ACP-EEC Committee, which shall meet every quarter, shall be composed, on a basis of parity, of representatives of the ACP States and of the Community appointed by the Council of Ministers, or their authorized representatives. It shall meet at ministerial level each time one of the parties so requests and at least once a year. A representative of the Bank shall be present at committee meetings.
4. The Council of Ministers shall lay down the ACP-EEC Committee's rules of procedure, in particular the conditions for representation and the number of members of the Committee, the detailed arrangements for their deliberations and the conditions for holding the chair.
5. With the agreement of the Committee of Ambassadors, the ACP-EEC Committee may convene meetings of experts to study the causes of any difficulties and bottlenecks which may arise in implementing financial and technical co-operation. These experts shall suggest to the Committee possible ways of removing such difficulties and bottlenecks.
6. Any specific problem arising in the implementation of financial and technical co-operation may be submitted to the ACP-EEC Committee, which shall examine it within sixty days with a view to providing an appropriate solution.
7. To facilitate the work of the ACP-EEC Committee, ACP States and their beneficiary regional organizations, together with the Commission and in collaboration with the Bank, shall submit to the Committee an annual report on the management of Community financial and technical aid.
The report shall in particular show the position as to the commitment, implementation and use of aid, broken down by type of financing, the results of work done to evaluate projects and programmes and specific examples of implementation problems.
8. The ACP-EEC Committee shall examine the annual re- ports on the management of Community financial and technical aid, which shall be submitted to it by the Commission and the ACP States pursuant to paragraph 7. It shall draw up, for the attention of the Council of Ministers, recommendations and resolutions relating to measures directed towards attainment of the objectives of financial and technical co-operation, within the framework of the powers conferred upon it by that Council. It shall draw up an annual progress report, which shall be examined by the Council of Ministers at its annual meeting on the definition of the general guidelines for financial and technical co-operation.
9. On the basis of the information referred to in paragraphs 7 and 8, the Council of Ministers shall establish the general guidelines for financial and technical co-operation and shall adopt resolutions or guidelines on the measures to be taken by the Community and the ACP States in order to ensure that the objectives of such co-operation are attained.
10. Where the financing of projects within the Bank's sphere of competence is concerned, the arrangements and procedures for implementing financial and technical co-operation, as set out in Chapters 3 and 4, may, in consultation with the ACP States concerned, be adapted to take account of the nature of the projects financed by the Bank and to permit it, within the framework of the procedures laid down by its Statute, to act in accordance with the objectives of this Convention.
Chapter 2. Financial Co-operation
Section 1. Financial Resources
Article 194.
For the duration of this Convention, the overall amount of the Community's financial assistance shall be 8500 million ECU.
This amount shall comprise:
(1) 7400 million ECU from the Fund, allocated as follows:
(a) for the purposes set out in Articles 185, 186 and 187, 6 060 million ECU consisting of:
- 4860 million ECU in the form of grants;
- 600 million ECU in the form of special loans;
- 600 million ECU in the form of risk capital;
(b) for the purposes set out in Articles 147 to 174, 925 million ECU in the form of transfers for the stabilization of export earnings;
(c) for the purposes set out in Articles 176 to 184, a special financing facility of 415 million ECU under the Sysmin scheme;
(2) for the purposes set out in Articles 185, 186 and 187, up to 1 000 million ECU from the Bank in the form of loans made from its own resources in accordance with the terms and conditions provided for in its Statute. These loans shall be combined, under the conditions laid down in Article 196, with an interest rate subsidy charged to the Fund.
Article 195.
1. Should an ACP State fail to ratify, or denounce, this Convention, the Contracting Parties shall adjust the amounts of the resources provided for therein.
2. Such adjustments shall also apply upon
(a) the accession to this Convention of new ACP States which did not take part in its negotiation;
(b) the enlargement of the Community.
Section 2. Terms and Conditions of Loans
Article 196.
1. In order to permit effective support for ACP States' development programmes, the Contracting Parties agree that all loans extended to ACP States shall be provided on concessional terms.
2. Special loans from the Fund shall be granted under the following terms and conditions:
(a) a maturity period of 40 years, including
(b) a mandatory grace period of 10 years;
(c) such loans shall bear interest at the rate of 1% per annum, save as regards the least-developed ACP States, for which this rate shall be reduced to 0,50%.
3. Loans from the Bank shall be granted under the following terms:
(a) the rate of interest shall be the rate charged by the Bank at the time of signingâof each loan contract;
(b) except where loans are intended for investment in the oil sector, this rate shall be reduced by means of a 3% interest rate subsidy, which shall be automatically adjusted so that the interest rate actually borne by the borrower will be neither less than 5% nor more than 8%;
(c) the aggregate amount of interest rate subsidies calculated in terms of its value at the time of the signing of the loan contract shall be charged against the amount of grants provided by the Fund and shall be paid direct to the Bank;
(d) the duration of loans made by the Bank from its own resources shall be governed by terms stipulated on the basis of the economic and financial characteristics of the project, but may not exceed 25 years. These loans shall normally comprise a grace period fixed by reference to the construction period and the funds needed for the project.
Section 3. Methods of Financing
Article 197.
1. Projects or programmes may be financed by grant, or by special loan, or by risk capital, or by loans from the Bank from its own resources, or jointly by two or more of these means of financing.
2. For resources of the Fund administered by the Commission, the methods of financing for each project or programme shall be decided jointly by the Community and the ACP State or States concerned by reference to the level of development and the geographical, economic and financial situation of these States. Account shall also be taken of the economic, social and cultural impact of the methods of financing.
3. For resources of the Fund administered by the Bank, the methods of financing shall be fixed in close consultation with the ACP State concerned or the beneficiary on the basis of the economic and financial characteristics of the project or programme in question and the stage of development and economic and financial situation of the ACP State or States con- cerned.
4. For the Bank's own resources, the methods of financing shall be decided by reference to the nature of the project, the prospects for its economic and financial return and the stage of development and economic and financial situation of the ACP State or States concerned. Account shall be taken in addition of factors guaranteeing the servicing of repayable aid. Exami- nation by the Bank of the admissibility of projects and the granting of loans from its own resources shall be carried out in consultation with the ACP State or States concerned in accordance with the detailed rules, conditions and procedures laid down in its Statute and in this Convention.
5. The Bank's task in the ACP States shall be to contribute, through its own resources, to the economic and industrial development of the ACP States on a national and regional scale. To this end, the financing of productive projects and programmes in industry, agro-industry, tourism and mining, and in energy production, transport and telecommunications linked to these sectors shall be undertaken in the first place by the Bank with loans from its own resources or risk capital. These sectoral priorities shall not exclude the possibility of the Bank's financing, from its own resources, productive projects and programmes in other sectors which satisfy its criteria for making contributions, in particular in the area of commercial agriculture.
6. Where a request for the financing of a project or programme is submitted to the Commission or to the Bank, and it is found that such project or programme could not be financed by one of the forms of aid administered by the institution, the latter shall, having informed the potential recipient, transmit the request without delay to the other institution.
7. Grants or loans may be accorded to an ACP State, or direct to the recipient, or via a development bank, or may be channelled by the ACP State to a final recipient.
8. In the last-mentioned case, the terms on which the money may be made available by the ACP State to the final recipient shall be laid down in the financing agreement or loan contract.
9. In the course of its financial operations, the Bank shall establish close links with the national development banks of the ACP States. In the interests of co-operation, it shall endeavour to make all appropriate contacts with banking and financial institutions in the ACP countries concerned by its operations.
10. Any profit accruing to the ACP State because it receives either a grant or a special loan for which the interest rate or the repayment period is more favourable than that of the final loan shall be used by the ACP State for development purposes on the conditions laid down in the financing agreement or loan contract.
11. Special treatment shall be accorded to the least-developed ACP States when determining the volume of the financial resources which such States may expect from the Community for the purpose of their indicative programmes. In addition, account shall be taken of the particular difficulties of the land-locked or island ACP States. These financial resources shall be combined with particularly favourable terms of financing, having regard to the economic situation and the nature of the needs specific to each State. They shall consist essentially of grants, and, in appropriate cases, of special loans, or risk capital or loans from the Bank, having regard to the criteria laid down in paragraph 4.
Article 198.
At the request of the ACP States, the Community shall lend technical assistance in studying and finding practical solutions to their indebtedness, debt-servicing and balance-of-payments problems.
Section 4. Risk Capital
Article 199.
1. With a view to aiding the implementation of operations of general interest to the economy of the ACP States, the Community may contribute to the formation of risk capital which may be used inter alia for:
(a) increasing directly or indirectly the own resources, or resources treated as such, of public, semi-public or private enterprises and granting quasi-capital assistance to such enterprises;
(b) financing specific studies for the preparation and the drawing up of projects and providing assistance to enterprises during the start-up period or for rehabilitation purposes;
(c) financing research and investment in preparation for the launching of projects and programmes in the mining and energy sectors.