Rwanda - Third Education Project

Tonummut of The World Bank 1WOMCUaL USE ONLY Repwt ?. . P-4263-RW REPORT AND RECOMNENDATICN OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS - N A PROPOSED DEVELOPMENT CREDIT IN AN AMOUNT EQUIVALENT TO SDR 13.5 MILLION TO THE RWANDESE REPUBLIC FOR A THIRD EDUCATION PROJECT March 25, 1986 _l.b dnMt bh a rucbd db&&m mud am be _ed by rad iae pezff. of tbi ld. il enNmti my aft mib lop be dlsdmd w WeM Bak amduiznda  CURRENCY EQUIVALENTS CURRENCY UNIT ' RWANDA FRANCS (RwF) RwF 100 - US$1.093 (March 1986) US$1.00 - RwF 91.5 (March 1986) RwF 100 8 SDR 0.946 SDR 1.00 - RwF 105.75 SDR 1.00 a US$ 1.155 MEASURES metric system RWANDESE REPUBLIC FISCAL YEAR January 1 to December 31 GLOSSARY CERAI Centres d'enseignement rural et artisanal integre - Centers for integrated rural and artisanal education (post primary vocational education) ILO International Labor Organization IMPRESCO Imprimerie Scolaire - School Printshop MINEPRISEC Ministry of Primary and Secondary Education MINIFOP Ministry of Public Service and Professional Training NVTC National Vocational Training Center SFCS-PIU Service de financement et des constructions scolaires - project imiplementation unit TSS Technical Secondary School UNDP United Nations Development Programme  FOR OMCLAL USE ONLY RWANDESE REPUBLIC THIRD EDUCATION PROJECT Credit and Project Summary Borrower: Rwandese Republic Beneficiaries: Ministry of Primary and Secondary Education (MINEPRISEC) and Ministry of the Public Service and Professional Training (NINIFOP) Amount: SDR 13.5 million (US$15.6 million equivalent) Terms: Standard IDA Project Objectives and Description: The project is designed to assist the Government in its plan to improve the quality and efficiency of its primary and post-primary education system through providing for the supply and distribution of textbooks and other teaching materials, establishing a self-sustaining textbook/teaching materials replenishment scheme, and strengthening the management and planning capacity of MINEPRISEC and MINIFOP through training and studies. In addition, the project would assist in alleviating shortages of critically needed manpower by providing for a technical secondary school and a national vocational training center. Benefits: The project's main benefits include: (a) improving educational quality through increasing provision of textbooks and teaching materials for about one million students, practically all of whom are in the poverty target group; providing about 20,000 sets of teaching manuals; and introducing student book-usage fees to render this service self-sustaining; (b) increasing yearly output of much-needed engineering technicians and skilled workers; and (c) strengthening the institutions of MINEPRISEC and MINIFOP. Risks: The major risks derive from the limited management and implementation capacity of existing sector institutions. These would be minimized through recruitment of experienced specialists to launch the institutes/services concerned and the training of Rwandese counterparts to succeed them. Tedocument ha a tatd disunbution nd may be by recipients only in the performance of their offkiold duties. Its contents miLy not odise be disclsed without World Bk authorization.  Estimated Project Costs: -- US$ Million-- Local Foreign Total (a) Textbook/Teaching Materials 1.0 3.6 4.6 (b) Technical Secondary School 1.8 3.5 5.3 (c) National Vocational Training Center 1.0 2.6 3.6 (d) Institutional Support 0.3 0.9 1.2 Total Base Cost 4.1 10.6 14.7 Physical Contingencies 0.3 0.6 0.9 Price Contingencies 1.0 2.4 3.4 Total Project Cost 5.4 13.6 19.0 (of which US$1.3 million in taxes and duties). Financing Plan: US$ Million Local Foreign Total IDA 3.3 12.3 15.6 Government 2.1 - 2.1 UNDP 1.3 1.3 Total 5.4 13.6 19.0 Estimated Disbursements: --US$ Million IDA FY 1987 1988 1989 1990 1991 1992 Annual 1.0 4.0 5.4 3.6 1.2 0.4 Cumulative 1.0 5.0 10.4 14.0 15.2 15.6 Economic Rate of Return: Not applicable Staff Appraisal Report: No. 5805-RW of March 19, 1986 Map: IBRD No. 19109  INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE RWANDESE REPUBLIC FOR A THIRD EDUCATION PROJECT 1. 1 submit the following report and recommendation on a proposed development credit to the Rwandese Republic in a total amount of SDR 13.5 million (US$15.6 million equivalent) on standard IDA terms to finance a third education project. The project will be co-financed with a UNDP grant for US$1.3 million on a joint basis. PART I - THE ECONOMY 2. A Country Economic Memorandum (Report No. 4059-RW) was distributed to the Executive Directors on May 20, 1983 which discussed economic develop- ments in Rwanda until that date. An economic mission visited Rwanda in September 1985. Its report is under preparation, and preliminary findings are incorporated below. Country data are provided in Annex I. 3. Rwanda's salient characteristics include its small size, an annua]. population growth rate of 3.7 percent (ranking among the highest in Africa), a population density (in terms of agricultural land) of about 500 per square km (ranking among the highest in the world), hilly terrain and high average altitude, a landlocked position, lack of natural resources (including a serious shortage of arable land), underdeveloped physical and institutional infrastructure, and a very low level of development as measured by a variety of social as well as economic indicators. These indicators include a per capita income of about US$270 (1983), among the lowest in the world; an average life expectancy of 47 years; and an adult literacy rate of 37 percent. 4. The country is heavily dependent on agricultural exports (coffee, tea, pyrethrum, cinchona), which provide 75 percent of its foreign exchange earnings. Rwanda's manufacturing base is narrow, and the growth of modern manufacturing is limited by the small size of the market and the lack of raw materials, marketing facilities, entrepreneurial skills, and skilled man- power. The country, consequently, imports capital goods, steel, petroleum products, cement and other construction materials, and virtually every modern consumer product. Its merchandise trade is hampered by high transportation costs and dependence on neighboring countries for access to the sea ports of Mombasa and Dar-es-Salaam. 5. Despite these constraints, Rwanda has made a creditable effort toward economic and social development. During the 1976-80 period, the country managed to satisfy its subsistence needs and to make important advances not only in agriculture but in other fields such as education,  - 2- health, water supply, and small-scale industry. These achievements reflect the Government's commitment to economic and social progress, as well as its prudent fiscal, balance of payments and debt management policies. At the same time, Rwanda has been able to attract a substantial volume of external aid from a great diversity of sources, confirming donor perceptions that Govern- ment is indeed development-oriented and is pursuing generally appropriate objectives. The Government's efforts during this period were significantly helped by favorable weather conditions and the coffee boom of the late 1970's. 6. Achievement and good fortune notwithstanding, development efforts in Rwanda have not alleviated the fundamental problems which continue to compromise development prospects: population growth, increasingly at odds with land availability, an undiversified economic structure, Government's limited capacity to provide social services, and the economy's inability to generate jobs either outside or within the rural sector. Though foodcrop output has, at least, kept pace with the population growth, it has apparently done so at a cost to the land's long-term fertility. Agricultural land use in Rwanda has reached a point where there is little fallow or grazing area left. The rapidly growing population has resulted in serious deforestation, accom- panying erosion and has required the cultivation of marginal lands with a fragile ecology. Concomitant with these adverse trends has been a deteriora- tion of nutritional standards induced by the shift to traditional high-yield, high-calorie, but low-protein crops. The limited success of Government's efforts has been largely due to the country's structural constraints (among them the critical population problem), institutional weaknesses (stemming largely from a shortage of skilled personnel), and insufficiency of domestic financial resources. At the same time, the shortage of skilled personnel, fragmentation of institutional responsibilities, and poor interagency coordination have limited the country's capacity to absorb external resources. 7. The Rwandese authorities have taken steps to address these problems. Of particular importance have been actions concerned with the extremely rapid population growth, and the lack of education and training. A proposed Family Health project, scheduled for Board consideration during FY86, is our first full-scale effort to assist the Government to respond to its pressing population realities. To address the problem of lack of education and training, the Government introduced an education reform in 1979 which - after subsequent adjustment - was responsive to the country's needs, but whose implementation has been hampered by financial constraints and the lack of teachers. 8. A quantitative assessment of Rwanda's recent economic performance can only be tentative, as the national account statistics have serious short- comings. These estimates suggest that, compared to the period of 1978-1980, during which the GDP grew by about 6 percent annually, economic growth in Rwanda slowed down during 1983-1984 - GDP grew on average by about 1 percent p.a. - mainly on account of a downswing in tertiary sector activities. Balance of payments and budgetary constraints impinged heavily upon trade and transport activities whose rapid growth in the past had been facilitated by greatly enlarged availabilities of foreign exchange and budgetary revenues. Budgetary austerity measures introduced since 1983 resulted in stagnation of  - 3 - Government's expenditures in real terms during 1983 and 1984. Notwithstanding this domestic recession, the manufacturing sector expanded its productive capacity and improved its capacity utilization due, in part, to the import restrictions which limited foreign competition. Mining continued the decline that started in 1980 due to persistent financial and management problems of the major mixed-ownership company (SOMIRWA), which has been recently declared bankrupt and ceased its operations. In agriculture, the sluggish performance of food crop production due to drought has been partially offset by the rise in production of export crops. Preliminary data suggest that 1985 witnessed moderate growth after the economic slump of the preceding three years. This renewed growth occurred mainly on account of an increase in agricultural production and despite a precipitous decline in the price of tea and the virtual cessation of all mining activities. 9. Rwanda's external position came under strong pressure, as the volume of imports continued to expand at a time when export earnings were declining. Since 1981, the total value of exports has been consistently below their 1977-80 levels, reflecting the decline in world coffee prices rather than a shortfall in export volume. The terms of trade deteriorated by about 24 percent between 1979 and 1984. In an attempt to arrest the deterioration of the balance of payments, the Government adopted - beginning in 1983 - what they expected would be temporary measures, including licensing, prior deposit requirements and increased import tariffs. The restrictions aimed mainly at curtailing imports of non-essential consumption goods as well as those of locally produced commodities. The Rwandese authorities also shifted the peg of the Rwandese franc (in September 1983) from the US dollar to the SDR, entailing a 5.2 percent depreciation vis-a-vis the US dollar. These measures, coupled with some improvement in the terms of trade in 1984 and 1985 (with respect to the 1981-1983 period) helped to reduce the current account deficit to about 9 percent of GDP both in 1984 and in 1985 as compared to 12 and 11 percent, respectively, in 1982 and 1983. 10. On the budgetary side, the authorities did not realize that the high level of tax revenues recorded in 1979 and 1980 was a temporary phenomenon not justifying a permanent increase in expenditures. As a result, the sharp decline in revenues from coffee export taxes beginning in 1981, together with increases in current outlays (in order to achieve the social objectives of the Plan), resulted in an overall budgetary deficit equivalent to about 2 percent of GDP in both 1982 and 1983 (as compared to a surplus of 0.9 percent in 1980.) Concern over the worsening budgetary situation led Government to introduce corrective fiscal measures. In 1984, the growth of current expenditures (in nominal terms) was limited to 2.3 percent. The growth of public sector employment was held under 0.5 percent - the education sector was exempted in order to achieve the revised targets of the 1979 Education Reform. This represented a major break from Government's past policy of practically -guaranteeing- employment to every secondary-school graduate. Large reductions were also decided in net transfers to parastatals. Thanks to the austerity measures and increased revenues from taxes on international trade both in 1984 and 1985, the Government has been successful in reducing the budgetary deficit to about 1 percent of GDP. The Government is likely to face an even more favorable budgetary situation in 1986 because of an anticipated increase in coffee prices and the introduction of a new sales tax.  -4- 11. Government has been traditionally conservative in its monetary and credit policies. Inflationary pressures have arisen mainly from supply shortages caused by frequent disruptions of supply routes through neighboring countries, high international transport costs, and increased prices of imports and seasonal fluctuations in the price of domestic foodstuffs. Inflation averaged 10.6 percent per annum during 1977-82, it peaked at 12.6 percent in 1982, reflecting mainly the substantial increases in electricity and water tariffs and educational fees. In 1983 and 1984 inflation was down to 6.6 and 5.4 percent, respectively. In 1985, the inflation appears to have further declined to about 4 percent. 12. Rwanda has been one of the most favored beneficiaries of foreign aid in recent years. Per capita disbursements of net official development assist- ance (ODA) have been above US$30, much larger than the average for Africa. In line with Rwanda's development priorities, this foreign aid was used to finance basic infrastructure and rural development. During the period 1981-84, grants comprised about 80 percent of total external aid flows, and were provided m2inly by Belgium, the. Federal Republic of Germany, and France. In view of its level of development, Rwanda will need external assistance for a long time to come. While the anticipated coffee price increases for the next two years may provide temporary balance-of-payments relief, this is unlikely to continue beyond 1987. To help the Rwandese to implement their economic growth program (Programme de Relance), which focusses on agricultural and small-scale industrial development, as well as on rehabilitation of public enterprises, foreign assistance would have to continue at least at the current level given population growth and export constraints. 13. Rwanda's medium- and long-term external public debt is relatively small, estimated at US$304 million at end-1985, equivalent to about 16 percent of GDP. Most of Rwanda's external debt was contracted on highly concessionary terms; the grant element was over 70 percent on average during the 1972-84 period. Due to the concessionary nature of these loans, the debt service payments on medium- and long-term debt are relatively low: about 8 percent of exports of goods and nonfactor services in 1985. Hence, there remains scope for further borrowing. However, given the poverty of the country, its over- whelming constraints and vulnerability, and its long-term unfavorable terms of trade prospects, external funds should continue to be provided in the form of grants or loans at highly concessionary terms, and include a high proportion of local cost financing and non-project assistance. PART II - BANK GROUP OPERATIONS IN RWANDA 14. Bank Group assistance to Rwanda, started in 1970, was initially focused on the improvement of the road network and the strengthening of agricultural production. As of January 20, 1986, Rwanda has received twenty- six IDA credits totalling US$267.2 million: eight for agriculture (34 per- cent); six for roads (30 percent); four for DFCTs (10 percent); two for power (9 percent); two for education (6 percent); one for water supply (5 percent); two for technical assistance (4 percent); and one for telecommunications (3 percent). In addition, Rwanda has also received a Special African Facility  -5- Credit of US$15.0 million for the Sixth Highway project. There have been no Bank loans. Three IFC investments (one of US$535,000 for a tea factory; a second of US$226,000 with contingent equity commitment of up to US$60,000 to expand the tea factory; a third of US$249,000 also to expand the tea factory) were signed in 1976, 1980 and 1985, respectively. Annex II contains a summary statement of IDA credits and IFC investments as of September 30, 1985. 15. In fiscal years 1982-84, disbursements for Rwanda totalled US$49.1 nillion, compared to new commitments of US$86.2 million. The annual disburse- ment rate increased steadily over this period, to reach about 25 percent in FY85 which is above the average for countries of the Eastern and Southern Africa Region. There are no problem projects in Rwanda. 16. The Bank Group lending has been based on a country strategy which has emphasized: (i) agriculture and rural development, the main objective being to increase food production as well as export crops, while maintaining soil fertility; (ii) human resources development, focusing on support to basic education and skills training to improve agricultural productivity, provide skilled manpower, and influence attitudes on the population issue, and, more recently, on family planning programs per se; (iii) infrastructure develop- ment, particularly roads, to reduce the country's isolation and to provide incentives to further intensification of agriculture as well as increased specialization and diversification through better marketing; (iv) energy, to lessen the country's demand for fuel imports; and (v) development of small and medium-size enterprises in manufacturing and other sectors. 17. One of the major constraints to Rwanda's development is the shortage of administrative and technical/mar.agerial capacity. This affects all sectors and inhibits project preparation and implementation. Institutional and human resource development through intensive technical assistance and on-the-job training of Rwandese staff have, therefore, been a salient feature of the Bank Group program for Rwanda, both under individual projects in various sectors, and through free-standing technical assistance projects (a second Credit 1565-RW became effective January 10, 1986). These projects have helped strengthen inter-ministerial coordination, provided training to staff in the studies units of concerned agencies, and contributed to improve the prepara- tion of the next five-year plan. 18. The Bank Group program has been pursued in a climate of good rela- tions with the Government. In all sectors in which we are active, there exists a general receptivity to our advice and willingness to take action where required. In agriculture, improved sector management as well as more rigorous project planning and financial controls havx been attained, with a shift away from integrated rural development schemes towalr.Z more directly productive projects. In the highway sector, our active dialogue with the Ministry of Public Works and Energy is now focusing on the ways to reduce reliance upon expatriate expertise. In industrial development, we have gained Government's commitment to promote small-scale enterprises. In the education sector, a positive dialogue with the Ministry of Primary and Secondary Educa- tion (MINIPRISEC) has emerged in the past three years; the Ministry has revised its overly ambitious education reform proposal at the primary level and since adopted a less costly and lengthy primary cycle. On population, our initially cautious approach to Government has developed into cooperative efforts to promote suitable family health and planning programs.  -6- 19. The Bank Group strategy continues to center on the five sectors mentioned above (para. 16), with special emphasis on agriculture and popula- tion. For the former, we give priority to: (i) promote intensification by developing and strengthening Rwanda's agricultural research and extension capabilities; and (ii) reinforce the key sector institutions - the Rwandese Research Institute and the Ministry of Agriculture. In the population sector, our program involves close collaboration with the National Population Office (the agency responsible for designing and promoting educational programs and service delivery systems for family planning), support to maternal/child health initiatives through the Ministry of Health, and participating more effectively in other efforts to deal with Rwanda's bourgeoning population problem. 20. Finally, our dialogue with the Government has also had a macro- economic dimension. Rwandese authorities have recently indicated readiness to proceed with the preparation of an economic recovery program (Programme de Relance), and asked the Bank's assistance in its formulation. A Bank economic mission recently visited Rwanda in response to this request. The mission's work, which extended in particular over agriculture and mining sectors and public enterprises, will help further strengthen the cooperation between Rwanda and the Bank at the macroeconomic level. PART III - THE EDUCATION SECTOR The Education and Training System 21. Rwanda's formal education system consists of: (a) eight years of primary education followed by either three years of pre-vocational education in CERAI (Centres d'enseignement rural et artisanal integre) or six years of secondary education, under the responsibility of the Ministry of Primary and Secondary Education (MINEPRISEC); and (b) higher education courses provided by the National University of Rwanda (NUR) on two campuses under the authority of the Ministry of Higher Education and Scientific Research (MINESUPRES). Other formal as well as informal training is offered by various ministries for training in administrative and commerce skills, postal/communication services, extension services, health and nutrition. Vocational and home-making training are provided by many church-related agencies. Despite a variety of vocational training activities, the sector lacks adequate coordination at the national level. 22. The present education system is insufficiently relevant to Rwanda's needs. Main concerns are to maintain and improve participation under conditions of rapid population growth and increasing financial constraints and provide more job opportunities for school leavers; improve the quality, internal efficiency and equity of the system; improve administration, upgrade management skills and modernize office information systems; and better coordinate efforts of agencies involved in literacy programs. To accompany institutional development, Government should focus on measures to control costs for secondary and higher education and reduce dependence on external aid.  -7- Human Resources Development 23. Given the lack of natural resources, the current scarcity of qualified personnel, high illiteracy rate and poor health conditions, the development of human resources remains key to the socio-economic development of Rwanda. On-going investments are in line with overall priorities in the Third Development Plan (1981-86). First, most of them aim at alleviating the shortages of trained personnel, which constitutes one of the most serious constraints to socio-economic development. Second, by increasing general participation in education, in particular for women, they represent the most effective action towards containing population growth. Third, by raising the level of education of future farmers, they should increase agricultural productivity. The last two linkages have been amply demonstrated through experience in other countries. 24. While the dynamics of population growth will increase the labor surplus, there will nevertheless be, in the medium term, a shortage of skilled labor. The Third Plan, which incorporated ILO data into its projections, anticipated yearly shortages of 160 professionals and higher-level technicians (400 required as against 240 output) and over 2,000 middle-level technicians and skilled workers (3,400 required vs. 1,400 output). Given the lack of data on the manpower demand side, these figures indicate only an order of magnitude of the skill gaps. In an effort to define training needs, in the Bank Group's sector work a Phase I of a "Specialized Training Needs' study has just been completed and Phase II (strategy for Development) is expected to be completed by June 1986. Government Policy and Objectives 25. To redress the mismatch between the Rwandese education and training system and perceived national needs, major reforms included in the Second Development Plan (1977-1981) were introduced in 1979. These reforms had three basic objectives: (a) primary curricula reform emphasizing rural/agricultural needs; (b) diversification from academic secondary education; and (c) orienta- tion of higher education towards developmental priorities, including agricul- ture. Significant structural changes were made in primary and secondary education. Changes included (a) prolongation of primary education from six to eight years for the 7-14 years' age group with introduction of practical subjects in grades 7-8 in workshop extensions to be bqilt at schools; (b) orientation of 90 percent primary leavers to CERAI of which about 1,300 were planned for pre-vocational training in grades 9-11; and (c) orientation of 10 percent primary leavers to reformed secondary schools grades 9-14. It was also decided to terminate double-shift in primary schools and automatic promotion. 26. Enrollment targets proved far too ambitious for the available financial resources, teachers and construction capacity. However, through commendable community efforts such as voluntary construction work and support under the First Education project (Credit 567-RW), about 960 workshops were added at primary schools and 200 centers for integrated rural and artisanal  -8- education (CERAI) were built. With French and Belgian support reformed curricula have been practically completed. But introduction of these curricula in schools has not been successful for lack of qualified teachers and textbooks, the latter estimated to average one set per eight students. The Agriculture Faculty of the National University of Rwanda (NUR) was developed with Caradian assistance but enrollments therein comprise only 10 percent of NUR students. Following this unsuccessful implementation experience, the Government lowered targets in the Third Plan to eight percent yearly growth in primary enrollments, provision of two CERAI per commune and limitation of secondary enrollment increases to six percent yearly. The double-shift system in primary education was retained and reduction of the illiteracy rate from 63 to 59 percent was targeted. Financing of Education 27. The main contributors of aid to the education sector include: the Feder-I. Republic of Germany, World Bank, Belgium, African Development Bank, EEC, France, Switzerland and Canada. Non-Governmental Organization (NGO) aid, largely sponsored by religious organizations to support a close-knit fabric of local organizations, is another source. 28. Recurrent Expenditures. Reflecting the priority attached by Government to the development of human resources, the share of education in the recurrent budget increased from less than 24 percent in 1979 to over 27 percent in 1983. Preliminary estimates indicate a further increase to 31 per- cent in 1990. Over the last five years, the distribution of recurrent expenditures between primary/post-primary (CERAI), secondary and higher educa- tion has remained nearly constant and averaged 70 percent, 16 percent and 14 percent respectively. On the other hand, the structure of expenditures within primary/post-primary education indicates a major and worrisome decline in the share allocated to teaching materials and maintenance (from 14 percent in 1981 to three percent in 1984) as a result of severe overall budget cuts and increased expenditures on teachers and school administration (this share rising from 77 percent in 1981 to 90 percent in 1984). 29. In contrast, the structure of expenditures in both secondary and higher education has remained rather constant and marked by a relatively high allocation to administration/boarding for secondary schools (37 percent of secondary expenditures in 1984) and scholarships for higher education (31 percent of higher education expenditures in 1984). Unit recurrent costs per student in 1983 were: US$43 in primary/post-primary, US$700 in secondary and US$5,000 in higher education. By African standards, these unit costs are relatively low in primary but relatively high in secondary and higher educa- tion, due especially to low student/teacher ratios and high boarding costs. 30. Capital Expenditures. Witl4 a pragmatic approach to a difficult budgetary situation, the Government has significantly reduced its capital expenditures on education, from a level of RwF 410 million (US$3.7 million equivalent) in 1980 to RwF 300 million (US$2.7 million equivalent) in 1984, while the share of education in the Government capital expenditures also declined from over 20 percent in 1980 to less than nine percent in 1984.  These figures, however, do not include external aid, which provided about US$80 million (of which 36 pe:cent for technical assistance) in 1985 and is expected to contribute US$50 million for future projects. 31. The problems related to the financing of education will remain at the center of the Bank Group sectoral dialogue with the Government. Followirg a rapid increase from 1979 to 1981, mainly for teachers' salaries, education expenditures like Government expenditures generally have stagnated in current terms since 1981 clear*ly indicating a decline in real terms. Further adjust- ment in teachers' salaries is currently under consideration. Given the poor prospects for improvement in the Government's financial situation in the medium-term, ways will have to be found to reduce unit costs and expand cost sharing arrangements in order to allow continued growth in enrollment ratios in primary education. In this connection, with financing from the on-going Second Education Project (Credit 1263-RW), the Government is undertaking an optimization study of resource uses in the primary education sector, which may continue absorbing over 70 percent of the total resources allocated to education. Previous Bank Group Involvement in the Sector 32. The Bank Group has supported Rwanda's education sector through two projects, emphasizing primary and secondary education development, respec- tively. The First Education Project (Credit 567-RW) financed improvement in quality of primary education and its relevance to job opportunities, and institution building for project implementation. The Second Education Project (Credit 1263-RW) supports commerce, nursing and primary teacher training in secondary schools to meet acute shortages of personnel, with institution building on the quality/pedagogical side through technical assistance for improved training standards and more relevant curricula, and on the administrative side for project execution. Findings of the Project Completion Report (a Project Performance Audit Report has yet to be issued) for the First Project indicate reasonable success in the provision of buildings and equipment, establishment of project implementation and textbook printing capacity. However, the report noted ineffective teacher training, weak management of the school printshop and unsatisfactory textbook distribution due to lack of storage space and inconsistent financial support. Lessons learned from this experience are already being applied with good results in the second project. Clearly, more compact projects (such as the second), having fewer items, less widely scattered and more readily monitored by both parties, are more appropriate for Rwanda at present. 33. Forecasts of much more difficult economic circumstances for the foreseeable future coupled with doubling of population by the year 2000 (with vastly increased numbers demanding education, training and jobs) would lead to severe financial constraints requiring the most cost-effective use of resour- ces in the country's education and training system. overall, the sector must assist the Government to the extent possible, in achieving the priority goals of increasing agricultural productivity to ensure food supply, containing demographic growth and developing human resources for economic and social development at the maximum pace permitted by physical and financial constraints.  - 10 - 34. Bank Group support in the proposed project aims to gear education and training programs to these needs as recommended in the Bank Group's current Country Economic Memorandum. From our on-going discussions, we believe progress is being made on two major problems, i.e., prolongation of the primary cycle up to eight years, and premature establishment of two university campuses. Both have pedagogical and economic shortcomings. Double-shifting in grades 1-3 (which educators consider the most crucial years), and teaching of practical subjects in grades 7-8--especially with the high proportion of unqualified teachers and dire textbook shortages-are considered to have a deleterious effect on quality and motivation. The IDA Education Sector Memorandum (ESM) of June, 1985 proposed to shorten primary education to grades 1-7 and phase out double-shifting as quality improvements are realized and as financial resources permit. During ESM discussions and negotiations, Government ensured that an evaluation of progress in achieving an agreed action program for improvement of education quality and cost- effectiveness would be provided to the Bank Group by July 31 of each year. The framework of such an action program would include improvement in teaching quality and provision of textbooks, optimal utilization of resources in the sector and better cost control throughout the education system. 35. Problems emerging from the division of NUR into two campuses have been discussed in ongoing dialogue with the Government when it was emphasized that a comprehensive analysis is necessary as a prerequisite to cost-effective development of its higher education system. As a result of discussioas, Government requested Bank Group assistance in preparation of terms of reference for such analysis, which is now being undertaken with UNDP support. Results of the analysis would be discussed with the Association, with a view to a more rational development of the higher education sector. 36. Aid Coordination. The Association intends to continue to pursue exchanges with Government and aid donors on required sector work, project implementation and future aid possibilities. Coordination has been enhanced by the meetings of a local aid donors' coordination group in Kigali, Bank Group staff presented the findings of the ESM to the February, 1985 meeting of the group. PART IV - THE PROJECT 37. In the course of supervision and on-going dialogue with the Govern- ment, the project was identified in February, 1984. Project preparation was completed w'th UNESCO assistance in June, 1984 and appraised in March, 1985. During negotiations in Washington from March 7-11, 1986, the Rwandese delega- tion was led by Mr. Godefroid Ruzindana, Secretary General of MINEPRISEC. The Staff Appraisal Report No. 5805-RW is being circulated separately. Supplemental project data are included in Annex III.  - 11 - Project Objectives and Description 38. The project would assist the Government in its plan to improve the quality and efficiency of its primary and post-primary education system through providing for the supply and distribution of textbooks and other teaching materials, establishment of a self-sustaining textbook/teaching materials replenishment scheme and strengthening the management and planning capacities of MINEPRISEC and MINIFOP through technical assistance and staff training. The project would also alleviate the shortages of critically needed manpower by supporting technical and vocational training. 39. The project would consist of the following main components: (i) Supply and distribution of textbooks and teaching materials; (ii) Technical Secondary School; (iii) National Vocational Training Center; and (iv) Studies, training, technical assistance and operating costs, excluding salaries. 40. Supply and Distribution of Textbooks and Teaching Materials. Support would be provided for: (a) technical assistance for a manager (expert advisor/accountant) and expert(s) in printing techniques to strengthen the administration for textbook supply and distribution and provide training to Rwandese counterparts; (b) a new central storage depot in Remera (Kigali suburb) with office facilities and a modest regional transit depot in each of the nine remaining prefectures; (c) supply of paper for textbooks, exercise books and teachers' manuals; and (d) the introduction of a cost-sharing book-usage scheme through collection of student fees, which would ensure continuous replenishment of these items. In the past, there have been high costs for textbooks due mainly to frequent changes in curricula. Government has ensured that no major textbook revision in primary or post-primary school curricula would be made before March 1992. 41. The School Printshop, IMPRESCO, would be responsible for planning, programming, implementation and monitoring of textbook printing and distribu- tion. A Directorate under the authority of the MINEPRISEC, IMPRESCO was granted technical and financial autonomy by Presidential Decree dated December 30, 1985. It is believed that with improved efficiency IMPRESCO could under- take these responsibilities and produce these items timely and at competitive prices. Terms of reference for the manager have been agreed with the Associa- tion and the manager would be appointed by January 1, 1987. The manager would also train his Rwandese counterparts and organize on-the-job training. Plan- ning of the required textbooks and materials would be based upon enrollment forecasts and procurement of paper timed for phased production. Government would finance the supply of education materials. 42. Communes and their Parents' Associations with schools' participation would be responsible for collection of student fees and transportation of educational materials from the regional depots to the schools. Deposited student fees, transferred to an interest-bearing account in the Central Bank, National Bank of Rwanda (NBR), would form the basis of a School Supplies Revolving Fund established by the MINEPRISEC to ensure sustained replenishment of textbooks and teaching materials. This account would be established and a MINEPRISEC circular defining the student fees cost-sharing scheme would be issued by June 30, 1988.  - 12 - 43. A management committee having representatives of the MINEPRISEC, Ministry of Finance and the NBR has been established to advise IMPRESCO's management and monitor its operations. Monitoring would include quarterly review of the revolving fund and IMPRESCO accounts as well as operational plans, procurement and inventories for IMPRESCO and the Remera depot. These reviews would be incorporated into the semi-annual reports to be transmitted for IDA review and comment. The project includes support for continuous monitoring of the textbook distribution and cost-sharing schemes. 44. Technical Secondary School (TSS). The TSS with 270 student places, to be located at Kibuye (prefecture capital) close to Lake Kivu, would provide a six-year program for higher technicians and introduce two new mechanical engineering streams, heavy duty mechanics and plant maintenance. Existing and planned output of engineering technicians fall well short of requirements, and needs for the two disciplines mentioned above are acute. The yearly output of about 36 technicians would be absorbed equally by the labor force, higher education and technical teaching. Basic curricula are satisfactory, and Government has agreed that upper-level curricula required for heavy duty mechanics and plant maintenance would be developed under financing from the Second Education project (Credit 1263-RW) for Bank Group review by June 30, 1988. 45. The existing Kicukiro TSS has suffered from a high attrition rate which seems mainly due to poor instructor quality and weak student selection procedures. A study of the problem by MINEPRISEC educators, in cooperation with Kicukiro TSS staff, began in December 1985. Satisfactory proposals to apply the study results in the new IDA-financed TSS in Kibuye, including improved selection procedures, is a condition of disbursement against the civil works category of thie Kibuye TSS. To ensure efficient launching and management of the TSS, the project provides for two years of a suitably qualified and experienced director beginning January, 1989. A suitable Rwandese deputy director intended to succeed him would also be appointed by the same time and be trained in management of the school. Recruitment proposals for the director and deputy director would be provided for Bank Group review and comment by September 30, 1988. The project would include academic and boarding facilities and staff housing. 46. National Vocational Training Center (NVTC). The NVTC, to be located in Kigali, would provide both initial training programs (maximum nine months period) and shorter upgrading courses for skilled workers and would have a capacity to train 120 students at any one time, although there would be 240 training stations. Initial basic training would be given in six specialties: mechanics, welding/sheet metal work, electricity, auto-mechanics, carpentry and building construction. This basic training would be followed first by on-the-job industrial training and later by upgrading/re-training of one-year equivalent to qualify students as skilled workers. Evening courses are expected to be developed at the NVTC. Rwanda's requirements of skilled workers in the above specialities surpass existing and projected output.  - 13 - 47. A National Vocational Training Board (NVTB) attached to the HINIFOP would be established to develop vocational training policy and would have representation from other concerned ministries, the private sector and estab- lished trade unions. Under policy guidance from the NVTB and administrative authority of the MINIFOP, the vocational training office of the NVTC would be responsible for (in addition to training) planning and programming of vocational training and training activities outside the center, including in-plant training for specific skills and apprenticeship training. It is expected that close links will be developed by the NVTC with private and parastatal industrial enterprises. 48. To ensure efficient management and training in the NVTC three specialists-a technical adviser, a planner/programmer and an extension train- ing specialist-would be recruited. Recruitment proposals would be transmitted to the Association for review and comment by July 31, 1986. Technical secondary school graduates with industrial experience would be appointed to receive on-the-job teaching instruction and fellowship training abroad. The draft contract commitment for both TSS and NVTC fellowship trainees supported under the project, to work for a minimum of five successive years in these institutes upon their return from training abroad, would be finalized and transmitted for Bank Group review and comment by June 30, 1987. Technical Assistance and Training 49. The technical assistance program provides for 30 staffyears of specialists services and 46 staffyears of fellowship training. Five staffyears of specialists services are included for an expert advisor/ accountant to manage textbook distribution and maintain project accounts; two staffyears for expert(s) in printing techniques; and two staffyears for a director of the TSS. However, the major portion of technical assistance services (18 staffyears) is allocated to the NVTC, of which eight for MINIFOP institution building and preparation for launching the center; the remaining 10 staffyears are for vocational trainers for start-up of NVTC training. The major portion of fellowship training (28 staffyears) is allocated to the TSS for 14 selected Rwandese to train abroad for two years each in the specialities they will teach upon return. Training abroad would be included for the Rwandese director and training chief of the NVTC, as well as for the trainers in the six specialties to be taught. UNDP, which is expected to select ILO as implementing agency, would provide grant financing for 22 of the above staffyears of technical assistance and fellowship training. Female Participation in the Education System 50. In primary education and CERAI, where about one million students will be affected by the textbook component of the project, enrollment of females in 1984 was 48 and 46 percent, respectively. In secondary education in 1984, female enrollment by general, technical and teacher training streams was 19, 40 and 45 percent, respectively. However, because of existing traditions and the very specialized nature of the courses to be provided in  - 14 - the TSS and the NVTC, percentages of female students in these institutes are not expected to increase in the foreseeable future. The percentage of female students in the NUR has gradually increased over recent years to reach 16 percent in 1984. Project Cost and Financing 51. The total cost of the project is estimated at US$19.0 million, of which 72 percent or US$13.6 million represent foreign exchange costs. Base costs are in March 1986 prices. Cost estimates for civil works, furniture, equipment and vehicles were based on data from implementation of the First and Second IDA Education projects and on construction activities financed from other sources. Base cost per student (academic and communal) is estimated at US$6,500 for the TSS and US$7,200 for the NVTC. The average unit base cost of construction (excluding equipment) varies from about US$360 equivalent per square meter for technical workshops (secondary education) to about US$490 equivalent per square meter for the science laboratories. Costs reflect, inter alia, the transport difficulties associated with a landlocked country and heavy dependence on the external supply of goods and services. Physical contingencies averaging six percent are included. Price contingencies for local costs have been estimated at about 10 percent p.a. for 1986-88 and 7 percent for 1989-91; for foreign costs, 7 percent for 1986-87, 7.5 percent for 1988, 7.7 percent for 1989, 7.6 percent for 1990 and 4.5 percent for 1991. 52. The proposed IDA credit of SDR 13.5 million (US$15.6 million equivalent) would cover 88 percent of total costs (net of taxes and duties) and 100 percent of foreign expenditures except for the UNDP contribution. UNDP would provide about US$1.3 million in joint financing on a grant basis, representing 7 percent of total costs. A special condition of credit effectiveness would be provision by UNDP of a signed project document under which technical assistance required for the NVTC would be furnished. Government would contribute US$0.8 million or 5 percent of funds required for the project plus US$1.3 million in taxes. The incremental recurrent costs to be generated by the project are estimated at an annual RwF 67.3 million (US$0.4 million equivalent) and would account for 0.9 percent of total recurrent expenditures on education in 1992 when the project would be in full operation. The project has been designed to minimize cost impact on the budget through setting up of a cost-sharing scheme for the supply of textbooks and teaching materials (para. 42). Implementation 53. Tne project would be implemented over five and a half years and is expected to be completed by June 30, 1991, with a Closing Date of December 31, 1991. The implementation schedule is based on, inter alia, experience derived from the First and Second IDA Education Projects in Rwanda and takes into account that preparation of most of the required preliminary architectural designs and furniture/equipment lists with estimated costs have been prepared.  - 15 - 54. The SFCS (Service de Financement des Constructions Scolaires), which was established under the First Education Project and is responsible for implementation of the Second Education Project and education projects financed by other donor agencies, would implement the MINEPRISEC components of this project. The Training Director in MINIFOP would have responsibility for execution and overall administration of the NVTC component. He would be assisted by the technical assistance team, in particular the chief technical adviser. The expert advisor/accountant in the SFCS would maintain project accounts both for SFCS and MINIFOP. SFCS would be adequately staffed and maintained during project implementation. 55. Status of Preparation. Preliminary equipment lists and sketch designs with cost estimates were provided prior to negotiations for the TSS and depots (MINEPRISEC items). These equipment lists have been reviewed and costs revised downward, As preparation of preliminary designs for the NVTC was delayed, a condition of Credit effectiveness is that an architectural firm acceptable to the Association would be selected to carry out this work. Terms of reference have been prepared for all studies planned, training and technical assistance needs bave been identified with terms of reference prepared fcr all assignments, and satisfactory procedures for recruitment of consultants agreed. A schedule for timely recruitment of key personnel has been prepared. Contract packages and procurement methods have been defined and a schedule bas been prepared for civil works and equipment procurement. Procurement and Disbursement 56. Procurement. Rwanda's procurement procedures are being reviewed by an IDA assessment mission. Although I1. report has not been completed, local procedures are understood to be gene;32'.ly acceptable. Contracts for civil works, furniture, equipment and vehicles would be awarded on the basis of international competitive bidding in accordance with Bank Group guidelines for procurement. However, civil works contracts costing less than US$250,000 equivalent each and contracts for furniture and equipment costing less than US$50,000 each (an aggregate not to exceed US$1.0 million) would be awarded by competitive bidding, advertised locally and in accordance with local proce- dures. Standardized sketch designs, draft tender documents and master lists of furniture, equipment and vehicles indicating proposed grouping and estimates of costs would be reviewed by the Association. Items would be grouped to the extent practicable to encourage competitive bidding and to permit bulk procurement. Review of tender evaluation documents prior to award would be required only for contracts above US$250,000 equivalent for civil works and US$50,000 equivalent for furniture, equipment and other materials. 57. Where international competitive bidding procedures are used: (a) domestic manufacturers of furniture and equipment would be allowed a preference of 15 percent, or the existing rate of import duties, whichever is lower, over the c.i.f. price of competing foreign suppliers; and (b) if applicable, qualified domestic contractors would be allowed a preferential margin of 7.5 percent over prices of competing foreign contractors. Procure- ment arrangements are sumarized in Annex IV. All specialists and consultants would be hired in accordance with the Bank Group's Guidelines for the Use of Consultants.  - 16 - 58. Disbursement. The typical disbursement profile for Rwanda is eight years. Under the on-going Second Education project, disbursements are still slow; but since moat of the construction envisaged is underway or starting up, disbursements are expected to rapidly increase and the project should be completed on schedule. Based on this projection, the proposed project would have a five and one-half year disbursement profile which is considered reasonable. Funds from the Credit would be disbursed on the basis of: (a) 85 percent of expenditures for civil works; (b) 100 percent of foreign expendi- tures and 80 percent of local expenditures for furniture, equipment, vehicles and other materials, technical assistance, studies, professional services and seminars; and (c) 70 percent of expenditures for operating costs excluding salaries. 59. All disbursements would be fully documented except those for furniture, equipment, vehicles and other materials plus studies and local seminars, contracts for which value would be less than US$10,000 equivalent. These would be made against statements of expenditures (SOEs), documentation for which would be retained by the Borrower and readily available for review by Bank Group representatives during project supervision. The Borrower would not submit applications for reimbursement valued below US$20,000 equivalent. The SFCS has satisfactory institutional capacity to use SOEs and manage the special account (para 60). 60. Special Account. A Special Account would be established at the National Bank of Rwanda (NBR) with an initial deposit by IDA of about US$400,000 to cover about three months of expenditures. It would be replenished on the basis of documentary evidence, to be provided to the Bank Group by the SFCS, of payments made from the account for goods and services required for the project. In order to ensure that the Government's counter- part funding would be available when needed, the Government would establish a separate project advance account into which it would deposit, quarterly, its share of project costs, and which would be maintained at a level of not less than RwF 50,000. Establishment of the Project Advance Account and depositing the initial amount of RwF 500,000 into it would be a condition of Credit effectiveness. Reporting, Evaluation and Auditing 61. Semi-annual reports on implementation would be submitted to the Bank Group by the SFCS for the MINEPRISEC items and by MINIFOP for the NVTC. The Government, with assistance of MINEPRISEC and HINIFOP, would prepare and send to the Bank Group for comments a completion report within six months of the Closing Date. Annual auditing of project accounts would be required for all expenditures financed under this project, with particular attention to those expenditures reimbursed under statements of expenditure. Audits would be performed by auditors acceptable to the Bank Group and applying satisfactory auditing procedures. Audit reports would be submitted to the Bank Group within six months of the close of the Borrower's fiscal year.  - 17 - Benefits 62. The project'e main benefits would include Improvement of the quality of education through increasing provision of textbooks and materials from 12 to 50 percent (one set per two students) for about one million primary and post-primary students, practically all of whom are in the poverty target group. About 20,000 sets of teaching manuals would be provided and introduc- tion of student fees yielding about US$2.0 million yearly would help render this service self-sustaining. The project would also seek to increase yearly output of much-needed engineering technicians, skilled workers and other vocationally-trained personnel by 36, 60, and 240, respectively, and continue institution building within the MINEPRISEC and MINIFOP. Risks 63. The two main risks concern management and implementation capa- bility. Efficient management of the textbook and teaching materials scheme will require effective coordination in planning, programming and execution between the curriculum center for primary education and IMPRESCD in Kigali, as well as close monitoring of distribution in the regions. Introduction of a book-usage fee payment by students and handling of fees before their deposit into the School Supplies Revolving Fund would also need close monitoring. To assure appropriate management, capable specialists would be provided under the project to launch the institutes efficiently and train Rsandese counterparts to maintain established standards upon their departure. In addition, funds are included in the project for field monitoring of distribution and cost-sharing. PART V - RECOMMENDATION 64. 1 am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. A. W. Clausen President Attachments Washington, D.C. March 25, 1986  - 18 - Annex M.. TABLE s Page 1 of 6 RWASDA - SOCIAL loDtOB OAS s NOBT cNoS? Bu! TEUTIAT) /b i,~@L~k 190~: 330f8 LOW =CM~ AMRCa NIOLI 1rO2f L%oLb B3IHI~Lk Soul or sANAM& AFMCA S.O or 333*R AiAn cimuarn sQ. O TOTAL Z.3 26.1 26.3 ANRZON.IUBAL 135.0a 13.2 11. CW CITA ( ) .. .. 270.0 233.8 1063.3 si4aBA 0r OnL eQl.Alw 10.0 11.0 1.0 62.3 381. WZeLr JIDS VTAL ITAEXTISI WFiL.ATIONAID-Tm (TUOoSAu) 2753.0 3493.0 567..0 UAW B OIULATIaU(ZOr TOrAL) 2.4 3.2 4.8 20.1 32.0 FopuIATIOU P3OZ3CTOU POPULAUC IS TM 2000 CN3.) 10.2 S?TTraUsT POIULUIOS (PULL) 40.0 POPULATI NOIEN 2.0 IOPFULATIOK DEISMT M sQ. EL 101.5 140.3 213a 33.2 15.1 FM Sq. NI. Ja. LAND 1".1 212.9 370.9 1124 121.8 tOIUUZZ AE STUCCUIX, (C) 0-16 235 44.2 13.8 4.6 "6. 45.0 15-4 us 53.0 51.5 50.5 50.3 51.5 *5 AM AOI2. ZA 2.7 2.3 2.9 2.7 PWroLATIW -Rum amE (I) TOTAL X. 2.9 3.3 Z. 1.9 *E 3.3 5.81 6.3 GA 5.1 Can KM CME (M 0WS) 51.1 51. 1.9 47.2 47.0 CARDS T1AU "AME CU =NS) 19.2 17.6 1.4 17. 15.0 com EDBoIcIO RAZZ 3.3 3.8 4.1 3.3 3.2 FANILT PLARNI A. T(S. AUL. (TM) .. R CZ OF 3AR81 VWN1) .. .. I. 3.3 6.4 FM3 AM -DNI 1U110 orn FeDO. PrE CAPu C1969-71-10D) *1.0 102.0 107.0 33.3 32.9 PU CAP=A SOWLI OF cUAL- CE or B1UOIm3UU 81.0 35.0 *8.0 37.7 ,B.5 ,moi3ms CU(GU PU OAT) 49.0 54.0 50.0 31.9 S5S. OF MtaCI INSIAL AN ML 26.0 A 3.0 29.0 lc 18.7 16.5 CN1D (AMS 1-4) DKAT! NE 37.3 32.5 z2.0 23.1 16. LI mEXPET. AT 31W (YEARS) 4.2 48.0 ".5 47J s2.0 DWASr HIM. MM M MM5) 16.3 149.3 125.0 119.5 106.8 MCSS TO SAU WAU (170,) diL . 54.0 Ad 27.1 42.4 0333 . . 48.0 t 63.5 67.3 RUL 0. 55. M 19.3 353 tUS TO r CEM OrSPOSAL CIZ Of WOILAUOU2 TOTAL 33.0 31.0 /a 26.3 23.9 tRia 33.0 6U.0 0 65.4 37.7 RumA! . 3.0 50.0 71 20.0 20.7 PCIL&TIN PUR PImIC5tc 139050.0 la 59600.0 31340.0 d 27901.7 L179.7 7QW. PU UCLG PDRO 11270.0 .0 979.0 3300. 2459.8