Sri Lanka - Second General Education Project

Document of the International Development Association Report No. 17056-CE PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN AN AMOUNT OF SDR 51.4 MILLION TO THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA FOR A SECOND GENERAL EDUCATION PROJECT NOVEMBER 13, 1997 Education Sector Unit South Asia Regional Office  SRI LAiNKA SECOND GENERAL EDUCATION PROJECT CURRENCY EQUIVALENTS Currency Unit SLRupees (Rs) USs1.00 = Rs 58.58 (June 1997) FISCAL YEAR (FY) and ACADEMIC YEAR January I -December31 ACRONYMS USED ADB Asian Development Bank CAS Country Assistance Strategy CD Curriculum Development CPCU Cumiculurn Process Coordination Unit CPPR Country Portfolio and Perfornance Review DDG Deputy Director General DFID Department for Intemational Development (UK) EBMU Education Budget and Monitoring Unit (FC) EDCC Education Development and Coordination Committee EMIS Education Management Information System EPD Education Publications Department (MEHE) ERD Extemal Resources Department FC Finance Commission FMS Finance Management System GEPI First General Education Project (Credit No. 2072-CE) GEP2 Second General Education Project GOSL Government of Sri Lanka GTZ Deutsche Gesellschaft fair Technische Zusammnenarbeit (German Technical Assistance) HEI Higher Education Institutions ICTAD Institute for Construction Industry Training and Development IDA Intemational Development Association (World Barnk) ISA In-Service Adviser JICA Japan Intemational Cooperation Association MEHE Ministry of Education and Higher Education MOFP Ministry of Finance and Planning MPPE Master Plan for Primary Education Project (DFID) NATE National Authority for Teacher Education NBDC National Book Development Council NCCC National Curriculum Consultative Committee NCOE National College of Education NEC National Education Conunission NIE National Institute of Education NILIS National Institute of Library and Information Science NLDSB National Library and Documnentation Services Board NLSB National Library Services Board NPB National Publications Board PCU Project Coordination Unit PEA Provincial Education Authority PIAC Project Implementation Advisory Committee PIP Project Implementation Plan PPMC Policy, Planning and Monitoring Committee (reorganized structure) PPR Policy Planning and Research (MEHE) PSC Public Service Commission PTA Parent Teacher Association SDS School Development Societies Sida Swedish International Development Agency SLFO Sri Lanka Field Office (World Bank) TC Teacher Center TETD Teacher Education and Teacher Deployment Project (Credit No. 2881-CE) UGC University Grants Commission ZEA Zonal Education Authority ZEO Zonal Education Office Vice President : Mieko Nishimizu Directorof Operations : Robert Drysdale Country Director Roberto Bentjerodt Education Sector Manager: Ralph Harbison Task Leader Albert Aime  SRI LANKA SECOND GENERAL EDUCATION PROJECT TABLE OF CONTENTS PAGE PROJECT FINANCING DATA ..........................................................1 BLOCK 1: COUNTRY AND SECTOR BACKGROUND ......................................................2 1. Country Overview and Education Sector Characteristics .2 2. Project Objectives and Anticipated Outcomes .4 3. Project Components .5 4. Benefits and Target Population .6 5. Institutional and Implementation Arrangements .8 BLOCK 2: PROJECT RATIONALE ......................................................... 10 6. CAS Objectives Supported by the Project ....................................................... 10 7. Main Sector Issues and Government Strategy ....................................................... 10 8. Sector Issues to be Addressed by the Project and Strategic Choices ........................1 1 9. Project Alternatives Considered and Reasons for Rejection .................................... 12 10. Major Related Projects Financed by the IDA and/or Other Development Agencies ....................................................... 13 11. Lessons Learned and Reflected in the Project Design .............................................. 15 12. Indications of Borrower Commitment and Ownership ............................................. 15 13. Value Added of IDA Support ....................................................... 16 BLOCK 3: SUMMARY PROJECT ASSESSMENTS ........................................................ 16 14. Economic Assessment ...................................................... 16 15. Financial Assessment ...................................................... 17 16. Technical Assessment ...................................................... 18 17. Institutional Assessment ...................................................... 18 18. Social Assessment ...................................................... 18 19. Environmental Assessment ...................................................... 19 20. Participatory Approach ...................................................... 19 21. Sustainability ....................................................... 19 22. Critical Risks ...................................................... 20 23. Possible Controversial Aspects ...................................................... 22 BLOCK 4: MAIN CREDIT CONDITIONS ..................................................... 22 24. Board and Effectiveness Conditions ....................................................... 22 25. Disbursement Condition ...................................................... 23 BLOCK 5: READINESS FOR IMPLEMENTATION ...................................................... 23 BLOCK 6: COMPLIANCE WITH IDA POLICIES ........................................................ 24  PAGE LIST OF ANNEXES Annex 1: Project Design Summary ..................................... 25 Annex 2: Project Description ..................................... 37 Annex 3: Estimated Project Costs ..................................... 48 Annex 4A: Financial Summary ..................................... 51 Annex 4B: Financial Assessment and Sustainability ..................................... 52 Annex 5: Processing Budget and Schedule ..................................... 53 Annex 6: Procurement Plan and Schedule ..................................... 54 Annex 7: Project Implementation Schedule ..................................... 63 Annex 8: IDA Supervision Plan ..................................... 66 Annex 9: Key Indicators ..................................... 68 Annex 10: Status of Bank Group Operations in Sri Lanka ..................................... 71 AnnexI 1: Sri Lanka at a Glance ..................................... 73 Annex 12: Documents in Project File ..................................... 75 Annex 13 Cost Effectiveness Analysis Summary ..................................... 76 Appendix 1 National Education System Reform Policy Initiatives .............................. 84  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION EDUCATION SECTOR UNIT South Asia Region Project Appraisal Document Sri Lanka Second General Education Project Date: 10/22/97 1 Draft [x Final Task Manager: A. E. Aime Country Manager: R. Bentjerodt Project ID: 10525 Focal Area: POC: Lending Instrument: SIL PTI: [1 Yes [X] No Project Financing Data I Loan [ X] Credit [ Guarantee [ Grant [] Other [Specifyl For Loans/CreditslOthers: Amount (US$m/SDRm): US$70.3 million/SDR 51.4 million Proposed Terms: [] Multicurrency [X] Single currency Grace period (years): 10 [] Standard Variable [ Fixed [] LIBOR-based Years to maturity: 40 Commitment fee: NA Service charge: .75 percent Financing plan (US$m): Source Local Foreign Total Government - 8.2 8.0 IBRD/IDA 40.9 29.4 70.0 Cofmanciers: DFID Mathematics 0.6 4.3 4.0 Total 49.7 33.7 83.4 Borrower: Democratic Socialist Republic of Sri Lanka Recipient: Democratic Socialist Republic of Sri Lanka Guarantor: NA Responsible agency: Ministry of Education and Higher Education Estimated disbursements (US$M): 1998 1999 2000 2001 2002 Annual 10.5 14.8 17.1 16.0 11.9 Cumulative 10.5 25.3 42.4 58.4 70.3 For Guarantees: [ Partial Credit I ] Partial risk Proposed coverage: NA Project sponsor: NA Nature of underlying financing: NA Terms of financing: Principal amount (US$) NA Final maturity NA Amortization profile NA Financing available without guarantee?: NA [ Yes [ ] No If yes, estimated cost or maturity: NA Estimated financing cost or maturity with guarantee: NA Expected effectiveness date: 2/98 Closing Date: 6/30/2003  Project Appraisal Document Page 2 Sri Lanka (LKPA10525) Second General Education Project Block 1: Country and Sector Backgrounds 1. Country Overview and Education Sector Characteristics: Sri Lanka is a low-income developing country with a per capita GNP of US$710 in 1996. The economy grew at an annual average rate of 4.5 percent during 1985-95. Growth declined to 3.8 percent in 1996 due to a prolonged drought that adversely affected agriculture and caused an energy shortage. The economy is expected to grow at over 5 percent in 1997 and thereafter. The present Government has stressed its strong commitment to promoting human development through rapid economic growth, investment in education and targeted social safety nets. Past investments in education and health have contributed to the achievement of relatively good social indicators. An infant mortality rate of 19 per thousand, adult literacy of 88 percent, and life expectancy of 76 years for females and 72 years for males, compare well with social indicators in countries at considerably higher levels of per capita income. The General Education System The general education system in Sri Lanka, with an enrollment of 4.2 million in 1996 (of whom 50 percent were females), consisted of three cycles: primary education (grades 1-5) with an enrollment of 1.9 million children, secondary education (grades 6-11) with 2.1 million children, and collegiate education (grades 12-13) with 0.2 million students. Under a recent proposal of the National Education Commission (NEC), the Government plans to consolidate the education system into two types of schools: Junior Schools, covering grades 1-9, and Senior Schools, covering grades 10-13. Additional objectives are to implement compulsory education for ages 5-14 (to grade 9) and to adjust the management and financing of the education system. Education Sector Enrollment The gros enrollment ratio in primary education (grades 1-5) is high (101 percent of age cohort). The ne primary enrollment rate is 92 percent, and universal primary education is likely to be achieved before the year 2000. This is substantially faster than the rest of South Asia. Secondary enrollment (grades 6-11) reached 75 percent of the age cohort in 1996, far above South Asian averages. At the higher education level, Sri Lanka has the lowest participation rates in Asia, less than 3 percent of the age group, in contrast to the Asian average of 8 percent. During the 1996-2005 period, the total number of students is expected to decline from 4.1 million to about 3.5 million due to the fall in fertility rates. This will have a substantial impact on the system cost. Sri Lanka has a unique position among developing countries to have reached equitable female participation in general and university education. Almost all girls complete primary education and most complete grade 11 (GCE O/L). Female participation at GCE A/L and university education equals that of males. In 1996, women comprised over 80 percent of primary and 60 percent of secondary school teachers and averaged over 70 percent of teachers at all levels. Education Sector Expenditure By intemational standards Sri Lanka spends comparatively little on education with the proportion of GDP spent on education in 1996 being 2.9 percent. Over the past decade, the average share of education expenditure in the GDP has been approximately 3 percent, which is less than the 3.5 percent mean for Asia and the 3.9 percent mean for developing countries. The sector budget is projected to increase by 1.4 percent per annum, a rate which is below the projected GDP growth of 5 percent. Low Expenditure on Quality Inputs The central problem of the Sri Lankan education system is low quality. This is seen by the large failure rates in public examinations and high rates of repetition. At the main public examination, the GCE O/L, taken at age 16 after 11 years of schooling, the failure rate, in most subjects, is 80 percent. Moreover, 20 percent of students fail all subjects. The average grade repetition rate is 12 percent per year, representing a substantial degree of internal inefficiency. The low level of quality is mainly due to the minimal expenditure on quality inputs in the education budget and the high level of untrained teachers. In 1996, 76 percent of the central and provincial recurrent budget was allocated to salaries, 16 percent for subsidies and welfare programs, 7 percent for travel and other expenditure, leaving only 1 percent for quality inputs such as essential teaching materials, equipment, materials and supplies, and maintenance.  Project Appraisal Document Page 3 Sri Lanka (LKPA10525) Second General Education Project Issues in the Education Sector The quality of the education system has suffered drastically as a result of the continuously low level of expenditure on quality inputs. That in turn has created inefficiencies in the operations of the different components of the sector. * Inappropriate and outdated school curriculum. The existing school curriculum has largely not been updated for over ten years. It is not based on modem learning and teaching methods and contains significant gaps in information in a variety of subjects. The curriculum is considered by the Government to be unresponsive to labor market needs. * Poor quality textbooks. Textbooks have been a Government monopoly for over fifteen years. This has led to high cost production by a rigidly structured Government department, the Educational Publications Department (EPD). The textbooks are produced with inferior paper, poor binding and weak covers. Hence, the durability of textbooks is low, causing re-use rates in Sri Lanka to be approximately one-third of those of comparable developing countries. Low re-use rates add approximately US$1.7 million dollars per year to book production costs. The content of textbooks fails to reflect the school curriculum adequately and has generally not been updated for over ten years. There is a single mandatory textbook per subject per grade, preventing choice and quality competition. With a multiple textbook option, teaching and learning would be more effective. * Inequalities and shortages in physical capital and basic services. A substantial deficit exists in facilities and services with only a minority of schools possessing the necessary facilities. There is a shortfall of science rooms, libraries and book storage facilities, particularly in rural and urban slum schools. In addition, much of the equipment, in the majority of schools, is not in working order due to inadequate maintenance and replacement policies.