Tanzania - Fifth Education Project

CIRCULATMG COPY FILE CO BE RETURNED TO REPORTS DESK copy DOCUMENT OF INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Use Report No. P-1710a-TA REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE UNITED REPUBLIC OF TANZANIA FOR A FIFTH EDUCATION PROJECT December 16, 1975 This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCY EQUIVALENTS (as at November 1, 1975) Tanzania Sh = US$0.12 US$1.00 = T Sh 8.05 (The Tanzania Shilling is officially valued at a fixed rate of 9.66 T Sh to the SDR. The US Dollar/Tanzania Shilling exchange rate is there- fore subject to change. Conversions in this report were made at US$1.00 to T Sh 8.05, which is close to the short-term average exchange rate.) TANZANIA FISCAL YEAR July 1st - June 30th  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT TO THE UNITED REPUBLIC OF TANZANIA FOR A FIFTH EDUCATION PROJECT 1. I submit the following report and recommendation on a proposed credit to the United Republic of Tanzania for the equivalent of US$11.0 million on standard IDA terms to help finance a Fifth Education Project. PART I - THE ECONOMY General 2. The last full economic report on Tanzania (AE-26) was distributed to the Executive Directors on May 22 and June 22, 1972. This was followed by an Economic Updating Report (30-TA) distributed on December 11, 1972. A basic economic mission is scheduled for 1976. An agricultural sector report was issued on December 10, 1974. An industry and mining sector report and a report on the fiscal aspects of Tanzania's recent decentral- ization of Government were distributed in April 1975. The Consultative Grouip for East Africa met in April 1975 to discuss the progress and pros- pects of the Tanzanian economy and the need for additional resources to support the Government's development program. Country data are provided in Annex I. Tanzania is one of the 25 least developed countries as defined by the United Nations. 3. The TANU Party, under the leadership of President Nyerere, has been the guiding force in Tanzania's political evolution since the 1950's. Over the years following independence the political leadership has developed a philosophy of egalitarian socialism which has been articulated in many documents, most central of which is the Arusha Declaration of 1967. In restructuring the political, economic and social life of the countrv the leadership has introduced an impressive series of far-reaching institutional reforms. For the past decade Tanzania's social and economic policy has been guided by three fundameptal objectives; (a) the achievement of a part4- cipatory, decentralized socialist economic order; (b) the eradication of absolute poverty and progress toward greater income equality; and (c) more rapid long-term economic growth with full participat4on of all regions  - 2 - and population groups in the development process. Some of the Govern- ment's most significant decisions have been in the area of incomes policy; however, while considerable progress has been made toward reducing inequality within the category of employed workers, large gaps still exist between urban and rural standards of living. 4. Tanzania is one of the thlree Partner States belonging to the East African Community. The 1967 Treaty for East African Cooperation is one of the most far-reaching and comprehensive economic cooperation agree- ments in existence among sovereign states. However, in practice the dcgree of economic integration and cooperation among the Partner States is much less than what was envisaged in the Treaty. Political developments in the Partner States have created tensions within the Community and impaired the growth of interstate trade. These difficulties have been compounded by the balance of payments crisis which currently faces all three Partner States. 5. Between 1968 and 1973, Tanzania's GDP increased 4.6 percent per year in real terms. Exports of goods and services in constant prices grew 2.8 percent per year during the same period. Domestic savings were main- tained at about 18 percent of GDP. Investment increased from 19 percent of GDP to 23 percent with public sector investment rising to 80 percent of the total investment in 1973. Annual price increases were moderate to low. Current Government receipts more than doubled, but current expenditures increased at similar rates so that budgetary savings stagnated. Although the level of domestic savings and investment were substantial, the growth of GDP was probably not commensurate with the investment effort. This was largely due to the high proportion of investment that went into slow gestation infrastructure and social services, and to the difficulties encountered in expanding production in agriculture. The stagnation of agricultural export volumes and very slow growth in food production were the most worrisome problems. However, prudent domestic financial manage- ment, and an increasing inflow of external aid on concessionary terms, together with a rather sharp terms of trade improvement in 1973, made it possible to maintain a high investment rate. Reserves at the end of 1973 stood at a healthy $145 million which was then the equivalent of four months' imports. Indeed, the economy appeared in relatively good shape before the events of the winter of 1973-74. 6. Events occurred then which resulted in a drastic change in the overall balance of payments of Tanzania. Import prices rose sharply and in 1973 and 1974 rains failed in many parts of the country necessitating substantial increases in imports of basic food items. As a result, Tanzania's foreign exchange reserves declined by about $90 million in 1974 to a level representing about three weeks' imports and have remained at about the same level since. Tanzania has been able to cover the 1975 foreign exchange gap by curtailing imports to the bare minimum and by securing substantial program-type assistance including a $30 million Program Loan (No. 1063 TA) from the Bank and drawings on the second IMF credit tranche and the IMF special oil facility approved in August 1975.  - 3 - 7. In order to close the gap in the longer term the Government has begun a program of investment restructuring, improvements in the incentive framework, administrative changes, and reduction in the rate of growth of consumption. Under this program, the Government is reallo- cating public investment from infrastructure development to the directly productive sectors of agriculture, industry and mining. Actual public investment for directly productive sectors is estimated at 41 percent of the total in 1974-75 and it is planned to rise to 48 percent in 1975-76. Although the Government has made substantial progress in this endeavor, high level manpower constraints have inhibited both project preparation and execution. The single largest economic weakness is the slow growth of agricultural production. Several steps have been taken to increase output. The Government has raised producer prices to levels approaching world parity so as to provide greater incentive. The steeply progressive export tax on coffee, which had an average rate of 30 percent, has been reduced to an ad valorem rate of 12-1/2 percent to provide further in- centives to farmers. The overall planning capability of the Ministry of Agriculture is being improved and a project coordination unit to improve implementation has been established in the Ministry. The negative impact of villagization on output is being reduced through more careful planning. The Government is reducing unnecessary non-development related recurrent expenditure and is using taxation and wage/price controls to reduce the rate of growth of private consumption. The Government's progress in implementing policies and programs designed to close the balance of pay- ments gap in accordance with understandings relating to the program loan was the subject of a memorandum (see M75-687) from the Secretary to the Executive Directors dated September 25, 1975. 8. The program of economic restructuring initiated by the Tanzanian Government to cope with the economic crisis will generate benefits which will be spread out in time. Viewed negatively this means that the immediate barometers of economic health, such as the balance of payments, will re- main weak in the short run. The positive corollary is that Tanzania will have a basically stronger economy at the end of the restructuring process. The crisis acted as a catalyst in inducing significant policy shifts which were diagnosed as necessary beforehand but which did not command urgency until it struck. Not only did this hasten reallocation in the current Development Budget and Annual Plan, but it is also likely to have a subs- tantial impact on the forthcoming Third Five-Year Plan. For the long run the most encouraging aspect of the Government's response was the demons- tration that Tanzania retains the ability to push through necessary but unpopular policy measures over a wide front. It is this characteristic of a "hard state", together with the basically sound program of economic restructuring, which holds promise for the future. 9. The Tanzanian balance of payments will remain under severe pressure until more of the favorable balance of payments effects of recent policy changes can make an impact. Accordingly, Tanzania will require additional balance of payments assistance in 1976 and 1977. A gap of about $100 million is anticipated in 1976 after allowance for the  - 4 - balance of the IMF second credit tranche (paragraph 6 above) has been made. In this connection, an appraisal mission for a proposed second Bank Program Loan recently returned from Tanzania. In addition, a continued capital inflow in excess of the foreign exchange component of high priority projects will also be required if Tanzania is to achieve its development targets. Financing of some local expenditures will, therefore, be justified. 10. In terms of debt outstanding and disbursed, the Bank Group is Tanzania's second largest creditor after the People's Republic of China. Other major lenders are Sweden, Canada, Denmark, the Netherlands and the Federal Republic of Germany. The current low overall debt service ratio of about 7 percent is expected to rise to about 11 percent by 1980 and remain at about that level throughout the 1980's. Including a notional one-third share of the debt of the East African Community Corporations, the IBRD is presently holding 13 percent of Tanzania's outstanding external debt and IDA 10 percent; the IBRD share is expected to rise to about 23 percent in the next five years, and IDA share to rise to about 13 percent. Debt service payments to the Bank are about 13 percent of total debt service payments; the corresponding share for IDA is about 3 percent. These two figures are projected to rise to about 25 percent and 3 percent, respectively, by 1980. The debt service ratio of Bank loans to exports is expected to rise to about 2 percent by 1980. The Bank's exposure is high because several major donors are now making their aid available either on grant basis or very conces- sional terms and because as a result of prudent debt management suppliers' credits have been kept to a minimum. The average interest rate on loans to Tanzania outstanding at December 31, 1974 amounted to only 2.4 percent and the average term was 22 years. PART II - BANK GROUP OPERATIONS IN TANZANIA 11. Tanzania joined the Bank, IDA and IFC in 1962. Beginning with an IDA credit for education in 1963, 21 credits and nine Bank loans amounting to $320.8 million had been approved for Tanzania throvgh November 30, 1975. In addition, Tanzania has been a beneficiary of nine loans, totaling $229.8 million, which have been extended for the development of common services operated regionally by Tanzania, Kenya and Uganda through their associations in the East African Community. The only IFC investments in Tanzania to date, totaling $4.7 million, were made in the Kilombero Sugar Company in 1960 and 1964. This Company encountered financial cLifficulties and in 1969 IFC and other investors sold their interest in the Company to the Govern- ment. Annex II contains summary statements of Bank loans and IDA credits to Tanzania and the East African Community organizations as of October 31, 1975 and notes on the execution of on-going projects. 12. In keeping with Tanzania's overall development strategy our lending operations are increasingly focusing on the rural sector and directly productive projects. Up to the end of FY72 10 out of 14 loans  - 5 - and credits made directly to Tanzania had been for infrastructure. Of the 14 Tanzania operations approved since then all but three, Urban Sites and Services (Credit No. 495 TA), Highway Maintenance (Credit No. 507 TA) and Education IV (Credit No. 371 TA), were for directly productive projects. These projects are supporting both the agriculture and industrial sectors including an Integrated Rural Development Project (Credit No. 508 TA) and our first direct lending for an industrial project (Mwanza Textiles Loan No. 1128 TA). In addition, a project to support fisheries devel,pment is expected to be ready for consideration by the Executive Directors in the near future. A proposed forestry project, a project to support selected industries and related estate development at Morogoro.and a proposed second rural development project have recently been appraised in the fielu. A third power project is expected to be presented to the Executive Directors for their consideration in the near future and a proposed water supply project is currently being appraised in the field. In view of Tanzania's continuing balance of payments difficulties a mission recently visited the country to appraise a second program loan. 13. While it should be borne in mind that over one half of total Bank Group lending to Tanzania has been approved in the last two fiscal years and that initial start-up difficulties are perhaps inevitable, the project implementation difficulties referred to in Annex II of this report have been greater than anticipated. Some of these problems stem from the scarcity of suitably trained and qualified manpower, some reflect the understandable reluctance and apprehension of an essentially conservative traditional sector to adopt the new "technology" and others are undoubtedly a reflection of the strains created in a society which is attempting a unique traverse from one set of economic, institutional and political rules to another. The Government has become extremely conscious of these imple- mentation issues and is taking steps to resolve these problems. An earlier reluctance to recruit technical assistance for planning and implementation has been replaced by a greater willingness to utilize such assistance whenever it is demonstrably necessary. A technical assistance project designed to strengthen project preparation and implementation was recently approved by the Executive Directors. At the request of the Government about 10 technical staff have been supplied by ADS and a Bank staff member has recently been seconded to the newly established Project Implementation Unit in the Ministry of Agriculture. In a longer term attempt to alleviate the human resource constraints our lending is expected to increasingly emphasize formal and non-formal training. Furthermore, a conscious attempt is being made to develop more simple and less complex projects. 14. The difficulties facing the East African Community Corporations referred to in paragraph 4 above have affected the Bank's lending program for the Community. The East African Railways Corporation (EARC) has been the most severely affected. As a result of long delays by the Partner States in approving increases in tarrifs and restrictions on the inter- state transfer of corporate funds, EARC was unable to order essential spare parts and supplies with the result that its operational capacity has deteriorated considerably. In July 1974 the Partner States agreed, with the Bank assistance, on a package of financial measures to rehabilitate  - 6 - the EARC including interstate transfer of funds and injection of additional capital. However, this agreement was never fully implemented and as a result disbursements under Loan No. 674 EA (East African Railways III) were suspended in February 1975. 15. A Bank mission which visited East Africa in July 1975 was able, after meeting the Heads of State and other important officials 9' the three countries, to bring about an understanding on both the short- and long-term problems of the East African Community. On the general question of the future of the EAC, a decision was made to review various aspects of regional cooperation as now incorporated in the 1967 Treaty. It is anticipated that this review would begin before the end of the year and take 18-24 months to complete and would be undertaken by a commission consisting of nominated riepresentatives from each member country. To address the immediate financial and managerial problems, that will remain pending the agreement on a long range reform of the Treaty, the Partner States reached three major accords. To deal with the transfer problem, an agreement was reached on the mechanism for the transfer of funds from the regions to the Corporation headquarters. To ensure a workable plan for railway decentralization, a draft Consultancy Services Agreement on studying decentralization was adopted and will be financed under Loan No. 674 EA (the suspension of which has been lifted). Finally, the Partner States approved the appointment of financial consultants to undertake a study of the assets, liabilities, debts and financial con- dition of each of the three Corporations on a regional basis. This is viewed as a necessary step in providing the basis for the decentralization of the Corporations and is being financed by the UK. 16. It is expected that this broad agreement between the Partner States will provide a basis on which the Community can efficiently operate. Payment for past due loans has been received and all the actions reviewed above have been initiated. It would, however, be unrealistic to expect that decentralization of the Community structures will now proceed smoothly and without difficulties. There are fundamental differences in political outlook and development strategies between the Partner States and mutual suspicions of intent will undoubtedly continue. The newly agreed transfer formula (paragraph 15 above) is inevitably open to misinterpretation and goodwill will be required on all sides if it is to be successfully im- plemented. The dangers implicit in the possibility of operating diffi- culties growing in other Corporations is also recognized. However, a strong desire to retain control of the situation is also evident. The Bank's role as an "honest broker" has been accepted and endorsed by the Partner States and this role could be used effectively to help in the smooth transition in the Community's structure.  - 7 - PART III - THE EDUCATION SECTOR IN TANZANIA 17. At independence in 1961 Tanzania's education system involved only a fraction of its total population and was predominantly directed toward the needs of the modern sector. The adult literacy rate was low and the school pyramid had both an inadequate base (under 30 percent of primary school age children were enrolled in school) and tapered off rapidly (75 percent left school after four years and less than one third of the remainder reached secondary schooi). The education curriculum at all levels was oriented toward further study in spite of the fact that less than 8 percent of primary graduates entered public secondary schools and only a small fraction of those entered university. In addition, the major emphasis of study was on the urban and modern sectors in spite of Tanzania's overwhelmingly rural character (over 90 percent of the population lives in rural areas). This was perhaps the inevitable result of the significantly higher participation rates in the urban areas and the strong incentives for graduates to take up high paying posts in those areas. 18. In 1961 the Government concluded that its most pressing problem was the very small pool of skilled manpower. The existing level of trained Tanzanian managers and technicians was insufficient to man the Government administration, let alone implement its ambitious development plans. Therefore, while large numbers of expatriates filled the major manpower gaps, the Government's initial education strategy was to make Tanzania self-sufficient in skilled manpower by 1980. The First Five-Year Plan 19. In the First Five-Year Plan (1964-1969) emphasis was directed toward an expansion of education at the secondary, higher and adult education levels to address the manpower shortages. Special emphasis was placed on meeting the manpower requirements of the various ministries. A 1962 manpower survey provided a firm basis for secondary school expan- sion and the Government expanded enrollments as rapidly as was consistent with manpower planning projections. By 1970 the educational achievements in this areawere substantial. As a result of the large capital invest- ment program in new secondary schools and major extensions of existing schools, total enrollment at public secondary schools increased from 11,282 in 1961 to 29,958 in 1969. As important as the overall absolute increase, a reduction in dropout rates resulted in total enrollments expanding about twice as rapidly as the entry enrollments. 20. In higher education the achievements were no less significant. At independence there was no university in Tanzania and fewer than 100  -8- graduates continued their education annually (in either the University of East Africa or overseas). In 1961 University College, Dar es Salaam, was established; in the same year the Law Faculty opened, followed by Arts and Social Sciences in 1964, Science in 1965, Medicine in 1968, Agriculture (in Morogoro) in 1969 and Engineering in 1972. In addition, a number of specialized units for research and training were established (the Department of Development Studies, the East African Statistical Training Center, the Institutes of Education and Adult Education and the Institute of Kiswahili Research). Total university enrollments (in Tanzania and abroad) expanded from 940 in 1963 to 2,477 in 1969. Most of this increase occurred as a result of internal expansion -- in 1963, 34 students were enrolled in Dar es Salaam; by 1969, 1,253 were at the University College. 21. In technical and vocational education some important advances were made during the First Plan but they did not match the achievements in secondary and higher education. The Dar es Salaam Technical College was established in 1957 and a technical certificate course for those with industrial experience or four years of secondary school was inaugurated in 1965. Enrollments increased from 478 in 1962 to only about 700 in 1969. Problems with the recruitment of technical teachers and with establishing a relevant and useful course of study resulted in under-enrollment in courses and high dropout rates. The Government has taken steps to address these difficulties. 22. In assessing accomplishments under the First Plan, the most impressive fact is that Tanzania has become substantially self-sufficient in manpower. By 1974 citizens occupied 78 percent of the posts requiring university or equivalent education and 96.4 percent of those requiring secondary education. While gaps in particular areas remain (accounting, bookkeeping, engineering and medical education to name some of the most important), it is clear that the Government has established a viable and productive system for training the manpower required to run the country. Given the low base from which Tanzania began, this achievement is particularly impressive. The Second Five-Year Plan 23. In planning the education strategy for the Second Five-Year Plan the Government began to face a much broader problem in the education sector. As it was becoming clear that the minimum technical manpower needs were being addressed, Tanzania started to focus on the problem of establishing an appropriate education system for the entire country.  - 9 - 24. The political basis of this change was the Arusha Declaration, where the socialist ideology of Tanzania was comprehensively set out. In what was to be the first post-Arusha policy directive, "Education for Self-Reliance," President Nyerere critically reviewed the existing education system's performance and outlined the reforms required 'o bring the system into line with Tanzania's overall development strategy. He cited four major criticisms. Firstly, he stated that the existing system was elitist. He noted that the system could only address the needs of a very small proportion of the total population of school age children. Secondly, he maintained that pupils were isolated from the society that education was supposed to be preparing them to enter. As Tanzania is predominantly rural, he felt that an education system which stressed modern sector training was necessarily irrelevant to a majority of the population. Thirdly, he criticized the system's stress on book knowledge and its corresponding disrespect for practical experience. Finally, President Nyerere reviewed the dichotomy that the established system maintained between working and schools. He stressed the importance of work and of developing a society which views hard work as an appropriate role for all members of society -- including students. 25. In response to these criticisms the Second Five-Year Plan (1969-1974) involved a major restructuring of the education sector. Two related themes dominated this Plan's educational strategy -- making the education system more appropriate to Tanzania's needs and spreading its benefits to a greater proportion of the population. To make the system more relevant, emphasis was placed on reorienting the system towards the rural sector. Instead of the traditional emphasis on exams, entry to the next higher level and training for modern sector wage employment, the Second Plan called for the preparation of children for life in and national service to a poor and overwhelmingly rural country. School syllabi would be changed to focus on the skills needed in rural society. Practical subjects, notably in agriculture, were introduced. In addition, success in school alone would no longer be the sole means of selecting students for higher education -- recommendations from the Party and employers would also be taken into account. Students at the University would also be required to spend part of each year doing practical work in response to the call for self-reliance. 26. At the same time, the major emphasis in the educational effort shifted from secondary and higher education to primary education. The Plan set a target of 1989 for Universal Primary Education (UPE). It was decided that the wide disparity between regions in primary enrollment levels and the lack of opportunity for some children could no longer be accepted.  - 10 - In fact, in 1974 Tanzania accelerated the target date for UPE to 1977. Total Government expenditures in education have been held at about 17 per- cent of the Central Government's budget and 4 percent of GDP (both figures are low in the African context primarily because of the Government's abi- lity to restrict the growth in recurrent expenditures). It is expected that the Government will make every effort to minimize the effect of the 1977 UPE targets on public finances by a reliance on such measures as self- help and volunteer teachers. 27. While acceleration of UPE should probably be viewed as a target which the Tanzanians will push for but not reach, the increased effort will necessitate a revision of the content and delivery system. Providing a basic education to all primary age children in Tanzania continues to be accepted as a fundamental goal of the Tanzanian Government that cannot be compromised. President Nyerere has spoken extensively on the sacrifices necessary to ensure that UPE is achieved. In a recent speech to Parliament he called for a "more realistic physical standards" and the construction of schools and payment of teachers from local rather than national re- sources. He also reiterated the need for schools to include manual work in their curriculum, for example, growing food and assisting in construction. The effect of this emphasis on expanding enrollments has been impressive. While during the First Plan the growth in primary school enrollment was 14 percent (with a decline in the percentage of total school age children entering school), an expansion of 56 percent was achieved in the 1970-74 period. In 1972, a second major objective, eradicating illiteracy by 1975, was added to the goal of UPE. While it is certain that this target will not be achieved, there is clear evidence that increases in literacy have been made. 28. A more general aspect of the increased emphasis on primary education should also be noted. In order to fully integrate primary schools into the community, they are to become "community education centers." This involves making the primary schools focal points for the educational needs of the entire community rather than detached institutions used only for the education of children. Education and training for all members of the community would be incorporated into primary school studies. A General Assessment 29. Like most developing countries, Tanzania has given education and training a central role in its development strategy. What sets Tanzania apart from many other countries has been its ability to re-examine its education system in response to changing economic circumstances and the performance of the system as it grows. 30. From a very limited base Tanzania has substantially achieved its initial goal of self-sufficiency. More recently it has made major changes in the orientation of its education system and attempted to spread  - 11 - the benefits of education to broader segments of the community. While questions on the size and timing of this effort are legitimate, the Government feels the ultimate results will be significant in accelerating Tanzania's future development. 31. In the future it is anticipated that the trends that marked the Second Five-Year Plan in education will be maintained. The emphasis on literacy and primary education remains the key element of Government policy. Once UPE is attained it is anticipated that greater concern will be focused on designing appropriate curricula. In addition, the broader role of the schools in the community could be strengthened. The rural orientation is expected to be retained and could include organizing appropriate studies and expanding the use of experience into the courses. Rapidly changing circumstances may well result in new directions as well. Given past experience it is expected that the Government of Tanzania is fully capable of responding to these changes. Bank Role 32. The implementation of Tanzanian educational policies has been assisted by IDA in four previous education projects. A first project, financed in 1963 and successfully completed in 1967, helped the expansion of decondary education; a second project, financed in 1969 and nearly completed, is assisting teacher and technical education together with a further expansion of secondary education; a third project, financed in 1971, is assisting agricultural education. The fourth project, signed in 1973, is assisting training facilities for village development and teacher, technical and medical education with additional expansion of secondary education; sharp increases in building costs during 1972-74 have necessitated a reduction in the scope of the project and other difficulties in project implementatinn indicate a probable delay in execution of about one year beyond the original Closing Date. PART IV - THE PROJECT 33. An appraisal report entitled "Appraisal of the Fifth Education Project in Tanzania", No. 954-TA dated December 5, 1975, is being cir- culated separately. A Credit and Project Summary is provided as Annex III of this report. Objectives 34. The proposed project would be the fifth IDA credit for education in Tanzania. It includes three elements in support of Tanzania's educa- tional policy: (a) a program for the development of pergonnel necessary to organize and administer the cooperative villages; (b) continuation of  - 12 - the improvement of secondary education started immediately after inde- pendence; and (c) provision of specialists' services for accountancy and financial training, to survey the secondary school system, to review the content and delivery system of primary education, and to implement this project. 35. With the villagization effort, substantial additional manpower needs have developed in Tanzania's rural areas. The most urgent require- ments are those related to establishing a viable basis for administering individual villages. The rural training component of the project is the first phase of a broad long-range program directed at meeting these needs. Under this component training will be provided for the existing field staff of cooperative inspectors and community development workers in village management and they will be supplied with the essential facilities they need to operate effectively in the villages. It is anticipated that these trained Village Management Technicians (VMTs) will provide the skilled manpower required to assist the villages in evolving into viable entities producing the agricultural output needed to ensure the success of the villagization effort. 36. The secondary school component will provide for the expansion of secondary schools and represents a continuation of IDA's long involvement in the development of Tanzania's secondary school system (68 of Tanzania's 84 general secondary schools have received varying degrees of assistance from the Bank Group's first, second and fourth education projects). Together with parallel investments financed by bilateral agencies, this project would enable most of Tanzania's secondary schools to operate a balanced curri- culum including scientific and practical subjects. This would ensure that graduates are adequately prepared for entry into the local labor market or for further education in the scientific, technical and medical fields. 37. The major portion of the technical assistance component would involve studying the long-range needs of Tanzania in the areas of account- ancy and management. As noted above, in paragraph 22, manpower shortage in these fields have persisted throughout the post-independence period. However, as substantial investments have been made in these disciplines, what is viewed as essential is a comprehensive review of the availability and training of staff, the relevance of the curriculum, the long-run demand for accountants/managers and the status of existing and planned educational facilities in these fields. This project would therefore finance a study which should provide a rational and consistent basis for long-run planning in the fields of accountancy and management. The re- mainder of the technical assistance component will be devoted to surveys of Tanzania's primary and secondary school system as well as meeting Project Unit requirements. Ten years ago UNESCO carried out a comprehensive survey and assessment of the physical facilities of Tanzania's general secondary schools; in view of subsequent extensive development of schools, the Ministry of National Education wishes to repeat the survey so as to up-date its base for future planning of this education sub-sector. In addition, as a result  - 13 a of the increased emphasis on and rapid expansion ot the primary system, the Ministry also wishes to survey the primary school system. This should give the Government a complete picture of the existing strengths and weaknesses of the system and provide the basis for a more successful and rapid implementation of UPE. 38. The secondary school component of the proposed project was identified and prepared by UNESCO missions which visited Tanzania in July 1974 and May 1975 and was the subject of discussion and agreement 'U2tween the Government and the Bank Group in November/December 1974. The Rural Training component was prepared by a Bank mission to Tanzania in April/ May 1975. The proposed project was appraised in June 1975. Negotiations were held in Washington from November 24, 1975 to November 26, 1975 and the Tanzanian delegation was led by Mr. Mayagila of the Ministry of National Education. Project Items 39: The rural training component would retrain 1,500 cooperative workers during the project implementation period. The project would finance operational costs (incremental costs resulting from participa- tion in the program and necessary supplies), building materials for about 1,000 houses, equipment, 2,000 bicycles,.500 motorcycles, and other vehicles for a rural training program together with related equip- ment and furniture for five rural training centers (RTCs). The cooperative workers who are presently sited at Regional and District headquarters would be retrained at the five RTCs. After retraining, they would be posted to local areas as VMTs and each would work with the development of about five surrounding villages. Building materials financed under the proposed project would enable a self-helped house to be built for each VMT and the provision of a pedal-cycle would ensure his essential mobility. For purposes of monitoring the effective- ness of the VMTs, a nucleus of specialized staff would operate from District headquarters and regularly visit the VMTs in the villages; for the associated travelling, the specialized staff would have the use of motorcycles. 40. The secondary school component would provide equipment for, improvement to, or rebuilding of 15 secondary schools. These schools would have a total of 9,020 places, of which 2,100 would be an increase resulting from provision of new science laboratories and practical rooms and conversion of some under-utilized rooms under this project. 41. Recognizing the problems in establishing an efficient system of accounting and management training and realizing the need to create orderly planning for future development and define professional standards, the Government set up a National Board of Accountants and Auditors  - 14 - (NBAA). In order to execute the relevant planning and to initiate the possible development of a future project in this area, the NBAA is urgently in need of ten man-years of technical assistance which would be financed by this project. This assistance would include: (i) Two specialists in curriculum design, each for three years. They would survey all curricula and sylla'li of existing accountancy training with a view to their harmonization and standardization within a framework of appropriate professional standards for Tanzania. (ii) One specialist in development of instructional materials for three years. (iii) One specialist in training management for one year who would survey existing physical facilities and assess teaching and administrative staffs, hence determining the need for expansion of facilities to meet estimated manpower needs. Provision for office equipment would be included in the proposed project for use of the specilaists. 42. To carry out the survey of the secondary system, the proposed project would also include support for four man-years of technical assistance to cover the services of an architect and general educator, each for two years. The Government is making a major effort to achieve universal pri- mary education (UPE) by 1977 (paragraphs 26-27 above). More significant than the purely quantitative targets are the intended changes in the content, functions and organization of primary education which still remain to be fully articulated. In order to develop them further, the Government intends to carry out a review of the content of primary education and the delivery system. It would be organized and carried out by Tanzanian specialists with assistance from foreign consultants in selected areas. The project would include two man-years of consultants services to assist the Government in this effort. Finally, financing has also been included in the project for retaining staff for the Project Unit, originally estab- lished under the Second Education Project, if the existing contract with a bilateral agency is not renewed for the final year of project implementation. This involves three man-years of technical assistance to cover the services of an architect, a quantity surveyor and a building inspector. Project Costs and Financing Plan 43. The total project cost is $15.0 million equivalent, including taxes which total $0.5 million. The proposed credit of $11.0 million would meet the $6.4 million of foreign exchange costs (43 percent of project cost) and $4.6 million of local costs, thus covering about 73 percent of total project costs. The Government of Tanzania would finance the remaining $4.0 million of project costs. Details of project costs are contained in Annex III.  - 15 - Project Administration 44. The proposed project components would operate under the Ministry of National Education and the Prime Minister's Office. The existing Project Unit in the Ministry of National Education would be responsible for: (i) all operations concerned with expansion of the 15 general secondary schools; and (ii) the documentation associated with employment of the four specialists to be employed by the National Board of Accountants and Auditors under the Ministry of Finance as well as for procurement of equipment for the NBAA. This Project Unit is an integral part of the Ptoject Planning Section in the Ministry and is presently implementing the Bank's fourth education project. As part of its ongoing responsibilities, the Project Planning Section will also oversee both the primary and secondary school surveys. 45. For implementation of the Village Management Technician Training Program, the Rural Training Project Executive under the Prime Minister's Office would be responsible for the organization and operation of the five RTCs, the training of the VMTs, the dissemination of informa- tion to Regional and District offices and the briefing of local officials. The Project Executive, in association with Regional and District adminis- trations, would maintain records of all expenditures incurred in conse- quence of implementation of the VMT training program. The Project Executive would be assisted by a team of specialists from the NORDIC- countries who have wide experience of Tanzania rural development extending over the last seven years and who have been largely responsible for detailed prog- ramming of this project component. The NORDIC authorities have agreed to provide the Project Executive with not less than five appropriately experienced experts for the period of the project. Procurement and Disbursement 46. The civil works contracts for the expansions of the 15 secondary schools are each estimated to cost over $200,000 and are therefore suitable for international competitive bidding in accordance with Bank guidelines. 1/ Denmark, Finland, Iceland, Norway and Sweden are jointly providing finance for these specialists; DANIDA is acting as executing agency for the Tanzania-NORDIC rural development project.  - 16 - Qualified domestic contractors would be allowed a preferential margin of 7-1/2 percent over bid prices of competing foreign contractors. Except as noted below in paragraph 47, contracts for furniture, vehicles, construction materials and equipment would be on the basis of international competitive bidding if they can be efficiently grouped into contracts greater than $120,000. Government procurement procedures, which are satisfactory, would apply for the smaller contracts. All decisions on contract grouping would be made by the Project Unit in consultation with IDA. Domestic manufacturers of furniture and equipment would be allowed a preference of 15 percent, or the existing rate of duties, whichever is lower, over the c.i.f. price of competing foreiRn suppliers. 47. As the VMT houses proposed in this project are individually small and involve self-help contributions, they will not be subject to cons- truction contracts. Because of the wide geographic dispersion of the VMTs, construction materials for their houses and their bicycles would be purchased locally by the individual VMT where local stores maintain adequate supplies of the required items. For areas where such supplies are not available, the regional governments would be responsible for purchasing these items and distributing the needed quantities to individual villages. 48. The Association would disburse 75 percent of total expenditures on civil works and materials for VMT houses; 100 percent of foreign expend- itures for furniture, equipment and vehicles when such items were imported, 85 percent of expenditures when such items were imported but locally pro- cured and 100 percent of ex-factory cost in the case these items were locally manufactured;50 percent of expenditures on project administration and certain operational costs and; 100 percent of foreign expenditures or 90 percent of local expenditures on consultants services. Up to $120,000 equivalent would be disbursed retroactively for start-up expend- itures incurred on the rural training component since October 1, 1975. Risks 49. The VMT training program is the first scheme of comprehensive in-service training for the promotiorn of village development launched in Tanzania. It is also the first time that a Bank Group education project includes a scheme of this type. Therefore, there are considerable risks associated with its innovat:ive and experimental nature: the training courses for the VMTs are new; the effectiveness of the VMTs depends to a large extent on the acceptELnce they are able to gain from various groups of officials as well as from the villagers; the success of the physical aspects of the program -- i.e., the provision of bicycles and the self-help housing program, -- hinges upon initiative and effort at the local level. Several measures have been taken to minimize these risks:  - 17 - a strong technical assistance team experienced with problems of rural development in Tanzania would back-up the project and is already in post; courses and course materials have been developed and evaluated in detail; provisions have been made for briefing the existing authorities at the local level on the role of the VMTs; and special programs have been pre- pared for giving to the local officials responsibility and control over the physical aspects of the project. Most importantly, careful evaluation and monitoring provisions have been worked out in order to gain eynerience from the successes and possible failures of the first stage of the program with a view of planning a second and broader stage at the opportune time. Therefore, in spite of the risks associated with the VMT training program, the benefits expected from the proposed project point to its suitability as an integral part of the strategy for human resources and manpower development of Tanzania. PART V - LEGAL INSTRUMENTS AND AUTHORITY 50. The draft Development Credit Agreement between the United Republic of Tanzania and the Association and the Recommendation of the Committee provided for in Article V, Section I(d) of the Articles of Agreement and the text of a resolution approving the proposed Credit are being distributed to the Executive Directors separately. The draft agree- ment conforms to the normal pattern for credits for education projects. 51. I am satisfied that the proposed Credit would comply with the Articles of Agreement of the Association. PART VI - RECOMMENDATION 52. I recommend that the Executive Directors approve the proposed Credit. Robert S. McNamara President Attachments December 16, 1975   Pmgwtbt 3 pages COUNTRT DATA _- TANZANilA AREA POPULATON DENSITY 955,087 asS -7WFTR-llc (mid-1973) 157 /a Per 1oSof arable land SOCIAL INDICATORS Reference Countries l -197o190 2L OW PER CAPITA 113$ (ATIAe BASIS) A 120 Liba 170 A 310 /b 430 /b DEMNOGAPBIC Crude nirth rate (Per thouand) 56 a 7 c 8 4 f 3/g Crude death rats (Per thousad) 25/d 242 a 18,f 8 7 Infant mortal-ity rate (par thousand live births) 225 16o-iL65 o55 *.39 .& Life expectancy at birth (years) 38 /c 43 ~ 59 Li 65 65 L. Gross reproduction rate 2.3.2 Li 3.5 2.5Li 2.6 L Population growth rate 2.2 3.0 /h 3.2/ 2.2A 2.9 /h Population growth rate- orban . 5 7W. 7 , 6/ Age st-tructr (porcent) o-15 52 /pd4 I 1 58/ LO /b 1,5/ 15-65 56 7F 7 5 i ~ 548/i 5775 5327 65 and over1 3 3 L Age dependoecy ratio /5 0.8 c d 1 0.9 e 2.1 / 09 Ecunc,sic dependeccy rAti. 1.2 12 ~ 1: 45 j 1.5 1 '6 Urban population es percent of total 5 /c.d.p 7 /c.o 10 ti.a Ul Li 29 Family planning: Noa of acceptors cumulative (thous. . . .. 270 No. of users (5 of sarried womns) ......15' EMPLOYMENT To=talabor force (thousands) h,90o 5,600 /d L4i1210 ,0 Percen tage esployed in agriculture 89 y 91/Td.c 8 , Percentage uneployed ... 1 INCOE DISTRIBUTION Prcent ofntioa inooss reoived by highes,t 5% .. 35 /9t Percent of national income receivsd by highest 20% ..60 30 L6i', Perosnt of national inoo- received by lowest 20% .. 53/e Percent of national incose received by lowest 40% lot2 t 11 IIISTIBUNTION OP LAND OWBNBSHIP % oaned by top 10%. ofones-.. 28 % owned by smallest 10% of owners 2.... HEALhADNURTO Ppltio r physician 20,000 L~1 27'90$.. ,76 i. 1,3 67,5045k Population per nursing person 8,7 o z1 ido 5 1,70j Population pee bospitol bed 530 jggi 700 /dc 81 I,;,: /5 '290 L'.a Per capita colorie supply as % of requiremants 62 45Q 73 101 103 95 L Per .spit. protein supply, total (grans Par doyF L6 52/x3 71 65 594 DeOf shich lanOssal and puiss 227 23 29 19 L5y 20 &9 Deth rate 1- yer/7 6.. . EJIUIATIOM Adjust3ed /8 prinory school sa-ollent ratio 25 37 /n67 90 /b 89 / Adjusted LE secondary school anrollnet ratio 3 7-- 9 /cb Ili 35 Tears of schooling provided, first and second level 13 13- 13 I2 13 / Voca.tional enro1lment as % of sac, school enrollment 23 5/.o 2 /,b 15 o 3/ Adult literacy rate 5 .5 bntn 5/.ec 92