Liberia - Second Education Project

E u r?*f Document of The World Bank FOR OFFICIAL USE ONLY Report No. P-1795a-LBR REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF LIBERIA FOR A SECOND EDUCATION PROJECT May 13, 1976 This document bas a restricted distribution and may be used by recipients only In the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENT The official monetary unit is the Liberian dollar, with a par value equal to the US dollar. The US dollar is legal tender in Liberia. FISCAL YEAR July 1 - June 30 ABBREVIATIONS CARE Cooperative For American Relief Everywhere PIU Project Implementation Unit (Ministry of Education) ZRTTI Zorzor Rural Teacher Training Institute  FOR OFFICIAL USE ONLY INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE REPUBLIC OF LIBERIA FCIR A SECOND EDUCATION PROJECT 1. I submit the following report and recommendation on a proposed loan to the Republic of Liberia for the equivalent of US$4.0 million to help finance a second education project. The loan would be on standard Third Window terms of 25 years, including a grace period of 7 years, with an interest rate of 4-1/2 percent per annum. PART I: THE ECONOMY 2. A basic economic mission visited Liberia in March 1973. Its report "Liberia: Growth with Development - A Basic Economic Report" (No. 462a-LBR dated March 1, 1975) was distributed to the Executive Directors. An updating report entitled "Liberia: Economic Memorandum" (No. 873-LBR dated September 15, 1975) has also been distributed subse- quently. Country data sheets are contained in Annex I. Structural Characteristics 3. The growth of Liberia's economy remains heavily dependent on the performance of the enclave sector consisting mainly of: (a) iron ore mines, (b) rubber plantations, and (c) forestry concessions. These enclaves are the main source of export earnings, and contribute a sizeable share of government revenues and wage employment. Iron ore mining is by far the largest single activity in the enclave sector, accounting for about three- quarters of value-added. There are only limited linkages between the enclaves and the rest of the economy. As a result, the benefits of growth have beenunevenly distributed. Annual repatriation by foreigners of profits and savings is equivalent to about 20 percent of gross domestic product. 4. Traditional agriculture, at the other extreme, has minimal interaction with the monetized economy; however, it supports the majority of the population -- perhaps as much as 70 percent. About 4 percent of Liberians have per capita income levels above US$3,000, while the vast majority live at near subsistence level with average incomes of less than US$100 per annum. To help redress this imbalance the Government is trying to increase its earnings from the concessions and use the resources to diversify the economy withi increased participation of Liberians. Development Plan 5. In order to achLeve these objectives the Government has prepared a four-year Development PLan covering the period from July 1, 1976 to June 30, 1980. In the preparation of the Plan, it was assisted by a planning team financed joLntly by the Bank, UNDP, USAID and the Government This document has a restricted distribution and may be used by recipients only in the performance | of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  (Reference President's Memorandum to the Executive Directors, No. R74-61 dated March 25, 1974). The Plan identifies the basic, long-term objectives of Liberia's socio-economic development as: (a) diversification of production; (b) dispersion of sustainable socio-economic activities through- out the country; (c) total involvement of all Liberians in the development effort; and (d) equitable distribution of the benefits of economic growth and diversification so as to ensure an acceptable standard of living to the people throughout the country. 6. The Development Plan attaches a high priority to agriculture as the cornerstone of the Government's diversification strategy. The objective here is to diversify and modernize agricultural production, increase productivity, improve associated rural economic activities such as marketing and processing, and provide social and physical infrastructures to improve the quality of life in the rural areas where most Liberians live. Recent Economic Developments 7. During 1973-1975 Liberia, like most other developing countries, was hit by higher import prices and international inflation. While strong world demand for Liberia's major exports brought large gains in export prices in 1974, the 1975 recession in the industrialized countries signifi- cantly reduced the demand for the country's most important export commodities -- iron ore, rubber and timber. With growth performance continuing to be largely a function of enclave activities, real growth of GDP -- which averaged 5.9 percent a year in the 1964-1973 period -- dropped to 3 percent in 1974 and came almost to a halt in 1975. 8. However, because of good fiscal management, government finances did not come under pressure. In 1974, revenues grew by 20 percent and, despite increased government spending, an overall budgetary surplus of US$15 million was realized. In 1975, revenues increased by 10 percent over 1974 and recurring expenditures by 12.5 percent, the latter largely reflecting the effects of imported inflation on public expenditure. The following factors enabled the Government to manage its finances despite a deceleration of the economy: (a) the renegotiation of concession agreements that improved Liberia's share of the profits; (b) a further increase in the new contract prices for iron ore (in 1975 prices were on the average 55 percent higher than in 1974); and (c) higher maritime revenues from vessel regis- tration under the Liberian flag of convenience. Balance of Payments 9. Since Liberia uses US dollars as the medium of exchange, balance of payments analyses are at best tenuous. In the 1964-1972 period exports grew at 10 percent and imports by 5.9 percent annually. Thereafter, from 1972-1974, following accelerated international inflation, imports rose by 29 percent annually, exceeding the export growth of 22 percent a year. Oil imports increased from US$12 million in 1972 to US$56 million in 1974, and US$47 million in 1975. Nevertheless, Liberia achieved a trade surplus of US$96 million in 1974 and about US$75 million in 1975.  - 3 - 10. Liberia's external public debt outstanding and disbursed was estimated at about IJS$168 million as of December 31, 1975. The debt service ratio was 4.8 percent in 1975, as compared to 5.3 percent in 1974 and 7.2 percent in 1972. The ratio is projected to fall further in the next few years as the final portions of the heavy debt incurred in the early 1960s are paid off. The proportion of outstanding debt owed to the Bank/IDA is currently about 15 percent. Even with an expanded public borrowing program Liberia's debt service ratio through the 1980s is expected to remain relatively modest unless there is an unexpected deterio- ration in external conditions. However, it should be remembered that Liberia's exports are highly concentrated in a few commodities (mainly iron ore and rubber) with notoriously unstable world market prices. Its balance of payments is therefore essentially as vulnerable as that of most mono-crop economies. Moreover, given the fact that the vast majority (over 90 percent) of Liberians live at near subsistence level with average incomes of less than US$100 per annum, and taking into account the country's satisfactory performance in economic management, Liberia is considered eligible for Third Window loans from the Bank. PARr II - BANK GROUP OPERATIONS IN LIBERIA 11. The Bank Group has made 11 loans for projects in Liberia totaling US$60.2 million; 4 IDA credits totaling US$17 million; and one technical assistance grant of UJS$200,000 for development planning (paragraph 5). IFC has made one equity Lnvestment of US$250,000 in the share capital of the Liberian Bank for Development and Investment (LBDI). The Bank loans have been for roads, port expansion, power and LBDI. IDA credits havp been for education and agricuLture. Annex II contains a summary statement of Bank loans, IDA credits and IFC investments as at March 31, 1976, and notes on the execution of ongoing projects. 12. The objectives of Bank Group operations are: (a) to help increase the absorptive capaci.ty of the economy and enable Liberians to take greater initiative in developing their own resources for the benefit of their own people; (b) to support policies and programs leading to a broader sharing of the fruits of econ!omic progress; (c) to help the Government in broadening the economic base; and (d) to assist the Government in mobilizing development resources for sound projects from other external agencies. 13. The proposed Second Education Project would help promote these objectives by: (a) improving access to education for rural children and adults, (b) improving the quality and expanding the output of trained primary school teachers, and (c) strengthening education administration and planning. In addition, a DFC project has been appraised and is expected to be sub- mitted to the Executive Directors in the next few months. An agricultural development project for Bong County to be co-financed with USAID, a technical education project, a rubber rehabilitation project benefiting small indigenous plantations, and a forestry development project are under preparation.  - 4 - PART III: THE EDUCATION SECTOR Background 14. The education sector is inadequately developed and suffers from an uneven geographical distribution of school places and weaknesses in administration and planning. Public and private investment in educational facilities was traditionally concentrated in Monrovia and the south-eastern counties of Sino and Maryland. Despite some progress made over the past ten years in expanding education facilities to previously neglected areas of the country, educational oportunities are still unequally distributed. For example, the six north-western counties (excluding Monrovia) still have average primary enrollment ratios of about 40 percent, compared with an average of over 70 percent for Monrovia and the south-eastern counties (see map). At the secondary level, over 60 percent of those who complete grade 12 come from schools in Monrovia. 15. The Ministry of Education is responsible for primary, secondary and technical education. It suffers from administrative weaknesses, short- ages of well-qualified staff and inadequate budgetary allocations. The education and training budget of about US$13.3 million in 1974 was equal to about 14 percent of the national budget and 2.7 percent of GDP -- a relation- ship which is low relative to that in many other developing countries. The bulk of the budget is absorbed in staff salaries and the remaining funds are insufficient to provide an adequate supply of teaching materials and equipment. Manpower Planning and Training 16. The education and training system is not producing sufficient Liberians with the technical, managerial and administrative skills to man the economy at current levels of activity. At the same time, the Government's development plans, particularly for the rural areas, are constrained by the limited supply of trained manpower and by weak local administration. A start has been made under the first education project to determine manpower needs as a basis for planning in education and training. 17. In pursuit of a rational manpower development policy, the Govern- ment has: (a) established a manpower planning unit within the Ministry of Planning and Economic Affairs which is developing essential statistical reporting and evaluation systems; (b) created a Civil Service Agency through which it has inaugurated a program of public sector job classification, an examination of the civil service structure, and a review of the entire structure of public sector remuneration with a view to establishing a public service career with an effective and equitable system of incentives; and (c) established an Institute of Public Administration for purposes of upgrading middle and upper-level manpower in the public sector by offering training courses and by providing consulting and advisory services to Government ministries in a variety of subject areas.  -5- 18. The shortage of Liberians to manage the economy has been com- pensated for in the past decade by technical assistance from USA and inter- national agencies. This has been concerned primarily with manning the economy rather than ulth training Liberian replacements, and Liberia remains heavily dependent upon foreign technical assistance. Unit costs of such experts have increased significantly in recent years. The measures required to train more Liberians to man the economy include a more positive approach than in the past on the part of Government and technical assistance personnel to counterpart training and fellowship schemes and support for education and training projects in Liberia. 19. In its plans for manpower development, the Government is particularly concerned with training Liberians for public and private sector jobs in skills that will bring immediate benefits, notably those associated with exploiting the country's agricultural, mineral and forestry resources. Th!s approach is sound, as economic diversification and a more efficient management of resources are esseatial for the continuous growth of the economy over the long term. 20. In December 1975, the Government established a National Council for Vocational and Technical Education and Training to: (a) plan, coordinate and set policy for aLL Liberian public and private sector programs of voca- tional training, technical education and industrial skills training; (b) for- mulate guidelines and procedures for institutions operating vocational and technical education and training programs; (c) recommend the allocation of funds for training programs; and (d) establish vocational training standards, testing procedures and criteria for certification. This important step, which places responsibility for vocational training in the Ministry of Labor, should result in clarifying the differentiation between vocational training and technical education. The Council will oversee the creation of an apprenticeship system for which legislation is being prepared and will include representation from thle Ministries of Planning and Economic Affairs, Labor Youth and Sports, Education, Agriculture, the labor unions and employers. Development Strategy 21. The Government's educational strategy includes the following features: (a) an increase in Government's responsibility for providing physical facilities, trained teachers and an appropriate curriculum for primary schools; (b) closer links between secondary schools and the Liberian labor market; (c) establishment of a program of vocational and technical training relevant and responsive to the country's manpower requirements; (d) provision of increased opportunities for literacy among-adults as part of a broad national effort to improve rural productivity and living standards; (e) training of middle-level forestry staff required for the development of the country's forestry resources; and (f) improvements in educational administration and planning at both central and county levels.  - 6 - 22. At the primary level, a community schools program is being imple- mented to improve education in rural areas. This program provides improved physical facilities for primary schools that can also serve as adult literacy centers in the evening. Through this program the Government hopes to raise the national enrollment ratio for the 6-11 age group from about 60 percent in 1974 to about 80 percent by 1985; special efforts are being made to improve the ratio for girls which at present is 36 percent of total enrollment. 23. At the secondary level, the Government plans to expand science and practical subject content and will evaluate the impact of the two multilateral high schools financed under the First Education Project. Institutions offering technical education and vocational training would place emphasis on developing links with private and public employers. The Government plans to establish a center for vocational training in Monrovia to offer basic training and skill upgrading courses in the electrical, mechanical and building trades. In adult education, the Government would focus on promoting literacy, using part- time teachers and community schools. 24. In higher education, the Government has recently completed a develop- ment plan for the University of Liberia. It is now reviewing the manpower and financing implications of the plan. The issues to be resolved are: (a) the feasibility of moving the main campus out of Monrovia, and (b) a choice between consolidation and expansion in the number as well as in the range of disciplines offered. 25. The Ministry of Education is engaged in improving its organizational structure and cost effectiveness of government expenditures. Also, to make the education system relevant to the needs of the country, it is devoting attention to curriculum development, educational testing and the production of teaching materials. 26. Government's strategy combines a modest expansion of facilities for the period 1976-1980 with project preparation and planning for later years. Specifically, the Government plans to expand the community schools program, strengthen the Ministry of Education and introduce more practical and relevant programs at all levels of education and training in the country. The proposed second education project would assist the Government in attaining its objectives. PART IV - THE PROJECT Project Background 27. The First Education Project (Credit 305-LBR of May 1972) financed: (a) constructing, furnishing and equipping two rural multilateral secondary schools, expansion of a rural primary teacher training institute and con- struction of a new College of Agriculture and Forestry; (b) equipment for science eduation and technical teacher training; and (c) technical assistance for manpower and educational planning, project administration, technical teacher training and secondary education and fellowships for educational and  manpower planning. The implementation of this project has been slow due to difficulties in selecting suitable architectural consultants, in reaching agreement on designs and in following satisfactory bidding procedures for civil works. The problems have been resolved, and implementation is now proceeding satisfactorily. The first of the construction contracts has been awarded; and the full project is expected to be completed by around March 1978, about six months behind the original schedule, 28. The proposed Second Education Project would provide US$4.0 million to assist in: (a) supporting a community schools program which aims to improve access to and quality of primary education and adult literacy in rural areas; (b) strengthening educational administration,particularly in improved admini- strative systems and procedures and in ability to re-orient the education system towards local needs; and (c) preparing future projects in vocational and forest ranger training. The project was identified by the Government and the Bank and prepared joinatly by the Government, UNESCO and the Bank. The project was appraised in November 1975,and the Appraisal Report entitled "Appraisal of a Second Education Project in Liberia", No. 1036b-LBR dated May 13, 1976 is being circulated separately to the Executive Directors. A loan and project summary is given in Annex III to this report. Negotiations for the proposed Third Window loan were held in Washington on April 19-23, 1976,with the Liberian delegation led by Mr. Gerald Padmore, Deputy Minister of Finance. Project Description 29. The proposed project comprises: (a) assistance to the community schools program by providing for; (i) const:ruction, furnishing and equipping of 100 primary school units in about 50 villages and the expansion and improvement of a rural teacher training institute; 10 mun-years of technical assistance and 12 man-years of fellowships in primary teacher training; (ii) 2 man-years of technical assistance, 10 man-years of fellcwships and equipment to establish an efficient administrative system for adult education; and (iii) 2-1/2 man-years of specialist services, equipment and supplies to evaluate the program. (b) strengthening of the Ministry of Education by providing for: (i) minor works for preparing a building for textbook produc- tion; (ii) 14-1!2 man-years of technical assistance, 12 man-years of specialist services, 25 man-years of fellowships, equipment and supplies to effect administrative reform,  and improve curriculum development, testing, textbook production, planning, project administration and a feasibility study on educational broadcasting; and (c) preparation of future projects by providing: (i) 1-1/2 man-years of technical assistance for vocational planning and 4 man-years of fellowships in the training of forest rangers;and (ii) funds for architectural studies and design work on two training centers - one for tradesmen and craftsmen, the other for forest rangers. Community Schools Program 30. The project would provide 100 units of about 2,250 square feet each for replacing,or adding to,existing primary schools or establishing new primary schools in about 50 villages located in the counties of Bong, Lofa, Cape Mount, Grand Bassa, Nimba and Montserrado where enrollment ratios are lowest in the country. This would provide about 12,000 places and increase enrollments by 4,000. The Zorzor Rural Teacher Training Institute (ZRTTI) would be improved and expanded by provision of a new 70-place women's hostel, 3 new staff houses, a new agricultural workshop and improvement to existing staff houses, demonstration school, teaching spaces for home economics, arts and crafts and biology/agricultural science and electricity and water supply. Five expert teacher trainers for two years each would replace departing bilateral volunteer staff until Liberians trained on fellowships have returned. A new curriculum reflecting the rural and literacy concerns of the community schools program would be introduced and the Institute's extension service strengthened for more systematic liaision with primary schools and the com- munity. The adult education service of the Ministry would be strengthened through technical assistance, vehicles for transport and audio-visual teaching equipment to supervise and guide the village literacy centers. Ten Liberians would be trained under fellowships to serve as county adult education super- visors. The project would also finance the evaluation of the entire community schools program. Strengthening of the Ministry of Education 31. The Ministry of Education does not now reach the rural areas with effective educational and administrative services. The project would assist the Ministry of Education in a thorough review of its structure and organi- zational procedures and methods of operation. The Institute of Public Administration would conduct the review and would recruit specialists financed by the project to assist in this. The project would also provide fellowships for training in key areas of procurement and financial management and equip- ment for establishing a personnel records system and vehicles for transport of supplies. The project would strengthen the Ministry's capacity to improve relevance and raise standards of education by expediting curriculum develop- ment, expanding its testing program and producing suitable textbooks.  - 9 - Specialist services, fellowships, equipment and supplies would be financed for these purposes. Thus, the ability of the Ministry of Education to provide better educational and administrative services and deliver them to all parts of the country would be improved. The project would also provide necessary expert services to: (a) finalize the long-range education plan now at an advanced stage of preparation; (b) conduct an educational broad- casting feasibility study as a possible future option in formal and non- formal rural education; anad (c) assist in project administration and fellowships for training educational planners. Preparation for Future Projects 32. The project wouLd finance: (a) architectural studies for two training centers -- a vocational training center in Monrovia and a forest ranger training center; (b) technical assistance to plan the development of vocational training, including the center, and to assist in launching the newly established Nationa:L Council for Vocational and Technical Education and Training; and (c) feLlowships for orest ranger training, Preparation work will be carried out on these two training centers for possible inclusion in future projects. Project Implementation 33. The Project Implementation Unit (PIU) established under the Ministry of Education for the first project would be responsible for the execution of the second project. The second project would thus benefit from the experience PIU has gained in Bank Group project implementation procedures. PIU would be assisted by staff in the government ministries and agencies concerned with the second project. The Ministry of Labor Youth and Sports and the Ministry of Planning and Economic Affairs would each assign liaison responsibilities to an official for vocational training; the Ministry of Agriculture would do the same for forest ranger training and the various divisions of the Ministry of Education would do the same for the relevant project components. This would ensure full integration of the project with on-going operations wherever applicable. The Unit would be staffed by a director, two deputy directors, an architect, an accountant and other support personnel. The proposed loan would include a provision for 30 man-months of technical assistance for the services of the architect and one of the deputy directors. Project Costs and Financing 34. The total cost of the project is estimated at US$5.4 million, net of taxes and customs duties, with an offshore component of US$4,0 million. The proposed Third Window loan would finance the entire foreign exchange component representing 74 percent of the total cost of the project net of taxes and duties. The Government of Liberia would provide US$1.43 million, or 26 percent of total project cost, to finance local expenditures (see Annex III for the breakdown of project cost and financing plan). Retroactive financing of about US$60,000 is recommended to cover the costs of the services of experts engaged prior to loan signing for architectural  - 10 - designs of primary school units and the teacher training institute and the planning of vocational training. The cost of technical assistance totaling 28 man-years is estimated to average about US$40,000 per man-year (of which about US$27,000 is estimated to be for salaries, including post adjustment allowance). These estimates are based on the most recent experience of ILO, UNESCO and the Government in recruiting technical assistance personnel for Liberia. Procurement and Disbursement 35. Civil works for the teacher training institute (US$300,000), furniture (US$609,000), and equipment (US$742,000) would be procured on the basis of international competitive bidding. The renovation of two staff houses for the ZRTTI staff (US$34,000) and minor works for adapting and air- conditioning the publications unit (US$50,000) would be undertaken on force account by the ZRTTI staff and by the Ministry of Public Works, respectively. Furniture, equipment, vehicles and other items which cannot be grouped in packages of at least US$50,000 equivalent each or which are not suitable for international competitive bidding may be procured on the basis of quotations in accordance with local procedures acceptable to the Bank. Local manufac- turers of furniture and equipment would be allowed a preferential margin of 15 percent of the c.i.f. price of competing imports or the applicable customs duties and import taxes, whichever is lower. 36. The Government would build the 100 primary school units, valued at US$1.74 million, using Cooperative for American Relief Everywhere (CARE) as its executing agent. CARE, a non-profit organization, has successfully constructed 35 such schools for the Government under an on-going (1974-1976) program. It would promote local capability for construction and encourage self-help and private/community initiatives at the village level. This arrangement, requested by the Government, would ensure continuity between the on-going primary school construction program implemented under a contract with CARE and the rural community schools program under the proposed second project. CARE, whose costs, on the basis of past experience in Liberia, are normally about 50 percent of those quoted by commercial contractors for comparable work, has proven itself to be efficient in this type of construc- tion. It would also train local staff in basic construction skills and in the management of school building programs. 37. The proposed Third Window loan is expected to be disbursed during FYs 1977-1980 (details in Annex III). Disbursements from the loan would cover: (a) 45 percent of total expenditures for civil works; (b) 100 percent of foreign expenditures for direct imports and 80 percent of total expendi- tures for locally procured furniture; (c) 100 percent of foreign expenditures for direct imports and 75 percent of total expenditures for locally procured equipment; (d) 70 percent of total expenditures for consultants' services; (e) 80 percent of total expenditures for technical assistance; and (f) 100 percent of foreign expenditures for fellowships.  Project Benefits and Justification 38. The government of Liberia wishes to reduce the heavy dependence of its national economy on the performance of the enclave sector. Conse- quently, its development strategy aims at economic diversification; and the cornerstone of the diversification objective is integrated rural development and the deveLopment of human resources. The proposed second education project would promote a closer link between the education system and the country's economLc development objectives. It would assist the Government in: (a) making basic education accessible to rural children and adults; (b) increasing the output and improving the quality of trained teachers to serve in rural schools; and (c) training and giving experience to a corps of Liberians t:o administer the education sector. 39. The project would also assist the Government in correcting the traditional geographical imbalance in the distribution of school facilities: the primary community schools to be assisted under the project would be located in north-western Liberia (the counties of Bong, Lofa, Cape Mount, Grand Bassa, Montserrado and Nimba). It would help improve and strengthen the Gvoernment's administrative and planning machinery for the achievement of the country's longer-term educational and training objectives. PART V - LEGAL INSTRUMENTS AND AUTHORITY 40. The draft Loarn Agreement between the Republic of Liberia and the Bank, the Report of the Committee provided for in Article III, Section 4 (iii) of the Articles of Agreement and the text of a draft Resolution approving the proposed loan are being distributed to the Executive Directors separately. 41. Features of the Loan Agreement of special interest are referred to in paragraphs 35 and 36 of this report. 42. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and with the established criteria for Third Window loans. PART VI - RECOMMENDATION 43. I recommend that the Executive Directors approve the proposed loan. Robert S. McNamara President Attachments May 13, 1976   ANNEX I Page 1 of U pages TABLE IA LIBERItA- SOCIAL INOICAIOAS DATA SHEET LAND AREA (THOU KNM?)- -