Malawi - Secondary Education Project

Document of The World Bank Report No. 17320 MAI PROJECT APPRAISAL DOCUMENT ONA PROPOSED CREDIT IN THE AMOUNT OF SDR 35.5 MILLION (US$48.2 MILLION EQUIVALENT) TO THE REPUBLIC OF MALAWI FOR A SECONDARY EDUCATION PROJECT February 25, 1998 Human Development 1 Country Department 3 Africa Region  CURRENCY EQUIVALENTS Currency Unit = Malawi Kwacha US$1.00 = K17.4 (as of October 1997) SDR 1.0 = US$1.36 (as of December 1997) MEASURES Metric System FISCAL YEAR (FY) July 1 to June 30 (as of July 1998) Vice President: Callisto Madavco Country Director: Barbara Kafka Sector Manager: Ruth Kagia Task Team Leader: Janet Leno  GLOSSARY OF ACRONYMS ADB African Development Bank ADF African Development Fund CAS Country Assistance Strategy CIDA Canadian International Development Agency DANIDA Danish International Development Agency DEC Distance Education Centre EDMU Education Development Management Unit GABLE Girls Attainment in Basic Literacy and Education HIV/AIDS Human Immune Virus/Aquired Immune Deficiency ICB International Competitive Bidding IDA International Development Agency LS Local Shopping MTEF Medium-Term Expenditure Framework MIE Malawi Institute of Education MOE Ministry of Education MTR Mid-Term Review NCB National Competitive Bidding NGO Non-Governmental Organization PEP Primary Education Project PIF Policy Investment Framework PPF Project Preparation Facility PS Principal Secretary QCBS Quality and Cost-Based Selection SEP Secondary Education Project SOE Statement of Expenditure SU Supplies Unit USAID United States Agency for International Development  I  MALAWI SECONDARY EDUCATION PROJECT PROJECT APPRAISAL DOCUMENT CONTENTS Page No. Project Financing Data................ BLOCK 1: Project Description .............................................................2 1. Project development objectives .............................................................2 2. Project components ..............................................................2 3. Benefits and target population .............................................................2 4. Institutional and implementation arrangements ..............................................................3 'BLOCK 2: Project Rationale ..............................................................4 . CAS objective(s) supported by the Project ..............................................................4 6. Main sector issues and Govermment strategy ..............................................................4 7. Sector issues to be addressed by the project and strategic choices .........................................................6 ,3. Project alternatives considered and reasons for rejection .............................................................. 7 9. Major related projects financed by the Bank and/or other development Agencies ................................8 10. Lessons learned and reflected in the project design .......................... ....................................9 11. Indications of borrower commitment and ownership ..............................................................9 12. Value added of Bank support ..............................................................9 ]BLOCK 3: Summary Project Assessments ............................................................. 10 3. Economic Assessment .............................................................. 10 14. Financial Assessment .............................................................. 10 IL 5. Technical Assessment ..............................................................1 1 16. Institutional Assessment ............................................................. 11 17. Social Assessment .............................................................. 11 18. Environmental Assessment ............................................................. 11 19. Participatory Approach .............................................................. 11 20. Sustainability ............................................................. . 12 21. Critical Risks ............................................................. . 12 22. Possible Controversial Aspects ............................................................. 12  BLOCK 4: Main Credit Conditions ................................... 13 23. Conditions ................................... 13 24. Other ................................... 13 BLOCK 5: Compliance with Bank Policies ................................. 13 Annexes 1. Project Design Summary ................................... 14 2. Detailed Project Description ................................... 18 3. Estimated Project Costs ................................... 22 4. Economic Assessment ................................... 23 5. Financial Summary ................................... 26 6. Procurement and Disbursement Arrangements ................................... 27 7. Project Processing Budget and Schedule ................................... 32 8. Documents in the Project File ................................... 33 9. Status of Bank Group Operations in Malawi ................................... 34 10. Malawi at a Glance ................................... 35 Map: Malawi - IBRD No. 29374R  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Africa Region Country Department 3 Project Appraisal Document Malawi Secondary Education Project Date: February 25, 1998 [] Draft [x] Final Task Team Leader: Janet L. Leno Country Director: Barbara Kafka Project ID: MW-PA-1670 Sector: Education Lending Instrument: Specific Investment Loan PTI: [ ] Yes [x] No Project Financing Data [ Loan I x I Credit [] Other I I Guarantee jSpecifyj For Loans/Credits/Others: Amount: SDR35.5 million/ US$48.2 million equivalent Proposed Terms: [x] Multicurrency [ ] Single currency Grace period (years): 10 [I] Standard Variable [I] Fixed [] LIBOR-based Years to maturity: 40 Commitment fee: 0.50% Service charge: 0.75% Financing plan (US$m): Source Local Foreign Total Government 6.5 -- 6.5 IDA 22.2 26.0 48.2 Total 54.7 Borrower: Government of the Republic of Malawi Guarantor: NA Responsible agency: Ministry of Education Estimated disbursements (Bank FY/US$M): 1998 1999 2000 2001 2002 2003 Annual 0.5 8.5 7.6 13.6 13.5 4.5 Cumulative 0.5 9.0 16.6 30.2 43.7 48.2 For Guarantees: [] Partial [] Partial risk Credit Proposed coverage: NA Project sponsor: NA Nature of underlying financing: NA Terms of financing: Principal amount (US$) 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: 6/30/98 Closing date: 6/30/03  Page 2 Project Appraisal Document Malawi: Secondary Education Project Block 1: Project Description 1. Project development objectives (see Annex 1 for key performance indicators): * The main objective of the operation is to support the Government's plan to expand and improve secondary education. * Specific objectives are to: - expand access, by constructing 20 new day secondary schools and related physical facilities - improve educational quality, by providing teaching and learning materials in all Government and grant-aided conventional secondary schools - improve efficiency and effectiveness of the secondary education system, by strengthening school-based management through training of methods advisors, deputy heads and heads of department in all schools, and new headmasters and headmistresses - stem the spread of HIV/AIDS among teachers and students, through provision of training and materials - strengthen project implementation capacity, through technical assistance in procurement and financial management - support MOE's policy to encourage private secondary schools, through a short-term consultancy on private education e Progress towards these development objectives will be monitored and assessed based on key output and development outcome/impact indicators as shown in Annex 1. 2. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): Component Category Cost Incl. Contingencies % of Total (US$M) Access to Secondary Education Physical 39.8 72.9 Quality of Secondary Education Institution Building 10.0 18.4 Efficiency and Effectiveness of Secondary Institution Building 1.7 3.0 Education HIV/AIDS 1.7 3.0 Support to Administrative Unit/ Monitoring & Project Management 1.5 2.7 Evaluation/ Studies Total 54.7 100 3. Benefits and target population: Social: First, the project will offer expanded opportunity to economically less-advantaged and, in particular, rural students by creating 9,600 new places in conventional day secondary schools, which traditionally have tended to cater for relatively-well off and urban students (currently serving 4.3% of the secondary school age population). Second, since 50% of all new Form I places in day secondary schools are reserved for girls (in line with Government policy), the system expansion will help to increase the number of female secondary students, which in turn can be expected to produce a range of positive spin-off effects associated with educating females through secondary level -- e.g., reduced fertility rates, improved child health, higher primary enrollments, and enhanced labor productivity and wages of women (with a consequential rise in household incomes and a reduction in poverty). This expansion of places for girls is to be complemented by project-financed training of school-level managers that will include a module on gender sensitization. Economic: Because secondary education imparts cognitive skills that increase labor productivity more broadly, its expansion can be expected to contribute to economic growth. This conclusion has been reached through a number of multi-country comparisons of labor force, level of education and rates of economic growth, as well as in several country-specific studies (e.g., a comparative study of public investment in secondary education in Kenya and Tanzania, which indicated the dampening effect on growth of Tanzania's policy to limit secondary enrollment [The East Africa Natural Experiment, J. Knight and R. Sabot]).  Project Appraisal Document Page 3 Malawi: Secondary Education Project Improved Learning Outcomes and Increased Internal Efficiency: Through strengthening of school-level management and teacher support capacity, the project is intended to improve the quality of secondary education, as evidence from around the world has demonstrated that effective school management and teacher support are key to improving student performance. In addition, provision of instructional materials in all conventional secondary schools is intended to improve learning outcomes of all secondary students. Moreover, research from Brazil and elsewhere has shown that improvements in instructional quality can lead to increased internal efficiency of the system through reduction of repetition and dropout rates. Project benefits will be quantified more accurately in terms of increased access, learning achievement and improved efficiency through the monitoring and evaluation component of the project. 4. Institutional and implementation arrangements: Irnplementation period: Five years Executing agency: Ministry of Education Project coordination: Overall responsibility for project implementation will rest with the Secondary Education Project (SEP) Steering Committee, chaired by the PS/Secondary and Higher Education and comprised of the PS/Finance and Administration, Director/Secondary Education, Director/Supplies Unit, Director/Education Methods Advisory Unit, Director/Malawi Institute of Education, MOE Financial Controller, Coordinator/Education Development Management Unit (EDMU) (as secretary), Director/Planning Unit, Secretary/Teaching Service Commission, Budget Director/Ministry of Finance, and Secretary to the National Economic Council. The Steering Committee will have two subcommittees: Finance -- to be chaired by the PS/Finance and Administration, with members including the MOE Financial Controller, Coordinator/ EDMU, Director of Buildings, Controller of Stores, Accountant General (or his representative), EDMU/Chief Accountant (as secretary), EDMU Financial Advisor (ex officio), and by invitation, representation from EDMU. Civil Works -- to be chaired by the Project Officer/SEP, with representation from the Planning Unit, Methods Advisory Unit, Secondary Education Unit, the Civil Works Technical Advisor, and Chief Architect of the Department of Buildings. The Coordinator/EDMU will be responsible for the procurement of all goods and services and the disbursement of project funds for all project components. Specific responsibility for management of the components will be as follows: Civil Works -- This component will be managed by the Project Officer/SEP, supported by a full-time technical advisor, to be funded through the PPF and the project, who will be responsible for accelerating the preparatory work leading up to construction of the project-financed schools (including standard design work, description of specifications, overseeing site analysis, and preparing initial bid packages). Further, drawing on the model initiated under the Primary Education Project, EDMU will hire a private sector architectural/construction management firm to handle site-specific plan development and day-to-day management of all civil works activities. Instructional Materials -- The MOE Supplies Unit will prepare an aggregated list of selected titles, prepare bills of quantities, prepare lists of materials required and a related distribution schedule by school, and maintain records of signed documentation of materials distribution. The EDMU procurement officer will coordinate all procurement documentation, the EDMU Chief Accountant will pay suppliers, and final documentation will be held at EDMU. Procurement packages will include responsibility for distribution to schools by the supplier. School-level Managers' Training -- MOE will hire a Training Coordinator to work with a local training team, to design and deliver needs-based, participatory training during the project's first two years. Working in close liaison with the Methods Advisory Unit, the Training Coordinator will be housed at the Malawi Institute of Education. Finances will be handled through an imprest account at the selected training institution, with accountability to the EDMU Chief Accountant. HII/AIDS -- Adaptation of instructional materials from Zimbabwe for use in Malawian secondary schools will be undertaken by consultants, with supervision provided by the MOE Methods Advisory Unit. Reproduction of these materials for use in the School-level Managers' Training will be handled by Supplies Unit and EDMU. Consultants will also provide professional inputs into the HIV/AIDS module of the training course, reporting for this purpose to the Training Coordinator.  Page 4 Project Appraisal Document Malawi: Secondary Education Project Administrative Management Support, Monitoring & Evaluation, and Studies-- The SEP Steering Committee, with the support of the EDMU Coordinator, will be responsible for consultant selection (including engaging a consultant to advise MOE on the organization and regulation of private schools); the Financial Management Advisor will handle the processing of consultant hiring and procurement of goods under his component. Project oversight (policy guidance, etc.): In addition to project implementation oversight, the SEP Steering Committee will provide policy guidance. Provision of policy guidance will be particularly important in light of the agreement between MOE and IDA to revisit the SEP design at the Mid-Term Review. This would allow MOE to take advantage of any new policy initiatives or emerging lessons that might be learned over the next few years, and to ensure that MOE is able to use IDA financial support for secondary education in Malawi as efficiently and effectively as possible. Accounting, financial reporting and auditing arrangements: In light of EDMU's responsibility to provide strong financial management for both the present project (SEP) and the ongoing Primary Education Project (PEP), additional professional capacity in this area will be added to the unit. This will include MOE's posting to EDMU an experienced government accountant, as well as hiring under SEP an external financial management advisor (to be appointed for 18 months). Together these two will be responsible for ensuring the combined financial management activities of both projects. Oversight of SEP will be provided by the Finance Sub- Committee of the SEP Steering Committee. Agreed arrangements will follow systems and procedures acceptable to IDA. Accounting records will be kept for all project-related expenditures following generally accepted accounting principles. Government will establish a project account in Malawi kwacha to ensure the availability of counterpart funds for the project. Project accounts will be audited annually, following international auditing standards, by independent auditors acceptable to IDA. Disbursements under Statements of Expenditure will be audited semi-annually. Annual audit reports will be submitted to IDA within six months of the end of each fiscal year, and the semi-annual audit report within three months of the end of each period. Monitoring and evaluation arrangements: Ongoing monitoring of progress in achieving agreed indicators will be the responsibility of the MOE Planning Unit, which will manage data collection and analysis activities. At appraisal a list of indicators was agreed, including where relevant specific targets to be achieved during the project. Progress reports will be submitted to IDA semi-annually, and a Mid-Term Review will be held prior to end February, 2001. Block 2: Project Rationale 5. CAS objective(s) supported by the Document number and date of latest CAS discussion: Report No. 1 5494-MAI project: Discussed on March 19, 1996 The objective of the Country Assistance Strategy (CAS) is growth through macroeconomic stabilization, unleashing private initiative, population control and human resource development, and capacity building/decentralization. One strategy to reach these goals is to increase secondary enrollment rates and improve education quality and efficiency. The proposed operation fits this strategy by helping to ensure that a growing number of students obtain access to secondary education, and that the education they receive is of a better quality. In particular, increasing the number of girls eligible to participate in secondary education will have positive ripple effects, as secondary education of females has been directly linked to reduced fertility and the improved health, nutritional status and increased school participation of their children. There is also a high demand for education in Malawi, as shown in feedback from a Systematic Consultation exercise (1995), in which communities ranked the need for schools as one of the two top priorities, and indicated their willingness and interest to actively participate in order to have their demands met. 6. Main sector issues and Government strategy: Sector Issues: Rapid primary enrollment growth: Due to Government's abolition of primary school tuition fees in late 1994, enrollment grew from 1.9 million to 3.2 million in 1995 (later falling to an estimated 2.9 million). At present enrollment in Standard (grade) 5 is over 200,000; in Standard 4 it is 300,000; in Standard 3 it is 425,000; in Standard 2 it is 600,000; and in Standard l it is nearly 900,000. This nominal increase in access has been accomplished at the expense of the quality of instruction due to severe overcrowding, deployment of 20,000 untrained teachers, and a dearth of instructional materials. Growing demand for secondary education: Secondary education in Malawi is provided in conventional Government schools, Distance Education Centres (DECs), and private schools. Total enrollment in 1997 is approximately 183,000 students,  Project Appraisal Document Page 5 Malawi: Secondary Education Project equivalent to an estimated 16% of the age cohort. Of this total, the majority of students are enrolled in DECs (11%), followed by enrollment in conventional secondary schools (4%) and private schools (1%). Historically, conventional schools have been privileged relative to DECs in terns of their high level of public subsidy. Conventional schools have been characterized by good-quality physical facilities, provision of trained secondary school teachers, and relatively well-off students (although in recent years the provision of instructional materials to these schools has declined dramatically, leaving them without sufficient supplies of appropriate books and consumables). Until recently, all such schools were boarding schools, with highly-subsidized feeding and accommodation. Selection for entry was done nationally. DECs were designed as a low-cost alternative to the conventional schools. Physical structures are put up by the communities, class monitors are primary school teachers, and selection tends to be from the surrounding community (although some students come from a distance and board in the community). Examination results have been better in the conventional schools than in the DECs (see below). Less is known about the range of private secondary schools, which have developed in recent years in response to the limited space in the conventional schools and the poor quality of the DECs. Private schools tend to charge higher fees than do either the conventional schools (where fees are very low) or the DECs (where fees are low, but still higher than in the conventional schools). As a result of the historic limitation on places in conventional secondary schools, coupled with the near-universal primary enrollment and rapid population growth, demand for places in conventional secondary schools is growing rapidly. At the end of 1995 the Standard 8 enrollment stood at 142,000, while the annual intake into the conventional secondary schools (entry into which most of these students would aspire) was 9,250. This pressure for expansion is being released through the uncontrolled expansion of private schools and DECs. Private school enrollments have doubled in the past few years, with very limited licensing and regulatory oversight from Government. Although no firm figures exist regarding the growth rate of DECs, expansion of the DEC system has been dramatic in recent years. This is due to the fact that the opening of new DECs has not been controlled by Government, so that DEC expansion is purely a function of local capacity to put up a structure and obtain a primary school teacher. Low learning achievement at secondary level: In 1996 the percentage of students attaining full Senior Certificate level certification (Form 4/grade 12)) was 11% for students at DECs, 42% in private secondary schools, and 58% in conventional secondary school students. Thus, academic performance across the board was very weak, even in the relatively better-staffed and equipped conventional system. Output is particularly weak in the areas of science and technology, especially in the DECs where there are no facilities for practical science work. Results are also very weak in English, for which the percentage of students attaining credit in 1996 was 3% in DECs, 25% in private schools, and 30% in conventional schools. Inequitable access to secondary education: Educational access is especially limited for females beyond Standard 6, due to the long distances girls must walk between home and school, and to the perception of some parents that formal education does not teach young Malawian women what they need to know to perform their role in society. Access is also limited geographically: in the rural areas there are very few schools; and in the urban areas where there are more schools, there are also many more secondary school-age youth trying to gain entry to secondary education. Limited institutional capacity to analyze, plan and manage at all levels of the educational system, from MOE headquarters through to the school level. The HIV/AIDS epidemic: According to the recent AIDS Assessment, incidence of HIV/AIDS in Malawi is very high, especially among adolescents and young adults. In Blantyre it is estimated that about 30% of the population between 15 and 49 years are infected; nationwide the estimate is 13%. This situation has serious implications for the premature loss of trained teachers and secondary school graduates. High recurrent costs of system expansion and improvement: Government's efforts to respond to all of these issues -- dramatic growth in primary enrollments, growing demand for expansion of secondary school places, the need for improved quality and equity of the system at all levels, the importance of strengthening system planning and management capacity, and the need to plan to replace educated Malawians who die prematurely from HIV/AIDS -- combine to create enormous pressure for additional public budget support. At present the education budget share stands at 26% of total Government recurrent spending. This pressure for additional recurrent budget is exacerbated by the high rate of public subsidy in both conventional secondary schools and DECs, where fees for tuition and boarding are nominal.  Page 6 Project Appraisal Document Malawi: Secondary Education Project Government's Strategy: In response to the expansion in primary enrollments since 1994, Government has been focusing its own and donor resources mainly at the primary level. Donor support for primary education is broad-based, including the Bank-financed Primary Education Project, the objectives of which are to: construct 1,600 classrooms, undertake comprehensive teacher upgrading, and provide instructional materials to all new classes. In light of the growing social demand for secondary school places related to this expansion at primary level, as well as the recognition that secondary learning outcomes are low, Government is now beginning to turn its attention to expanding and improving secondary education; the proposed Bank project would fit within this context. Increasing secondary school access for girls is being addressed through: (i) official admissions policy that reserves 50% of Form I (grade 9) places in day secondary schools for girls, and (ii) the USAII) GABLE (Girls Attainment in Basic Literacy and Education) project, which provides scholarships to cover tuition fees for all girls enrolled in secondary education institutions and supports a Social Mobilisation Campaign that reinforces the importance of educating girls; MOE is trying to strengthen its sector planning and management capacity through technical assistance and training being financed by USAID, DANIDA and other donors. In response to the growing HIV/AIDS epidemic, MOE would like to move beyond mere provision of information about the epidemic to try to change the behavior of teachers and students, in order to begin to stem the rate of new infections. In an effort to manage the high recurrent costs of operating an expanded and improved system, MOE intends to operationalize its sectorwide Policy and Investment Framework (PIF). The objective is to produce a document that will serve as an operational guide to rational sector resource allocation. To this end, Government will work closely with interested funding agencies over the next eight months or so to prioritize and cost the many proposed interventions for sector improvement and expansion that are included in the current PIF. This work is closely linked with the ongoing Medium- Term Expenditure Framework (MTEF) exercise, in which the education sector has been a leader over the past several years. The process leading to a revised PIF is being supported by IDA, DANIDA, and USAID, including the conduct of a sector expenditure review and organization of broad-based workshops to take place over the coming year. In addition, in order to relieve part of the burden of expanding secondary education from Government's shoulders, MOE would like to operationalize its policy to encourage good-quality private provision of secondary education. 7. Sector issues to be addressed by the project and strategic choices: The proposed project responds to Government's urgent request for IDA assistance to address the impending explosion in the number of primary school graduates and the corresponding social pressure to expand and improve the quality of secondary education. The project would thus focus on: * expanding access to conventional secondary education through construction of new day schools (five of which will operate on a double-shift schedule, thereby increasing the number of new student places) and related facilities * improving the quality of secondary education by providing instructional materials to all secondary schools * improving the efficiency and effectiveness of secondary education through strengthening of school-level management practices; and specifically through provision of training in teacher management and support to be targeted at secondary school deputy heads, heads of department, methods advisors, and new secondary school heads * stemming the growth in HIV/AIDS infection through provision of appropriate instructional materials for all secondary students in the country, and inclusion of an HIV/AIDS module in the training for school-level managers  Project Appraisal Document Page 7 Malawi: Secondary Education Project * strengthening project management and monitoring capacity, and providing technical assistance to MOE in implementing its policy to encourage and regulate private secondary school provision The project has been narrowly conceived in order to target some of the immediate problems in secondary education as quickly as possible. Government has asked the Bank to restrict its focus in this project to secondary education with the understanding that primary education improvement and expansion will continue to be supported by most other donors and, possibly, by a Bank-financed follow-on to the Primary Education Project. At the same time, however, broader sector analysis to feed into the policy dialogue will be undertaken. First, PPF funds are being used to support study of one of parents' willingness to pay for secondary education, the results of which will have important implications for the sustainability of secondary school expansion in the medium-to-long term. Second, IDA and other donors are supporting Government in a collaborative process to assess sector goals, strategies, and financial parameters over the next eight moni:hs or so, the objective being to develop through consultation a broad-based consensus on a sector strategy to be implemented within available resources. Third, an in-depth sub-sector study (initiated by DANIDA, with collaboration from the Bank) focusing on the role of DECs as providers of secondary education will provide valuable inputs into the sector strategy to help guide longer-term policy decisions. It is possible that the analytical work noted above will produce findings that could be useful in a redesign of the proposed project. For example, the work on DECs could lead to development of interventions to strengthen DEC provision at relatively low cost, thereby offering a less-expensive alternative to expanding secondary education than the approach being supported under the project. Further, the vvork on school fees could lead to agreements on how to attract additional non-public resources into the secondary schools. To the extent that useful findings emerge from this analytical work, they will be considered by a joint Government-IDA team at the project's Mid-Term Review and, where appropriate, they will be incorporated into a Mid-Term project redesign or modification. 8. Project alternatives considered and reasons for rejection: Sector Investment Program: In light of the importance of allocating limited public and external resources as efficiently and effectively as possible, consideration was given to development of a sector investment program. Government has produced a sector policy document (PIF) and discussed the sector approach with the Bank and other donors. However, there is not yet broad agreement on sector priorities to be financed by such a program, and there is an urgent need to expand secondary education provision. For these reasons MOE asked the Bank support the proposed secondary education project rather than development of a broader sectorwide program at this time. Nonetheless, the sector approach remains the medium-term objective of the Bank (as well as the broader donor community) and preparation of the present project has given careful consideration to the impact of secondary education expansion on the recurrent budget, the availability of funds for the whole of the education sector, and the development of a revised, operationalized Policy Investment Framework on which to base future IDA support. Support to expand and improve the quality of education in the DECs: As noted above, the quality of education offered in the DECs is very low, particularly at the Senior Certificate Jevel (Form 4), where only 1 1% of DEC students attained full accreditation. Government is attempting to strengthen the quality of education provided by the DECs with a number of different and somewhat uncoordinated interventions (e.g., converting some DECs into conventional secondary schools; upgrading the primary school teachers who work in the DECs; considering initiating a diploma program in distance education for DEC teachers; and providing sets of instructional materials to each DEC). In order to formulate a coherent strategy to either strengthen or reconceptualize the DECs, information is needed on the effectiveness and costs of these and other approaches to secondary education provision. Thus, given the complexity and scale of the problems associated with the DECs, it was decided that it would be premature to invest in them before undertaking further study of these issues (through a major sub-sector study being supported by DANIDA). On the basis of this work Government and the donors will be in a stronger position to develop a well-founded secondary education strategy in which DECs would play an important role. As noted above, to the extent that these studies yield useful recommendations regarding the strengthening and expansion of DECs, these can be incorporated into the project at the time of the Mid-Term Review.  Page 8 Project Appraisal Document Malawi: Secondary Education Project 9. Major related projects financed by the Bank and/or other development agencies: Sector issue Project Latest Form 590 Ratings IP DO Bank-financed Secondary school expansion, primary teacher training, and First Education Project; Cr. 102-MAI. S S introduction of technical subjects in secondary schools. Signed in 1967 and closed in 1980. Primary teacher training; expansion of secondary education Second Education Project; Cr.590- S S MAI. Signed in 1975 and closed in 1982. Expansion and improvement of primary education and primary Third Education Project; Cr.9 I 0-MAI. S S teacher training; expansion of DEC facilities, establishment of an Signed in 1979 and closed in 1986. Institute of Education; and strengthening educational management and planning. Fourth Education Project; Cr. 1123- S S Secondary education expansion; secondary teacher output at the MAI. Signed in 1981 and closed in university; and preparation of a National Education Plan and pre- 1986. investment studies. Improvement of primary education; expansion of primary teacher Fifth Education F'roject; Cr.1330- S S training, expansion of regular secondary education and DECs; MAI. Signed in 1983 and completed increasing the number of trained accountants; and preparation of a in 1990. school mapping survey and studies regarding delivery and utilization of books. S S Primary school expansion and quality improvement; expansion of First Education Sector Credit; secondary schools; and institutional development. Cr.1767-MAI. Signed in 1987 and closed in 1994. S S Upgrading primary school buildings and teachers' houses; providing science kits and improving library services to secondary Second Education Sector Credit, Cr. schools; expanding DECs; in-service teachers' training; 20983-MAI. Signed in 1990 and developing curricula and textbooks; strengthening management, scheduled to close in 1998 S S budgeting, and planning; and improved resource mobilization and allocation. Improve the quality of primary education by providing teaching Signed in 1996 and scheduled to close and learning materials, and pedagogical support to/in-service in 1999. Primary Education Project; training for untrained teachers. Cr. 2810-MAI. S S Poverty alleviation through the construction of demand-driven Malawi Social Action Fund social infrastructure (including schools). (MASAF); Cr.2856-MAI. Signed in 1996 and scheduled to close in 2001. S HS Other development agencies USAID: Primary education and scholarships for girls at Girls' Attainment in Basic Literacy secondary level. and Education (GABLE) African Development Fund: Access to primary and secondary ADF 11 education, including construction of three secondary schools.  Project Appraisal Document Page 9 Malawi: Secondary Education Project Danish International Development Agency: Construction of Under preparation primary classrooms and teacher resource centers, secondary education sub-sector review (including DECs), and secondary education curriculum reform. CIDA: Diploma in Distance Education for DEC supervisors Under discussion JICA: Construction of up to five day secondary schools Under discussion 10. Lessons learned and reflected in the project design: Several of the lessons learned from earlier project experience have been applied in the design of the present project. The positive experience to date with EDMU (in which Government employees are engaged at Government pay rates) has led to the decision to locate implementation responsibility for the proposed project within this same unit, while at the same time adding technical expertise and addition staff to ensure EDMU capacity is not overstretched by the new project. Second, in light of past problems with small contractors failing to deliver buildings of acceptable quality, the project's civil works component will be managed by a large and experienced private sector construction management firm to ensure that civil works contracts can be successfully implemented. More broadly, this approach -- initiated under the PEP -- will also help to reduce pressure on EDMU for the day-to-day operation of the civil works activities financed by the project. Third, in light of serious complications associated with the past financing of motorcycles for district-based staff (as well as the need for a reconceptualization of the role of these staff), it has been decided not to finance transport for district-based methods advisors. Lessons from international experience have also been taken into consideration in the project design. These include: (i) focusing on the school and on teacher support as key factors in improving learning outcomes; (ii) more specifically, strengthening the management capacity of deputy heads and heads of department to enhance their capacity to guide and advise their teachers in the classroom and within the school; (iii) building in a role for enhanced community involvement in the running of the new schools in light of the demonstrated importance of parents in encouraging student performance as well as in protecting schools from vandalism and ensuring regular maintenance of the physical plant (this issue was discussed during pre-appraisal and appraisal, with agreement that it will be operationalized by the Mid-Term Review, by which time MOE will have experience with the day secondary schools being constructed with Government resources). Lessons learned from the policy dialogue in Malawi. Over the past several years, progress has been made in several areas. Most importantly, education's share of public recurrent expenditure has risen from 11% in 1993/4 to 26% in 1996/7. With respect to secondary education, important decisions have been made in terms of shifting from a reliance on boarding schools (with very high unit costs) to day schools, reducing the unit cost of construction of conventional secondary schools in the proposed project, and experimenting with double sessioning. These policy decisions indicate an increasing readiness in Government to confront resource constraints and work out ways to manage within them. 11. Indications of borrower commitment and ownership: The project scope and design respond to an urgent request from Government for IDA assistance to expand and improve secondary education. Commitment has been demonstrated through: (i) an official request for a PPF to finance a range of preparatory activities and sub-sector studies; (ii) MOE's formation of several working groups to collaborate with the Bank team in preparing the project components; and (iii) MOE's timely presentation to the Bank of a range of agreed preparatory documents, including a draft Letter of Education Sector Policy. Between pre-appraisal and appraisal, Government took action to produce a more cost-effective school design so that project funds can be used more efficiently to build more schools. This effort was spear-headed by the Honorable Vice President, reflecting Government's desire to make good use of available resources. 12. ialue added of Bank support: The Bank has provided support to the Malawian education sector over the past 30 years, including direct project investment assistance and, during the past several years, assistance in production of Medium Term Expenditure Framework analysis and an education sector Policy Investment Framework. At this point the value added associated with Bank support is twofold. First, the Bank is the only  Page 10 Project Appraisal Document Malawi: Secondary Education Project funding agency with considerable financial resources that is interested in financing the expansion of secondary education. Second, on a parallel track with preparation of the proposed project, the Bank -- along with other donors -- is helping to facilitate broader thinking about and analysis of various policy options to ensure the sustainability of quality improvements and quantitative expansion of the country's education system. Discussion between MOE and the Bank on other key issues (e.g., restructuring secondary education provision to allow for exit after Form 2; increasing tuition fees; or instituting a textbook user fee) will be pursued during project implementation, and policy decisions taken over the next year or two could allow for some redesign of the present project at the time of the Mid-Term Review. Block 3: Summary Project Assessments (Detailed assessments are in the prcject file. See Annex 8) 13. Economic [x ] Cost-Benefit Analysis: NPV= NA; ERR= NA [] Cost Effectiveness [x] Other Assessment (see Analysis: [Fiscal; Annex 4): Least Cost] Cost-Benefit Analysis: Rate of return analysis was undertaken in 1995 as part of the preparation of the Primary Education Project. The analysis indicated a private rate of return to secondary education over primary education of 15% based on wage data and 9% based on income data. Social returns were found to be 14% using wage data and 8% using income data. Additional rate of return analysis was not undertaken for this project in light of the significant structural changes taking place in the economy and the assumption that given Malawi's relatively low secondary enrollment rate, the economic value of secondary education will continue to be high for the foreseeable future. Fiscal Analysis: The main economic issues posed by this project are budgetary. Public expenditure commitments are over-extended and competing claims on scarce resources will become even more intense over the next ten years. In light of the fact that anticipated budget growth will be consumed by growth in primary school enrollments, it is likely that any expansion of secondary education will require additional recurrent budget provision. Fiscal projections of education expendituire were undertaken to model the effect of different rates of secondary enrollment expansion and changes in secondary school fees (see Annex 4). The results indicate that even a moderate expansion of the primary and secondary education system would consume nearly 33% of the public recurrent budget by the year 2005 (current budget share is 26%). The effect of increases in school fees would lower the share somewhat, although fees would need to increase considerably for this to become an important revenue source. (DMOE is undertaking a study, financed through the PPF, to see how fees can be increased and to investigate other mechanisms that could help reduce the public burden of providing secondary education.) Further analysis was done at appraisal, based on an agreed expansion program that inclades 20 IDA-financed schools, three schools funded by the ADB, and eight by Government. Based on the same assumptions used in the earlier projections, the implications of this level of system growth over the next five years is that recurrent spending will need to increase to 31 %; if fees are increased the total recurrent budget share could be reduced to around 29%. The implication of all the budget projection work is that additional policy changes are needed to ensure sufficient recurrent cost financing of secondary expansion. For example, in addition to increasing tuition fees, there are a number of measures that could either attract additional non-public revenue or reduce Government's burden in the provision of secondary education -- e.g., increased community involvement in school maintenance and management, reduction in the number of boarding schools, heavier reliance on private provision, allowing for exit at Form 2 rather than Form 4. The Bank will continue to raise these and other policy options with MOE in the context of revising the Policy and Investment Framework over the next eight months or so. Least Cost Analysis: Analysis of alternative secondary school designs was undertaken to determine the least cost approach to school construction (see Annex 4). Given Malawi's historic reliance on relatively-costly boarding and day schools, a participatory approach was used to facilitate community acceptance of a strategy that emphasizes a good-quality but basic school design. Initial unit cost estimates demonstrated a difference of 58% between the school space plan initially proposed by MOE and a lower-cost, but pedagogically-sound alternative. Additional unit cost analysis was done during appraisal, leading to further unit cost reduction, thereby allowing Government to build more schools under the project. 14. Financial Assessment (see Annex 5) NPV = NA ERR = NA See 13 above.  Pro ject Appraisal Document Page 11 Malawi: Secondary Education Project 15. Technical Assessment: Projiect components (school construction, instructional materials, training for school-level managers, adaptation of HIV/AIDS instructional materials) have been prepared on the basis of international experience, norms and standards and are technically sound. Estimates of investment and recurrent costs are based on prevailing market unit costs, with appropriate allowance for inflation. Civil works costs were specified at pre-appraisal by a local quantity surveyor based on recent experience of the local and regional market for building materials. 16. Institutional Assessment: Et. Executing agencies: Although the Ministry of Education has long experience in implementing Bank-financed projects, including the ongoing Primary Education Project (PEP), implementation capacity is limited. Capacity has been strengthened, however, through the project preparation process, which has been highly collaborative and broad-based. This approach has also paid dividends in terms of expanding commitment to the project from key professional staff within MOE, whose support during implementation will be essential to ultimate project success. In addition, it was agreed at appraisal to make judicious use of external technical assistance in key areas (e.g., civil works, procurement and financial management) to facilitate smooth project implementation. b. Project management: In light of limited implementation capacity, the project will rely on three sources of support. First, overall responsibility for project management will rest with the EDMU, which has gained relevant experience in implementing the PEP' over the past year. Second, EDMU's experience will be supplemented by technical assistance for management of all civil works activities and by additional staff to oversee procurement and financial management. Third, EDMU will contract out major pieces of project implementation responsibility to the private sector. A private construction management firm will be engaged to take responsibility for all construction work (e.g., preparing bid packages, overseeing the tender process, and supervising the contractor), and an externally-recruited technical assistant will be hired to lead the work on management training design and delivery. 17. Social Assessment: A major hindrance to successful provision of secondary education in Malawi is school vandalism. The project will address this issue through efforts to enhance local school communities' sense of ownership of the project-financed schools, as experience in other countries indicates that community "ownership" can offer a measure of protection against physical destruction and theft of school property. MOE is designing a community consultation process, beginning with school site selection and leading eventually to agreement on communities' rights and responsibilities in the running of their schools. Security issues are also being addressed in the physical design of the new schools. The low participation of girls in secondary education is currently being dealt with in part by the MOE policy to reserve 50% of all Fonrm I places in day secondary schools for girls. The project would support this policy by: (i) constructing additional secondary school facilities, thereby reducing the distance that girls would need to travel to attend school; and (ii) ensuring that all project- financed schools will have toilet facilities, which have been shown to be important to the retention of female secondary students. Additionally, the project component to train school-level managers will include a module on gender sensitization, a key topic to be followed up at the school level between the school managers and their teachers. 18. Environmental Assessment: Environmental Category [ ] A [] B [x ] C The project is Category C, as it is not expected to have any negative effect on the environment. Provision of toilet facilities and water at the new schools would promote hygiene and have a positive impact on the school environment. 19. Participatory Approach: Identification/Preparation Implementation Operation Beneficiaries/community groups CONS COL COL Intermediary NGOs -- -- -- Academic institutions COL COL COL Local government COL COL COL Other donors COL COL COL  Page 12 Project Appraisal Document Malawi: Secondary Education Project 20. Sustainability: Project sustainability will depend on the availability of funding to cover the operating costs of the new schools. This will require either: (i) an increase in the recurrent budget share allocated by Government to the education sector, (ii) major structural changes in public provision of secondary education (e.g., allowing for exit from the system at Fonn 2), (iii) dramatic increases in tuition and boarding fees, or (iv) external financing of a major share of the incremental recurrent costs associated with the project. On the first point, at appraisal the Bank team received assurance from the Ministry of Finance that the estimated 31% recurrent budget projected to be required to cover expansion of secondary education (of which this project will finance more than 58%) will be made available for this purpose in light of the high priority Government attaches to secondary education. In the context of revision of the PIF, the Bank will pursue discussion of possible structural and policy changes that could be implemented in the future to reduce Government's financial responsibility for secondary education. MOE's intention to rely increasingly on private provision of secondary education could also help to decrease the public burden at this level of the system. 21. Critical Risks (see fourth column of Annex 1): Project outputs to development objectives Risk Risk Rating Risk Minimization Measure Turnover of key MOE staff would jeopardize Moderate Steps being taken -- through project preparation, frequent planned successful project implementation supervision missions, and upcoming sector studies -- to work in a highly collaborative fashion and in so doing build the capacity of a broad base of MOE stafl Non-availability and lack of continuity of Moderate Reliance on private sector construction management firm for civil appropriate high-quality, adaptable project works activities, on technical assistance for procurement and financial staff management, and on technical expertise for the design and delivery of training for school-level managers Project components to outputs Rsk Risk Rating Risk Minimization Measure Civil works procurement is not efficiently Moderate Technical Assistance to assist in all aspects of civil works is being undertaken obtained during the period leading up to project effectiveness to ensure that bidding packages for the first round of major civil works activities will be prepared prior to effectiveness Capacity for the procurement and distribution Moderate Procurement staff the MOE/Supplies Unit will be assisted by of books and other instructional materials will procurement technical assistance in EDMU; distribution will be not be adequate incorporated into contracts for the provision of books and materials Overallproject risk rating Moderate Overall project risk is mitigated by Government's commitment to expanding and improving secondary education, by the engagement of targeted technical assistance, and by the Bank's readiness to provide strong support throughout project implementation 22. Possible Controversial Aspects: Location of new schools. The location of secondary schools is being conducted in a highly consultative manner, involving traditional leaders, politicians, NGOs and local communities desiring a secondary school. A complicating fact is the high demand for secondary education in the country. Thus, although selection criteria for school sites have been developed and applied (based on the size of the  Project Appraisal Document Page 13 Malawi: Secondary Education Project seccindary school age cohort, poverty profile, distance from a secondary school), the ultimate selection of communities in which to begin construction of the project-financed schools could be politically sensitive. Day schools and double shifting. In order to increase the number of students who can take advantage of the limited number of places to be provided by the new secondary schools, Government intends to construct day schools only (as opposed to the tradition of boarding schools), and to rely on double shifting in the urban schools where student numbers are high. In Malawi double shifting means that schools are to be used by two sets of students and teachers (sharing one school principal and two deputy principals). Both the reliance on day schools and the double shift policy could be controversial to the extent that parents perceive these moves away fronm the traditional boarding model as a threat to educational quality. Block 4: Main Credit Conditions 23. 4Conditions Effectiveness: * Title for land for school construction transferred to MOE. * Project Implementation Plan adopted by MOE (including finalized procurement plan). * Selection of SEP Procurement Specialist, Financial Advisor, and Training Coordinator completed. * Initial deposit in Malawi Kwacha equivalent to US$15,000 made into the Project Account. 24. Other Iclassify according to convenant types used in the Legal Agreements database.l * MOE and IDA to conduct jointly a twice-yearly workshop to assess implementation progress and project management effectiveness; MOE to present to IDA a status report on project progress no later than six weeks before the agreed workshop start date. * MOE and IDA to conduct jointly a Mid-Term Review (MTR) by February 28, 2001, to review progress in project implementation and implementation of policy reforms, institutional arrangements and private sector participation. MOE to present to IDA with reports for the MTR three months before the review. Block 5: Compliance with Bank Policies [x ] This project complies with all applicable Bank policies. Task Team Leader: Janet L. Leno Acting Sector Manager: Eduardo Velez Acting Country Director: Surendra Agarwal  Page 14 Project Appraisal Document Malawi: Secondary Education Project Annex I Malawi Secondary Education Project Project Design Summary Narrative Summary Key Performance Indicatorsl Monitoring and Supervision Critical Assumptions and Risks CAS Objective (CAS Objective to Bank Mission) Improve access to and quality and A: Economy grows at projected efficiency of secondary education, rate. encourage private sector involvement, and stress capacity A: Education is vital to economic building and decentralization in growth (and to CAS objective) the interests of human resource development and population R: Economic growth will be control as catalysts for slower than projected macroeconomic growth. Project Development Objectives (Development Objectives to CAS Objective) Increasing the number of students Share of student cohort finishing MOE Annual Statistical Report A: Strong government from disadvantaged groups who secondary education to increase commitment to human resource graduate from public and private from 15% to 26% by end of 2003. development and to population secondary schools with higher control continues and manifests performance Girls completing secondary MOE Annual Statistical Report itself in adequate public funding education to increase from 29% to of education. 40% by the year 2003. A: Government continues to focus on primary and secondary education subsectors in terms of policy formulation and budget allocations A: Government provides conducive legal and regulatory framework for private provision of secondary education, and provides standards and monitoring to ensure quality. A: Education of girls to at least junior secondary education level has a direct effect on fertility reduction and on health, education and welfare of their children. I Baseline and targeted values should be shown, with the latter divided into values expected at mid-term, end of project and full impact.  Project Appraisal Document Page 15 Malawi: Secondary Education Project Project Outputs (Outputs to Development Objectives) I) Increased access to secondary Enrollment rate in secondary MOE Annual Statistical Report A: Parents and guardians will education, especially for girls, education increases from 15% to perceive the schools as providing rural and economically- 26% in 2003, disaggregated by education of sufficient quality and disadvantaged students females and urban/rural residence. utility. 2) Improved quality of learning in Share of conventional school MOE Annual Statistical Report A: Textbooks, instructional the classroom students attaining full MSCE materials and teacher support will certification increases from 58% to be effective. 60% by 2003. 3) Sc!nool-based management By 2003, 100% of school-based EDMU training records A: Training programs will be capacity strengthened managers are trained. appropriate and adequately designed and implemented Training of school-based School-level observations before managers has produced and after training improvements in their administrative, financial and personnel management 4) Project management and Project staff are in place and R: Non-availability and/or lack of monitoring installed and enhanced trained for the job continuity of appropriate and high- quality, adaptable staff Project implementation work plans are developed and monitored on R: Tumover of key MOE staff an ongoing basis would jeopardize project implementation success Monitoring and evaluation schedules have been developed and are in use Prjeczt Components For All Components: (Components to Outputs) - EDMU records - EDMU, MOE, IDA spot checks during and between formal supervision missions - Analysis of TORs, work programs and records of relevant units and institutions (EDMU, MOE, schools, training institutions, examinations board, etc.) A. Secondary Education Access A. I) Construct new facilities 20 secondary schools built EDMU records R: Civil works procurement inefficient A: Building capacity adequate A: Building materials available A.2) Iquip and furnish the # of school rooms of different EDMU records facilities types furnished and equipped  Page 16 Project Appraisal Document Malawi: Secondary Education Project B. Quality of Teaching and Learning B. 1) Provide textbooks and ensure # of students in new schools with EDMU records indicating that R: Inadequate procurement, that they are used effectively access to full set of required equipment, books, and other distribution and storage capacity textbooks instructional materialls are for books and other instructional procured, delivered, :in use, and materials # of books supplied to new school level of use in the schools libraries and for reference # of teachers oriented to book use Observe use of materials in classroom B.2) Provide other instructional # of sets of other instructional materials materials available to each school, class, or student (as appropriate) B.3) Regularly assess learning Improvements in learning over JCE and MSCE examination A: Assessment capacity exists outcomes time results among teachers and examination procedures are effective and efficient C. School-Based Management C. 1) Provide pedagogic support to # of new principals, deputies and Monitor quality and effectiveness A: New principals, deputies and teachers through training of new heads of department trained and as of training program. Observe heads of department are principals and all deputy a % of total establishment participants' performance before, responsive to training principals and heads of department during and after the program in teacher support methods Indication of improvement in performance after training D. Project Management, Monitoring and Evaluation D. 1) Management training, Project work plans and checklists A: Management capacity is in strengthening and support routinely produced place or successfully developed A: Routines are established and followed A: All parties (EDMU, MOE, IDA, contractors, etc.) collaborate as a team D.2) Training and support in Rate timeliness and effectiveness monitoring and evaluation of actions on each component, process, support function, etc. Routinely use instruments to monitor activities under the project, including implementation  Project Appraisal Document Page 17 Malawi: Secondary Education Project actions, progress on sites in training and their effectiveness Rate short and medium term impact  Page 18 Project Appraisal Document Malawi: Secondary Education Project Annex 2 Malawi Secondary Education Project Detailed Project Description The proposed project is being designed as an immediate response to Malawi's need for greater numbers of secondary school graduates. As noted above, the secondary education system in Malawi is complex, consisting of Government owned and operated conventional secondary schools (which are highly subsidized and patronized largely by economically-better off Malawians), the community-initiated and run DECs (which, receive little Government subsidy and are attended by those who don't gain entry into the conventional school system), and an increasing number of private schools (which tend to charge higher fees and are essentially unregulated by Goveniment). The present system, with its inherent disparities in quality, cost and public subsidy level, is a cause of tension and inefficiency. Over the medium term Malawi will need to rationalize its approach to provision of secondary education in order to expand access to many more students, increase equity, ensure good-quality education, and rely increasingly on non-public sources of funds to do so. A clear vision of how best to restructure the system to achieve these objectives has not yet emerged. However, over the next few years the Bank will be working closely with Government, donors and others in Malawi to design a secondary education system that will achieve these objectives. In the meantime, there are some clear indications of a few key elements that are likely to play an important role in a rationalized system: e.g., focusing on quality in the classroom, moving toward greater community participation in the financing and running of the system, and relying on lower-cost approaches to secondary education provision (e.g., Government's decision to encourage day schools rather than boarding schools). The proposed project design reflects this thinking and begins to move some way along this path. In addition, to the extent that analytical work undertaken over the next year or two produces findings that could assist Government to strengthen the system, these will be considered during the project's Mid-Term Review for possible inclusion during the second half of the project's life. Project Component I - Expanding Access to Secondary Education (US$39.8 millior: This component comprises all civil works activities related to the construction of day secondary schools. For costing purposes, it is broken into two sub-components, one for construction of 15 rural schools (each with capacity of 320 student places), the other for 5 urban schools (capacity 480, relying on double shifting, therefore offering 960 student places). Costs include all school facilities, furniture and equipment, library furnishings, teachers' housing, toilet blocks, water supply, electrical installation, diesel generators, shade trees, playing fields, and paths, roads, and car parks. Between pre-appraisal and appraisal, MOE decided to reduce the unit costs of both the rural and urban schools, in order to be able to build more schools and thus offer secondary education to more students. As a result, the number of schools to be constructed with project funds increased from 8 to 20 between pre-appraisal and appraisal, based on costs projected at the time of pre-appraisal by a local Quantity Surveyor. At today's prices, the unit cost for the rural schools was estimated at $1.1 million, and the unit cost of the urban schools at $1.6 million. Additional efforts to reduce unit costs have been made through a Design Ideas Consultation, undertaken by MOE with PPF financing. MOE contracted with three local architecture firms to elicit from each their best ideas for cost-effective ways to resolve a range of school design challenges. For example, cost-effective ideas were sought to respond to the need for reliable school security; to provide electricity in rural schools; to provide hygienic facilities that can be easily-maintained; and to make optimal use of space in order to limit the unit cost of construction. The ideas produced through the Consultation have become the property of MOE, and will inform the deliberations on final design principles to be provided to the architecture firm selected to design the schools. The credit will finance architectural design and construction management services, civil works technical assistance, civil engineering services, construction of schools, and provision of classroom and laboratory furniture and equipment.  Project Appraisal Document Page 19 Mallawi: Secondary Education Project Project Component 2 - Instructional Materials Provision (US$ 10.0 million) Instructional materials in the project-financed schools. The credit will finance the provision and distribution of instructional materials in both project-financed schools and existing conventional secondary schools. In the 20 new schools, the project will finance: * a set of textbooks in the core subjects in all forms at a ratio of 1: 1 in English, Mathematics, Biology, Chichewa, Physical Science and Bible Knowledge; and in junior secondary at a ratio of 1:3 in History, Geography and Agriculture; and in senior secondary forms 1:2 in History, Geography, and Physical Science. * school libraries stocked with reference books, textbooks in optional subjects not covered above, and supplementary readers; * an initial set of basic school supplies and consumables for science * science and home economics equipment to be installed for specialized facilities. For all other public conventional schools (including 86 existing Government and grant-aided schools, eight new Government schools, but excluding three schools being financed by ADB), the project will provide textbooks and schools supplies and consumables for science. Books will be selected by secondary school heads and heads of department from a range of available materials to be presented by publishers at a book fair. The objective is to allow schools to chose for themselves the materials that they believe to be most appropriate for the purpose of teaching the prescribed syllabus. Each school will be given a notional budget, within which it will make its book selections. These will be transmitted to the MOE Supplies Unit, which will aggregate book requests from all secondary schools and place orders accordingly. It is hoped that this process will offer both choice to individual teachers and schools, as well as provide the potential for Supplies Unit to obtain some degree of discount on the basis of large orders from publishers. In light of the work currently being undertaken to develop a new curriculum (estimated to go on for at least the next five years, it has been assumed that the new project schools will initially offer the existing curriculum and that instructional materials to be provided to all schools under the project should be consistent with the current syllabi. Provision will be made for the introduction of the new curriculum into all secondary schools when syllabi and appropriate instructional materials, including textbooks, are ready. The credit will finance distribution costs in light of problems that have arisen in the use of the recurrent budget for materials distribution. The quantities of materials are based on the official school capacity and do not take into account over-enrollment. In addition, in the interests of quality assurance, agreement has been reached that approximately 50% of the teaching staff posted to new schools should be serving teachers. Key staff-- headmasters/mistresses, deputy heads, and heads of department -- would be deployed from existing secondary schools to form the nucleus of the staff. The remaining 50% would be newly-qualified teachers. MOE has estimated the teacher requirements by subject for the new schools and must inform the colleges and universities of these three or four years in advance so that incoming trainee teachers can be guided into appropriate specializations. Also, serving teachers to staff the new schools should be identified early and transferred in a timely way. Project Component 3 - Training on School-Level Management and Teacher Support (US$1.7 million) The objective of this component is to increase the effectiveness of secondary school-based managers in developing teachers in order to improve the quality of teaching and learning. This is in line with MOE's intention to empower deputy heads as school-based teacher supervisors and to support heads of department. Thus, training will be provided for deputies (100), heads of department (450), methods advisors (40), and new heads (10) in all the managerial and technical areas that make schools effective. This will include leadership, vision, organization, staffing, rules, discipline, gender sensitivity, HIV/AIDS and the relationship between the school and community. Specific skills to be imparted will include coaching, counseling, analyzing development needs, appraising performance, giving feedback, and modeling behavior. The training is to be designed and delivered jointly by an externally-recruited training coordinator, two short-term local consultants (specialists in the areas of behavior change on HIV/AIDS and gender) and a team of eight experienced  Page 20 Project Appraisal Document Malawi: Secondary Education Project Malawian trainers. The technical advisor will be based at the Malawi Institute of E,ducation (MIE) for 18 months, starting as soon as the project becomes effective. The Malawian trainers will be drawn from local training institutions such as the MIE, the Staff Development Institute, and the Malawi Institute of Management. A. fundamental task of the training coordinator is to strengthen local capacity to design and carry out participative, practical training. The credit will finance establishment/equipment of a small training unit located in MIE (computers, printer, fax, photocopier, furniture), purchase of one vehicle, international and local consultant services, transport and per diem costs for all training participants, honoraria for workshop facilitators, follow up visits to schools and supervision of deputies by training team, monitoring and evaluation activities. Project Component 4 - HIV/AIDS Materials Reproduction and Adaptation (US 1.7 million) Recent data indicate that the prevalence of HIV/AIDS infection in Malawi is around 30% of the working-age population. MOE is currently in the process of producing informational materials for primary schools (with support from UNICEF) and for out-of-school youth (in collaboration with UNFPA). In light of the gravity of the HIV/AIDS situation, MOE would also like to target teachers and students in secondary schools and DECs and, in particular, to go beyond the provision of information to the more difficult objective of changing behavior. To support this effort in the shortest possible time, the project will do two things: First, it will finance the rapid adaptation of high-quality, behavior-change instructional materials from Zimbabwe to be put into every secondary school and DEC in Malawi. These materials have been identified by UN/AIDS as an excellent example of thought-provoking, participatory materials for use in secondary schools. Malawi will save valuable time by adapting these materials to the local situation and in order to get them into the schools and DECs as quickly as possible. The project will finance provision of 180,000 sets of these student materials. Use of the materials in the classroom will be monitored by MOE and IDA. Second, in order to inject these same behavior change strategies into the training program for school-level managers (component 3 above), the project will finance the costs of reprinting some of the Zimbabwe materials for immediate use in the training program. It was agreed that rapid provision of good materials in the training program is so urgent that it would be better to reprint those from Zimbabwe rather than wait for completion of the adaptation process. (Training for DEC teachers is to be provided by secondary school heads of department, who will have participated in the project-financed training program, one component of which will deal with HIV/AIDS.) The credit will finance consultancy services (two local, one international) to adapt the materials, and to work closely with the trainers in development of the training module for school-level managers; materials and equipment to support this team; printing and dissemination of the adapted materials; and reprinting of the original Zimbabwe materials for use in the training program. Project Component 5 - Support to Administrative Unit, Monitoring and Evaluation, and Studies (US$1.5 million) The smooth implementation of the project components described above will depencl, in part, on two key areas -- procurement and financial management. The project will therefore cover the costs of engaging technical assistance in these two critical areas. * Procurement: PPF funds have been allocated to finance short-term technical assistance to assure the rapid preparation of initial procurement packages, and project funds will finance full-time technical advisor during the life of the project. The objective in both cases is to strengthen existing capacity within EDMU, in addition to the management of document preparation. * Financial Management: In order to assure that financial systems are established and functioning, capacity within EDMU will be supported by an external financial management advisor over the first 18 months of the project's life. In light of EDMU's responsibility for implementation of both PEP and SEP, the advisor will assure the financial management of both projects. In addition, the project will finance the installation of a computerized financial reporting system and the training on the use of this system for all project staff. To facilitate communication among project implementors and between these key people and the Bank, the project will also finance establishment of electronic mail capability and provision of personal computers in EDMU, the MOE/Planning  Proiect Appraisal Document Page 21 Malawi: Secondary Education Project Unit, Secondary Education Section, Methods Advisory Unit, and Human Resources Unit; the Teaching Service Commission; and MOE Principal Secretaries for Secondary/Higher Education and Finance/Administration. In support of ongoing project monitoring and evaluation, the credit will finance annual workshops that will be held to assess and monitor project implementation progress. This will be done on the basis of the agreed indicators contained in Annex I and in the Project Implementation Plan. This component will also include a short-term consultancy on private provision of secondary education. In support of the Ministry's stated objective and current efforts to encourage and effectively regulate private secondary education, the credit will finance the costs of an experienced consultant who will come to Malawi to discuss these issues with MOE officials and make recommendations to MOE on the establishment of a reliable system for the licensing and ongoing monitoring of private schools.  Page 22 Project Appraisal Document Malawi: Secondary Education Project Annex 3 Malawi Secondary Education Project Estimated Project Costs (in million US$) Project Component Local Foreign Total % Foreign % Total Exchange Base Costs 1. Construction and Equipping of 12.8 14.0 26.8 52 70 Secondary Schools 2. Provision of Teaching and 1.8 5.9 7.7 76 20 Learning Materials 3. Training for School-based 0.9 0.3 1.2 25 3 Managers 4. Support to Administrative 0.8 0.2 1.0 21 3 Unit, Monitoring & Evaluation , and Studies 5. HIV/AIDS Materials 1.0 0.3 1.3 21 3 Reproduction and Adaptation Total BASELINE COSTS 17.4 20.7 38.1 54 100 Physical Contingencies 1.7 2.1 3.8 54 10 Price Contingencies 9.5 3.2 12.8 25 34 Total PROJECT COSTS 28.6 26.0 54.7 47.5 144 Note: Totals might not add up due to rounding.  Project Appraisal Document Page 23 Malawi: Secondary Education Project Annex 4 Malawi Secondary Education Project Economic Assessment I. Fiscal Analysis/Part 1 During the course of project preparation the Bank team analyzed a range of different secondary education expansion scenarios in order to assist Govemnment in making a decision on how quickly to expand the sub-sector. In particular, the analysis focused on the recurrent cost implications of four different expansion scenarios (detailed tables and description of analysis are available upon request). Each scenario is driven by different rates of secondary enrollment growth, which have implication for the total level of public recurrent spending for education. The following basic assumptions apply to each of the four scenarios: 2 * the overall national budget will grow at 3% annually; * primary enrollment will grow at 2.5% slightly lower than population growth, and this will take up any normal growth in the recurrent budget (expected to grow at 3% annually); * enrollment in DECs will grow at 10% annually and government will cover the cost of improvements to this part of the secondary education system; * public spending on tertiary education will grow at 3% annually; * teacher's salaries are increased by 15 to 25% in line with the April, 1997 civil salary increase. A summary of the four scenarios and their major differences are outlined below. Scenario One: Moderate Expansion Under the first scenario, five distance education centres are converted to day schools of 320 capacity and 2.5 schools of 960 studer[t capacity are built each year. At this rate of expansion, the current output of secondary teacher training colleges is sufficient to meet the additional teacher demand. Each student in the secondary system is supplied with learning materials (notebooks, pens, etc.) and a textbook in each of the major subjects. As a result of the envisaged secondary expansion, the annual education budget will grow to require 33% of the total government recurrent budget. Scenario Two: Moderate Expansion with Increased School Fees The second scenario is identical to the first, except that secondary school fees are increased. The cost of attending a boarding school is increased to MK 3,750 per year (MK 3250 for boarding and MK 500 for tuition), the cost of attending day secondary school is increased to MK 500 per year, and the cost of attending an MCDE Centre has increased to MK 275 per year. The additional revenue raised from increased school fees is significant, but only reduces the education budget to 31 % of the total goverment budget. Scenario Three: Rapid Expansion Under the third scenario, ten distance education centres are converted to day schools and nine schools of 960 student capacity are built every year. A basic number of textbooks and learning materials continue to be supplied to all students in the existing and new schools. Under this rate of expansion, the current output of secondary teacher training colleges is insufficient to meet the additional teacher demand and these institutions must also be expanded. To support the running and operating costs of the additional schools, the annual education budget will grow to 36% of the total government recurrent budget. 2A ful!] description of the assumptions and unit costs used in the model are available from the Ministry of Education Planning Unit upon request.  Page 24 Project Appraisal Document Malawi: Secondary Education Project Scenario Four: Very Rapid Expansion Under the final scenario, ten distance education centres are converted to day schools and 150 schools of 960 student capacity are built each year. As a result of the additional schools and the growth in DECs, 306,000 additional secondary school places are created by the end of ten years. The current output of secondary teacher training colleges is insufficient to meet the additional teacher demand. The annual education budget will grow to 39% of the total government recurrent budget. A summary of the implications for secondary expansion under the four scenarios is presented in the following table: Ten Year Secondary Education Expansion Plan Scenarios Expansion Scenario Education sector's Number of new day Number of new Secondary share of the recurrent secondary schools (960 secondary school enrollment rate budget places) and number of places (including DECs converted (320 DECs) places) Moderate expansion 33% 25 new day schools and 168,000 29% 50 DECs converted to day schools Moderate expansion 31% same as above 168,000 29% with increased school fees Rapid expansion 36% 90 new day schools and 231,000 35% 1 00 DECs converted to day schools Very rapid expansion 39% 150 day schools and 306,000 41% 100 DECs converted Fiscal Analysis/Part 2 During appraisal additional work was done to project the recurrent cost implications of adding 15 rural schools (of 320 places each) and 5 urban schools using double sessioning (of 480 places x 2) financed by IDA, plus the addition of 8 new government schools and 3 new schools financed by the African Development Bank (all of 320 places). The simulation also assumed the continued conversion of 5 DECs per year. The projections indicated-that the current level of Government recurrent spending on education would need to rise to 31% by 2202 to cover the additional costs associated with these new schools. The analysis then examined the effect of increasing tuition and boarding fees from MK60/term (approximately US$3.50) to MK400/term (approximately US$23), finding that under this hypothetical situation, the additional non-public financing would lessen the burden on the public budget, requiring education's share of total recurrent spending to rise to 29%. II. Least Cost Analysis The unit costs of two different school space programs were compared to identify specific areas for possible cost savings in the school construction process. The first option included the elements and associated costs of a proposed "core school" which incorporates minimum design aspects required for a good-quality, but basic, school. Option 2 was a more elaborate school design, as originally proposed by MOE. The main differences between the two options include the provision/lack of provision of the following elements: woodworking and metalworking workshops, assembly hall, kitchen, security fence, generator, science laboratories (as opposed to portable science kits), home economics laboratory (as opposed to a Human Ecology room). Other differences between the two options pertained to the scale of investment in certain design elements (e.g., the quality of the headmaster's house, the amount of electrical installation).  Project Appraisal Document Page 25 Malawi: Secondary Education Project The exercise indicated a cost differential of 58% between the two options, and clearly highlighted the areas where the potential for cost savings was greatest. During the pre-appraisal mission these costs were updated by a local quantity surveyor, whose work indicated a substantial increase in unit costs and thus further underlined the need to scale back the school space program to a more affordable level. As a result of these two pieces of work, Government has now decided to revise the original school design proposal in order to come up with a lower-cost space program.  Page 26 Project Appraisal Document Malawi: Secondary Education Project Annex 5 Malawi Secondary Education Project Financial Summary Financial Summary Implementation Period Operational Period (in US$ million) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Project Costs Investment Costs 0.44 8.5 7.5 13.5 4.2 0 0 0 0 0 Recurrent Costs 0.05 0.5 0.6 1.3 2.7 2.4 2.4 2.4 2.4 2.4 Total 0.49 9.0 8.1 14.8 6.9 2.4 2.4 2.4 2.4 2.4 Financing Sources (% of total project costs) IDA 100 94.0 94.1 91 87.0 0 0 0 0 0 Government 0 6.0 5.9 9.0 13.0 100 100 100 100 100 Total 100 100 100 100 100 100 100 100 100 100 Operational Period costs include incremental teachers' salaries and book replacements.  Project Appraisal Document Page 27 Malawi: Secondary Education Project Annex 6 Malawi Secondary Education Project Procurement and Disbursement Arrangements Procurement Procurement Methods (Table A) Procurement for Project Preparation. The preparation work for the project was carried out primarily by consulting services financed by a PHRD Grant, the Swiss Consultant Trust Fund, and the Netherlands Trust Fund, and these contracts (amount less than US$50,000) were entered into mainly through sole source selection. Additional work undertaken under the PPF has been contracted through shortlisting of local consultants, local shopping for goods and equipment, and for site selection work carried out by the Ministries of Education and Water. A procurement specialist is to be engaged under the PPF to assist EDMU in finalizing the procurement plan and bringing key contracts to an advanced stage of readiness prior to effectiveness. Procurement under the Project. The total value of consulting assignments (22 packages) will be $3.2 million. These assignments mainly comprise architectural design work/construction management, and technical assistance for civil works management, procurement assistance, financial management, and training coordination. Consultants will be hired in accordance with the Bank's Guidelines for Selection and Employment of Consultants (January 1997). The major contract for architectural design/construction management will be handled through competition among qualified short-listed firms in which the selection will be based on Quality-and-Cost-Based Selection (QCBS) by evaluating the quality of the proposal before comparing the cost of the services to be provided. Exceptionally, single source contracts of less than US$100,000 will be awarded when justified with the approval of IDA. Short lists for contracts estimated under US$100,000 may be comprised entirely of national consultants if at least three qualified bidders are available at competitive costs. However, if foreign firms express interest they will not be excluded. Larger works contracts (individual contract value -- local costs and IDA support -- US$0.5 million and above) will be awarded on the basis of ICB for an aggregate value of US$27 million (foreign exchange cost equivalent to US$14.0 million). This will comprise about 5 packages for the construction of schools and related facilities. Smaller works contracts (individual value less than US$0.5 million equivalent) will be awarded on the basis of NCB for an aggregate of US$1.2 million (of which the foreign exchange cost is US$1 million). Procedures for NCB are being followed by the EDMU which is managing the ongoing Primary Education Project and are largely consistent with IDA procedures. Tender documents will be based on the Bank's Standard Bidding Documents. Goods contracts (16 packages) will come to a total of US$15.2 million. Contracts for the procurement of books and learning materials will be contracted through ICB (aggregate US$7.7 million), through NCB (US$2.3 million), and through shopping (US$0.5 million). The aggregate for textbooks and learning materials is US$10. 5 million, of which the foreign exchange share is US$7.4 million. Contracts for procurement offurniture and equipment will be carried out through ICB (US$3.1 million), through NCB (USS$ 1.1 million), and through shopping (US$0.2 million through shopping). The aggregate amount for fumiture and equipment is US$4.4 million, with a foreign exchange component of US$1.2 million. Contracts for vehicles will be handled through NCB, for an aggregate value of US$0.3, of which none is foreign exchange. The summary of proposed procurement arrangements is presented in Table A. The General Procurement Notice was published in Development Business at the end of November 1997. The draft procurement plan has  Page 28 Project Appraisal Document Malawi: Secondary Education Project been prepared and a final procurement plan (to be included in the Project Implementation Plan))will be a condition ofproject effectiveness. Implementation Arrangements. There are an estimated 41 separate contracts under SEP, the majority of which need to be completed within the first year of project implementation. The SEP procurement staff consists of a Procurement Advisor (engaged initially on a short-term basis betvween Negotiations and Effectiveness, and then for at least an 18-month period), a Civil Works Technical Advisor, a Procurement Officer within EDMU, another Procurement Officer in the Supplies Unit, an EDMU accountant and secretary. Selection of the long- term procurement technical advisor is a condition of effectiveness. Specific responsibilities will be allocated as follows: Staff Member Area of Responsibility EDMU Procurement Officer Coordinate all SEP procurement activity Responsible for immediate high-priority goods and services procurements Supervise and train the EDMU and Supplies Unit Procurement Officers and coordinate with the Civil Works Technical Advisor Report to the Project Officer/SEP EDMU Civil Works Technical Advisor Responsible for initial civil works procurement and civil works-related good and services actions EDMU Procurement Officer Responsible for most consulting services and some goods procurement Supplies Unit Procurement Officer Responsible for procurement of other goods These staff will be supported by one full-time accountant and one full-time secretary.  Project Appraisal Document Page 29 Malawi: Secondary Education Project Table A: Project Costs by Procurement Arrangements (in US$million equivalent) Expenditure Category Procurement Method Total Cost (including contingencies) ICB NCB Other N.B.F A. Civil Works 27.0 1.2 -- -- 28.2 (26.4) (1.2) (27.6) B. Goods 1. Vehicles -- 0.3 -- 0.3 (0.2) (0.2) 2. Furniture & Equipment 3.1 1.1 0.2 -- 4.4 (2.9) (I 1) (0.2) (4.2) 3. Books & Learning Materials 8.6 2.3 0.5 -- 11.4 (8.4) (2.3) (0.5) (11.2) C. Consultants' Services -- -- 3.3 -- 3.3 (3.1) (3.2) D. Recurrent Costs -- -- 3.0 4.0 7.0 (1.7) (1.7) Total 38.7 5.0 6.3 4.0 54.7 (37.7) (4.8) (4.9) (48.2) Note: Totals might not add up due to rounding. N.B.F. = Not Bank-financed. Figures in parenthesis are the amounts to be financed by IDA credit. Other Procurement Methods include shopping, selection of consultants following Bank/IDA guidelines, and direct purchasing of goods.  Page 30 Project Appraisal Document Malawi: Secondary Education Project Prior review thresholds (Table B) For procurement of works, all contracts greater than US$250,000 will be subject to prior review by IDA. Contracts for goods above US$100,000 will require IDA review. For goods contracts, any contract valued over US$100,000 will be subject to prior review by IDA. For consultancy services, IDA will review contracts to firms worth over US$100,000 and to individuals when contract value is greater than US$50,000. During the first year of project implementation all contracts will be subject to prior review. Thereafter, post review will be applied to selected contracts. Table B presents prior review thresholds. Table B: Thresholds for Procurement Methods and Prior Review Expenditure Contract Value Procurement Contracts Subject to Category (Threshold) Method Prior Review 1. Works >$500,000 ICB >$250,000 <$500,000 NCB 2. Goods >$100,000 ICB >$100,000 $20,000 - $100,000 NCB <$30,000 LS 3. Services >$200,000 QCBS >$100,000 Firms <$200,000 QCBS, Other >$100,000 Firms >$50,000 Individuals 4. Miscellaneous <$30,000 LS Disbursement Allocation of Credit Proceeds (Table C) Disbursement and withdrawal procedures are detailed in the Wlorld Bank Disbursement Handbook (1992 edition). All disbursements are subject to the conditions of the Credit Agreement and the procedures defined in the Disbursement Letter. All applications to withdraw proceeds from the Credit account will be fully documented, except for: (i) expenditures of contracts with an estimated value of US$250,000 each or less for works; (ii) US$100,000 or less for consulting firms and goods; (iii) US$50,000 or less for individual consultants, and (iv) incremental operating costs and training which may be claimed on the basis of Certified Statements of Expenditure (SOE). Documentation supporting expenditures claimed against SOEs would be retained at EDMU and will be available for review as requested by IDA supervision missions and project auditors. Special Account. To facilitate disbursements of eligible expenditures, the Government of Malawi will open a special account (SA) in a commercial bank to cover local and foreign currencies of IDA's share of eligible expenditures. The authorized allocation for the special account will be US$2 million, covering an estimated four months of eligible expenditures financed by IDA. Upon credit effectiveness or as needed, an amount of US$1 million will be deposited in the SA. Subsequent deposits may be requested as needed not exceeding the total authorized  Project Appraisal Document Page 31 Malawi: Secondary Education Project amount of US$2 million. Replenishment applications should be submitted regularly, preferably monthly, after monthly bank statements are received and reconciled, with appropriate supporting documents for local and foreign expenditures as required. To the extent possible, all of IDA's share of eligible expenditures should be paid through the SA. Table C: Allocation of Credit Proceeds Expenditure Category Amount in US$million Financing Percentage 1. Civil Works 25.0 100% foreign and 95% local expenditure 2. Pedagogic materials, textbooks, equipment and 13.6 100% foreign and vehicles 95% local expenditure 3. Consultants' services and audits 2.0 100% 4. Training 1.0 100% 5. Incremental operating costs 1.6 90% 6. Refunding of Project Preparation Facility 0.8 7. Unallocated 4.2 Total 48.2 Operating Costs includes incremental operating costs incurred due to project implementation, management and supervision, including office supplies, communication costs, office machinery and vehicle maintenance, vehicle fuel and spare parts, office rent, travel and allowances of project staff, but excluding salaries of MOE civil service officials.  Page 32 Project Appraisal Document Malawi: Secondary Education Project Annex 7 Malawi Secondary Education Project Project Processing Budget and Schedule A. Project Budget (US$000) Planned Actual (At final PCD stage) $520,000 $534,000 B. Project Schedule Planned Actual (At final PCD stage) Time taken to prepare the project (months) 11 months I Imonths First Bank mission (identification) 11/18/1996 11/19/1996 Appraisal mission departure 09/19/1997' 10/04/1997 Negotiations 12/08/1997 12/15/1997 Planned Date of Effectiveness 05/15/1998 6/30/98 Prepared by: Malawi Ministry of Education Preparation assistance: Japanese PHRD grant, Swiss Trust Fund, NetherlEnds Trust Fund, PPF Bank staff who worked on the project included: Core team members -- Janet L. Leno (task team leader, senior education specialist, AFTH4); Yisgedullish Amde (economist consultant); David Bruns (economist/fiscal analyst, consultant); Arthur Fields, (procurement specialist, consultant); Noel Kulemeka (economist, Resident Mission); Eileen Nkwanga (Malawi Education Cluster Leader, principal education specialist, AFTH3')); Leo Sinke (architect, consultant), Harry Wiebe (architect, consultant) Extended team members -- Kevin Brown (management specialist, consultant); Helena Kithinji (management specialist, consultant), Tony Hegarty (financial management specialist, AFTSl),Geise Santos (language task assistant, AFTH4), Eva Ngegba (task assistant, AFTH 1) Quality Assurance Team -- Professional/Sector: Bob Prouty (senior education specialist, AFTH2) Jamil Salmi (senior education economist, LASHD) Economic Analysis: Gene Tidrick (AFTMI) Operational Quality: Surendra Agarwal (AFTSI), Uche Mbanefo (AF'RVP)  Project Appraisal Document Page 33 Malawi: Secondary Education Project Annex 8 Malawi Secondary Education Project Documents in the Project File* A. Project Implementation Plan B. Bank Staff Assessments 1) Fiscal Analysis Under Four Scenarios for Expanding Secondary Education in Malawi 2) Projections of Teacher Needs Under Four Scenarios for Expanding Secondary Education in Malawi 3) Malawi Education Economic Analysis* (Gene Tidrick, May 21, 1997) 4) Aide-Memoire, Preparation Mission (February 28, 1997) 5) Aide-Memoire, Pre-Appraisal Mission (June 7, 1997) 6) Aide-Memoire, Appraisal Mission (October 24, 1997) C. Other 1) A Policy and Investment Framework for Education in Malawi 1995-2005 (MOE) 2) Secondary Education Development Plan (MOE Draft, April 1996) 3) Secondary Teacher Development Plan: Analysis of training capacity of Chancellor College faculty of Education, The Polytechnic, Bunda College, and Domasi College (MOE, December 1996) 4) Report of the Secondary School Curriculum Review Symposium (MOE, February 1995) 5) Preliminary Cost Estimate for Proposed Malawi Secondary Schools (Quantity Surveyor's Report, June 1997) 6) Conversion of Distance Education Centres into Day Secondary Schools: Community Management Issues/Danida Consultancy Report by John Williams (March 1997) 7) Danida Preparatory Support to Education in Malawi (1996) 8) Training Needs in the Division of Planning/Malawi Ministry of Education (USAID/GABLE Project) *Including electronic files.  Page 34 Project Appraisal Docunent Malawi: Secondary Education Project Annex 9 Status of Bank Group Operations in Malawi IBRD Loans and IDA Credits in the Operations Portfolio as of 31 January 1998 Original Amount in USS Millions Loan or Fiscal ProjeCt ID Credit Year Borrower Purpose No. IBRD IDA Cancel- Undis- lations bursed Number of Closed Loans/credits: 71 Active Loans MW-PE-1648 IDA28533 1998 GOVT FISCAL RESTR&DERE 0.00 2.40 0.00 2.30 MW-PE-1664 IDAN0250 1997 GOVERNMENT ENV. MANAGEMENT 0.00 12.40 0.00 11.66 MW-PE-1648 IDA28530 1996 GOVT FISCAL RESTR&DERE 0.00 102.00 0.00 1.49 MW-PE-1668 IDA28560 1996 GOVERNMENT SOCIAL ACTION FUND 0.00 56.00 0.00 31.01 MW-PE-42305 IDA28100 1996 GOVERNMENT OF MALAWI PRIMARY EDUCATION EM 0.00 22.50 0.00 12.69 MW-PE-1667 IDA27530 1995 NAT WATER DEV 0.00 79.20 0.00 58.06 MW-PE-34489 IDA26960 1995 GOVT MALAWI RAILWAYS REST 0.00 16.16 0.00 14.33 MW-PE-1657 IDA26240 1994 GOVT. INSTIT.DEV.II 0.00 22.60 0.00 13.23 MW-PE-1660 IDA25140 1993 GOM AGRIC SERVICES 0.00 45.80 0.00 20.51 MW-PE-1677 IDA25130 1993 Rural Finl Svcs 0.00 25.00 0.00 7.65 MW-PE-1636 IDA23790 1992 GOVT. LOCAL GOVT. 0.00 24.00 0.00 11.06 MW-PE-1662 IDA23860 1992 GOVERNMENT POWER V 0.00 55.00 0.00 34.47 MW-PE-1646 IDA22200 1991 GOVT. PHN SECTOR CREDIT 0.00 55.50 0.00 28.57 MW-PE-1655 IDA22210 1991 GOVT. FINANCIAL & ENTERPRI 0.00 32.00 0.00 .92 MW-PE-1658 IDA22250 1991 GOVT FISHERIES DEV. 0.00 8.80 0.00 3.80 MW-PE-1649 IDA20830 1990 GOVT EDUC.SEC.II 0.00 36.90 0.00 4.73 Total 0.00 596.26 0.00 256.48 Active Loans Closed Loans Total- Total Disbursed (IBRD and IDA): 320.33 1,184.67 1,505.00 of which has been repaid: 0.00 136.81 136.81 Total now held by IBRD and IDA: 596.26 1,014.69 1,610.95 Amount sold 0.00 .72 .72 Of which repaid : 0.00 .72 .72 Total Undisbursed : 256.48 0.00 256.48 STATEMENT OF IFC's Committed and Disbursed Portfolio As of 3 1-Jan-98 (In US Dollar Millions) Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1986/90 LFCM 0.00 .19 0.00 0.00 0.00 .19 0.00 0.00 1995 AEFMal Stkbrkrs 0.00 .11 0.00 0.00 0.00 .11 0.00 0.00 1996 AEF Mwaiwathu 0.00 .81 0.00 0.00 0.00 .81 0.00 0.00 1996 AEF PCEIL .53 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1997 AEF Maravi .60 0.00 0.00 0.00 .60 0.00 0.00 0.00 TotalPortfolio: 1.13 1.11 0.00 0.00 .60 1.11 0.00 0.00 Approvals Pending Commitmnent Loan Equity Quasi Partic 1998 AEF UFULU .31 0.00 0.00 0.00 GARDEN 1998 IDHM 0.00 .50 0.00 0.00 1994 INDEFINANCE 0.00 .51 0.00 0.00 Total Pending Commitment: .31 1.01 0.00 0.00  Project Appraisal Document Malawi: Secondary Education Project Annex Pge 35 MalLawi at a glance 9/111/97 Sub- POVERTY and SOCIAL Saharan Low- Malawi Africa income Development diamond' Population mid-1996 (millions) 10.0 600 3,229 GNP per capita 1996 (USS) 180 490 500 Life expectancy GNP 1996 (billions US$) 1.8 294 1,601 Average annual growth, 1990-96 Populabon (%) 2.7 2.7 1.7 GNP Gross Labor force (%) 2.5 2.6 1.7 per G pnmary Most recent estimate (latestyear available since 1989) capita enrollment Poverty: headcount index (% of population) Urban population (rx oftotalpopulabon) 14 31 29 Life expectancy at birth (years) 43 52 63 Infant mortality (per 1,000 live births) 133 92 69 Access to safe water Child malnutrition (% of children under 5) 27 Access to safe water (% of,population) 54 47 53 Illiteracy (% of populatlon age 15+) 44 43 34 Gross primary enrollment (% ofschool-age population) 120 72 105 Malawi Male 126 78 112 Low-income group Female 114 65 98 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1975 1985 1995 1996 Economic ratios GDP (billions US$) 0.6 1.1 1.5 2.2 Gross domestic investmenVGDP 33.7 18.6 15.2 17.6 Openness of economy Exports of goods and services/GDP 29.1 24.2 28.8 21.2 O Gross domesticsavings/GDP 17.0 12.9 2.1 10.9 i Gross national savings/GDP 20.8 9.1 -0.9 9.1 T Current account balance/GDP -14.1 -8.5 -15.5 -8.5 Interest payments/GDP 1.4 2.6 2.5 ,, Savings Investment Total debttGDP 42.4 90.0 146.1 Total debt service/exports 8.0 38.9 24.9 ..l Present value of debVGOP .. .. 69.5 Present value of debVexports .. .. 234.3 Indebtedness 1975-85 1986-96 1996 1996 1997-05 (average annual growth) - Malawi GOP 2.9 2.5 9.5 10.4 4.2 GNP per capita -0.8 -0.2 7.3 9.4 1.7 Low-income group Exports of goods and services 3.0 2.9 9.7 1.6 6.3 STRUCTURE of the ECONOMY 1975 1986 1996 1996 (% of GOP) I Growth rates of output and investment (%) Agriculture 37.2 42.9 42.7 39.8 60 Industry 20.3 21.9 27.4 21.3 I Manufacturing 13.1 14.5 18.0 14.0 30 2 Services 42.4 35.2 29.9 38.9 91 95 9 Private consumption 68.9 69.4 77.4 71.9 -.0 - Generai govemment consumption 14.1 17.7 20.5 17.2 GDI GDP Imports of goods and services 45.9 29.9 41.8 28.0 1 197645 1986-96 1995 1996 (average annual growth) Growth rates of exports and Imports (%) Agriculture 1.8 3.0 28.3 29.1 25 Industry 2.1 3.4 5.5 4.3 20 Manufacturing 2.8 3.0 6.3 4.0 15 Services 3.3 1.1 -2.1 -8.9 10 Private consumption 1.8 4.0 7.3 11.4 Generalgovemmentconsumption 6.7 0.4 4.0 -11.9 s5 91 94 55 Gross domestic investment -4.8 0.9 33.4 42.7 -10. Imports of goods and services -2.4 3.9 6.5 -6.6 Exports --m- Imports Gross national product 2.4 2.8 10.2 12.3 Note: 1996 data are preliminary estimates. The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete.  Page 36 Project Appraisal Document Malawi: Secondary Education Project Malawi PRICES and GOVERNMENT FINANCE 1978 1985 1995 1996 r DomesO'c prices Inflation (t%) (% change) ' 10c Consumer prices .. 10.5 83.1 36.3 75-. Implicit GDP deflator 8.2 8.9 82.4 36.2 Govemment finance 29 1 (% of GOP) o Current revenue .. 23.8 25.7 17.4 91 92 93 94 95 96 Current budget balance . 1.5 1.2 -4.7 Overall surplus/defcit -7.5 -7.5 -10.1 -GOP def CPI TRADE 1975 1985 199S 1996 [ (miNions USS) Export and import levels (mill. USS) Total exports (fob) .. 250 410 436 ' Tobacco .. 26 256 273 Tea . 53 27 26 . Manufactures .. 16 ..WO- Total imports (cif) 6 5. 549 Food . . 76 52 20D i Fuel and energy . .. 33 31 9 Capital goods . .. 159 114 Exportpriceindex(1987=100) .. 84 105 112 90 91 92 93 94 95 96 Import price index (1987=100) .. .. 132 142 oExpots m Imports Terms of trade (1987=100) .. .. 79 79 BALANCE of PAYMENTS 19T5 1955 1996 1996 - (millions USS) Currant account balance to GDP redo (%) Exports of goods and services 174 276 431 466 Imports of goods and services 284 331 613 614 9 12 93 1 94 9 Resource balance -110 -54 -182 -148 Net income 21 -53 -44 -32 Net current transfers 3 10 -1 -8 Current account balance, before official capital transfers -87 -97 -227 -188 |i -29 Financing items (net) 68 54 311 289 Changes in net reserves 18 43 -84 -101 -25 Memo: Reserves inciuding gold (m7ll. USS) 61 49 125 227 Conversion rate (/ocaWUS$) 0.9 1.7 15.3 15.3 EXTERNAL DEBT and RESOURCE FLOWS 1975 1985 199i 1996 (millions USS) Compositon of total debt, 1995 (mill. US$) Totaldebtoutstandinganddisbursed 260 1,018 2,140 |F G A IBRD 0 69 55 42 14 47 55 IDA 62 322 1,251 1,346 E Totaldebtservice 17 110 108 *- 277 IBRD 0 7 19 13 IDA 0 3 16 18 l Composition of net resource flows 380 Offical grants 5 38 259 Official creditors 44 54 74 / B| Private credItors 8 -31 -15 .. C 1251 Foreigndirectinvestment 9 1 1 116 Porfolio equity 0 0 0 World Bank programI Commitments 20 125 100 185 A A-13RD E-Bilateral Disbursements 11 34 73 141 B-IDA D - Other mulblateral F - Private Principal repayments 0 2 19 18 C-IMF G - Shot-termn Netflows 11 32 55 124 _ I Interest payments 0 8 18 14 Net transfers 11 24 39 110 Development Economics 9/1i 97  IBRD 29374 32 To Dr r T s D olnom =nlseope MALAWI Th.tmopwooprodocess %>) <\v , . ADMINISTRATIVE ythW opdtBsnm \2 t ihmbo DIVISIONS The bo..dcries, colors, \./ YD d--otno,- ord -ry . dosp. 4ons te porn o- REGIONS AND DISTRICTS or thrs mop do not vmgstosrs The Word hok Gpart of RIJM', h- i Try *dgmentonrhe leol 0 str tus of r ny territory, ,J Kaoro ,Z fr or ony' srdorsement 0 RoPump,jC JI />PRINCIPAL ROADS or -oeptonce of such boundornes o.>f ,,.,J"'r.j-' RIVERS g4,e ,/ QEhknde.. Lake 0 TOWNS SJe S I/vcr a ~ ~ltkh to Q $ DISTRICT CAPITALS 3ap St. Aogoaj f NATIONAL CAPITAL jMzimbru\ AY * / A / DISTRICT BOUNDARIES MziS / LjmlWsi - I) o t d S Chrsom ss j><& - -- REGION BOUNDARIES 1' , (,Ukom~ -- INTERNATIONAL BOUNDARIES -\ Maltwi KILOMETERS 0 20 40 60 80 100 Chul iA I> 0 S 4 >-t sN l { MILES 0 20 40 60 Tj0~~ ~ Koop "C gfNkhotus1stre Ntch To Lu-oko ? M \ I -T\GWE > oMnmc 14 L{ .2 > A r e 14 ADEDZA Oedzo To Noc.lo | t -e.- 3aloka r : L.T t~ ~ ~ ~~~ch Ch"'t IE.REP /ror o To Tele !/sL C AZL OE C0G 7crgorr.io<. INDfiAN . hww Lchenso0- MO flI i ANGOv < 1 ? X CHIK29qWQ a, To heirs rK IMABE. roOZ / UE K \ , < . o S rmo NAMIBSA \4 r ~ >< rI BOTSWANA l \ ADAG P NOT SOUT /t3 \ t _3 /M T.AFRICA __ _ _._ _ Peabruary 19598