Tanzania - Secondary Education Development Program Project

Document of The World Bank FOROFFICIAL USEONLY ReportNo: 27631 INTERNATIONAL DEVELOPMENTASSOCIATION PROGRAMDOCUMENT FORA PROPOSEDADJUSTMENT CREDIT INTHEAMOUNT OF SDR 82.7 MILLION(US$123.6 MILLION) AND A GRANT INTHE AMOUNT OF SDR 17.7MILLION(US$26.4MILLION) TO THE UNITED REPUBLIC OF TANZANIA FORA SECONDARYEDUCATIONDEVELOPMENT PROGRAM May 14,2004 Human Development 1 CountryDepartment4 Africa RegionalOffice This document has a restricteddistributionandmay be usedby recipientsonly inthe performance of their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective February27,2004) Currency Unit = TanzanianShillings(TSH) 1TSH = US$0.00090 US$1 = TSH 1110 FISCAL YEAR July - June ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy EMAC EducationalMaterialsApproval Committee EMIS EducationManagement Information System ESDP Education Sector DevelopmentProgram ESMF Environmental and SocialManagementFramework F M Financial Management FTE Full-Time Equivalent GER Gross Enrollment Ratio GOT Government o f the United Republic of Tanzania GNP Gross National Product HIPC Heavily IndebtedPoor Country HRDP Human Resources DevelopmentProject IBRD International Bank of Reconstructionand Development ICT Information CommunicationTechnology IDA International DevelopmentAssociation IMF International Monetary Fund LGAs Local GovernmentAuthorities LGRP LocalGovernment Reform Program MDGs Millennium DevelopmentGoals M&E Monitoring and Evaluation MoEC Ministry of Educationand Culture MoF Ministry of Finance MTEF Medium-Term ExpenditureFramework NECTA National ExaminationCouncil ofTanzania NGO Non-GovernmentalOrganization ODA Overseas DevelopmentAssistance OED OperationsEvaluationDepartment PEDP Primary EducationDevelopment Program PER Public ExpenditureReview PM ProcurementManual PMO Prime Minister's Office PO-RALG President's Office- RegionalAdministration and Local Government PRBS Poverty ReductionBudget Support PRGF Poverty ReductionAnd Growth Facility PRS Poverty ReductionStrategy PRSC Poverty ReductionSupportCredit PRSP Poverty ReductionStrategy Paper PSAC ProgrammaticStructuralAdjustment Credit PSRP Public ServiceReform Program RPF ResettlementPolicy Framework SECAL Structural Credit Adjustment Lending SEDP Secondary EducationDevelopmentProgram SEMP Secondary EducationMaster Plan TIE Tanzania Institute of Education TPR Teacher-Pupil Ratio TTC Teacher Training College URT UnitedRepublic ofTanzania Vice President: Callisto Madavo Country Director: Judy O'Connor Sector Manager: Dzingai Mutumbuka Task TeamLeader: Donald Hamilton  FOROFFICIALUSEONLY THE UNITED REPUBLICOF TANZANIA SECONDARY EDUCATIONDEVELOPMENTPROGRAM(SEDP) TABLE OF CONTENTS I. FINANCING AND PROGRAMSUMMARY i I1. INTRODUCTION ................................................................................................... .................................................................. 1 I11. SECONDARY EDUCATION DEVELOPMENT PROGRAM............................. MACROECONOMIC FRAMEWORK 2 4 .B . A . Sector Issues ...................................................................................................... 4 Government Strategy and SEDP .......................................................................... 6 (1) Policy Reformsto ImproveAccess andEquity ........................................................ 8 (2) Reformsto ImproveEducationalAchievements (3) Reforms in Service Management and Delivery.................................... ...................................................... 9 (4) Phasingo f Reforms.................................................................... 10 11 C . 11 D . ProgramFeasibility.......................................................................................... Poverty Reductionand Social Impact ................................................................ 12 E . 12 FinancialManagementand Procurement............................................................ EnvironmentalSafeguards ................................................................................ F . 13 G . Monitoring and Evaluation............................................................................... 13 FINANCING ................................................................................................................. IV. THE PROPOSED SECONDARY EDUCATIONDEVELOPMENT 14 A . FinancingRationaleand Coverage.................................................................... 14 B . Risks............................................................................................................... 16 C . Financingand DisbursementArrangements ....................................................... 17 V.D IDA OPERATIONS .............................................................................................. . Agreed actions for tranche release ..................................................................... 18 20 VI. COLLABORATIONWITH IMF AND OTHER DONORS ................................ 22 Annexes 23 Annex B: Tanzania Key Economic Indicators .................................................................. Annex A: Tanzania Social Indicators ................................................................................ 24 Annex C: Status o fBank Group Operations inTanzania.................................................. 25 Annex E: Logical Framework .......................................................................................... 27 Annex D: Program Data Sheet ......................................................................................... 26 Annex F: Letter of Secondary Education Sub-SectorPolicy ........................................... 30 Annex G: Institutional and ImplementationArrangements ............................................. 31 Annex H: Key Performance Indicators ............................................................................ 38 Annex I:Summary Environmental and Social Management Plan................................... 42 Annex J: Economic and FinancialAnalyses .................................................................... 46 This operation was preparedby a team led by Donald Hamilton (AFTHI). with team membersof Rest Lasway (AFTH1). DinaAbu-Ghaida (HDNED). Keith Hinchliffe (AFTHD). T.Mpoy-Kamulayi (LEGAF). SteveJ.Gaginis(LOAGZ). JustinaKajange. Evelyne Kapya (AFC04) and consultants Sam Bartlett.George Bethell. Andrew Clegg. Carmelle Denning. RichardJohanson. and Keith Lewin. The quality assurance team consists of Richard Cambridge (AFTOS). Jacob Bregman(AFTH3). and Kin Bing Wu (SASHD). lwithoutWorld Bank authorization . ...   THE UNITEDREPUBLIC OF TANZANIA SECONDARY EDUCATION DEVELOPMENT PROGRAM FINANCINGAND PROGRAMSUMMARY Borrower: The UnitedRepublic of Tanzania Amount: US$ 150million equivalent (US$26.4 an IDA Grant) Terms: Standard IDA credit terms with a maturity of 40 years Program0bjectives And Description: The proposedfinancing is to support reforms by the Governmentofthe UnitedRepublicofTanzania insecondary educationthroughthe Secondary EducationDevelopment Program(SEDP). The objectives of the SEDP are to: (i) increase the proportionof the relevant age group completing secondary education, (ii) improve learningoutcomes of students, especially amonggirls, and (iii) the public enable administrationto manage secondary educationmore effectively. Inorder to expandenrollments with equity the SEDP includesmeasuresto: (a) make more efficient use ofresources, (b) provide development grantsto schools and communitiesmainly inunderservedareas, (c) expand teacher supply, (d) lower householdcosts for secondary educationand expandthe scholarshipprogram for students from poor families, and (e) enhance the partnershipwith the non-governmentsector. The program for quality improvement includes: (a) curricula and examinations reforms, (b) provision oftextbooks and teachingmaterialsthrough capitation grants to schools, and (c) quality improvements inpre-service teacher training together with establishment of a system for professional in-serviceteacher development. SEDP also includes institutional reforms and capacity building at central, region, district, and school levelsfor more efficient operationofthe secondary educationsystem. Risks: The programentails moderaterisks. One risk is that the governmentwill be unableto deliver on promises to allocate more funds to education in general, and secondary educationinparticular inview of competing priorities. Another risk is inadequatepublic capacity to manage the implementationofa large secondary educationsystemsimultaneously with the current Primary Education Development Program(PEDP). A furtherriskis that the governmentmay beunableto produceor hire sufficient numbersofteachers for the expansionofenrollments, or attract them to underservedareas. Finally, facilities to be constructedunderthe program inareas with relatively lower incomesmay be underutilized if parents still cannot afford the fees required. Benefits: The main economic benefits ofthe operation are: (a) the increased number of secondary graduates given that they are seen to be more productivethan primary graduates, (b) the returns to the improvement in i  the quality of secondary graduates, and (c) efficiencies achieved through reducedteaching costs per student. An equity rationale also supports the program as overall enrollments increase, supported by reduced fees to day students and targeted scholarships, access will extend to larger numbers o f students from poor families and more girls at secondary level. Estimated Disbursement: Three tranches o f US$50 million each will be disbursed after the agreed actions for tranche release are successfully completed. .. 11  INTERNATIONAL DEVELOPMENT ASSOCIATION PROGRAM DOCUMENT FOR A PROPOSEDFINANCING TO THE UNITED REPUBLIC OF TANZANIA FORA SECONDARY EDUCATION DEVELOPMENTPROGRAM I. INTRODUCTION 1. The United Republic of Tanzaniahas requestedassistance from IDA inthe amount of US$l50 millionto help finance the proposedSecondary EducationDevelopmentProgram (SEDP). The total financing will includeanIDA Grant ofUS$26.4 million. The borrower has requestedthat the credit ofUS$ 123.6 million be on standardIDA terms with 40 years maturity and a 10-yeargrace period. 2. The objective ofthe IDA operation is to provide supportto the Governmentof Tanzania in reforming secondary educationthrough the SEDP. The Programwould be the second phase in the implementationo f its EducationSector DevelopmentProgram(ESDP). This phasewould buildon achievementsfrom the first phase program, the Primary EducationDevelopment Program(PEDP) supportedby athree-trancheAdjustment Credit (Cr.3 570-TA) approved in October 2001. The first and second tranches ofthis Credit havebeenreleased. The SEDP aims to (i)increase the proportion of the relevant age group completing lower and upper secondary education, (ii)improve learning outcomes of students, especially girls, and (iii) the public enable administrationto manage secondary educationmore effectively. The access and equity objective is to be achievedthrough measuresto use existing resources more efficiently, assist poor communitiesto build and expandfacilities, expandteacher outputs, reducethe costs of secondary educationto households,provide scholarshipsto poor students and collaborate with non- governmentschools. The quality objective will be pursuedthrough reforms incurricula, textbooks, examinations andprofessionaldevelopment o fteachers. Improved service delivery includes institutional capacity building at central, district, and school levels. Basedon projectionsof the resources neededfor achievingthe government's policy goals for the developmentof secondary education, with sufficient resources reservedfor primary education, the availabletotal educationsector budgetaryallocation without the externalsupportwould be around20 percent lower than the estimatedcosts during fiscal years 2004 through 2009. To effectively tackle the sector issues, immediateadditional funding is therefore necessaryto support investmentsinthe Government's SEDP. 3. The structure of the report is as follows. Part I1presents the macroeconomic framework in Tanzania. PartI11describes the Government's Secondary EducationDevelopmentProgram. Part IV providesdetails ofIDA'S operation. PartV discusses IDA'Sportfolio implementation, particularly with regardto lessons learnedfrom IDA operations inthe country context. PartV I discusses the collaborationbetweenTanzania andthe International Monetary Fund(IMF) and other external donors. The report concludeswith arecommendationfor financing approval from the ExecutiveDirectors. 1  11. MACROECONOMICFRAMEWORK 4. Since the mid-l990s, Tanzaniahas made substantialprogress in implementing structural reforms inthe economy and achievingmacroeconomicstabilization. At the start ofthe reform process, economic growth was slow to pick upbutthe annualrate over the last 5 years or so has averagedover 5 percentand was 6.2 percent in2002. Not only has growth accelerated, it has also become muchmore resilient to adverse shocks. This is illustrated by the fact that despite the poor rains in2003, expectedGDP growth is still a very respectable5.5 percent. Growth rates of over 6.0 percent are anticipatedinfuture years. Fiscalconsolidation has beencentralto the success in macroeconomicstabilization. Insupport ofTanzania's reform program, donors have provided sizable financial assistance andthis has almost coveredthe government'sdomestic financing needs. This has again ledto lower interest rates and stimulatedprivate sector growth. Continued conservativefiscal policy management, supportedby cautiousmonetary policy, contributedto a decline ininflation from 7.0 percent at end-1999to 4.5 percent in2002 and to 4.2 percent by March2003. 5, Tanzania's overall balanceof payments position improved in2002/2003 due to larger h inflows of donor assistance, as well as the impact of debt reliefunder the HIPC Initiative. However, the current account deficit, excluding official transfers, widened slightly inspite of a strongincrease innon-traditional exports, mainly gold, combinedwith amoderateimprovement intraditional exports. Importsrosesignificantly in2002/03, reflecting the investmentcycle ofthe miningsector and a returnto trend following lower than normal imports inthe previous year. Additionally, service imports increasedbecauseofa rise intelecommunications-related payments. Internationalreserves are equivalentto 7 months of importsof goods and non-factor services. The exchange rate has continuedto depreciateand is now close to the IMF's estimated equilibrium real rate. Foreigndirect investmentreached a peak in2000 mainly on account of investmentsinthe mining sector. Since then, some ofthe largest investmentsof these have been completedand gold productionhas come on-stream. As a consequence, foreign direct investment has declinedbut is still muchhigher than inpre-reform years and compares well with other countries inthe region. 6. Tanzania completedall of the requiredconditions to reachthe completion point under the HIPC Initiative inNovember2001. As aconsequence, debt reliefgrantedby IDA and the IMF, and by the Paris Club, is at a level to ensure the sustainability ofTanzania's public and publicly guaranteedexternal debt. The Government has also taken significant steps to deal with its domestic debt, and has reducedits arrears with the private sector. Debt management has been strengthenedthrough the adoptionof aNational Debt Strategy in2002 and an amendment to the Loans, Guarantees and Grants Act. 7. Fiscal developmentsinFY 2002103 were characterizedby a substantially better-than- projectedrevenueperformance, as well as higher-than-expectedexpenditure. Revenue exceeded projections by 0.3 percent of GDP on accountof buoyant receiptsfrom VAT, import duties and non-tax revenue. Total expenditureexceededprojectionsby 1.2 percent of GDP, due to higher than projectedend-of-yearcatchup inrecurrentexpendituresandthe upwardrevision of developmentexpenditures financed with foreign grants. Inthe first quarter 2003104, revenues again exceeded projectionsby 0.1 percentof GDP, but expenditures remainedbelow budgetdue to a shortfall inprogramsupport and lower-than-expectedpaymentsof interest on external debt, as well as arecordedshortfall inforeign-financeddevelopmentexpenditure. Expenditure executioninthe first five months of 2003/04, nonetheless, substantiallyexceededthat inprevious 2  years, with priority sector expenditures over performing by 5 percent relative to projections. The deficit-to-GDP outturn (after grants) in 2002103 was 4.3 percent and is projectedto decline to 3.6 percent 2003104. 8. Over the pastthree years, the level and compositionof foreign aid to Tanzania has changed ina number of important ways. Grants and soft loans (net) to Tanzania increasedfrom 4.0 percent o f GDP in 1997to 5.9 percent in2002. As a proportiono ftotal budget ODA currently accounts for about 40 percent. Until 1999project support was increasing and program support decreasing. This trend has beenreversed with a decline inproject support and an increase inprogram support including HIPC debt relief. Program support provides the flexibility to fully integrate recurrent and development spending under the MTEF. 9. With the adoption of the National Poverty Eradication Strategy and, inparticular, the Poverty Reduction Strategy (PRS), poverty reductionhas become the overarchingobjective of public policy. The comprehensive HouseholdBudget Survey 2000101 indicates the challenge. Between 1991and 2001 basic needs poverty decreasedonly from 39 percent to 36 percent and food poverty from 22 percent to 19percent. The Government's PRS prepared in2000 emphasizes priority sectors of primary education, primary health care, agricultural researchand extension, ruralroads, thejudiciary, and HIV/AIDS. The expenditure plan inthe budgethas been closely aligned with these core activities. Most of the targets inthis programhavingbeen achieved and the Government is now preparinga revisedStrategy that will focus on growth and diversification o f the economy, and the integrationo fthe MillenniumDevelopment Goals (MDGs). 10. Tanzania's economy today is largely market oriented and has inplace many elements requiredfor private sector-led growth. However, it does not have an adequate qualified and trained work force essential for rapid economic growth and for effective diversification o f the production and export bases. The combination of intermittent economic growth, fiscal constraints, and inadequate sector policies and programs constrained the performance o fthe education sector inthe late 1980sand early 1990s. Recent reforms inprimary education lifted the gross enrollment rate to 100 percent in2002. The secondary school Gross Enrolment Ratio (GER), however, remains among the lowest inSub-SaharanAfrica atjust ninepercent ofthe relevant age group. 3  111. SECONDARYEDUCATIONDEVELOPMENT PROGRAM 11. The Governmentproduceda framework for an overall EducationSector Development Program(ESDP) inthe late 1990s. Because of the onerous task of developingan investment programfor all sub-sectors concurrently, the government decidedto address the main issues sub- sector by sub-sector, startingwith the top priority -primary education. The first program developedunder the ESDP framework umbrellawas the Primary EducationDevelopment Program(PEDP), approved in2001. Inaddition to the educationalobjectives,PEDP addresses issues of budget, personneland system managementassociated with achieving a more decentralizedsystem of basic education. The reforms of primary educationhave now taken hold, as indicatedby the increase inthe gross enrollment ratio from 78% in 2000 to over 100% in2003. The secondphaseofthe ESDPfocuses onreforms insecondary education. The SEDP seeks to expandaccess equitably, and to improve learningachievementsacross the board. A. Sector Issues 12. Extensivesector analyses have beendone since the mid-90s, including specific evaluationsofsecondary education, as preparationfor the ESDP andfor a subsequent master plan for secondary education. Governmentproducedan EducationSector Country Status Report in 2000 with emphasis on Primary education, which drew from previousanalytical work, and deepenedthe analysis of costs and financing issues. The Public ExpenditureReviews andthe Medium-Term ExpenditureFrameworkhave also provided insights into publicfinance issues in the sector. More recently, acomprehensivereview ofsecondary educationwas undertakenas part of Bank-supportedsector work on post-primaryeducationandtraining. Subsequently, specific studies were commissionedon secondary teacher demand and supply, curricula, textbooks, examinationsandthe administrationandmanagement of secondary education. The major sector issues identified inthese analyses and addressed inthe SEDP are summarized below. 13. The generaleducationsystem is comprisedof sevenyears ofprimary education, four years of lower secondary and two years of upper secondary. The systemcurrently faces three main challenges in secondary education: increasingaccess, raising quality, andreducingcosts. Tanzaniahas one ofthe lowest secondary gross enrollment ratios in Sub-SaharanAfrica. Only about nine percent of the relevant age group attends secondary educationas a whole (compared with an average of 27 percent for Sub-SaharanAfrica inyear 2000) including about 11percentat lower secondary and less than 2 percent at upper secondary. Only 22 percent of primary school leavers inTanzaniahave a chance to continue their educationat the secondary level, compared with 50 percent inUganda(2001). Secondary enrollment ratios are low for all population groups, butespeciallyfor low-income youth andstudents inrural areas. Few governmentschoolshave beenestablishedand inadequateincentives existto provide non-governmentschoolsinrural communitieswhere householdsare unableto pay the fees required. 14. A policy shift inthe mid 80's with strongemphasis on community andprivate sector participation ineducation leadto a rapid growth of non-governmentsecondary schools. This policy provedto be an effective way to cope with some ofthe excess demandfor secondary schoolinginthe contextof tight constraintsonthe public budget. Currently, private providers enroll 40 percent of all secondary students. However, non-government schools face major constraintsto increase their enrollments. Constraintsinclude a significant and lengthy registrationprocess and limited ability ofparentsto pay both teaching and capitaldevelopment costs. At present fee levelsthe private sector may already have tappedmost of its potential clientele. The bulk of future increases inenrollments will likely come from the public sector 4  through increased support of "community schools". Community secondary schools are the means by which communities express an effective demand for secondaryeducation. They are built on community or donated land innon-urban settingsby membersofthe community without government help. Once functioning, the communities may apply for government assistance, which requires that nationalminimumstandards be met. Government supports approved community schools by payingall teacher and staff salaries and providing some teaching and learningmaterials. Other recurrent costs mustbe borne by the school from fees. Community schools make up the vast majority of the government supported secondary schools. The government directly owns 101 secondary schools1,compared with about 674 community-owned secondary schools, 87 per cent of the total. Ifaccess to secondary education is to be expanded equitably, communities indisadvantaged and underservedareas have to be assistedas many cannot afford the initialcosts of construction. 15. The Government introduced fees inpublic secondary schools inthe late-1980s. Currently, the fees and other contributions from parents amount to 35-40 percent of the total government costs per student. This level of cost sharing is prohibitive for many households, giventhe low household income level o fTanzania. Feesfor government and non-government secondary education exceedthe financial capacity of most poor families and depress the overall demand for secondary education. 16. The current limitedprovision of secondary education is economically unwise and socially unsustainable. Economically Tanzania is beingheldback by the low level of human capital development resultingfrom the restricted access to secondary education. The recent introduction o f free primary education has causeda bulge inprimary enrollments, and the increasing number o f primary school leavers will create mounting pressure for places insecondary schools. Over time the Government will have to transformthe secondary education system from one servinga small, privilegedclientele into a mass system catering to a much larger and more diverse group o f children. How to managethis expansion ina fiscally sustainable manner is a major policy issue. 17. The quality of secondaryeducation is low. Giventhat only one infive primary school graduates enter secondary school and that the secondary pupil-teacher ratio averages 1:22, one would expect highachievements insecondary schools. This is not the case. The secondary system functions poorly interms of learningachievements. Inthe absence of better measures o f student achievement, performance interminal examinations must be usedas a proxy for the quality o f learning. About 80 percent o f students pass the examinationat the endo f the four year lower cycle, but halfo f all examinees achieve only the lowest level, Division IVYwhich requires a minimumof a "D" pass intwo subjects (and does not require a pass ineither mathematics or science). Substantial gender differences also occur: girls under-perform, particularly in mathematics (with pass rates o f only around 20 percent in2000) and insome sciences. As a result, the transition rate for girls from lower to upper secondary is only 23% compared with 33% for boys. One survey reports that about half of the students benefitfrom outside tuition which poorer students cannot afford. Students perform much better at the upper secondary level, averaging 95 percent pass rates. However, this obscuresthe fact that only about a quarter o f examinee achievesthe upper grades (A-C) in principal subjects. 18. Low student achievement inthe lower secondary cycle stems from multiple, interrelated deficiencies. The curriculum is overloaded, with 13 subjects at the lower secondary level. The switch to Englishfrom Kiswahilias a medium o f instruction in Form 1 makes comprehension even more difficult for students. Another concern is the shortage of qualified teachers ' The government has not built any new secondary schools since 1980. 5  particularly inmathematics. Retentionof degree teachers is also a problem. Highturnover reflects competingjob opportunities for degree teachers inan expanding economy. Access to in- service training is rare for all secondary teachers, who have little opportunity to update their content knowledge. Teaching is done with a limitednumber of textbooks, which are in short supply inmost schools as are teacher guides andsupplementary printed materials. Schools are supposedto buy textbooks, but public schools receive only the equivalent of $0.61 per student per year for this purpose. Terminal examinations, emphasize recall of memorized facts and procedures rather than higher order skills. This distorts teaching practices inthe classroom. External inspectors visit the schools annually to evaluate compliance with standards, and this appears to be one of the brighter spots inthe system. 19. Curricula have beenchanged at the margin from time to time, butno fundamental review and revisiono f secondary curricula has taken place over the past quarter of a century. Thus, much o f the content inthe curricula is out of date. Curricula are not outcome basedwith clear and reasonablelearning goals linkedto criteria. The schoolcurriculum could also serve to transmit vital information on national priorities, such as information on HIV/AIDS for pupils and teachers. Some HIV/AIDS interventions for teachers and pupilshave been initiatedby different agencies supporting the Government. However, the efforts are fragmented and there is no comprehensive HIV/AIDS strategy for the sector. 20. Secondary education absorbs only about seven percent o f total public spending on education. Yet, public expenditure per student is still higher than necessarybecauseof the inefficient use ofteachers. Major expansion of secondary enrollments cannot be achieved or sustained at the present level of teaching expenditure per student. The prime sources of inefficiency seem to be overloaded curriculum and relatively low teacher workloads particularly inurban districts. 21. All government secondary schools are supervised directly from the MOEC. School administrators have authority over school level decisions but little flexibility inthe use of government budgetary resources. Greater effectiveness requires a review o fthe regulatory framework and some degree o f devolution, with new roles definedfor regions, districts, school boards and school heads for the delivery o f secondary school services. B. Government Strategy and SEDP Government Strategy 22. Social sector development is one ofthe most important elements within Tanzania's poverty reduction and development framework. In 1995,MoEC prepared an Education and Training Policy that emphasized liberalizing the education sector instep with the rest of the economy and increasing the accountability o f service providers to clients. Expenditure reviews, education sector work and specific analyses have identifiedthe critical constraints on the provision and further development o f secondary education. Furthermore, with the overall objective of producing more and better qualified graduates to support the development efforts o f Tanzania with a much strengthened labor force, the Government's sector policies have been refinedand finalized basedon extensive consultations with technical working groups comprising all stakeholders. 23. The SEDP (2004-2009)updates and expands an earlier Secondary Education Master Plan (SEMP). As stated inthe Government's Letter of Secondary EducationDevelopment Policy, SEDP is the nexttop priority after primary education inthe Government's sector-wide 6  developmentprogram. The government's secondary programis basedon a carefulanalysis of enrollment targets, teacher demand and financial requirements for the sector as awhole. GOT'S preference is to pursue a high growth scenario that would yield GERs ofabout 17%informs 1-4 by 2006 and 49 YOby 2010 to meet the labor marketneeds as well as to absorb the bulge of students from primary educationinthe next few years. At the upper secondary level the gross enrollment ratios will increase from 2% in2004 to 3% by 2006 and 5% by 2009. Entrantsto lower secondary educationwould increasefrom 135,441 in2004 to 226,000 in2006 andto 554,000 by 2009. 24. However, because of the uncertaintiesabout how the resourceand institutional requirementsfor the high growth scenario would be met, it was thought prudentto start with the mediumgrowth scenario which is consideredmore feasible. A switch to the highgrowth scenariocould be made after it becomesclear that the resources and capacity to achievetargetsin this scenariowould bemade available. Overall, the mediumgrowth scenariocalls for an increase ingross enrollmentratios inlower secondaryto 15%by 2006 and23% by 2009. At the upper secondary level gross enrollment ratioswould increase from 2% in2003 to 3% by 2006 and 5% by 2009 with a tripling of student intake. Entrantsto lower secondary would increase from 135,441 students in2004 to 189,000 by 2006 and 299,000 by 2009. Upper secondary intake would expandfrom 15,740 in2004to 22,880 in2006 and49,212 in2009. A salient challenge will be to meet the requirementsfor teachers. Overall, 2,900 more secondary teachers must be hired eachyear by 2006 increasingto 6,800 by 2009. Inaddition, the annualrequirementfor new classrooms ingovernment secondary schools will increase to 1,360 in2006 and 2,485 in2009. (see Annex J). 25. Expansionof the system even with the mediumgrowth scenariowould require a significant increase infinancial resources. Together with the protection of PEDPto universalize primary schooling anda modestexpansionofhigher education, total recurrent public resources for the educationsector would needto increase from a current level of 3.6% of GDP to 4.2% in 2006 and beyond. Secondary EducationDevelopmentProgram 26. The Secondary EducationDevelopmentProgram (SEDP) seeks to achieve three basic objectives. The first is to increasethe proportion ofthe relevant age group completing secondary education, especially underservedgroups who are now getting better opportunitiesto complete primary educationthrough the PEDP. This will requiremeasuresto ease constraintson enrollment expansion; to reducethe cost per student (a burdensharedby householdsandthe public sector); and to provide more equitable access and output The second objective is to improve learning outcomesof students, especially for girls and at the lower secondary level. The third objective is to enable the public administrationto manage secondary educationmore effectively through the devolution of authority to lower levels and the strengtheningof management capacities. The long-termaim is to builda productive and adaptable labor force, as well as supplying more andbetter qualified students at higher levels ofthe educationsystem, as neededfor continuedgrowth and diversification to allow Tanzaniato participatemore successfully inthe global economy. Inaddition, SEDP seeks to reduce poverty through increasingthe proportion ofthose from poor communitieswho complete secondary schooling and are enabledto enter the modernsector labor market. Annex Epresents the logical framework for SEDP. 7  (1) Policy Reformsto ImproveAccess and Equity 27. The specific strategiesto raise access and equity in secondary education includethe following measures: reducingteaching costs per student by increasing the ratio of teachers to students subject to a maximum o f 1:30; assisting communitiesto buildschools and providing incentives for non-government schools to increase their enrollments further; lowering the costs of education to households; expanding scholarships for children from poorer families; introducing innovative schemes to produce qualified teachers more quickly and support their practice more effectively; and expanding distance learningprograms for those who cannot access formal secondary education. 28. Resource utilization -reducing teachingcostsper student: The scope for expanding secondary education is limitedby excessive teaching costs per student. The proposed Program features, therefore, a set of changes inpolicy and practice to use teaching resources more effectively. Chief among these are policies onteacher deployment and utilization. The target is to raise the average number of students per teacher from 1:22 to 1:30 within five years, thus reducing unit costs and allowing a substantial increaseinenrollments. This, inturn, requires consolidationof the curriculum (focusing on fewer core subjects); increasesinthe average number of teaching periods deliveredper week; and establishment/enforcemento f minimumclass sizes, particularly at the upper secondary level. Inaddition, some physical facilities are underusedat presentand improvements in scheduling offer a means of raisingthe pupil-teacher ratio simply by increasing the intake. 29. Relieving constraints on the expansionofpublic andprivate secondary education: Accommodating substantially more students insecondary schools requires the constructionof new schools andnew classrooms inexistingschools. Communities inmany poor areas have been unable to afford the costs o f constructing schools, a prerequisite for government takeover o f the operating costs. To remove these constraints, the SEDP will provide development grants to communities that qualify basedon agreedcriteria. The grants will be paid by MOEC to schools through the sub-treasury accounts. Inaddition, the programwill include policy changes, such as streamlining procedures for registration. 30. Relievingfinancial constraints on enrollment: The highcost to households limits the demand for secondary education. SEDP therefore includes steps to make secondary education more affordable, including reductions intuition fees ingovernment day schools from TSh 40,000 to TSh 20,000 as well as elimination of other contributionsthat would deter enrollment. For those still unable to affordthe direct costs, SEDP includes an expanded scholarship scheme to enable the enrollment of qualified students from poor household. 31. Breaking the bottleneck of trained teacher supply: Lack ofteachers forms a tight constraint on major expansion o f secondary enrollments. First, policies will be adopted to attract 8  and retain qualified secondaryteachers inthe teachingservice, such as improvementsin conditions of service and increasedopportunities for professionaldevelopment. Second, the output ofqualified teachers will be accelerated by reducingthe lengthof pre-servicetraining from two to one year at diploma level. For degree leveltraining, the governmentwill look into possibilities oftraining teachers from four to three years combinedwith one year of in-service professionalmentoringineach case. 32. Establishing distancesecondary equivalencyprograms: Efforts will also be madeto establishsecondary educationequivalencyprogramsby open and distancelearning. Such programshave hadgood experiences in some countriesinthe SADC region andelsewhere, and they offer an opportunity for youth and adults bypassedby formal secondary systemto obtain secondary qualifications. The keys to success of equivalencyprogramsare quality teaching materials, local support from distancetutors (often teachers using school facilities inthe late afternoon) and reasonable postal delivery. Offerings by ICT will also be explored. (2) Reformsto Improve EducationalAchievements Strategiesfor raising the quality of learninghave the following elements: Reform of curricula, including concentrationon fewer, updatedsubjectswith more focus on definedlearning outcomes; comprehensiveexaminationsreform coupledwith improved school-basedmonitoring and assessment; measuresto stimulate a market for textbooks and improve their quality; practical pre-serviceteacher training and provision of opportunitiesfor continuous professional developmentof teachers; and attentionto HIV/AIDS and other cross-cutting issues. 34. Curricula, testing and textbooks: Major reforms are neededinthe secondary curriculum to reduce the number of subjects and to update the content, including adapting levels of difficulty to appropriategrades. The Form 2 and Form4 examinationswill also be reformedalso to test better desiredcompetencies. This orientationwill provide strongincentives for the redirection of teachingand, in particular, should discourage the excessive use of memorization inthe classroom. Assessment of learningoutcomeswill be monitored as part ofthe programvia improved analysis of examination performanceandthrough the establishmentof a national assessment system. Incentivesfor book publishersand sellers needto be establishedand anew system adoptedfor generatingnew textbooks, with better designs andmore reasonablecosts, andreflectingthe revisedcurricula. Capitation grants to schools for teachindlearning materialsare expectedto providethe effective demandfor publishersto developthe necessarymaterialsand for booksellersto supply the schools directly. Inadvance ofthe new curricula, existing TIE textbooks will be offered to private sector publishers for revision, re-writing, editing, designing and illustrating andmanufacture as durabletextbooks. To ensure that schools are not supplied with sub-standard textbooks, the MOEC will adopt a strengthened evaluationand approval systemthrough EducationMaterials Approval Committee(EMAC) with rigorous standards for textbook durability, content quality and price, i.e. "value for money". 9  35. Countering the under-financingof non-teachingcosts: SEDP features the introduction of capitation grants (i.e., a normative funding formula) for recurrent non-salary costs insecondary education, both government and non-government schools. The grants would be allocated to schools through regional sub-treasuries and district authorities onthe basis of verified student enrollments, with higher per student grants givento upper secondary schools. The grants would cover non-teacher operating costs, especially textbooks, teaching materials and in-service development o f staff. Eligible non-government secondary schools (e.g. non-profit) would receive halfthe capitation grants. 36. Teacher Competencies: Improved quality of learning inschools will not be achieved without raisingthe professional knowledge and abilities o fthe current teacher force as well as those whojoin the system inthe future. Pre-service teacher training at the diploma level will become less academic, more balanced andmore practical. Instead of two years o f academic training, trainees will undergo one year training inresidence at TTCs plus one school year of extended practice teaching in schools. SEDP also includes the introduction of a national program for continuous in-service development for teachers and school administrators. Strategically, the scheme will first target school heads, as the principal agents for school improvement. 37. HIV/AIDS Several cross-cutting issues have been identifiedthat require study to improve understanding, followed by the development and implementationof appropriate interventions. These include an evaluation of the current HIV/AIDS intervention programs. In this context SEDP calls for (i)an assessmentof ongoing projects on -IIV/AIDS for schools towards a comprehensive approach for public and non-public schoolstargeting pupils and teachers; and (ii) integrationof HW/AIDS information in the curriculum for secondary education pupils as well as for teacher training. Increasedenrollment and retention insecondary education will of itselfreduce HIV/AIDSinfectionsaccordingto recent studies. (3) Reforms in Service Management and Delivery 38. RevisedRegulatovy Framework The program includes the review andrevision o fthe regulatory framework as it pertains to all schools, government and non-government. Procedures for registrationo f non-government schools will be streamlined. Gaps and inconsistencies inthe legal framework within and among government ministrieswill be addressed. 39. Decentralization: Inaccordancewith government-wide reforms of local administration and the steps taken under PEDP, the program will devolve major administrative and management functions (including student admission and placement, and teacher recruitment and deployment) to lower levels ofthe system. The functions o f regional offices will undergo reforms, which will include increasedresponsibilies to manage secondary education. The role and capacity o f the inspectorate inthe program will be reviewedand appropriate measures taken to maximize its effectiveness. The composition and functions of school boards will be strengthenedto reflect more community control. The role of community participationwill be reinforced through reforms inthe composition o f school boards, which will take on additional management responsibilities. School heads will be authorized to take on new duties for which they will receive training. School board members, school heads, and senior academic and administrative staff will be provided with management training to undertake their new responsibilities. This devolution also has implications for the center, including a strengthening o f its role inanalysis, setting policy and standards, planning, and monitoring performance. The specific aspectso f the devolution, including new systems for financial flows to schools, are being worked out. Finally, the EMISsystembeingdeveloped will be strengthenedinscope. 10  (4) Phasing of Reforms 40. SEDP consistsofthree strands ofreforms: expansionof secondary education, quality improvementsand better management. Each strand entails differentsequencing. Expansion requires first the restructuringof pre-serviceteacher training to expandteacher outputs rapidly. Increasingthe average number of students per teacher must also be done early inthe Programto facilitate initial expansionand an early start onthe constructionof new schools and classrooms. Quality improvementscould beginwith revision of curricula. When curricula are completed, examinationreform and production of new textbooks can start. Reforms inorganizationand system management must first be plannedin detailto be introducedinthe second and third years of implementation. C. Program Feasibility 41. SEDP is technically soundand financially feasible. The technical design of various components of the programwas done by governmentandvettedthrough government'sthematic technical working groups on schoolaccess, educationquality, financing andresources, and institutional arrangements. Technicalassistance was provided inthe areas of: curricula; textbooks; examinations; pre-serviceand in-service teacher professionaldevelopment. The implementationarrangements are built on experiences with the on-going PEDP, as revisedand modified to take into account lessons learned. The PEDP adopted, inter alia, a series of revised regulationsandproceduresinfinancial managementand procurementto ensure efficient flow of funds to, and effective utilization of funds at, school/community level. 42. SEDP is also financially feasible providedboth government and donors are willing to fund secondary educationaccordingto the level ofpriority, which the sub sector is being given in the evolving PRSto be publishedlater this year. The activities inthe Programare plannedto be implementedbetween2004 and 2009, thoughthe financial implications runover into future years. Assuming (a) the government'scurrent estimates of growth inGDP and domestic revenues, and(b) an increase for the educationsector inthe shares of these aggregatesto levels pertaining inseveralneighboringcountries, the modeldevelopedduring the preparationfor enrollment and financial projectionssuggests a financing gap which can realistically be filled by donor funding (see Annex J). 43. More specifically, assumingthat the current programto universalizeprimary educationis fully fundedandthat higher educationmaintains modest expansion, educationsector recurrent expenditure would needto increase from 25 percent to 30 percent oftotal governmentrecurrent expenditure andfrom 3.6 percentof GDP to 4.2 percentby 2009, and remain at these levels for severalyears. Within the overall recurrent allocationto education, the share for secondary would needto increase from the current very low level of 7 percent to around 16 percent by 2009 and continueto climb. While these increasedshares are plausibleover the mediumterm, they would be difficult to attaininstantly and a recurrent financing gap is projectedduring the early years of the Program. This, plusthe estimateddevelopmentexpenditures, will result inanoverall financing gap inthe first three years of the Programofroughly 49 million U S dollars in 2004/05, 70 million U S dollars in2005/06 and 88 million U S dollars in 2006/07. Consequentlyaround 207 millionU S dollars of externalassistancewould be required. It is anticipatedthat other donors will add to the proposedFinancing of 150million US dollars through the PRBS and specific sector support inother years. Inlater years, future Bank support for this sub sector could be consideredfor inclusion inthe PRSCs. 11  D. PovertyReductionand SocialImpact 44. The program complies with all applicable Bank policies. SEDP will expand accessto secondary education substantially, particularly inremote areas where most ofthe economically and socially disadvantaged populations are located. It will also reduce financial barriers to participationby the poor by expanding substantially the number o f children from lower income households who receive scholarship assistance. SEDP will benefithouseholds with children enrolled insecondary education by improvingschool inputsand education quality. With better access and higher quality secondary education, the poorest populationwould have an opportunity to strengthen their capacity to earn increasedincome. 45. Better educated graduateswill support the overall development efforts of Tanzania with a much strengthened labor force, which will enable poverty reduction to be achieved at a faster rate. Inaddition, the large amounts o f funds flowing into communities for school construction and school materials will bringincreaseddemand for local goods and labor thus potentially increasing individual income. Inaddition to raising incomes, a higher prevalence of secondary education will increasethe quality of life through, for instance, reduced child mortality and improvements innutrition and health standards. 46. An improvedpublic policy and financial management system would increasethe effectiveness inthe use of public sector and donor resourcesby better identifyingpriorities of investments, and improvingtargeting of resourcesto highpriority areas with minimumleakage. Decentralizationof education managementwill lead to more appropriate solutions for communities and more effective delivery o f education services. Schools and communities will have greater input indecision making, givingthem a greater stake and interest inthe success of education service delivery. E. EnvironmentalSafeguards 47. The school construction programunder the SEDP potentially gives rise to environmental concerns. The Government has prepared an Environmental and SocialManagement Framework (ESMF) to address these issues. The Framework is consistent with national laws and requirementsrelatingto environmental managementfor development projects as well as the Bank's triggered Safeguard Policy, Environmental Assessment OP 4.01. The ESMFcontains a screening mechanism that school management boards would use to identifythe adverse potential impacts from their proposed construction activities. This includes corresponding mitigation measuresrequiredduringthe planning, construction, and maintenance stages o f constructed, expanded or rehabilitatedschools. The ESMF also contains a monitoringmechanism to (i) ensure that these mitigation measures are successfully implementedat all stages, (ii) identify where applicable, corrective measures to the environmentalmanagement process contained inthe ESMF, and (iii) make a final evaluation regardingthe success ofmitigation measuresin to eliminating, off-setting or reducingthe adverse impacts to acceptable levels. 48. The ESMFcontains verifiable indicators to measurethe mitigation plan. The ESMF places significant responsibilitieson the school boards for self-monitoring and oversight monitoring responsibilities on the Local Government Authorities (LGAs) with capacity building and training support from the Vice President's Office. Furthermore, the ESMFcontains a consultation planto facilitate the participation o f local communities and other stakeholders inthe planning and decision making process. Inaddition to the ESMF,the Government of Tanzania has also prepared a Resettlement Policy Framework (RPF), consistent with the requirements o f the Banks triggeredSafeguardsPolicy, Involuntary Resettlement OP 4.12. Decisions on school 12  location and expansion inthe SEDP would be made with active participation o f the local communities. Also, the Government has prepared the RPFto meet the needs o f those people who may be affected by the SEDP construction that may lead to their involuntary resettlement due to loss o f or access to land, shelter and or other economic assets and hencethreaten their livelihoods. F. FinancialManagementand Procurement 49. An assessmentofthefinancial management system for SEDP concluded that the program currently satisfies minimumWorld Bank Financial Management requirement. The Financial risks associatedwith the operation are considered moderate givengovernment's demonstrated ability to manage adjustment programs, includingthe PRGF, PSAC, PRSC and the PEDP. However, inorder to strengthenthe system GOT will take the following actions: (a) prepare a financial managementand accounting manual and distributeit to secondary schools at the inception of the program; (b) by the secondyear train all agencies managing SEDP funds inthe use o f FMmanual; and (c) audit the Deposit Account usingauditors appointed by the Controller and Auditor General. Current procurement practice shows that procurement o f fixed assets and vehicles for secondary schools is centralized at the Ministryof Educationand Culture, with secondary schools involved inprocurement o f items relatedto recurrent academic needs and services. A general procurement capacity assessment revealed a lack of procurement capacity at both levels and the needfor its strengthening. The areas o f weakness have been identifiedas lack o f skilled personnel, filing and record keeping systems, and lack o f skills inpreparation o f procurement plans. Under SEDP, procurement will be carried out by respective secondary schools followingdetailed procedures outlined inthe Procurement Manual (PM), currently under preparation. The P M is beingprepared inaccordance with the Public Procurement Act o f 2001. See Annex G for the Government's detailed SEDP implementationand institutional arrangements, including financial management. G. Monitoringand Evaluation 50. The development of secondary education monitoringandevaluation (M&E) systems has been a focus of discussion throughout the SEDP planningprocess. Tanzania has developed an impressive Poverty MonitoringSystemthat provides a strong foundation for sector-specific M&E systems. However, MoEC faces a range o f challenges indeveloping and utilizing a robust education management information system (EMIS) as indicatedinAnnex G. Processesfor data collection and dissemination have beenestablished. Data quality varies, verification protocols are weak, and analyticalwork is underdeveloped. Overall, EMISdoes not realize its potentialto facilitate informed planningand policy-making within MoEC. 51. Inlightofthese challenges, the SEDP M&Eframework has beendesigned to complement broader management reforms within MoEC. EMISwill be strengthened through needs assessment, system design and capacity building. The SEDPM&E framework itself (Annex H),seeks to focus onbothshort-term reformimperatives and longer term program outcomes, while adopting a pragmatic position on the type and quality o f data available from the EMIS. The impacts ofthe program interms ofeducational achievement andpoverty reduction will be difficult to quantify inthe short term. Annual reviews, combining both internal and external expertise, have beenscheduled to verify program achievements and support organizational learning. 13  IV. THE PROPOSED SECONDARY EDUCATIONDEVELOPMENT FINANCING A. FinancingRationaleand Coverage 52. A strong case can bemade for increasedpublic intervention insecondary education in Tanzania interms o f its potential impact on economic growth and on social equity. Both arise from the increasednumber of higher quality secondary school graduates with productivity levels higher thanthose ofprimary school graduates. 53. Economic growth: Today's rapidly growing economies depend increasingly on the creation, acquisition, distribution, and use of knowledge. An important pillar o f the knowledge- basedeconomy is an educatedand skilled populace that can create and use knowledge. In addition, there is growing evidence that at least halfof aggregate economic growth is drivenby increases infactor productivity rather than by factor accumulation ineither capital or labor. Secondary education plays a particularly important role inthis regard. Inan increasingly globalized economy, developing countries may be able to attain increases infactor productivity through technology transfer from the global "leaders". Such technology transfer can happen through trade, foreign direct investment, and through learningacross international supplier- producer chains. However, much o f the technology developed inthe leader countries is very skill intensiveand therefore "inappropriate" for developing countries without a minimumthreshold level of skills. Several recent studies have concluded that a large pool o f workers with secondary education is indispensable to attracting imports of technologically-advanced goods and foreign direct investment. 54. The value of secondary educationto the individual Tanzanian is clearly apparent from an analysis of the 2000/2001 Integrated Labor Force Survey. The average hourly wage for those wage earners with a primary education was roughly 200 TSh. as compared to over 700 TSh. for those with a secondary education. A more extended analysis o f wage differentials controlling for individual characteristics such as experience, geographic location, and gender suggestedthat the returnsto an additionalyear of schoolingamounted to 16percent. Again controlling for these individual characteristics, a wage earner with a complete primary education earned 75 percent more than an uneducated wage earner; an employee with complete lower secondary made 163 percent more; and one with a complete upper secondary education earned 181percent more. 55. Evidence from recent tracer studies suggests that virtually all secondary and tertiary level graduates are eventually absorbed into occupations appropriate to their level of education. Secondary graduates inthe informal sector are muchmore likely to be either wage employees or employers than are primary graduates who tend to be self-employed in low productivity occupations. 56. Insummary, economic growth and diversification will increasinglyrequire higher levels of skill and education, as demonstrated inthe CEM, "Tanzania at the Turn of the Century: From Reforms to Sustained Growth and Poverty Reduction". The current secondary output does not adequately support this strategy. Evidence from recent labor market surveys indicates a significant income premium to secondary education; and tracer studies suggest that virtually all secondary andtertiary level graduates are eventually absorbed into occupations appropriate to their levelofeducation. Already Tanzanians are losing out to qualified citizens from other countries who seek employment inTanzania because the education and training system is not able to meet labor market demands. 14  57. Social equity: The returnsto education outlined above are not spread equally across all population groups. The distribution of education inTanzania by geographic location, gender and household income status shows who is garnering these returns. Data from the 2000/2001 Household BudgetSurvey indicate that lower secondary enrollment rates are 7 times higher for urban than for rural children, and again 7 times higher for children inthe highesthousehold income quintilethan for those inthe poorest quintile. The inequities are even greater for upper secondary schooling. An expansion of the overall level o f participation insecondary schooling can be expected to raise the levels ofthose under-representedmost. However, part o fthe reason for the lower participationrate of poor children is the highfinancial burdenof attending secondary school, which is demonstrated inthe recent Household Budget Survey. The findings highlightthe needfor alleviatingthe privateexpenditures ofhouseholds onsecondaryeducation by reducingschool fees as well as other direct costs. 58. Lending Instrument: The proposed operationwill follow a sector adjustment approach. This approach has beenusedsuccessfully to carry out fundamental reformsto expand enrollment and improve quality inprimary education inTanzania supported under the PEDP. A SECAL is also needed to reform secondary education inTanzania, which has one of the lowest enrollment rates inAfrica. Fundamental changes are neededto increase enrollment and improve quality in bothgovernment and non-government schools. These changes include reducingthe costs to households, redesigningand restructuring education programs and strengtheningsystem management through decentralization. These changes will take time and needto be nurturedina flexible way ina complex environment. A SECAL will enable the Bank to support the policy and institutional changes necessaryto attack system-wide issues, focusing attention on priority reforms and appropriate resource allocation insecondary education while helpingthe Government to build a sustainablesystem for providing quality secondary education. Three tranches are necessaryto allow time for the requiredreforms to mature progressively. It was deemedunsuitable to incorporate the SEDP into the PRSC currently beingprepared, because o f the scale and complexity ofthe changes beingplannedand the needto support directly the change process over three years. To loadthe PRSC with a large secondary education sector program could result init beingunwieldy and unworkable. Inaddition, the annual nature o f the PRSC would be a limitation as it is usually a one tranche operationand would break an evolving process into discrete actions and risk losingthe coherence of the proposed reforms. Once the key reforms insecondary education havebeenundertakenanda clear policy framework established, future support for this sub-sector will be considered for inclusion inthe PRSC. 59. Links with Broader Objectives:The proposed SEDP aligns closely with government policy, IDA'SCountry Assistance Strategy (CAS) and the Poverty Reduction Strategy (PRS). The education sector has beengiven priority inthe context of government's comprehensive poverty reduction strategy. The CAS focuses on higher growth, poverty reduction and institutionalreforms to improve governance and service delivery. The lendingprogram includes, inter alia, policy-based lendingoperations insupport of sectoral reforms. One o ftwo stated benchmarks inthe CAS for country performance ineducation is an increase inthe transition rate from primary to secondary schools. The PRSP also includes this indicator and calls for expanded secondary education through existing government schools and encouragement o f non- government schools. A target is to have one secondary school inevery ward (implyingabout 2,500 secondary schools, compared with 1,000 at present). The Tanzania Development Vision 2025 calls for atransition rate of 50 percent from primary to secondary education (compared with 22 percent of a much lower primary output at present). With projected financing deficits resultingfrom the comprehensive scope and goals o f SEDP, the IDA operation would again provide fundingto support a major component o f the sector development program. 15  60. Analytical Underpinnings:IDA has a richbody of up-to-datecross-sectoraland sector- specific analytic work relevantto the educationsector inTanzania. This includesthe Country Assistance Strategy, the CountryEconomic Memorandum, the growth study "Tanzania at the Turn of the Century" andthe Tanzania Social Sector Review. Most recently, the Post-Primary Education andTraining Review was producedincloseconsultationwith abroad cross-sectionof Tanzanianstakeholders. Combinedwith Tanzania-specificoperationalexperienceculledfrom a series of educationprojectssupportedby IDA and other donors, especially implementationofthe PEDP, this knowledgebase is expectedto facilitate the achievementof Tanzania's goals inthe secondary educationsub-sector. IDA'Swork insupportingthe decentralizationand devolution program inTanzania inthe context ofthe Local Government Reform andthe Public Service Reform Programswill also provide critical inputs for the development of appropriate institutional systems and capacitiesfor improveddelivery of secondary education. 61. ExpectedAdjustment Outcomes:The proposedadjustment operation supportsthe first three schoolyears (2004-2006) of the longterm SEDP. The mainpurposeof the adjustment operationis not quantitative, althoughsubstantialnumbers of schools will be built, classrooms constructed,teachers trainedand students enrolled. The main purposeis to lay a foundation of reforms on which can be built over the mediumterm asystem of quality secondary educationthat i s relevant, effective and efficient. Specifically, within the three-yearreform period curricula will be reviewed and revisedandteachers orientedintheir use; a new examinationssyllabus will be completedand issued; a new pre-serviceteacher training structure and content will be established; policies will be adoptedto make more productive use ofteachers; new textbooks will start to have beendeveloped; and a new organizationalstructure put inplace with capacities built to perform more functions effectively at lower levels. This does not meanthat all the reforms will have beenfully completedwithin three years. Experienceshows that such far reaching changes cantake up to decade to take root fully. However, a solid foundation will have been laid to enable governmentto achieve its longer term plan objectives. B. Risks 62. The risks associated with the operationare consideredmoderategiven GOT'S demonstratedability to manage adjustmentprograms, includingthe PRGF, PSAC andthe PEDP. However, the following riskswill be addressed. 63. Financial: One risk is that the government, inview ofcompetingpriorities, will be unableto deliver on promisesto allocate more funds to educationin general, and secondary educationinparticular. This generalrisk will be mitigated by the ongoing efforts to strengthen the role of domesticstakeholdersinbudgetformulation andreview. More directly, the riskwill be mitigated by the government's very public commitmentto the development of primary and secondary educationas ameans ofreachingthe MDGs, increasingequity and increasingthe capacity ofthe labor force. Substantialroom exists for increasedallocationsfor secondary educationinview ofthe relatively low share of government revenues devotedto education (below the regionalaverage), and with that the very low share which secondary education receives(9 percent). A moremodest expansionscenario, assumingshortfalls inGOT budget allocations to secondary education, would still allow substantialincreases inpupils over time who would benefitfrom the reforms and additional inputs to the system underthe Program. 64. Implementationcapacity: A potential risk is inadequate public capacity to manage the implementationof an expanded secondary educationdevelopment programsimultaneouslywith its implementationof the large PEDP. The issue of capacity is accentuated by the comprehensive scope ofthe reforms neededin secondaryeducation, including the achievement of expansionwith 16  quality improvements and managing a new flow o f funds. Organizationalreforms at the central MOEC, regional offices, districts and schools will also necessarily take time. At present, professionals are inshort supply with the neededskills and experience inpolicy analysis and formulation, planning, monitoring and evaluation. The government's program includes moving many administrative functions from the center to lower levels o fthe system and to schools where they can be exercised more efficiently and effectively. This will free the central administrationto concentrate more on policy development and monitoring the implementation of reforms such as included inthe SEDP. The government plans to introduce a sustained program o f capacity buildingfor staff at all levels. Expert services are also envisaged under the programto assist in implementation at all levels. 65. Teachers: One programrisk i s that not enough qualified teachers would be produced to support intended enrollment expansion. This could compromise service delivery, leadto overcrowding o f classrooms or scaling back o f construction. Currently it takes two to four years to produce such graduates, and intake comes from a small pipeline o f successful graduates from Form 6. The program includes a detailed, innovative plan for increased production of teachers. Implementation o fthe plan is linkedto tranche release conditions. Projections indicate that at peak expansion upto 27% o f graduates from Form 6 would need to enter diploma level teacher training. The level of uptake into pre-service teacher training will be kept under careful review by the Ministry, and measures taken - such as elimination of tuition charges and addition of bursaries -to increase its attractiveness as needed. Another risk is that sufficient teachers, once trained, may be unwillingto take up positions inthe disadvantaged areas intendedfor construction. The program requires that an incentives package be developed to ensure that sufficient qualified teachers are attracted to the target areas and regions under SEDP. 66. Affordability: Facilities to be constructed underthe program inruralareas and areas with relatively lower incomes may be underutilized ifparents still cannot afford the direct and indirect costs. Development and capitation grants are intendedto be basedon careful analysis o f demand inthe catchment area, andthis will be monitored. Inadditionto scholarships administered locally, the SEDP includes measuresto minimize the direct costs to parents o f secondary education, including development and capitation grants, and reductions inpayments for tuition fees and textbooks. C. Financingand DisbursementArrangements 67. The proposedIDA financing would be US$ 150 millionofwhich US$26.4 will be an IDA Grant andUS$ 123.6millionwill bea credit. The borrower would bethe UnitedRepublic o f Tanzania. Disbursement would be inthree tranches of US$50 millioneach for FY2004, FY2005 and FY2006. The IDA grant will be includedinthe first tranche o f US$50 million. The first tranche would be releasedupon Boardapproval and effectiveness of the Development FinancingAgreement. The other two tranches would be subject to satisfactory implementationof the reform program, and the completion of applicable actions for tranche release. The final policy matrix specifyingthe content o f tranche release actions and performance targets was agreedwith the URT government duringnegotiations. 68. Disbursement arrangementswill follow the simplified procedures approved by the Board on February 1, 1996. The Government of URTwill open an account inthe Bank o f Tanzania. UponIDA notification of tranche release, proceeds o fthe IDA Financing will be deposited by IDA inthis account at the request ofthe URTgovernment. A routine audit ofthe account will not be required, but IDA reservesthe rightto require it. 17  D. Agreed actions for tranche release 69. The Government is committedto the development and implementation o f SEDP. The MinisterofEducationandCulture madeanexplicit statement onproposals for the development o f secondary education during the debate on the 2003104 budget. The statement received overwhelming support from other Parliamentarians. GOT has also taken the following actions to facilitate SEDP progress: General SecondaryEducation: m . Completedand discusseda sub-sector report on secondary education with donors and other stakeholders; Prepared and discussedthe draft Secondary Education Development Programwith a cross section of the educational professionals, donors, NGOs and other stakeholders. Access and equity: Agreed to reduce the cost of secondary education to households by a substantial . expansion ofthe scholarships program; Strengthenedlinks with non-government schools to enhancetheir capacity to expand provision of quality secondary education. . Improving learning outcomes: . Agreedto allow schools to retainschool fees for use for recurrent expenditure; Agreedto reducethe number of subjects inthe curriculumto increasetime on task for core subjects. Institutional arrangementsfor planning and delivery of education services: . Decentralized significant aspects o f secondary schoolmanagementto regional levels; Increased the role of schools inthe management o f school accounts. 70. The first tranche will bereleaseduponthe fulfillmentofthe following conditions of effectiveness: . Enactment of regulations on capitation, development and scholarship grants for . secondary schools; Enactment of regulations on norms for postingo fteachers inpublic schools with a view to achieving by 2008 a ratio o f at least 30 students per teacher; and .Conclusion of arrangementsbetweenthe Tanzanian Institute of Education(TIE) and private sector publishers for publishingexistingtextbook titles, and to disengage TIE from publishingnew textbooks for secondary schools. 71. The secondtranche will be releaseduponthe fulfillment o fthe following conditions: 18  Budgetary allocations madeto cover staffing, scholarships, capitation grants, and development grants for facilities andpedagogical improvements according to agreed norms; Government reduction infees for public secondary schools from TSh40,000 to TSh 20,000 starting in2005 school year; Enactment of regulations for a packageo f benefits to attract teachers to underserved areas; Revision of the textbook evaluation process, incorporatingagreed criteria, standards and procedures; and Adoption and implementationof a programfor continuous professional development of school managers and teachers in secondary education. 72. The thirdtranche will be releaseduponfulfillment o fthe following conditions: Budgetary allocations made to cover staffing, scholarships, capitation grants, and development grants for facilities and pedagogical improvements accordingto agreed norms; Revisedcurricula completed and introduced; revisedexamination structure approved and distributedto all schools; and New regulatory framework and organizational structure inplace for decentralized management of secondary education. 19  V. IDA OPERATIONS 73. IDA has financed ten education projects inTanzania starting with the FirstEducation Project in 1964. Following the SeventhEducation Project approved in 1980, the most recent projects inthe sector include Human Resources DevelopmentPilot Project I(1997), and the PEDP (2002). Most ofthese operations were rated satisfactory with regard to their development objectives including improving education quality and efficiency, increasing school access, as well as promoting school retention. Most importantly, these operations provided and continue to provide valuable experience, and constitute a good basis for designing various elements o fthe SEDP. 74. Tanzania has a longrecordof implementing adjustment operations. A Country Assistance Evaluation (OED, 2001) has identifiedstrengthand weakness o f IDA'S adjustment operations inTanzania. This evaluation noted IDA'Semphasis on addressingthe issue of stagnant social indicators inTanzania. Inparticular, the report identified a lack of balance between the attainment of fiscal discipline and protection of operations and maintenance spending. The introductionof a school capitationgrant would reinforce the proportionof spending inthe total secondary education budget devoted to textbooks and teaching materials. 75. The SEDP builds onthe impetus and experiences o f PEDP. PEDP has pioneered a decentralized system for channeling funds directly to schools through local authorities. It abolished tuition and other fees that were a barrier to the enrollment o f children from poor families. It directly attacked systemic issues o f under-fundingfor essential expenditures such as textbooks and teaching materials. The outcomes o f PEDP are expected to solve one of the fundamental constraints on the expansion o f secondary education: an adequate and representative supply of qualified graduates from the primary system. The lessonso fPEDP implementation have beenstudied, distilled and fed into the design o f the proposed secondary adjustment operation. Further lessons learned and reflected inthe program designalso includethe following: PEDP demonstrated the importance of sequencing reforms. It was found to be relatively easy to buildnew classrooms, but more complex and time-consuming to . train teachers, develop and delivertextbooks and revise curricula. The lesson is that qualitative reforms should start early inthe educational reform program. Organizations and human resourcesdictate the pace o f educational reforms. For that reason an assessment was carried out as part o f preparationonthe organization and delivery o f secondary education. The SEDP implementation phase features continuous work on capacity buildingfor further organizationaldevelopment. Implantingorganizational reforms i s expected to be a major challenge and effort throughout execution. Accountability and efficiency o f resource utilization can be enhancedwhen funds flow downstream to be managed at the community and school levels. The flow o f funds and intendedutilization offunds needto be designed-inpartthrough manuals and guidelines-- and accountabilities identifiedwithin the context of public administration reforms. Delivering funds directly to communities is an effective way to effect school improvements on a wide scale. 20  .One of the lessonsof PEDP is the needfor flexibility inuse o f grants within agreed criteria and procedures. This allows communities to identify their most pressing needs. Requirementscannot easily be prescribed from above. For example, some communities placed the highest priority on water supply or sanitary facilities for schools under PEDPrather than classroom construction. Preparations for PEDP were carried out under the guidance of the Inter-ministerial Steering Committee for Educationand Training and within the ESDP structure. This process demonstratedthe value o ftransparent collaborationamong stakeholders, NGOs and donors at policy, technical and financial levels, as well as with monitoring and evaluation. At the same time, the government's authority and responsibility to implementthe agreedprogramwas clearly differentiated. PEDP experiencesalso underscore the point that fostering and respecting government ownership of its sectoral reforms contributes greatly to ensuringsustainability. Collaboration occurred between the government, donors and NGOs inthe preparation o f the PEDP, but the final documentation was prepared by government officials, as was the SEDP program. 21  VI. COLLABORATION WITH IMFAND OTHER DONORS 76. Inthe context ofthe EnhancedHIPC program, IDA, IMFandother donors havebeen supporting the GOT inthe implementationofthe PRS, particularlyinestablishingaMTEF, as well as carryingout annualPERs. The proposed SEDPhas beenpreparedwithinthe context of the parametersestablishedby this exercise. 77. IDA has beencollaboratingwith developmentpartnersthroughthe ESDP structure ledby the PMO, andset upby GOTto coordinateeducationandtrainingsector ministriesand institutions. This structure allowsfor collaborationontechnical issues as well as forjoint appraisalofprograms, as well as monitoringof programsandreportingmechanisms. Inaddition, separate meetingsof developmentpartners are heldto develop a coherent approach inproviding support to Tanzania's development efforts. Attachments Washington, D.C. May 14,2004 22  Annex A: Tanzania SocialIndicators Latest single year Same regionlincome group Sub- Saharan Low- 1970-75 1980-85 1995-2001 Africa income POPULATION Total population, mid-year (millions) 15.9 21.8 34.4 673.9 2,505.9 Growth rate (Oh annual average for period) 3.0 3.2 2.4 2.5 1.9 Urban population (Oh of population) 10.1 17.6 33.2 32.3 30.8 Total fertility rate (births per woman) 6.8 6.5 5.2 5.1 3.5 POVERTY (% of population) National headcouqt index 35.4 Urban headcount index 23.5 Rural headcount index 38.6 INCOME GNI per capita (US$) 280 460 430 Consumer price index (1995=100) 1 8 190 Food price index (19951100) 7 200 INCOMElCONSUMPTlON DISTRIBUTION Share of income or consumption Gini index Lowest quintile (Oh of income or consumption 5.0 Highest quintile (% of income or consumptiot 53.0 SOCIAL INDICATORS Public expenditure Health (% of GDP) 2.8 2.5 1.1 Education (Oh of GDP) 2.1 3.4 2.8 Social security and welfare (% of GDP) Net primary school enrollment rate (% of age group) Total 56 65 Male 55 82 Female 56 79 52 Access to an improved water source (% of population) Total 68 58 76 Urban 90 83 90 Rural 57 46 70 Immunization rate (% under 12 months) Measles 66 83 58 60 DPT 86 53 61 Child malnutrition (% under 5 years) 29 Life expectancy at birth (years) Total 48 51 44 46 59 Male 46 49 43 45 58 Female 50 53 44 47 60 MortaIity Infant (per 1,000 live births) 118 100 104 105 80 Under 5 (per 1,000 live births) 197 160 165 171 121 Adult (15-59) Male (per 1,000 population) 513 451 569 520 312 Female (per 1,000 population) 419 370 520 461 256 Maternal (modeled, per 100,000 live births 1,100 Births attended by skilled health staff (Oh) 58 35 2003 World Development Indicators CD-ROM, World Bank 23  Annex B: Tanzania Key Economic Indicators icator Sational accounts(as YOof GDP) Grossdomesticproductla 100 100 100 100 100 100 100 100 Agriculture 45.1 45.0 44.8 44.4 43.4 43.4 43.4 43.4 Industry 15.5 15.7 16.0 16.3 16.9 17.3 17.5 17.6 Services 39.4 39.2 39.2 39.3 39.8 39.3 39.1 39.0 TotalConsumption 96.6 90.8 91.6 89.5 93.2 92.0 91.3 91.5 Grossdomestictixedinvestment 15.4 17.4 16.8 17.2 18.7 18.7 18.2 18.0 Governmentinvestment 3.1 3.4 3.5 4.0 5.1 5.1 4.6 4.4 Privateinvestment 12.3 14.1 13.3 13.2 13.6 13.6 13.6 13.6 13.8 14.4 15.3 16.7 18.0 18.4 17.8 17.2 26.0 22.7 23.9 23.6 30.2 29.4 27.8 26.8 Gross domesticsavings 3.4 9.2 8.4 10.5 6.8 8.0 8.7 8.5 Gross nationalsavingsIC 2.0 7.6 7.3 10.2 6.5 7.9 8.6 8.5 Memorandumitems Grossdomesticproduct 8635 9079 9342 9414 9513 10337 11405 12567 (US$ millionat currentprices) GNIpercapita(US%, Atlasmethod) 250 270 270 280 280 280 300 320 Realannualgrowthrates("1% calculated from 1992prices) Gross domesticproductatmarketprices 3.6 5.7 6.1 6.3 5.5 6.4 6.5 7.0 Gross DomesticIncome 3.9 5.9 11.1 7.3 5.1 7.7 6.6 6.9 Realannualpercapitagrowthrates(`3% calculatedfrom 1992priiXS) Gross domesticproductatmarketprices 1.1 3.6 3.3 4.2 3.0 3.9 4.0 5.8 Totalconsumption 1.3 -1.8 10.9 1.5 7.1 4.0 3.9 5.9 Privateconsumption 2.6 -2.9 21.9 0.2 4.9 2.9 3.3 5.3 BalanceofPayments(US%millions) Exports(GNFS)h 1190 1307 1430 1569 1711 1905 2034 2160 Merchandise(fob) 543 663 776 903 1060 1224 1320 1406 Imports( W S ) 2242 2064 2232 2224 2877 3041 3173 3370 Merchandise(fob) 1368 1368 1563 1512 2084 2170 2252 2387 Resourcebalance -1052 -757 -802 -656 -1166 -1136 -1139 -1210 Netcurrenttransfers -38 -38 -19 49 8 5 14 0 Currentaccountbalance(beforegrants) -1172 -900 -907 -690 -1196 -1146 -1146 -1203 Currentaccountbalance(after p t s ) -639 -366 -352 -133 -472 -475 -445 -470 Netprivateforeigndirect investment 517 463 327 240 248 260 273 287 Long-termloans(net) 184 118 574 100 346 235 199 189 Official 177 111 273 104 351 235 193 185 Private -7 -7 -301 4 5 0 -6 -4 Othercapital(ne<incl.errors &ommissic -44 -194 -63 -6 0 0 0 0 Changeinreserves/d -125 -148 -171 -347 -268 -185 -188 -200 Memorandum items Resourcebalance("7 ofGDP) -12.2 -8.3 -8.6 -7.0 -12.3 -11.0 -10.0 -9.6 Realannualgrowthrates(YF92 prices) Merchandiseexports(fob) -2.4 17.8 16.4 -4.5 10.5 10.9 11.1 3.0 Manufactures -27.9 59.1 64.3 17.3 10.8 10.8 8.8 8.9 Merchandiseimprts (cia 7.4 -2.4 7.7 -3.3 37.9 4.1 3.8 6.0 24  Annex C:Status ofBankGroup OperationsinTanzania Operations Portfolio (IBRDIIDA and Grants) As Of Date01/16/2004 Closed Projects 102 IBRDIIDA Total Disbursed(Active) 697.44 of which has beenrepaid 0.00 Total Disbursed(Closed) 3,173.27 of which has beenrepaid 703.03 Total Disbursed(Activet Closed) 3,870,703,094.41 of which has beenrepaid 703,032,028.34 Total Undisbursed(Active) 732.20 Total Undisbursed(Closed) 2.15 Total Undisbursed(Active+ Closed) 734,348,505.85 Active Proiects Last PSR SupervisionRating Project ID Project Name DeveloDment ImDlementation Obiectives Proaress Fiscal Year PO02804 AGRIC RESEARCH S S 1998 PO59073 DAR WATER SUP & SANll S S 2003 PO57187 FlDP II S S 2000 PO71014 HIV/AIDS S S 2004 PO02789 Human Res. Dev. I S HS 1998 PO73397 Lower KihansiEnvironment;S S 2002 PO49838 PRIVATIZATION S S 2000 PO60833 PUBLIC SERV REF PROG S S 2000 PO67103 Partic. Agr. Dev. and Empo\S S 2003 PO71012 Primary Educ.Dev. ProgranS S 2002 PO47762 RURAL WATER SUPPLY S S 2002 PO50441 RegionalTrade Fac. Proj. - S RURAL& MICRO FIN SVC S U 2000 PO69982 S 2001 PO82335 Second HealthSector Dev. # # 2004 PO65372 SocialAction Fund S S 2001 PO02822 TANZANIA PSAC I S S 2000 PO47761 TAX ADMINISTRATION S S 1999 PO58706 TZ ForestConservation andS S 2002 PO02770 TZ ROADS I1 S S 1994 PO02797 TZ SONGO SONGO GAS [:S S 2002 PO46837 TZ:LAKE VICTORIA ENV. HS HS 1997 PO38570 TZ:RIVER BASIN MGMSM S S 1997 PO02758 URBAN SECTOR REHAB S S 1996 OverallResult 25  Annex D: Program Data Sheet Timetableof Key processingevents Appraisal: February 3,2004 Negotiation: March 30, 2004 Board Presentation: June 8,2004 EffectivenessDate: September 8,2004 Closing Date: September 8,2007 26  Y VI L 8 iI D I < c C eec .( eec  eo N vi c I a, 0 3 c .-m VI  '0 S m  Annex F: Letterof Secondary EducationSub-sector Policy (Located at the end ofthis report after Annex K) 30  Annex G: Institutionaland ImplementationArrangements 1. Policy,legaland regulatoryframework Issues: (a) Excessivelycentralizedmanagement of secondary education. This centralized control is underpinned by the current legislation (Education Act), which has not changed in line with the 1995 Education and Training Policy and ongoing decentralization reforms. (b) Gaps and inconsistenciesin legislation: Some o fthe provisions inthe current Education Act are not internally consistent with the provisions inthe Regulations issued by the MinisterofEducation in2002. There are also inconsistencies betweenthe EducationAct, the Local Government (District Authorities) Act, 1982 andRegional Administration Act, 1997. The current legislation does not cater for the evolving diversity, and increasing role for the private sector. Stratevies (c) A more enablingenvironment will be created for rapidexpansion of secondary education inorder to: (i)facilitate the speedy achievement of SEDP strategic objectives and the smooth implementation o f the program, and (ii)the current Education Act will be revisedto accommodate minimal amendments necessary to facilitate smooth implementationof the SEDP. These will be complemented by changes inpolicy and regulatory framework. (d) Specifically, changes will be made to the policy, legal and regulatory framework under SEDP to achieve the following: 0 To enable decentralised administration o f Secondary Education. 0 To streamline and harmonise secondary schools classification. e To enable speedier registrationof non-government schools. 0 To enable owner management of private schools. 0 To divest from non-core roles and functions from Tanzania Institute of Education (TIE). 0 To enable maintenance of database o f registeredschools by the ChiefEducation Officer (CEO). 0 To provide a role for the CEO inestablishment o f schools. 0 To enable effective inspectionand monitoring o f performance o f all schools. 0 To enable schools and school Boards to manage andbe accountable for school funds. 31  2. Organization and management arrangements Issues: (a) An excessively centralised managementsystemwith virtually most decisions beingmade by MoEC headquartersstaff. This is not consistent with policy shifts infavour of decentralisation. (b) An ambiguous role and limitedcapacity ofthe RegionalEducationOfficer. The Education Act states that RegionalEducationOfficers (REOs) will be representatives ofthe CEO intheir respective areas, which placesthem under the MoEC. Thus, MoEC appoints the REOs. However, the institutional locus of REOs inthe decentralized Government framework that was promulgated in 1987 is under Regional Administration Secretariat (RAS), to whom the REO reports. (c) Weak inspectorate function due to the inadequate staffing and facilitation. (d) Poor managemento fthe teaching force leadingto disincentives, demotivation and obstacles to teachers' performance. There is lack o f clarity incareer progression, slow payment system for non-salary claims, poor teaching environment and infrastructure, and inadequate teaching materials. (e) Limitedparticipationof local communitiesinthe management of schools. (0 Low capacity of the NationalExaminationCouncil of Tanzania (NECTA), which affects its ability to execute its roles effectively. The problems include under funding, limited skilled personnel and exam processing equipment. Stratepies: (g) Decentralizationto regions, schools and local communities inorder to achieve greater effectiveness and operational efficiency. Except policy, curriculum development, examinations inspections, resources, mobilization, and other core functions o f MoEC, the focus o f secondary schools managementwill be at the Schools Boards. (h) Enhance a direct and prominent role for Regional EducationOfficers inthe management o f secondary education, and as such, their direct accountability to the ChiefEducationOfficer. ,Additionalroles will include monitoring and evaluation of the quality o f education, inspection, transfer of students and teachers, and teacher recruitment and deployment. Inthis regard, it is recommended to strengthen and re-define roles at the regional level to be directly responsible for: (i) curriculum implementationand examinations administration, (ii) management, (iii) teacher Schools Boards oversight, and (iv) inspector, who will transferred from the zonal levels. (i) Roles at the school, district and Regional Levels will be re-definedto incorporate SEDP. ('j) Schools and School Boards will be empowered so that they can make decisions affecting the school suchas use of funds, disciplinary matters, and construction. Financialreporting systems will be strengthened and appropriately qualified accountants hired ineach school, in addition to establishing a permanent Finance and BudgetingCommittee. (k) Localcommunities will be mobilized to participate in construction of schools and in decisions relatingto the management of the secondary schools. 32  (1) The Inspectoratesystemwill be strengthenedby extendingit down to the regional level. Inaddition, adetailedcapacity building programfor the inspectorswill bepreparedand implementedat boththe Ministry andthe regionallevels. (m) Professionalmanagementofthe teachingforce will be improved to enhancedteacher moraleandmotivation. (n) A comprehensivecapacity buildingprogramwill be developedand implementedinthe framework of the SEDP. 3. Management Information System (MIS) Issues with the current MIS: (a) There is no MIS strategyor Information Communication Strategy(ICT) as aresult previous investmentinMIShave beenadhoc. For example, each department has its own budget for procuring computers and softwarenot basedon a strategic MISdevelopment. (b) Currentdata collection, processingand disseminationis cumbersome. (c) Current systems are not user friendly (e.g. Statistical database is characterbasedwhich requirethe users to rememberthe commands). (d) Statisticaldatabase works on stand-alone computerswhich limit electronic sharingof information. (e) Currentdatabases are not integrated. (storage f ) Some PersonalComputers inthe EMISsectionhave limited processingpower and capacity to handle larger files and newer versions ofthe standardsoftware. (g) The EMISDevelopmentplan 2004-2007though still ina draft form does not seem to prefer offthe shelfDatabases but rather consider developingdatabases (i.e. bespoke). Stratepies: (a) A three-phase process will be adoptedto developthe MISunder the SEDP. The first phase will entail re-engineeringthe process ofcollecting data to ensure that collection is done efficiently and data is validated at schools, district and regional levels, building capacity of data collection at the source of data (e.g. at schools and districts); and developing mechanismof validating data, which can be done by the software inbuilt mechanismas well as physical validation where head of schools, district and regional levels will be heldresponsiblefor quality ofthe data submitted. (b) Inthe secondphase, anoverall ICT Strategythat will assist the Ministry to invest economically inICT will be developed. The strategy will identify systemrequirements interms of its outputs, data inputs, database, operatingsystem, communication infrastructure,hardware, etc. The terms of reference should include developingICT strategiesfor all institutions involved ineducationdatacollection (e.g. NECTA, TSC andTIE). 33  (c) Third, an integrated EMISwill be designedand implementedacross the country. The system will enable first level automation and validation o f data inputs and processing at either school or district levels. 4. FinancialManagement, ProcurementAnd AccountingArrangements Issues: (a) Current financial and accounting arrangementsreflect the centralized and management regime for the secondary education system. Schools budgets are consolidated into the MoEC vote, and the ministrymakes decisions on ceilings, allocations and disbursements. Evencontrol and disbursement of school fees for the Government assisted schools is on the Government's (MoEC) IntegratedFinancialManagement System(IFMS), which uses regional Sub-Treasuries for establishments outside Dar es Salaam. (b) A significant proportion offunds made available by Government are retained and disbursedat MoEC headquarters, usually cater for payments ofpersonnel emoluments and utilities. Funds for teaching materials (laboratories materials and reference materials) and cateringcosts are disbursedto schools by warrant o f funds through regional Sub-Treasuries. Accounting for these expenditures is processedby the IFMIS. (c) While there &re realstrengths inthe use ofthe centralised (Regional Sub-Treasury based) systems, it has also major deficiencies, which include the following: 0 Subventions disbursedto public schools are made irrespective o f approved budget and allocations. 0 There are no objective criteria for allocation of funds among the public secondary schools. Neitherdo the allocations reflect imbalances by location, income and gender 0 While disbursementsare expected to be made on quarterly basis, this is usually not the case. 0 Schools' monthly reports are not producedon time. Inaddition, some of the reports have errors and as a result there are delays inpreparingthe monthly flash reports at the ministry. 0 The warrant of funds dispatchedto headsof schools/ regional SubTreasuries are not received on time due to inadequate communication facilities and as a result, there are delays inthe implementationof plannedactivities. 0 Most secondary schools do not have staff with adequate skills and capacity inthe areas o f both accounting and procurement personnel. 0 The revenue section at the MoEC which deals with monthly reports collated from schools does not have enough facilities and capacity to process information received. 34  0 Auditingo f secondary schools expenditure concentratesmore onthe review of document available at regional SubTreasuries and at the ministry and very little verification of activities is carried out at schools. (d) Other issues with the current financial and accounting arrangements include, that: a Financingmechanisms are not responsive to priorities and imbalances. Currently, over 60 percent o f budgetary allocations go to personnel enrolments and as a result o fthis, the key quality related inputs such as textbooks, chemicals, new technologies, disadvantage groups etc, are poorly funded. In addition, government allocations to public secondary schools are made irrespective o f locations, income and gender consideration. This method is insensitive to the equity principle and tends to exacerbatethe levels o f inequalities. 0 Inefficiency of relyingon regional Sub-Treasury for channelling and controlling funds to schools. Remoteness of schools from regional Sub Treasuries and delay inreceivingthe warrant of funds and guidelines on funds disbursedby the Treasury, tend to negatively affect the effectiveness of Sub Treasuries. 0 Poor collection, control and management of the school fees since there are disincentives and no effective guidelines on enforcement o f fees collection. Schoolmanagement has no authority to spendthe money unless the amounts collectedare first transferred to regional Sub-Treasuries and this tends to demoralise the school management givendelays inaccessingthe funds. Also, there are inadequaciesinthe accountability of school fees. a There is inadequatecapacity to process, manage and account for government funds at school level. This is primary due to inadequatenumber of qualified staff and modern tools for information processing. a MoEC has inadequate capacity to oversee proper utilization of funds at schools level. For example, there are no qualified accountants at the ministryand school levels. In addition, internal audit department has no capacity to visit all government schools inthe country. Stratew: (a) SEDP implementationwill operate within the Medium Term Plan and Expenditure Framework (MTEF) approach, and IntegratedFinancialManagement System (IFMS). (b) World Bank and other development partners will deposit funds into an established USD holding account at the Bank o f Tanzania and thereafter channel their financing for specified SEDP activities through the Consolidated Fund. Grants will be accounted for as part o f MoEC voted expenditure. Funds will be releasedfrom these accounts to meet SEDP quarterly expenditure. (c) Inthe initialtwo years ofthe SEDP, schools will continue to useregional Sub-Treasuries inprocessingandeffectingpayments. However, to address challenges ofusingregional Sub- 35  Treasuries, and in line with decentralisation o f managementto schools and local communities, measures will be taken under the programme to shift control of funds to the schools. (d) Inthe mediumto longterm, SEDP grants will be channelled directly to school's bank accounts. To this end, the following measures will be put inplace to enable devolvement of financial management and accountability to Schools Management Boards: 0 Promulgation of a new policy, legal and regulatory framework to enable schools to receive and account effectively for all funds; 0 Strengthening, legislation and regulation to empower School Boards in school financial management. This will legally enable the Boards to prepare school's balance sheets and budgets, monitoringand oversight o fschool's activities. 0 Introduction of a simple accounting system to be applied at school level, including the development o f procedures and accounting manual. 0 Training accounting personnel, heads of schools and members of school boards on responsibilities and system for managing and accountability for all funds. (e) SEDP will provide support to private schools inthree modalities: (i)scholarship to the needy; (ii)enablingparticipation inmanagementdevelopment activities; and (iii) effective more schools. To determinewhich schools qualify for financial support under such fiscal measures. The following indicative criteria will be used: 0 The schools must not restrict admission of students on the basis of unconstitutional, illegal, cultural or religious basis. In other words, the school must be open to all Tanzania communities. e The school must be subject to financial scrutiny from the ministry. 0 The government and community mustbe represented inthe school boards. 5. ProcurementCapacityand Arrangements (a) Current procurement practice of secondary education shows that procurement of fixed assets and vehicles for secondary schools is centralized at the Ministryof Educationand Culture HQ,with secondaryschools involved inprocurement of items relatedto recurrent academicneeds and services. (b) Currently, the Director o fAdministration and Personnel (DAP) is responsible for all programs of fixed assets and vehicles. The DAP overseesthe MinistryProcurement Unit (MPU) inhisdepartment. The headofMPU, who is the ministry'sSenior SuppliesOfficer (SSO I), is responsible for carrying out day-to-day tasks. The SSO Iis assistedby SSO I1to carry out day to day procurement at the ministryinaccordancewith Art 19 o f the Public Procurement Act (PPA), 2001. 36  (c) Procurementunder SEDP will be decentralizedat the Secondary Schoolsand will be conductedin accordancewith the PPA. Detailedprocurementprocedures are outlined inthe ProcurementManual (PM), currently under preparation. The PM is beingpreparedinaccordance with the PPA and the Governmentwill disseminateit before effectiveness. Eachsecondary school will be requiredto constitutea SchoolProcurementCommittee (SPC) responsible for approving contracts at a limited threshold. The SchoolBoard (SB) will be requiredto approve the contracts of value above SPC thresholds. The functions ofthe MoEC with regardto procurementofwork shall be confinedto quality assurance, inspectionandtechnical support in terms ofpreparingstandard drawings documents, Billof Quantities (BOQ), organize developmentoftechnical specifications, bid documents etc. All private schools supportedunder SEDP arrangement will be requiredto comply with Governmentprocurementprocedures. In summary, procurementofworks, goods, textbooks, and services is categorizedas follows: Works (construction of class rooms, toilets, teachers' houses, libraries and laboratory) 0 Consultancyservices 0 Text books usingthe MOEC approvedlist of titles. 0 Goods (office andteachingconsumables, laboratoryequipment and supplies, and library materials) (d) A general procurementcapacity assessment has revealedlack of procurementcapacity at both levels(MOEC HQ and Secondary Schools) andthe needfor strengtheningsuch capacity. The areas ofweakness hasbeenidentified as lack ofskilled personnel, filing andrecordkeeping systems, and lack of skills to prepare procurementplans. Following is a summary o f some o fthe issues that negativelyaffect effective procurementat the secondary schools and at MOEC HQ. 0 Schools do not prepare annualprocurementplan at the beginning of the year based on approvedbudgetallocations. This could be causedby the fact that quarterly allocations made to schools do not always meet the schoolneeds. Inaddition, there are no projected requirementsof items for procurementat all levels. 0 Lack of capacity and skilled personnelhas been a major impediment to conducting sound procurementat all levels. 0 There is no automatedinformation systeminplace for the supply chain managementof productslgoodsat the ministry. Underthe program a detailedprocurementneeds assessment will be undertakenand a comprehensivecapacity building programwill be developedand implemented. Eachyear the MOF will engage a consultantto carry out Ex-post procurementreview and action would be sharedwith the Bank. 37  Y- 0 Tm 00 m  n .-0 Y e> m 0  ui 3 c v) U aJ c 5 v) 5 a, 0 d  m A I  Annex I:Summary Environmentaland SocialManagementPlan 1. Education is one ofthe priority sectors specifiedinthe Tanzania DevelopmentVision 2025 and the PRS. Withinthis context, the government is deepeninga comprehensiveEducation Sector DevelopmentProgram(ESDP). The ESDPhas definedthe following general priorities: 0 Priority inspendingon basic education; 0 Improvementinequitable access to quality secondary education; 0 Demand-drivenand market-orientedpost-secondaryand higher education; and 0 Institutional developmentto improve sector management and strengthen implementationcapacity. 2. As part ofthe ESDP, the GovernmentofTanzaniahas preparedthe Secondary Education DevelopmentProgram(SEDP). The Objective ofthe SEDP is to promote economic and social developmentand reduce povertythrough humanresourcedevelopmentat the secondary level, especially for disadvantagedgroups. The specific objectives ofthe SEDP are: 0 To increasethe proportion ofthe relevant age group completing secondary education, especiallyunderservedgroups. 0 To improve learningoutcomes of secondary students, especially at the lower level. 0 To enable the public, including local authoritiesand private sectors to manage secondary educationeffectively. 3. To achievethese objectives, the program is structured into specifically linkedsub- component activities per specific objectives as follows: 0 Objective 1: Increasethe proportionof the relevantage group completing secondary education, especiallyunderservedgroups. (indicator: achievementof targeted enrollment completion ratios by age group for lower and upper secondary). 0 Objective2: Improvelearningoutcomes of students, especiallyat lower secondary level. (indicator: raisededucationalattainment of students as shownby continuous assessmentsand performanceon public examinations). 0 Objective3: Enablethe public administrationto manage secondary educationeffectively. (indicators: authority devolved and exercisedwell at Regional, Local GovernmentAuthorities (LGAs) and school levels; better centralpolicy developmentandstandards settingfor cost-effective delivery of quality of secondary education, and improved oversight). 4. Under Component 1(Objective l), financing will be made available for the construction ofnew secondary schools andthe expansionand rehabilitation of existing secondary schools, inter alia. 42  5. However, since the exact locations for these new schools were not identified at the time the SEDP was beingprepared, the Laws ofthe UnitedRepublic inTanzaniaandOperational Policy 4.01 ofthe Bankrequiresthe Governmentof Tanzaniato prepare an Environment and Social ManagementFramework(ESMF) which is to establishamechanismto determine and assess future potentialenvironmental and social impactsof all programactivities to be financed under SEDP. This will helpto set out mitigation, monitoringandinstitutional measuresto be taken during implementationand operationofthe programactivities to eliminate adverse environmentaland social impacts, offset them, or reduce themto acceptable levels. 6. The Governmentwill disclosethis document incountry as a separate and stand alone documentso that it is accessible by the generalpublic, local communities, potential project- affectedgroups, localNGO's and all other stakeholders as well as at the World Bank Infoshop. 7. The key highlights inthis ESMF are as follows; 0 Detailed andcomprehensiveenvironmentaland socialbaselinedata, which will provide the environmentaland socialmanagementprocess with key baseline information when identifying adverse impacts.The information contains data on Tanzania's bio-physical environmentalfeatures such as its ecosystems, geology, hydrology interms of ground and surface water resources, major and sensitive wetlands, flora and fauna. On social baselines the report discusses the main features of Tanzania's demographics,public healthfeatures and poverty. 8. Table 5.1 presentsa summary ofthe requirements ofthe World Bank OP 4.01 EnvironmentalAssessment and OD 4.12 Involuntary Resettlement. 0 The administrative, policy, legislative andregulatory framework inTanzaniafor Educationinparticular andfor environmentalmanagement ingeneral is presentedinchapter 6.0. 0 Generic potential adverse environmentaland socialconcernsand impactsfrom anticipatedprogramactivities with root and immediatecauses is presentedin detail in Section7.0 0 The rolesandresponsibilities of key institutions andplayers for the purposes of this ESMFare discussed inChapter 8.0 andthey are; 9. Implementationofthe SEDP will be coordinatedby the Ministry of Educationand Culture inaccordancewith the ESDP structure. THE NATIONALENVIRONMENTMANAGEMENTCOUNCIL(NEMC) 10. The NEMC is responsiblefor ensuringthat all developmentprojects andprograms in Tanzania comply with all relevant environmental laws. This ESMF recognizesthat the NEMC have a significant role to play inthe SEDP. This role would be to provide on the groundESMF performancereviewdaudits both for enforcement purposes, but more importantly to reinforce capacity for the ESMF implementation. at all levels. TheNEMC would also provide periodic monitoring to ensure no adverse cumulative impacts from the school constructionprogramat the national level andwill provide oversightandtechnical assistance to the Local Government Authorities when required. 43  THE REGIONS 11. The main role ofthe Regions inthis ESMFwould be limitedto coordinatingthe planning activities of their LocalGovernment Authorities by consolidatingthe District Secondary School Development Plans (DSSDP's) into Regionalones (RSSDP) before they are submittedto the SEDP for approvalfor funding. THE DISTRICTS 12. The LocalGovernment Authorities would berequiredto reviewand clear the environmentaland social managementprocess, requiredo f the School Management Boards (SMB), prior to fundingthe construction program. 13. The LocalGovernment Authorities would beresponsible for carrying out the following: (i)ensuringthe Districts school construction programcomply with Tanzania's environmental laws and requirements, and the World Bank's triggered Safeguard Policies, (ii) receiving, reviewing and commenting, requiringrevisions where necessary and clearing of School Boards completed environmentaland social screening forms and checklists, (iii) carrying out aregular and intrusivemonitoringregime duringthe planning,implementation, construction, operations and maintenance stages o fthe schools, (iv) for preparing periodic monitoring reports on the school constructionprogram at all stages of operations andto sendthese reports on a regular basis to the MOEC as part o f other SEDP reports, (v) to comply with (consistent with national laws) the directives of the government, (vi) to issue directives to the School Boards consistent with national laws on environmentalrequirements. THE SCHOOLBOARDS 14. The School Boards will be responsible (i)for complying with all national laws regarding the environment andwith all social/poverty guidelines, parameters andtargets set by the program, and of all triggered World Bank Safeguards policies, (ii) to implement their school construction program according tokonsistent with the provisions of this ESMF, implementing,inter alia, all appropriate mitigationmeasures identifiedintheir completed environmental and social screening form andchecklist into the construction planning cycle, technical and engineeringdesigns and drawings, and civil works contracts, etc., (iii) ensure that these mitigation measures are to complied with duringconstructionand post construction (i.e. operations) stages of their activities, by self monitoring o f their activities andby periodically reporting to the Local Government Authorities, (iv) to maintain a budget to implement the appropriate maintenance procedures and practices for the operationo f their school, to ensure relevant mitigation measures identifiedinthe environmental and social screening form and checklist are implemented and sustained inthe sub school construction program, and (v) to comply with any directives that may be issued from time to time from the government. 15. The Environmentaland Social Management Processcontains the followingkey steps: Step 1: School Boards (SB's) will screen their own development activities to identify adverse environmental and social impacts using the screening form in Annex 2 and the checklist in Annex 3. 44  Step2: Then the SB's will introduce into the sub projectdesignthe requiredmeasuresto mitigate impacts identifiedfrom use of the screening form and checklist before submission of the sub project design to their respective Local Government Authorities for reviewandsubsequentenvironmental and social clearance. Step 3: The Local Government Authorities will review and clear the sub projects by ensuring sub project designs have identified environmental and social impacts, mitigatedthese impacts and have monitoringplans and institutionalmeasures to be takenduringimplementationandoperation. ESMFimplementationwill beintegratedintoSEDPactivities to befinancedthrough DevelopmentGrantsat the schoolleveland monitoring,supervisionand capacity building at regionaland centrallevels. 45  Annex J: Economic and FinancialAnalyses 1. Tanzania's economy today is largely market oriented and has inplace many elements requiredfor private sector-led growth. However, it does not have an adequately qualified and trained work force essentialfor rapid economic growth, and effective diversification o f the production and export bases. The combinationof intermittenteconomic growth, fiscal constraints, and inadequatesector policies and programs constrained the performance of the education sector in the late 1980s and early 1990s. The reforms supported inprimary education by PEDPhave liftedthe gross enrollmentrate in primary schools, which had stagnatedat around 77 percent during 1995-2000,to 100percent in2002. The secondary school gross enrollment rate, however, is still the lowest inAfrica atjust 7 percent ofthe relevant age group. Rationalefor public intervention 2. There is a strong case to bemade for public intervention insecondary education in Tanzania on both market failure as well as redistributiveor equity grounds. The first section below outlines some ofthe private as well as social benefits of education, ingeneral, and secondary education, inparticular. Giventhe existence o f social benefits or externalities to secondary education, there is a role for public intervention inorder to bringthe supply o f secondary education closer to the socially optimal amount. The second section below discusses the current inequities insecondary education enrollment (coupled with clear private returns to a secondary education), implyinga role for public interventionto correct these inequities. Private and social benefits of education 3. Investment ineducation is beneficial in a multiplicityo f ways both for individuals and society as a whole. Educationincreases individual productivity, as measured by the well- documented link between the level o f education and personal earnings. Onthe national level, education plays an important role infostering economic growth. Today's rapidly growing economies dependmore on the creation, acquisition, distribution, and use o f knowledge, and one of the pillars o fthe knowledge-based economy is an educated and skilled populace that can create and use knowledge. Inaddition, there is growing evidence that perhaps half(ifnot more) of aggregate economic growth is drivenby increasesinfactor productivity rather than by factor accumulation ineither capital or labor. 4. Secondary education plays a particularly important role inthis regard. Inan increasingly globalizedeconomy, developing countries may be able to attain increases infactor productivity through technology transfer from the global "leaders". Such technology transfer can happen through trade, foreign direct investment, and through learning across international supplier- producer chains. However, much o fthe technology developed inthe leader countries is very skill intensiveandtherefore "inappropriate" for developingcountries without a minimumthreshold level of skills; Many studies have concludedthat a large pool of workers with secondary education is indispensable to attracting imports of technologically-advanced goods and foreign direct investment (Borensztein, De Gregorio and Lee 1998; Caselli and Coleman 2001; Xu 2000). For example, one findingis that the bulk o f the difference incomputer penetrationbetween Latin America and the East Asian "tigers", which have much larger computer coverage, can be explained by differences inthe degree o ftrade with the OECD, and inthe fraction o f the workforce with secondary school (De Ferranti et al. 2003). 46  5. Ofcourse, the benefits of educationspan a wide rangeof areas beyondeconomic productivity. Indeed, for both menand women, one important private benefit of increased education is its positive impact on personalhealth. Inboth developedand developingcountries, a strong correlation exists betweenschooling and goodhealth, whether measured usingmortality rates, morbidity rates, or self-reportedhealthstatus (Case 2001). Indeed, educationappears to have an effect on healthindependentof income, race, or social background(OECD 2001). In particular, for boys andgirls, educationhas beenprovento provide protection against HIV infection (World Bank 1999). A basic educationhas a generalpreventiveimpact: it can inform childrenandyouth, equippingthemto make decisionsconcerningtheir own lives and bringing about long-term behavioralchange (World Bank 2002). Secondary educationplays an important role here again: a study inZambia found a markeddecline inHIV prevalence rates in 15-19-year- old boys and girls with a secondary to higher level education, but an increaseamongthose with lower educationallevels (Kelly 2000). 6. Femaleeducation, inparticular, results in a wide array of private as well as social benefits. Thus, investments infemale educationhave a positive impact on gender equality, women's empowerment, andtheir well-being (Malhotra et al. 2003). Furthermore,the evidence indicatesthat relatively high levels of education-secondary or above -are consistently positively relatedto most aspects of gender equality, pointingto a"threshold" effect of secondary schoolingwhereby women themselves are muchmore likely to be the agents ofchange. In addition, the positive effect offemale educationon economic output extendsto the next generation: higher educationlevels of mothersenhance children's intellectual achievement, partly since better-educatedmothers are better able to guide their children. Thus, inIndia, childrenof more literate mothersstudy nearlytwo hoursmore a day than children of illiterate mothers in similar households(World Bank 2001). Better-educatedwomen are also more likely, compared with their peers, to delay marriageand childbearingand have fewer childrenand healthier babies. According to one estimate, a 10 percentagepoint increase infemale primary enrollment lowers the infant mortality rateby 4.1 deaths per 1,000 live births, anda similar rise infemale secondary enrollment is associated with another 5.6 fewer deaths per 1,000 live births(World Bank 2001). Inaddition, recent Demographic andHealth Surveys in49 developingcountries(including Tanzania) show that the mortality rate of childrenunder five is highest inhouseholdswhere mothers have no schooling, and lowestwhere mothershave some secondary schoolingor higher (see Figure 1). 47  Figure 1: Under-5 mortality, by mother`s education level 200 180 160 cn z 140 -.-g120 s 0 100 80 5 8 60 40 20 0 ' East Asia and Pacific Latin America & Middle East & North SouthAsia Sub-Saharan Africa Tanzania Caribbean Africa No education .Primary education USecondaryeducation or higherI Source: Author's calculationsbasedon 49 recentDemographicandHealthSurveys. Note: Regionalaverages are population-weighted. Inequities in secondary education enrollment 7. The value of secondary educationto the individual Tanzanian is clearly apparent from an analysis ofthe 2000/2001IntegratedLabor Force Survey. Ina sample of over 3,000 wage earners betweenthe ages of 18to 65 years, over halfhadcompletedprimary education, a quarter completedlower secondary (Form IV), and a further 5 percent completedupper secondary (Form VI); 33 percent were female; and23 percentresidedinrural areas. The average hourly wage for these wage earners amountedto approximately400 TSh, but was roughly 200 TSh for those with primary educationas comparedto over 700 TSh for those with secondary education, with sizeablerural-urbanand gender disparities (see Table 1). The size ofthe earnings differential betweenthose with primary andthose with secondary education, combinedwith their shares amongst wage earners describedabove, further highlight the scarcities inthe supply of those with seconPary educationthat the SEDP aims to counter. 48  (FormIV) (790) (470) (320) (138) (652) Incompleteupper secondary 560 924 195 788 445 (FormV) (6) (31 (3) (4) Complete upper secondary 743 759 698 (21375 805 (FormVI) (137) (99) (3 8) (20) (117) University 1,405 1,502 1,021 418 1,414 (114) (91) (23) (1) (113) Overall 404 454 302 209 462 , (3,017) ,(2,022) , (995) , (689) , (2,328) , employment(1.e. 19observations). This was necessary since hoursofwork are reportedfor the maineconomic activityonly whilewages are reportedonly as atotal. 8. Table 2 reportsonthe returns to ayear of schoolingcontrolling for individual characteristics such as experience(proxied by age), geographic location, and gender3. These private returns represent, inpercentage terms, the present discountedvalue of the average stream of earnings for an additional year of schooling. Thus, the returnsto an additional year of schoolingamount to 16 percent; urbanresidence is associated with a 47 percent increase inwages relative to residence inruralareas; and females earn 16percent less than males with the same educationandcharacteristics. Table 3 compares the returns to educationby level of education completed, again controlling for experience, geographic location, and gender. Here the private returns represent, inpercentage terms, the present discountedvalue of the average streamof earnings ofthose with the level of educationunder analysis minusthe average streamof earnings for the precedinglevel. Thus, a wage earner with acompleteprimary educationearns 75 percent more than anuneducatedwage earner; an employeewith complete lower secondary makes 163 percentmore; and one with a completeupper secondary educationearns 181percentmorethan a salariedworker with no education. Table 3 further reportsmuchthe same findings as Table 2 on the effects ofgeographic location and gender onreturns to education. Reportedreturnsare basedonMincerianregressionsand as such depictprivate returnsthat do nottake into accountthe direct costs o feducation. 49  Variable Coefficient Standard t-statistic error Years of education 0.160 0.0047 33.95 Age 0.153 0.0085 18.01 Age squared -0.002 0.0001 -13.34 Urban 0.468 0.0363 12.9; Female -0.162 0.0327 -4.92 Constant 0.290 ******* 0.1448 2.92 Number of observations 3,017 Adjusted R-squared 0.542 Table 3: Extendedearnings function, wage earners aged 18-65 years (dependent variable = In hourlywages) Standard t-statistic error Education levelattained: Incomplete primary 0.273 0.0876 3.12 Complete primary 0.747 0.0716 10.43 Incomplete lower secondary 1.034*** 0.1134 9.12 Complete lower secondary 1.630* 0.0758 21.49 Incomplete upper secondary 1.785* 0.3334 5.35 Complete upper secondary 1.810* 0.0981 18.45 University 2.286 0.1038 22.02 Age 0.144 0.0085 16.94 Age squared -0.001 0.0001 -12.28 Urban 0.481 0.0359 13.41 Female -0.189 0.0326 -5.81 Constant 0.744****** 0.1553 4.79 Number of observations 3,017 Adjusted R-squared 0.553 50  9. Giventhe returnsto education outlined above, it is importantto understand the distribution of education inTanzania by household welfare, gender, and geographic location, in order to ascertain who is garneringthese returns. To this end, data from the 2000/2001 HouseholdBudget Survey were analyzed for three age groups, roughly corresponding to primary, lower secondary, and upper secondary schooling, i.e. 7-13, 14-18, and 18-21year-olds, respectively. Table 4 reports the findings for primary schooling: enrollment rates are lower in rural than inurban areas, with an overall difference of approximately 15 percentagepoints; the gender disparitybroadly favors girls inthe poorer quintiles,and boys inthe upper quintiles, and is therefore probably related to male overage persistence in schooling. Finally, across the board, enrollment rates in the richer quintiles are higher than in the poorer quintiles,resultinginan overall rate for the richest quintile inMainlandTanzania that is 1.5 times the rate for the poorest quintile, for example. Table 4: Enrolment rate of 7-13 year-olds in primary education(percentage) Urban areas Ruralareas Mainland Tanzania Quintile Male Female Total Male Female Total Male Female Total Poorest 58.4 58.1 58.3 46.3 52.8 49.5 47.3 53.1 50.2 2 60.3 67.1 64.0 57.7 58.4 58.1 58.0 59.7 58.8 3 71.3 80.6 76.3 54.2 62.0 58.0 57.3 65.9 61.5 4 80.3 73.6 76.7 61.2 70.0 65.6 67.0 71.2 69.1 Richest 79.5 73.3 76.4 76.7 66.9 71.9 78.1 70.1 74.2 Total 70.8 71.5 71.1 53.9 58.5 56.2 56.8 60.8 58.8 10. The above disparities inenrollment inprimary education by geographic location, gender, andhousehold welfare are arguably familiar from similar analyses inother developing countries. Tables 5 and 6 present enrollment rates inlower and upper secondary schooling, respectively, again by geographic location, gender, and household welfare. Again, male overage persistence in schooling seems to underlie the gender disparity broadly favoring females. However, the geographic and householdwelfare disparities are far more stark at the secondary than at the primary level o f education. For example, inlower secondary schooling, the total urban enrollment is on the order of 7 times the enrollment rate inrural areas; and for Mainland Tanzania, the enrollment rate for the richest quintile is again on the order o f 7 times the enrollment rate for the poorest quintile. Of course, the enrollment rate of 17 percent for the richest quintileremains remarkably low. These disparities are yet more stark for upper secondary education: the total urban enrollment is approximately 12times the total rural enrollment rate (indeed, the rural enrollment rate is so low as to be almost negligible,renderingupper secondary education accessibleonly to the urbanpopulation); and for Mainland Tanzania, an 18-21 year-old belongingto the richest quintile is roughly 16times more likelyto be enrolled inupper secondary school than a cohort member from the poorest quintile. 51  Table 5: Enrollmentrate of 14-18 year-olds in Forms I-IV, by quintile(percentage) Urban areas Rural areas Mainland Tanzania Quintile Male Female Total Male Female Total Male Female Total Poorest 5.9 9.7 7.7 0.7 2.5 1.7 1.3 3.1 2.3 2 10.4 14.5 12.5 1.5 1.8 1.6 2.8 4.0 3.4 3 17.0 9.6 13.0 3.3 4.1 3.7 6.5 5.5 6.0 4 18.4 18.9 18.6 3.1 4.7 4.0 9.2 10.4 9.9 Richest 22.4 28.3 26.2 2.6 2.3 2.4 14.0 18.0 16.5 Total 14.8 17.3 16.2 1.7 2.8 2.3 4.4 6.2 5.3 Urban areas Ruralareas MainlandTanzania Quintile Male Female Total Male Female Total Male Female Total Poorest 0.1 1.3 0.7 0.0 0.0 0.0 0.0 0.1 0.1 2 0.8 0.4 0.6 0.1 0.0 0.0 0.2 0.1 0.1 3 3.4 0.2 1.5 0.5 0.5 0.5 1.3 0.4 0.7 4 1.3 1.5 1.4 0.0 0.0 0.0 0.5 0.5 0.5 Richest 2.5 1.6 1.9 0.0 0.0 0.0 1.6 0.9 1.1 Total 1.7 1.1 1.3 0.1 0.1 0.1 0.5 0.3 0.4 11. The above-mentioneddisparities insecondary enrollment rates raisethe questionof affordability of secondary education. Table 7 reports on educationandmedical expenditures (combined) basedon data from the 2000/01 HouseholdBudget Survey, showing an increase in per capitamonthly amountsby consumptionexpenditurequintile, with the richest quintile spendingaround 5 times the amount spent by the poorest quintile. This translates into aratio of educationand medical expenditures to total expendituresof roughly 4-5 percentfor all quintiles. However, inorder to assess the affordability of these expenditures, a more useful measure is the ratio to discretionary or non-food per capitaexpenditures. This is greatest for the poorest quintile at 22 percentand implies a greater burdenfor the poorerhouseholds. For illustrative purposes, the last column inTable 7 demonstrates the burdenofthe government day schoolannualfee of TSh 40,000 per student, by quintile. This fee not only constitutesa far greater burdenon poorer households(for the poorest, on the order of 3 times the burdenfor the richest) but is arguably unaffordableacross the board. These findings highlight the needfor alleviatingthe private expendituresofhouseholdson secondary educationby reducing schoolfees as well as other direct costs of education(see below). 52  Quintile Mean per capita monthly Ratio to total Ratio to non-food Ratio of TSh 40,000 education and medical expenditures expenditures secondary fee to non-food expenditures (TSh) (percentage) (percentage) expenditures (percentage) Poorest 184 5.0 21.8 104.7 2 254 4.1 18.6 73.5 3 370 4.1 16.4 53.9 4 509 3.9 17.7 49.4 Richest 1085 4.2 13.2 32.6 Total 455 4.3 17.7 64.7 Financial Sustainability 12. Primary Education. Inorder to discuss the future expansion and quality improvement for secondary education inTanzania and the associatedcosts, projections for primary education are necessary as this level provides the entrants into the secondary level and its financing must be guaranteed first and foremost. The reforms of primary education initiatedin2000/2001 (including implementationof PEDP) have resulted inan increase inthe primary GER from 78 percent in2000 to over 100percent in2004. Table 8 shows enrollment and GERprojections for primary schooling, basedon current trends in intake, repetition, and drop-out rates, as well as an annual growth rate of 2.5 percent for 7-13 year-olds. The table demonstratesthe "wave" o f enrolments currently making its way through the primary education system as a result of the afore-mentioned reforms, leading to a peak intotal enrollments and GER in2007. Although all children o f primary school age will be enrolled, enrollments fall after 2007 (until2013, when they beginto grow again) since the wave createdby entry into primary school of overage children duringthe periodofrapid expansion subsides, and almost all childrenenrolling inStandard Iare at the appropriate age. 13. A reduction inthe pupil-teacher ratio from the current 57:l to 45:l by 2010 is envisioned. This change is more thanoffset bythe trends inprimary enrollments so that the requirednumber o f new primary teachers (who complete one-year Certificate A courses incolleges) falls from over 21,000 in2004 to less than 2,000 in2010 (assuming a 3 percent teacher attrition rate4), thereby releasing capacity inthe college system for teacher training for secondary education. Finally, Table 8 indicates the projected primary education development expenditures' for classroom construction, basedon a cost o f 5 TSh millionsper classroom, o f which 70 percent is publicly financed andthe remainder by communities. These expenditures are substantial until 2006, after which they fall rapidly as enrollments drop. The 2004 primary education development expenditures are fully fundedby the ongoing PEDP, which closes by 2005. The Poverty Reduction Support Credit planned for negotiation in2005 will address primary education development expenditures, amongst other issues. Teachingforce attrition rates are assumed to take into accountteacher morbidity and mortality (e.g. as a result o fHIV/AIDS), retirement, as well as pursuitof alternativeemployment. Note that development expenditures for primaryteacher training purposeswill be small in the foreseeable future as the expansion inprimaryeducationenrollment will peak shortly and then decline, leadingto a falling demand for new teachers. 53   14. SecondaryEducation Enrollments. By contrast to the primary enrollment rates, analysis o f the 2000/2001 Household Budget Survey indicates that only 5 percent o f 14-21 year-olds are enrolled insecondary education. The most recent administrative data point to a 2003 GER of 7 percent ingovernment schools and an additional 4 percent innon-government schools. The stated intention of the Government of Tanzania is to increase participation rates at the secondary level so as to narrow the gap between Tanzania's GER and the average GER for Sub-Saharan Africa (27 percent in20006). At the same time, enrollments at the secondary level cannot simply grow at the rate o f increase o f primary graduates. Instead, the flow into government secondary schools will continue to be regulated, as has beenthe practice inthe past, to reflect the number of places available7. Nonetheless, the rate of expansion of secondary enrollments will be rapid: government secondary school entrants into Form Iare to grow by 30 percent in 2004 and 20 percent annually over 2005-2008 (see Table 9). Entrants into non-government secondary schools are projected to increaseat a lower rate of 15 percent annually over 2004-2008, giventhe high costs to households o f non-government schools. 15. The above-described expansion ratesresult inan increase inthe Forms I-NGERfrom 11 percent in2004 to 15 percent in2006 and 23 percent in2009, more than doubling total enrollments inForms I-Nover the 2004-2009 period (enrollments rise from roughly 380,000 in 2004 to 896,000 in2009). The Government o f Tanzania is, however, interested inentertaining a highgrowth scenario inwhich total enrollments inForms I-IVreach 1.9 millionby 2010, i.e. almost double the 2010 total enrollments in the current projections. This highgrowth can be achieved ifthe necessary institutional arrangements are put inplace and the requiredresources mobilized. For purposes o fthis discussion, the implications o f this highgrowth scenario on teachers and development andrecurrent expenditures, for example, will be mentioned for purposes of comparison but are presentedinmore detail inAppendix 1. 16. Secondary Education Teachers. Secondaryschools are staffedby Diplomaand Degree- level teachers, the former currently trained for two years incolleges, the latter for four years largely inthe Faculty o f Educationof Dar es SalaamUniversity. As a result, the cost for training a Degree-level teacher averages 15-20times the cost for a Diplomateacher, and rapid expansion of secondary education implies a diminishingshare ofDegree holders inthe teaching cadre until 2010 (see Table 10). This is further necessarygiventhe higher attrition rate exhibitedby Degree- level teachers (estimated at 15 percent), who are more likely to find alternative employment than Diploma teachers (with an estimated 5 percent attrition rate). An increase inthe student-teacher ratio from the current 22:1to 30:1by 2007 is also envisioned inorder to keep the demand for new teachers within realistic levels'. The combination o f expanded secondary enrollments, teacher attrition, and increased student-teacherratios leads to the need for roughly 2,170 new Diploma and 760 new Degree-level teachers in2006, for example. 'constraintson Source: World BankEdStats (http://www.worldbank.org/education/edstats/) Enrollments innon-government secondary schools are notregulatedinthis manner. The main expansion inthe non-governmentalsector are likelyto be acombinationo faffordability and the fact that non-governmentschoolstend to be urbanor peri-urban, i.e. concentratedinareas ofhigher ropulation density. Under the high growth scenario, the student-teacher ratio would reachan upper limit o f35:l to fhrther reducethe necessaryrate of increaseindemand for newteachers. 55  I - - I I I  '8' n n e 8 e 8 e .4i 8 f i e .z E .P 8 .z e  17. These numbersare of such magnitude that existingteacher training programs need to be modified: Diploma training would bereorganized along the lines o f one year incollege followed by one year mentored school practice; and Degree-leveltraining would revert to three years, also possibly followed by one year mentored probation(Lewin and Osaki 2004). The projections on recurrent costs below, which include the costs of teacher training, assume the above restructuring of teacher training programs. Finally, a constraint on teacher supply may be the output of qualified Form VI leavers, particularly since teaching is rarely a first choice for the best qualified. The share of Form VI graduateswho would haveto opt for teacher training starts at roughly 13 percent in 2004, reaching ahigh of 27 percent in2008, so that recruitment o fteacher trainees is a key concerng. 18. SecondaryEducation Capital Investments and DevelopmentExpenditures. Assuming an average class size of 40 throughout inorder to facilitate the rapid expansion", Table 11 reports on the number ofnewclassroomsto bebuilt eachyear to absorb increasedsecondary enrollments. In2006, for example, roughly 2,000 new classrooms(1,360 government, 640 non-government) will be needed. These new classrooms would be built either as part o fexisting schools or innew schools. They are currently assumedto be evenly dividedbetweenthose inexisting schools (the most cost-effective way of creating new capacity) and those innew schools (the most effective way of improving access to excluded populations). With this division, government would needto build over 180new secondary schools over the period2004-2006 and close to 480 schools over 2004-2009. Significant numbers o f government secondary school classrooms would also be refurbished,andconstruction ofteacher housing will be necessary for schools inremote rural areas. 19. Communities are assumedto contribute a quarter o fthe cost o f buildingthe classrooms and schools inthe government sector. The resultingpublic portion of requiredconstruction expenditures is projected to reach 54 TSh billions in2006 and 87 TSh billions in2009 (all values are assumedto grow at a real rate of 5 percent annually). Additional capital requirements include development programs for new curricula, examinations, learningmaterials, inspection, and ICT, and are costed at 5.7 TSh billions in2006 and falling to 2.9 TSh billions in 200911. Finally, hostel construction inconjunction with teacher training institutions will be necessaryto accommodate the expansion inthe secondaryteaching force and is estimated at a cost of 3.1 TShbillions in 2006 and 1.4 TSh billions in2009. Thus, the public portion of development expenditures for secondary education amounts to roughly 42 TSh billions in2004, 74 TSh billions in2006, and 106 TSh billions in2009, and is assumedto require external financing (see Table 11). Note that under the high growth scenario, at peak demand for newteachers as many as 43 percent o f FormVI leaverswould needto enter teacher training, which seems unlikely giventhe alternative opportunitiesavailable to them. loUnder the high growth scenario, average class size is 45. I1Laboratories, specialpurposerooms, libraries,etc. are included inthe school costing. 58  - --1 - I - I as m" I 6 /f.- y 3 r . v )  J 20. Secondary Education Public Recurrent Expenditures. Table 12 demonstratesthe substantial growth in the secondary education recurrent budget necessary in order to achieve desiredexpansion and quality improvements, with annual growth rates over the period 2004-2015 averaging 23 percent. Teacher salaries remain the main component of the recurrent budget, exhibiting a secular increase in absolute value throughout the projection period. However, teacher salaries per student show a decline until2008, reflecting the efficiency gains from an increase in the student-teacherratio to a highof30:1by 2008. Although non-salary recurrent expenditures include some expenditure on educational materials and supplies, Table 12 includes projections for the costs ofa newsystemofcapitation grantspaidto schoolsthat is to ensureeducation quality improvementthrough provision of learningmaterials, curriculum development, and in-service support. These projections are basedon a 2004 capitation grant of 2,500 TSh per month per student for all students ingovernment schools and 1,250 TSh per month per student for 80 percent of students in non-government schools (growing at 5 percent annually inreal terms). The capitation grant is aimed at improvingthe quality o f education insecondary schools without the needfor schools to raise funds towards this endfrom their students, a current practice detrimental to the poorer students (e.g. the use of caution money or "fees for improving education", amounting to an annual 5,000 TSh and 10,000 TSh respectively insome schools). The capitation grant quickly captures a sizeable share o fthe secondary education recurrent budget, at 18 percent in 2006, for example. 21. Inadditionto the capitation grants, a20,000 TShfee subsidy is envisionedfor allstudents ingovernment schools, reducingthe current annual fee from 40,000 TShto 20,000 TShfor day schools, and from 70,000 TSh to 50,000 TSh for boardingschools. Further targeted bursaries o f 20,000 TSh annually to the poorest students (estimated at 15 percent o fthe government schools' secondary student population) will render their secondary education free. An additional allocation for needy girls (at 50 percent of the total allocation for the poorest) and a subsidy to mentally or physically disabled students at so-called disadvantaged schools (amounting to 1,250 TSh per student per monthand reaching 15 percent of government school students) are plannedfurther. The government schoolfee subsidy constitutes by far the largest o fthese items interms of share of the secondaryeducation recurrent budget, amountingto 13 percent in2006 and 15 percent in2009. 60  -I  22. Education Sector Financial Sustainability and SecondaryEducation Financing Gap. Table 13 presentsprojectedrecurrent expendituresfor all educationsub-sectors. For primary and secondary educationand teacher training, previously discussed expansions andlor quality improvementsare utilized to derive recurrent expenditure projections. Administrative and adult educationexpendituresare allowed to grow at projectedGDP growth rates. Tertiary education, on the other hand, grows below GDP growth rates (i.e. at only 4 percentannually at constant prices). This implies a drop intertiary education's share inthe educationrecurrent budgetfrom 17percent in2003104to 14percent in2005106 and 13 percentin2008109 (see Figure 2). Allocations to primary educationare at 63-65 percentofthe educationrecurrent budget throughout2003104-2008109. The share of secondary education, however, morethan doubles during this period(from 7 to 15 percent). Nonetheless, educationsector recurrent expenditures are arguably financially sustainable when measuredas a share of GDP or oftotal recurrent expenditures (see Table 13). While the share of GDP would have to increase from the baseline 3.6 percent in2003104, it would stabilize in2005106 at 4.1-4.3 percent for the next 10years. Similarly, the share of the educationsector intotal recurrent expenditureswould needto increase from the 2003104 level of 25.6 percentto 29.3 percent in2005106 and 30.6 percentby 2008109. Barringthese increases, there is a sizeable financing gap for secondary education(see Table 13 and Figure 3) consistingofthe resulting recurrent financing gap (calculated as the difference betweenprojectedneeds anda secondary educationbudgetgrowing merely at the GDP growth rate) and the requireddevelopment expenditures. This financing gap (which takes into account secondary educationteacher training recurrent and development expenditures) amounts to close years12. to 270 TSh billions (equivalentto closeto 243 millionU S dollars) over the next three fiscal l2Underthe highgrowthscenario, the secondary educationfinancing gap is on the order of 371 TSh billions(334 millionUSdollars) over the nextthree fiscal years. 62  m m d - - m - o m m - E: m W - m O d m N - - 0 E:  -0 5  Figure 2: EducationRecurrent Expenditures,by Sub-sector .Adult Education Secondary Teacher Training mPrimary Teacher Training OTertiary Education (excl. teacher training) 0Secondary Education W Primary Education mAdministration & General Education Fiscal Year Figure 3: Secondary EducationFinancingGap 400,000 350,000 300,000 -.-e250,000 +Recurrent 0 Financing Gap 200,000 c -8- Development 150,000 Expenditures Total Financing 100,000 Gap 50,000 0 Fiscal Year 65  Appendix1 High Growth Scenario 1, Under this scenario, government secondary school entrants into FormIgrow by 30,35, and40 percent in2004,2006, and 2009 respectively (see Table 14). Entrants into non-government secondary schools increase at a lower rate of 15 percentin 2004 and 20 percent annually over 2005-201 1. 2. These expansion rates result inan increase inthe Forms I-IVGER from 11percent in2004 to 17 percent in2006 and 37 percent in2009. Total enrollments inForms 1-IVrise from 380,000 in 2004 to 1.9 million in2010. 3. The student-teacherratio increasesfrom 24:1in2004 to 28:1in2006 and 34:1 in2009, reaching a higho f 35:1 in2010 (see Table 15). The combinationo f expanded secondary enrollments, teacher attrition, and increased student-teacherratios leads to the needfor roughly 3,300 new Diploma and 980 new Degree-level teachers in2006, for example. The share o f FormVI graduateswho would haveto opt for teacher training starts at roughly 13 percent in 2004 and reachesa high o f 44 percentin 2010. 4. Assumingan average class size of 45 throughout inorder to facilitate this rapid expansion, Table 16 reports on the number of new classrooms to be built eachyear to absorb increased secondary enrollments. In2006, for example, roughly 2,840 new classrooms (2,070 government, 770 non- government) will be needed. Assuming halfthese classrooms will bebuilt innew schools, this translates into 240 new government secondary schools over the period 2004-2006 and over 940 new schools during 2004-2009. The resultingpublic portion of requiredconstructionexpenditures is projected to reach 99 TShbillions in2006 and 327 TShbillions in2009. Overall, the public portion o fdevelopment expenditures for secondary education (which includes government schools additional school capital and costs for teacher training institutions) amounts to roughly 51 TSh billions in2004, 80 TSh billions in 2005, and 122 TSh billions in2006. 5. Annual growth rates o fthe secondary education recurrent budget over the period 2004-2015 average 32 percent (see Table 17). The main items inthe secondary education recurrent budget are teacher salaries (roughly stable at 30 percent of the budget), non-salary recurrent expenditures (25 percent in2006 anddeclining), government schools capitationgrants (roughly stable at one fifth ofthe budget), and government schools fee subsidies (13 percent in2006 and increasing). 6. Secondary education recurrent expenditures capture an increasing share oftotal education recurrent expenditures, starting at 7 percent in2003104, reaching 12percent in2005106, 19 percent in 2008109, and 44 percent in 2015116 (see Figure4). Inaddition, the education sector as a whole would capture an increasing share o f GDP (see Table 18): 3.6,4.1,4.6, and 5.9 percent o f GDP in2003104, 2005106, 2008109, and 2015116, respectively. Perhapsthe most stark demonstration of the required increase ingovernment commitment to education is the share of the education sector intotal recurrent expenditures, which would needto increase from the 2003104 level o f 25.6 percent to 29.7 percent in 2005106,33.4 percent in2008109, and 42.4 in2015116. Barringthese increases, the financing gap for secondary education (see Figure 5) amounts to close to 371 TSh billions (334 million US dollars) over the nextthree fiscal years. 66  I I I I I - c.ll I  $ 1 e -  I - 3 --I -.I ~ \ o m U w w m r -" m - -. m" W m N 3 m m h h d m d m .-0m II .-m &     Figure 4: EducationRecurrent Expenditures,by Sub-sector .Adult Education SecondaryTeacherTraining W PrimaryTeacherTraining =Tertiary Education(excl. teacher training) 0Secondary Education W Primary Education Administration & General Education Fiscal Year Figure 5: Secondary EducationFinancingGap 900,000 800,000 700,000 -2 u)600,000 C +RecurrentFinancing 500,000 400,000 +Gap Development v) Expenditures 300,000 Total FinancingGap 200,000 100,000 0 FiscalYear 73  References Borensztein,E., J. de Gregorio andJ. W. Lee. 1998. "How DoesForeign Direct Investment Affect EconomicGrowth?, Journal of International Economics 45( 1): 115-35. Case, Anne. 2001. "The Primacy of Education." ResearchProgram inDevelopmentStudies, PrincetonUniversity. Caselli, Francesco, and Andrew Coleman.2001. "Cross-Country Technology Diffusion: The Case of Computers." American EconomicReview,Papers and Proceedings9l(2): 328-35. D e Ferranti,David, Guillermo Perry, IndermitGill, Luis Guasch, William Maloney, Carolina Sanchez-Paramo, andNorbert Schady. 2003. Closing the Gap in Education and Technology,The World Bank,Washington, D.C. Kelly, M.J. 2000. TheEncounter betweenHIV/AIDS and Education. Harare, Zimbabwe: UNESCO, Sub-regional Office for Southern Africa. Lewin, Keith, andKalifunja Osaki. 2004. "SEDP Position Paper: Strategiesfor IncreasedOutput of Secondary Teachers." Ministryof Educationand Culture, UnitedRepublic of Tanzania. Malhotra, Anju, Rohini Pande, and CarenGrown. 2003. "Impact of investments in female educationon gender equality." Draft of August 27, 2003, International Center for Research on Women, Washington, DC. OECD. 2001. The Well-beingof Nations: TheRole of Human and Social Capital. Centre for EducationalResearchand Innovation,Paris, France. OECD and StatisticsCanada. 2000. Literacy in the Information Age: Final Report of the International Adult Literacy Survey. Paris, France. World Bank. 1999. Confronting AIDS: Public Priorities in a Global Epidemic. A World Bank Policy ResearchReport. New York: Oxford University Press. World Bank. 2001. EngenderingDevelopment: ThroughEquality in Rights, Resources, and Voice. New York: World Bank and Oxford University Press. World Bank. 2002. Education andHIV/AIDS: A Window of Hope. Washington, DC: World Bank. Xu, Bin.2000. "Multinational Enterprises,Technology Diffusion, and Host Country Productivity Growth." Journal of DevelopmentEconomics 62(2): 477-93. 74  Annex K Tanzania at a dance 10127103 Sub- POVERTYand SOCIAL Saharan LOW- Tanzania Africa income Developmentdlamond' 2002 Population, mid-year (millions) 35 2 688 2,495 Life expectancy GNI percapita (Atlasmethod, US$) 280 450 430 GNI (Atlasmethod, US$ billions) 9 7 306 1,072 Average annualgrowth, 1996-02 T Population(%) Laborforce (a) 2.4 2.4 1.9 2.6 2.5 2.3 GNI Gross per primary Most recentestimate (latest year available, 1996-02) capita nrollment Poverty(% of populationbelownationalpovertyline) 35 Uban population (% of total population) 35 33 30 Lifeexpectancyat birth(years) 47 46 59 I Infantmortality(per 1,000 live births) 65 105 81 Childmalnutlition(% of children under 5) 31 Access to improvedwater source Access to an improvedwater source (% of population) 51 58 76 Illiteracy(% of population age 15+) 22 37 37 Gross primaryenrollment (36 of school-age population) 65 66 95 -Tanzania Male 65 92 103 -- Low-incomeprom Female 65 60 67 KEY ECONOMICRATIOS and LONG-TERMTRENDS 1982 1992 2001 2002 Economlcratios. GDP (US$billions) 6.2 4.6 9.3 9.4 Gross domestic InvestmenffGDP 27 2 17.0 17.4 Eworts of goods and serviceslGDP 11.1 12.4 15.3 16.7 Trade Gross domestic SavingslGDP 13.4 -1.6 8.4 10.5 Gross nationalsavingdGDP 15.9 4 2 7.3 10.2 Current account baiancelGDP -6.7 -23.2 -9.5 -7.4 Interest paymentdGDP 0.9 1.3 1.3 0.5 Domestic Investment Total debtlGDP 99.9 145.1 79.6 56.4 savings Total debt servicelexports 23.6 42.4 31.2 8.6 Presentvalue of debtlGDP 43.9 19.1 Presentvalue of debtlexports 137.0 109.6 Indebtedness 1982-92 1992-02 2001 2002 2002-06 I (average annualgrowth) GDP .. 4.0 6.1 6.3 6.4 GDP percapita .. 1.3 3.3 4.2 4.1 -TanzaniaLow-incomeoroun Exports of goods and senn'ces 6.5 6.6 -2.7 1.o 4.9 STRUCTUREof the ECONOMY 1982 1992 2001 2002 IGrowthof (% of GDP) InvestmentandGDP(%) I Agriculture 48.5 48.0 44.6 44.4 Industry 14.3 16.2 16.0 16.3 Manufaduring 9.2 6.2 7.4 7.6 Services 37.2 35.8 39.2 39.3 Privateconsumption 73.4 60.0 79.9 77.0 Generalgovemment consumption 13.2 19.6 11.7 12.5 importsof goodsand services 20.4 39.4 23.9 23.6 L -GDI *GDP 1 1982-92 1992-02 2001 2002 Growthof exports and Imports(%) (averageannualgrowth) T Agriculture 3.9 3.6 5.4 5.0 40 Industry 1.7 5.3 6.9 9.3 Manufaduring 77.8 4.3 5.0 7.6 20 Services 6.2 3.7 5.5 6.2 0 -20 Privateconsumption 3.1 3.9 25.2 2.2 Generalgovemment consumption 4.2 1.9 -32.6 13.6 -40 Gross domesticinvestment .. 0.7 5.7 6.6 Importsof goodsand services 1.7 2.3 19.5 -3.3 Note: 2002 data are preliminary estimates, *The diamondsshowfour keyindicators in the country (in bold) comparedwith its income-groupaverage. If data are missing, the diamondwill be incomplete. 75  THE UNITED REPUBLIC OF TANZANIA MINISTRY OF FINANCE Telegram: "Treasury", Dar Es Salaam P.0.Box 91 1I. Telephone: 11117416, Fax: 110326, Telex: 41329 DAR ES SALAAM All official Communications should be addressed to The Permanent Secretary to the Treasury and Not individuals Inreply please quote: Ref. No. ...........TYCIBMOI12...1....A. . .................... '-' . . Sth April, 2004 nzania and Uganda, World Bank Country Office DAR ES SALAAM. Dear Ms. O'Connor, RE: TANZANIA'S SECONDARY EDUCATION SUB-SECTOR POLICIES, STRATEGIES AND DEVELOPMENT PROGRAMME 1 I am writing on behalf of the Government of the United Republic of Tanzania to request a credit of US $ 150 million from the International Development Association (IDA) in support of the Secondary Education Development Programme (SEDP). The proposed credit will be used to increase both the proportion of youth who complete secondary education and the quality of education provided. 2, The Government attaches high priority to strengthening human resource capacity as a means of reducing poverty and promoting economic growth through raising the education levels of the population. This letter highlights the main sector constraints and the Government strategies to address them, consistentwith the Poverty ReductionStrategy (PRS) objectives. Background and Sector Issues 3 A dynamic education sector is essential for producing a qualified and skilled Tanzania work force for acceleratedeconomic growth and poverty reduction. In this regard, education is key to raising productivity and improving living standards. Tanzania, in collaboration with development partners has managed to accelerate enrolments at the primary level, and is in the process of raisingquality through provision of adequate and appropriate teaching and learning materials and teacher improvement. Gross Enrolment Ratio has increasedfrom 77.6 percent in 2002 to 105.3 percent in 2003. However,the education system at the secondary level in Tanzania performs far below requirements of meeting development needs. Overall access is amongst the lowest in Africa South of the Sahara -only 10 percent Gross Enrolment Ratio at lower secondary and 2 percent at upper secondary. Children from the poorest 40 percent of households are thirteen times less likely to be enrolled in secondary school than are children from highest income quintile. Qualityof 1  student performance is also a matter of concern. Academic performance is low as measured by exit examinations at the end of lower secondary; almost two thirds of students achieve only the lowest pass mark in the examination; moreover,the performanceof girls is lower than boys and contributesto weak participationof girls in upper secondary and post secondary education. Secondary education occupies a strategic place for the future growth and development of our country for the following reasons: 4 First, the growth of the modern sector of the economy depends to a large extent on the supply of educated secondary graduates. At present only about 9 percent of the labour force has attended secondary education. Most of those in formal employment and the public sector will continue to be secondary school leavers, including teachers for basic education. Even people in the informal sector have better chance to prosper when they have secondary education that makes them more self-reliant and productive. 5. Second, secondary education is an essential foundation for the human resources required to build a competitive economy. In an era of science, technology and information science, secondary education develops and reinforces the capacity for continuous learning and updating to match requirementsof globalization. 6, Third, expansion of secondary education will increase the enrolment of children from poor families and thereby ultimately improve their productivity, incomes and living conditions. 7 Fourth, pressure for expansion of secondary intake is likely to mount quickly. The number of primary school leavers is projected to increase by 240% between 2005 and 2008 as a result of earlier expansion in primary education thus increasingthe pressureon expansion of secondary intake. The prospect of wider participation in secondary education will also encourage and help sustainthe recent acceleration in primary enrolments. 8 Fifth, secondary education has many positive externalities, such as improved health, reduced infant mortality and reduced fertility rates among girls, HIV and AIDS prevention and enhanced social participation. Quality secondary education for girls contributes directly to the empowerment of women, allowingthe economy to grow optimally. 9 Finally,the scope, quality and gender balance of tertiary and higher education depend on the graduates of secondary education. 2  Strategies for Education Reform I O . In 1995, the Government, through the Ministry of Education' and Culture (MOEC) issued an Education and Training Policy (ETP) that opened further participation of the non-government sector in the provision of education. Further more, ETP led to the development of a framework for the sector by designing the Education Sector DevelopmentProgramme (ESDP) in 1997. A series of master plans were prepared in specific sub-sectors, including primary, secondary, teacher and higher education. The master plans were technically linkedto each other to realizethe sectoral approach and the basis for developing sub-sector programme. The focus of the first phase of ESDP was to strengthen and improve performance of the primary education sub- sector. The Primary EducationDevelopmentProgramme (PEDP) launched in 2001 has increased primary enrolment and raised quality as reflected in a substantial increase in the pass rate in the primary school leaving examination. Now that the PEDP is well underway, the next priority is secondary education. 11.A comprehensive Secondary Education Development Programme (SEDP) was prepared in December 2003 and discussed by stakeholders. The SEDP provides a comprehensive analysis of the critical issues in the sector and sets targets and an overall Plan for improving the performance of the sub-sector. The overall objective of the SEDP is to increase the proportion of Tanzanian youths who complete secondary education at the lower and upper levels with requisite learning achievements. This goal recognizes that it is not enough to enroll more children in secondary schools, but to retain them and ensure that they learn properly. Specifically,the aim is: 12.First, that 50 percent of the school age group successfully completes lower secondary education by 2010 compared with 5-6 percent at present and 25 percent at the upper secondary level compared with less than 2 percent at present. In order to accomplish this goal there is need to increase access by expanding enrolments at lower secondary from 329,000 students in 2003 to 1,860,000 in 2010. At upper secondary level,total enrolments would increase from 26,000 in 2003 to 190, 000 by 2010. However, in view of the current growth of the economy, the Government will person in the short term, a medium growth scenario where enrolments at lower Secondary will expand from 329,000 students in 2003 to 1,028,889 in 2010. At upper Secondary enrolmentwill increase from 26,000 in 2003 to 86,799 by 2010. 13.Second, there is need to achieve better retention of students in the system to acquire requisitesecondary education. l.Q.Third, we need to ensure that the education received by students is of high quality and relevantto their daily lives and work prospects. 3  15,Fourth,the Governmentaims at achievingbetter management and delivery of secondary education services through devolution of authority to regions, local authorities, school boards and institutions. Secondary Education Development Programme (SEDP): 16.SEDP has three main strategic elements (i) increased access with equity; (ii) quality; and (iii) management reforms. 17.Access with Equity-The strategyto increaseaccess and equity involves five sub-programmes; 18,teachers. First, reducethe prevailing recurrentcost per student by making better use of This means: (a) Reducingthe number of subjects students take at the lower level; (b) Increasingthe averageteacher workload per week; and (c) Adhering to strict norms in teacher allocation to schools. The target is to lower teacher-pupil ratiofrom 1:22to of 1:30 in all schools by 2009. Second, introduce development grant to accelerate the construction of needed schools, classrooms, teachers houses and other a school infrastructure. Financial incentives will be provided for the establishment and expansion of community secondary schools in underserved areas. Communities will be expected to contribute labour for construction, while the Government will finance procurement of the necessary building materials, furniture, equipment and technical skills. Third, expand teacher supply to meet the needs of enrolment expansion. In this context it is intended to replace the current training programme with one that involves a shorter period of initialtraining followed by in-school mentoring and subsequent professional development. Thus, teaching qualificationsat diploma level will be obtained through a one-year residential training followed by one year mentored supervision in the classroom. Efforts will also be made to increase the pool of qualified Form 6 graduates for entry into teacher training. Steps will be taken to ensure recruitment of the newly trained teachers into the teaching profession and their retention. The Government will continue to improve the living conditions of teachers in Government Schools as an incentivefor retention. Fourth, secondary schooling will be made affordable to those with lower levels of household incomes, and socially and culturally marginalized groups. The direct costs borne by parents for public secondary education in terms of tuition fees for day scholars, textbooks, and construction costs will be reduced. Scholarships will be provided for children who still cannot afford to pay, covering up to 48,000 students from the lowest income segments of the population. 4  Fifth, recognizing the vital role that non-government providers play in secondary education in Tanzania, the strategy will provide development grants to selected non-profit making, non-government providers catering for the physically challenged children. 19. Quality Improvement: Quality improvementwill address issues in areas of curricula and examination,textbooks, professional development of teachers and girls' achievementand retention. First, the curriculum structure will be streamlined and reduced to a manageable number of subjects. In addition, all subjects will be reviewedto make content up to date and more relevant, reformed assessment system and examinations will be used to improvequality. Second, the government will strengthen institutional coordinationof curricula and examination so as to synchronize curricula and examination reforms. The Form 2, 4 and 6 examinations will be reformed to reflect reviewed curricula and test competencies rather than rote learning. Third, SEDP seeks to create a sustainable system for ensuring good quality teaching learning materials in secondary schools. The Education Material Approval Committee (EMAC) will be strengthened. The policy on open private sector textbook publishingwill continue to be implemented. Schools, will be made responsible for the purchase of teachingnearning materials.The Government will introduce ring-fenced capitation grants for non-salary recurrent costs of secondary educationwhich will be disbursedto schools for use within agreed criteria. This will create sustained textbook demand which will stimulate a market and supply response by private publishers. Eligible non-government schools will receive half of the capitation grant for textbooks. Fourth, substantial effort will be made to improve the competence of classroom teaching by introducing continuous in-servicetraining of teachers. Finally, retentionand academic performanceof girls will be improvedthrough tailor made interventions. 20. Management Reforms It is intendedthat administrative and managementfunctions will be devolved to lower levels in accordance with the government's overall policy on Decentralization. The Ministry of Educationand Culture will be strengthened to focus on core functions of policyformulation, strategy development, setting standards, monitoring and evaluation, and quality control through human resourcecapacity building based on needs assessment and improving support infrastructure,RegionalEducation Officeswill'overseethe general ' management of secondary schools in the Regions.  Finally, Districts, Wards, School Boards and School Heads will be provided with management training to undertake new responsibilities guided by financial and procurement manuals. Implementation of SEDP. 2 SEDP implementationneeds to be made on severalfronts simultaneously First, Improvement of Access byfocusing on: (a) Optimum utilization of teachers, tutors and existing physicalfacilities; (b) Expansion of school facilities, and equitable distribution of resources in underserved areas; (c) Expansionof Form 5 and 6; (d) Establishing open and distance learning; (e) Supportto the non-government sector. Second, Quality Improvemententailing: (a) Expansionof production of diploma and degreeteachers. (b) Improvementof qualifications and quality of teachers and tutors; (c) Capitation grantsfor teaching and learning materials; (d) Review of curriculum for secondary and teacher educationto make it more relevant; (e) Enhancementof quality of examinations and assessment systems. Third, Management Reforms by focusing on (a) Devolution of implementation and management responsibilities from the centre to lower levels; (b) Capacity building at all levels of the devolved system; (c) Strengthening of the inspectorate and support mechanism for quality assurance; (d) Strengthening of monitoring and evaluation and informationsystems. 22 Currently, the Government is working actively with Development Partners and all stakeholders to move SEDP forward. Many Bilateral donors are committed to the continuous support to the development of Tanzania's education system. With the commitment of the Government and the support of the Development Partners including the proposed IDA Secondary Education Development credit, Tanzania will be able to mobilizethe resources needed to successfully address sub-sector issues. In this context, the government is committed to increase allocation of resources for SEDP partly through increase of resources to the sector to finance Capitation and Development Grants, as well as costs related to the development and implementation of curricula, examinations and the provisionof teachers. 23 Development grant will be allocated based on the extent the area is underserved. The criteria to determine the underserved areas, among 6  others, are Gross Enrollment Ratio (GER); Transition Rates from Std VI1 to Form 1 and 0' level to A level , Poverty index and gender inequity. Capitation grant will be allocated according to the number of students based on unit costs. Scholarships will mainly be granted to children with academic ability but whose parents cannot afford to pay school fees due to poverty. The governmentwill establishmechanismfor :- i) Identifyingeligible students; and ii) Managingthe scholarship grants Staffing level will be according to teaching load norms and the agreed Pupil-Teacher ratio projected at 303 by 2009. Capitation grants will be distributed at the rate of Tshs. 25,000.00 per student. We look forward to IDA providingthe credit to facilitate partial implementation of the programme. .Yours sincerely, PERMANENT SECRETARY-TREASURY CC' Mrs. M.Malale PermanentSecretary, Ministry of EducationandCulture, DARESSALAAM. 7