Senegal - Third Education Project

Document of v p X The World Bank FOR OFFICIAL USE ONLY Report No. P-2477a-SE REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT AND EEC SPECIAL ACTION CREDIT TO THE REPUBLIC OF SENEGAL FOR A THIRD EDUCATION PROJECT May 1, 1979 This document ha a retricted dilstbtio.n and my be ued by reclpimbs only in the performuwe of their official duties. Its contests my not otherwise be dkibcoed widwht Wold Bak authorization.  CURRENCY EQUIVALENTS Currency Unit: CFA Franc (CFAF) US$1.00 = CFAF 220 CFAF 1 million = US$4,545. SYSTEM OF WEIGHTS AND MEASURES: METRIC 1 meter (m) 2 = 3.28 square feet (ft) 1 square meter (m2) = 10.76 square feet (sq. ft) 1 kilometer (km) 2 = 0.62 mile (mi) 1 square kilometer (km ) = 0.386 square mile (sq mi) ABBREVIATIONS AND ACRONYMS CCCE - Caisse Centrale de Cooperation Economique (France) EEC - European Economic Communities E01P - Enseignement Moyen Pratique ENSET - Ecole Normale Superieure de l'Enseignement Technique et Professionnelle ESGE - Ecole Superieure de Gestion des Entreprises FAC - Fonds d'Aide et de Cooperation FED - Fonds Europeen de Developpement INDR - Institut National de Developpement Rural INEADE - Institut National d'Etude et d'Action pour le Developpement de l'Education IUT - Institut Universitaire de Technologie FISCAL YEAR July 1 - June 30  FOR OFFICIAL USE ONLY REPUBLIC OF SENEGAL THIRD EDUCATION PROJECT CREDIT AND PROJECT SUMMARY Borrower: Republic of Senegal Amount: US$22 million equivalent IDA Credit US$4.5 million equivalent EEC Special Action Credit Terms: Standard Co-lender: Caisse Centrale de Cooperation Economique (CCCE, France) Project DescriLption: The proposed project is designed to achieve the following objectives: (i) in primary education, the project will provide increased quality and allow preparation of cost- reduction measures to help establish a solid base for its expansion, especially in rural areas; in addition to the proposed new teacher training college, seminars will be planned to upgrade about 1,200 headmasters and teachers, as well as to prepare about 360 teachers for instruction in local languages: (ii) in technical education, the project will provide increased capacity and quality of teacher training through the proposed new college enrolling 340 students; provision of equipment for existing technical schools will allow improved practical training and higher quality output of the 1,500 students enrolled; (iii) in vocational training, additional construction and equipment at existing centers will allow increased enrollments and improved training quality, and increase the supply of skilled workers for the modern industrial sector by about 500 annually; and (iv) in university-level training, proposed institutions will help meet Senegal's critical need for qualified technical and managerial manpower through their annual output of about 40 agriculturalists and 40 business managers; also, seminars will be organized for upgrading annually about 1,000 middle- and high-level managers of para-public and private enterprises. Addition- ally, the project will produce significant benefits in institution-building by providing improved capacity for project execution, for educational research and planning, and for coordination of vocational training. No difficulties are expected in physical implementa- tion because project preparation, particularly architectural designs, is well advanced. Staffing needs for new institu- tions are expected to be met from project-financed technical 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.  - ii - assistance and fellowships, as well as from other external sources. There is some risk that Government will find difficulty in providing budgetary support required for the new institutions; however, their priority is recognized clearly by the Government, and they are likely to be adequately supported unless the Government finds itself in the most adverse financial conditions. Estimated Project Cost: The cost of the proposed project (net of taxes and duties) is estimated at US$33.1 million equivalent, including foreign costs of about US$20.9 million (about 63%). A summary table of cost estimates is shown below: Local Foreign Total (in US$ million) Primary education, educ. research and planning 2.8 3.1 5.9 Technical education 2.5 3.5 6.0 Vocational training 0.2 2.3 2.5 National College of Agriculture 2.6 4.3 6.9 Management Training Institute 0.8 2.2 3.0 Project administration 0.4 0.7 1.1 Base cost 9.3 16.1 25.4 Contingencies - physical (average 7%) 0.8 0.9 1.7 - prices (average 22%) 2.1 3.9 6.0 2.9 4.8 7.7 Total project cost 12.2 20.9 33.1 Financing Plan: The project will be financed from the following sources: (i) the proposed IDA Credit of US$22 million equivalent will meet about 66% of total project costs net of taxes; (ii) a credit of US$4.5 million from the EEC Special Action Fund will finance construction and equipment of the pro- posed Primary Teacher Training College, and new equipment for the secondary technical school Lycee Peytavin; (iii) a loan of about FF 19 million (US$4.5 million equivalent) from CCCE will help finance the proposed National College of Agriculture, jointly with IDA for civil works and in a parallel arrangement for all equipment and furniture, and a proportion of the required technical assistance, consulting services, and fellowships; and (iv) a Govern- ment contribution of US$2.1 million equivalent will help finance the local element of project costs.  - iii - Estimated Disbursements: FY80 FY81 FY82 FY83 FY84 Annual 2.0 6.0 9.5 3.0 1.5 Cumulative 2.0 8.0 17.5 20.5 22.0 Estimated Project Completion Date: June 1984 Staff Appraisal Report: Report No. 2270a-SE dated May 1, 1979. Map: IBRD No. 3236 R3   INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED DEVELOPMENT CREDIT AND EEC SPECIAL ACTION CREDIT TO THE REPUBLIC OF SENEGAL FOR A THIRD EDUCATION PROJECT 1. I submit the following report and recommendation on a proposed Development Credit of US$22 million equivalent, on standard IDA terms, and a proposed EEC Special Action Credit, expressed in the currencies of the nine EEC Member States equivalent to about $4.5 million on the terms agreed with the EEC, 1/ to the Republic of Senegal to help finance a Third Education Project. Additional financing for the project will be provided by a loan of US$4.5 million equivalent from the French Caisse Centrale de Cooperation Economique (CCCE) to help finance the proposed National College of Agriculture; the CCCE loan will have a term of 20 years including five years of grace, with interest at 4.5 percent per annum. PART I - THE ECONOMY 2/ 2. A report entitled "The Economy of Senegal" (212-SE) was distributed to the Executive Directors on September 10, 1973. Since then, a series of preparatory sector missions, a basic economic mission, and most recently a public finance mission have visited Senegal to update the macroeconomic data base and to review the country's development strategy. The following para- graphs reflect the findings of these missions, whose conclusions will be included in a basic economic report now being finalized. Updated country data appear in Annex I. Economic Structure and Past Developments 3. Senegal is situated at the extreme western part of the African continent. In the traditional sector of the economy, the mainstay is millet cultivation and nomadic cattle-raising for domestic consumption, and ground- nut cultivation for exports. Soils are generally poor, and variations in rainfall periodically cause severe food shortages in the months between the sowing and harvesting of the next crop. The large river basins -- some of them fed in the tropical rain zone -- have so far been exploited only margin- ally. Land distribution is fairly even. In the western part of the country arable land is becoming scarce, but in the extreme south-east some good land is still available. The modern sector of the economy is concentrated in 1/ These are standard IDA terms except that currencies will be repaid in the amounts disbursed. 2/ The text of this Section is substantially unchanged from the President's Report for the Water Supply Engineering Project which was distributed to the Executive Directors on April 12, 1979.  - 2 - Dakar, a well organized city of about 1 million inhabitants. The economic base of Dakar consists of excellent port facilities, an industrial sector which is turning gradually toward exports, and a small but fast-growing tourism industry. Senegal's per capita GNP for 1977 was estimated at US$420, but average income in Dakar is roughly five times as high as in the country- side. 4. During the 1960s, the Senegalese economy experienced virtual stag- nation as real output increased less rapidly than population growth (the latter now estimated at 2.7 percent per annum), and per capita GNP declined. Two factors were responsible for this situation. First, with independence, Senegal lost its privileged position as the center of French West Africa, and therefore had to adjust to reduced economic, administrative and political circumstances. Secondly, in the latter part of the decade, groundnut produc- tion (representing the principal export factor) fell due to unfavorable weather and declining export prices. 5. In the 1970s, a new stage in Senegal's development set in, charac- terized by a higher rate of private and public investment. Private invest- ments, which had hovered around 4 percent of GDP in the late 1960s, rose to 7.5 percent during the period 1970-75, while public investments increased from around 5.5 percent of GDP in 1972 to almost 7 percent during 1973-75. In spite of this rise in the rate of investment, output and incomes were depressed in 1972 and 1973 by the Sahel's most severe drought in over a century, which brought a decline in real national income. Thereafter, when weather conditions improved and purchasing power of the rural population was substantially restored, both agricultural and industrial production increased markedly. However, in 1977 the country suffered another severe drought, the magnitude of which is reflected in the variations in groundnut crops; from a historical record of 1.45 million tons in 1975/76 (more than double the average for the 1968-73 period), output fell to less than 0.6 million tons in 1977/78; it recovered to about 1.0 million tons in 1978/79, ushering in a new phase of economic recovery. Despite these substantial fluctuations in agricultural production, industrial output (excluding groundnut processing) grew fairly evenly by about 5 percent a year. GDP in constant prices in- creased at an average annual rate of 4 percent between 1973 and 1977 thanks to the recovery from the earlier droughts, but in 1978 it is estimated to have declined by 14 percent reflecting the effect of the 1977/78 drought. 6. The strong physical fluctuations in production were aggravated by price fluctuations of Senegal's major export and import commodities. In 1974, the terms of trade improved by over 21 percent, mainly due to exceptionally high prices for phosphate rock, Senegal's second export commodity. However, in 1975 export prices for both phosphate rock and groundnuts declined sharply, and since then the terms of trade have stayed well below the level of the early 1970s. These wide international price fluctuations had serious conse- quences on domestic prices, public finance, and balance of payments. Public Finance 7. After some early hesitation, the Government responded with flexi- bility in adapting its policies to changes in the economic environment. In  - 3 - 1974, Government initially tried to maintain stable domestic prices in the face of skyrocketing food import prices; however, by the end of that year when it became clear that the costs of this policy were becoming excessive, several changes were made. Particularly, in an attempt to reduce subsidies and put public finances on a sounder footing, Government raised the prices for rice, sugar, and groundnut oil by 40 to 90 percent. In compensation, government salaries were raised on average by 16 percent, with actual increases ranging from 60 percent for the lower grades to 3 percent for the higher ones. The minimum wage was increased by 47 percent, thus raising the entire wage scale of the private sector. Average consumer prices rose by some 28 percent in six months' time, but Government managed to stabilize prices almost completely in the year thereafter. At the end of 1974, the Government also increased producer prices for groundnuts to bring them closer to world prices which were at that time particularly high. The loss of revenue to the Treasury because of this latter step was expected to be com- pensated in large part by additional revenues from the phosphate mine in which Government increased its participation while levying an 80 percent tax on the excess profits accruing from the quadrupling of export prices of phosphates in 1972/73. In 1974 and 1975, Government did indeed receive high revenues from phosphates amounting to roughly US$45 million a year. 8. These steps led to a net increase in public savings after debt service from a yearly average of US$25 million during 1971 through 1973, to US$46 million during 1974 through 1976. This high level of public savings was doubtless an important factor in stimulating Government to increase public investment outlays from a yearly average of US$24 million to US$49 million during the same two periods. In addition, purchases of equity and lending to domestic enterprises by Government increased sharply from a past average of US$5 million to US$62 million in FY73/74, and about US$32 million in 1974/75 and 1975/76, mainly because of increased participation in the phosphate mine and the acquisition of two foreign-owned public utility companies. The combined capital outlays of the Government were thus substantially in excess of public savings, and were financed in large part through medium-term foreign bank loans. As a consequence, foreign debt service carried by the Central Government increased from US$8 million in 1972/73 to US$38 million in 1975/76, representing about 10 percent of Central Government revenues. 9. A sudden fall in world phosphate prices in 1976 eliminated Govern- ment revenues from this source. As a consequence, Government increased taxes in the following year to derive additional yearly proceeds of about US$37 mil- lion; these tax measures, combined with a substantial restraint on recurrent expenditures, gave Government an opportunity to undertake some new commercial borrowing for its investment program. When it became clear that the 1977/78 crop would be a complete failure, Government substantially increased current expenditures to avoid famine in the countryside by importing more cereals and acquitting farmers' debts; however, the Government did not reduce its investment program which was kept going through heavy commercial borrowing amounting to US$134 million in 1977 and US$187 million in 1978. As a conse- quence, in 1980/81 when grace periods are over, debt service obligations of the budget will reach about US$145 million (or 18.4 percent of Government revenues). To cover this debt service and still leave a sufficient national  - 4- contribution to the public investment program, the tax ratio would have to be increased from 23 percent of GDP in 1976/77 to 25 percent in 1979/80, even if growth of recurrent expenditures is held, for a number of years, at rates well below existing trends. This would require substantial restructuring of current budget expenditures so as to protect such high priority outlays as road maintenance, education, and public health. Balance of Payments 10. The balance of payments came under heavy pressure in 1973 because of low groundnut exports and increasing imports of foodstuffs and equipment goods, and net foreign reserves of the country fell to minus US$15 million. In the following years the deficit on current transactions was reduced, but outflows of private capital related to the acquisition of foreign enterprises continued, and net foreign reserves declined further to minus US$48 million at the end of 1975. This deficit was financed partly by US$30 million in IMF oil facilities, and the rest by increasing the indebtedness of the mostly foreign- owned commercial banks to their parent companies. 11. Since then, the situation has not improved. In 1976, the state marketing board purchased the large groundnut crop at the high producer prices established in 1974, injecting massive purchasing power into the economy, while Government continued expansive monetary and budgetary policies. Both measures substantially increased import demand. However, export revenues stagnated since groundnut prices were 25 percent below the 1974 peak, and phosphate prices were down by 35 percent. Even though there were price declines of the same order in some of Senegal's food imports, the net effect on the terms of trade was heavily negative. The year 1977 did not bring any substantial improvement, although the 1976/77 groundnut crop was good. In December 1977 net foreign assets were down to minus US$53 million. 12. The 1977/78 drought caused a loss of US$200 million in groundnut revenues, creating a deficit on current account of US$280 million as compared to US$95 million in the previous year. Thanks to the heavy commercial borrowing, the impact of this huge trade deficit on net foreign assets could be limited to US$91 million, US$30 million of which was financed 'Ly drawings on the IMF compensa.-y facility. Prospects and Creditworthiness 13. The Government's long-range development strategy continues to be based on the promotion of agriculture and export-oriented activities. The agricultural program calls for development of areas less affected by rainfall fluctuations (Casamance and Eastern Senegal) where cash crops other than groundnuts can be grown. Irrigated cereal production is being developed in the arid northern part of the country along the Senegal River. This policy will make the country less dependent on the uncertainties of its climate and world market prices, and reduce the heavy burden of food imports; but since the majority of the rural poor remain involved in groundnut farming, Government is continuing its efforts to promote animal traction, treated seeds, fertilizer  - 5 - use, and crop rotation to raise the productivity of farmers. The Government also aims at long-term improvement of the balance of payments mainly through modest expansion of phosphate mining, and development of light export in- dustries and tourism; moreover, contracts have been signed for construction of a ship-repair yard, and plans for a phosphoric acid plant are in an advanced stage. With chances for export growth in the groundnut sector limited, and because of relatively high production costs in light industry, no spectacular improvements in the balance of payments can be expected. Govern- ment is counting heavily on the implementation of a number of large invest- ments, either in irrigation to diminish the heavy dependence on rice imports, or in export-oriented manufacturing industries. In view of the risks that Government would have to assume on the abovementioned investments, a cautious view of the long-term outlook is warranted. Even to achieve an economic growth rate of not more than 4 percent a year as compared to an official objective of 5.8 percent, the resource gap will keep growing, although still within manageable limits. 14. In the medium term, Government will need a particularly large pro- portion of foreign capital in the financing of new projects so as to allow implementation of a high public investment program. High public investments are essential for Senegal's future development, because total investments have to increase over the next several years to bring the country back on a satis- factory growth path. Moreover, the share of the public sector in total investments will have to go up, partly because of the critical dependence of the economy on acceleration of publicly financed irrigation, partly because of the increased share in ownership Government has recently acquired in the most important sectors of the economy, and partly because of the low propensity of the private sector to invest due to high production costs in Senegal. 15. This need for high public investments conflicts with existing trends in public savings. Despite a fast growth in Government receipts, public savings after debt service stagnated at a low level in the past, and are expected to become heavily negative in 1978/79, a period with low receipts due to the depressed economic condition in the previous drought year. Interest and amortization on the heavy debt contracted during this drought year will absorb most of the savings the budget can possibly generate in the next four to five years. Considering the already very high level of taxation in Senegal, further increases in the tax burden, while unavoidable, will necessarily remain limited, so that even under the best of circumstances, in the medium term public savings cannot be expected to contribute more than 15-20 percent towards the financing of new public investment. In the near term, prospects are worse, and foreign donors will have to finance even higher proportions of project costs. 16. To avoid a further increase of the debt service burden, Government should not, for some years, contract new commercial loans to finance projects that do not generate sufficient funds for the repayment of these loans. Higher debt service will necessarily compete with other recurrent expenditures such as the maintenance of existing infrastructure and of new development projects, types of expenditures which already cause budgetary problems for the Government. As a consequence, it is almost certain that a considerable  - 6 - number of projects currently under consideration which are not directly productive will have to be postponed. Government will also have to avoid excessive financial risks on productive projects by being more selective in its participations and guarantees on loans contracted by mixed enterprises, and may even have to consider disengaging itself entirely from some of these ventures. A better economic performance in the parapublic sector should be a key ingredient in the fiscal program Government is presently designing. 17. The balance of payments situation is dominated by the need for a better foreign reserve position. In the short term, Senegal can afford low levels of foreign reserves through its membership in the West African Monetary Union which provides for pooling of foreign reserves, and whose currency is guaranteed by the French Government. Moreover, as the experience in 1978 has shown, IMF and STABEX facilities provide a sufficient buffer for the periodic drops in export revenues linked with droughts and fluctuations in world market prices. However, Senegal's negligible contribution to the Union's foreign reserves for an extended period may harm this regional institution, whose existence is a cornerstone for Senegal's creditworthiness. An expected improvement in the public savings performance, together with continuing export-oriented policies, is expected to bring about a recovery of this unsatisfactory foreign reserve position. 18. The ratio of debt service to exports of goods and non-factor serv- ices increased rapidly from 6 percent in 1976 to a projected 15 percent in 1979, a level which the Bank considers close to the maximum allowable in Senegal's present economic situation. This steep increase is mainly due to an increase of commercial borrowing from about 25 percent of total bor- rowing during 1973-76 to an average of 64 percent during 1977 and 1978. Only with much greater reliance on concessionary capital flows will Government be able to keep the external debt service ratio around the present level. This might require a reduction in foreign borrowing over the coming years, espe- cially if access to concessionary capital remains limited. 19. On the assumption that Government takes steps to maintain a balance between public investments and public savings, Senegal would remain credit- worthy for some lending on IBRD terms. The Government has demonstrated its commitment to development by increasing public investments between 1970/71 and 1977/78 by 20 percent per year in current prices. The Government has also demonstrated its capacity to respond adequately to the problems which its vulnerable economy is bound to encounter periodically. In August 1978, the National Assembly was called from summer recess to approve a new fiscal package amounting to US$20 million, and Government is presently working (in cooperation with IMF and the Bank Group) on a new set of fiscal measures to redress the public finance situation. Government has committed itself to bring the level of public savings after debt service to at least 15 percent of public investment over the next few years. Senegal has reasonable pros- pects for long-term diversification and growth. Its access to short-term financing facilities and membership in the West African Monetary Union also reduce the risks associated with economic fluctuations. However, lenders (including the Bank Group) should provide a large part of their assistance on concessionary terms in order to avoid a further rapid buildup of debt service, and should be prepared to finance a considerable part of the local costs of projects.  - 7 - PART II - BANK GROUP OPERATIONS IN SENEGAL 20. The Bank Group has had 40 operations in Senegal to date. Total outstanding amounts to US$208.7 million, including twenty IDA credits, fourteen Bank loans, two blends of Bank and IDA funds, three IFC operations, and one blend of Bank and IFC funds. Annex II contains a summary statement of Bank loans, IDA credits, and IFC investments as of March 31, 1979, and notes on the implementation of ongoing projects. Execution of these projects is progressing reasonably well, except that some operations have been affected by the shortage of counterpart funds due to the Government's continuing dif- ficult public finance situation, as well as by lack of qualified local staff for key positions. The Government is well aware of the need to reduce delays caused by these problems, and particularly of the importance of assuring good management supervision of projects in all sectors. In this respect, the Para- Public Sector Technical Assistance Project approved by the Executive Directors in January 1978 is designed to initiate measures necessary to resolve on a sectorwide basis some of the issues regarding the general situation of the country's finances and Government control of public enterprises and mixed companies, particularly those which are channels for Bank Group assistance. In addition, the Government has recently created an Interministerial Committee with representation of foreign aid donors, to expedite preparation of new investment projects, and to identify bottlenecks in project execution and take remedial action. The work of this committee has already begun to produce some positive results. 21. The Bank Group's share in total external aid disbursements to Senegal over 1977-81 will stay at around 16 percent, of which roughly 45 percent in IDA financing. The Bank Group's share in outstanding disbursed debt was 20 percent in 1976, and will slowly start to surpass that level reaching about 22 percent in 1980. The Bank Group's share in public debt service is expected to increase from 3.8 percent in 1976 to about 9 percent by 1985, a rise which is mainly due to the increase in Bank loans and credits from 21 percent of Senegal's outstanding disbursed debt to the Bank Group at end-1976 to about 53 percent by 1985. 22. The objectives of Bank Group lending in Senegal fall under five main headings. First, we continue to give priority to rural development, includ- ing development of irrigation in the Senegal River Valley Region and intensi- fication of groundnut production and diversification into new crops and new regions. As in the past, we would expect our agricultural lending over the next few years to exceed one-third of the total. Secondly, we have supported diversification of the economy by lending to the growing industrial sector through the Societe Financiere Senegalaise pour le Developpement de l'Industrie et du Tourisme (SOFISEDIT), a development finance company established with Bank Group assistance in 1974, and through an ongoing tourism project. Thirdly, we have supported modernization and expansion (where economically desirable) of the country's infrastructure. An engineering project approved by the Board in April 1979 will pave the way for Bank Group involvement in the water supply and sanitation sector by financing studies and technical assistance for a water supply project in eleven secondary centers. Fourthly, Government has asked us to help re-orient and expand the country's education  - 8 - system at all levels, by meeting in particular the needs for trained high- and middle-level technicians and managers in the modern sector and in agricultural development activities, and by increasing access to primary level education, particularly in rural areas. The project proposed in this report is designed to meet these objectives. We remain conscious of the need to support other projects in the social services sector within the limits of the Government's ability to bear the recurrent costs involved, and have started preparing an integrated food and nutrition project. Finally, we are helping Government increase its absorptive capacity for planning, executing, and managing develop- ment projects through institutional support within individual Bank Group projects, and through broader efforts such as the Technical Assistance Project for the Para-Public Sector. Several Bank Group operations which fit into the overall objectives of the Government's economic strategy, notably in tourism, telecommunications, port infrastructure, loans to SOFISEDIT, as well as a second aviation project approved by the Executive Directors earlier in FY79, have the additional merit of generating revenues for the Senegalese Treasury. PART III - THE EDUCATION AND TRAINING SECTOR 23. Formal education in Senegal is modeled after the traditional French system, and has for a long time been oriented to preparing students for higher education and public service. Since 1970, several major reform proposals for restructuring the system have been considered, but Government has chosen to follow a course of gradual change; most of the impact of this change has been felt at the secondary level, where enrollments in science and technical streams have been increasing significantly (para. 28). Access to Education 24. In 1977, about 32% of the 7-12 age group were enrolled in primary schools; this proportion covers as many as 60% of children in the urbanized Cap Vert region, as against only about 12% in some of the poorest rural areas where the Muslim influence is strong and many children attend traditional Koranic schools. In recent years, growth in primary school enrollments in remote rural areas has levelled off primarily because of low interest of parents and Government's financial constraints; and it is becoming increas- ingly important to investigate possible relationships between the formal school system and traditional Koranic education. 25. Access to lower secondary schools is controlled by a selective entrance examination, and limited to about 20% of primary school graduates mostly from urban areas. The Government is experimenting with a system of non-formal rural youth training centers which would attempt to provide other primary school leavers or youth who have never attended school with some pre-employment skills in agriculture, rural trades, and an understanding of the basic concepts of health and nutrition.  -9- Education for Women 26. The Government is encouraging female participation in the education systems, and in 1977 the enrollment of girls was about 40% of the primary school age group. At the secondary level, girls account for a lower share of enrollments -- about 33% of the total in lower secondary schools, and about 26% at the upper secondary level. Nevertheless, enrollments of girls in the formal school system are expected to continue increasing at a higher rate than that for boys. Vocational training schools enroll girls mainly for training in "traditional" female occupations, particularly in the service sector. Quality of Education 27. The Government has always had a great concern for the quality of education, and strives for high standards for teachers at all levels. At the primary level, all teachers are Senegalese, and the proportion of those who graduate from the five existing training colleges has been increasing. Many teachers require upgrading, but in-service teacher training programs are organized infrequently and need improvement. At the secondary and higher levels, education standards are maintained by employing large numbers of expatriate teachers and instructors, pending training of qualified Senegalese teachers. 28. The Government's desire to maintain standards is running into difficulties because of an increasing demand for education, and the severe financial constraints to providing this education, particularly in view of the rising local costs of French technical assistance. Urban classes are overcrowded, there are shortages of qualified teachers especially in rural areas, and school supplies are insufficient and inadequate. As a consequence, the quality of education, particularly in primary and lower secondary schools, is suffering. At the same time, the curricula are largely academic and oriented toward the needs of urban life and the requirements of entrance examinations for the next level. At the upper secondary level, the Govern- ment' s continuing efforts to encourage students to select science and tech- nical subjects have been successful, and about half of the 2,500 annual graduates now obtain diplomas with these specializations compared with 30% in 1970. However, the general lycees offering traditional programs are still the preferred choice of most lower secondary school graduates, and attract the most qualified students. The two technical lycees enroll about 1,500 students, and offer courses preparing for the technical baccalaureate with specialization in economics, commercial skills, industrial skills, mathematics and technology, which prepare students for further studies as well as for direct employment. Most of the programs, however, are theoretical, and practical workshop instruction is insufficient. Financing of Education 29. Recurrent expenditures for education represent almost 25% of total Government expenditures and about 5% of GDP, which is high, but not uncommon for West Africa. At present, 40% of the recurrent education budget is spent  - 10 - on primary education, mostly for teacher salaries. Additional recurrent expenditures are financed by external aid (mainly from France) in the form of teachers and scholarships. Public education is free at all levels. The average annual salary per teacher (approximately US$4,000) is high for West Africa. Annual costs per pupil are also high: about US$118 for primary education, and about US$480 for upper secondary technical schools. It is difficult to foresee any improvement in the level of these costs for the near future, given the continuing need for expensive expatriate technical assistance and the increasingly high costs of building construction. However, the Government is becoming very aware that the feasibility of expanding education will depend largely on measures to reduce recurrent costs, and to adapt the system to local conditions. Several studies to this end are underway or planned and the Government appears willing to consider introducing some of the changes in teaching methods and school organization that will be required, but preparation of appropriate measures will require considerable time (paras. 34 and 46). 30. The total investment cost for education projects included in the Fifth Plan (1977-81) is about US$97 million equivalent, of which 80% is expected to be provided by foreign donors. The most important sources of financial and technical assistance have been French and Canadian bilateral aid, the EEC, and the Association. Manpower and Employment 31. In 1976, Senegal's working population numbered about 1.7 million persons, mostly working in rural areas and engaged in farming. Less than 10% of the active population (about 140,000 workers) are employed in the modern sector; of these, about 80,000 are employed in the private sector mostly as unskilled or semi-skilled labor, about 45,000 in the civil service, and about 15,000 in parastatal organizations. About 200,000 persons work in the infor- mal sector, mainly as artisans and traders. 32. The modern sector is expected to provide about 13,000 new jobs annually over the next five years, but in the same period, 28,000 students with at least a primary school certificate will enter the job market every year. This situation is leading to a general improvement in the education level of workers, particularly among those joining the informal sector. At the same time, however, there are serious shortages of lower- and middle-level personnel with either basic technical skills or with some training in bookkeep- ing, storekeeping, and other clerical skills. Important reasons for this are the shortage of vocational training facilities, in particular skilled worker training for the modern industrial sector, and the chronic shortage of trained and experienced Senegalese managerial and supervisory personnel. There are now about 2,000 middle- and high-level managers, many of whom need skill up- grading; the need for new managerial staff is estimated at about 100 annually, for whom no adequate management training programs are available in Senegal. Government's Educational Objectives 33. The Government's policy for developing the education sector has four major objectives: (i) to expand the coverage of primary education in  - 11 - rural areas; (ii) to satisfy at least part of the social demand for student places at the post-primary level; (iii) to make the education system more responsive to the specialized manpower requirements of the modern sector; and (iv) to strengthen the capacity for educational research and planning. These objectives are sound, and plans for achieving them are at varying stages of implementation. 34. For primary education, the problem of financial constraints has forced the Government to control expansion, and to close some schools with low enrollments; thus, even if the annual growth rate is maintained at the present 4%, primary education would be available to only about 50% of the age group by the year 2000. Important elements of plans for improving the quality and coverage of education provide for instruction in local languages in the first years of primary school rather than the French now used, organizing of effec- tive teacher training and upgrading programs, and implementation of cost- reduction measures. As regards secondary education, especially in science and technical subjects, enrollments are expected to increase by about 13% annually. To reach this target, the Government is planning to open an upper secondary technical school in each of the country's four regional capitals, and to increase teacher training. It also plans to establish employment- oriented technician training programs, and to improve the quality of practical instruction. At the same time, Government will expand specialized manpower training by increasing the number of technical upgrading courses, and offering preemployment courses in major industrial trades at the existing vocational training centers. The high-level manpower needs of the modern industrial and agricultural sectors will be met by new institutions (the National College of Agriculture and the Management Training Institute) planned for establishment under the proposed project (paras. 52 and 55). Overall, the Government recog- nizes that a considerable research and planning capacity will be required to achieve its stated educational objectives. It therefore intends to strengthen the existing educational planning section within the Ministry of National Education, and more importantly, to create under the proposed project a National Institute of Education where all ongoing work on educational research, evaluation, and curriculum development will be concentrated (para. 45). The Bank Group's Role in the Education Sector 35. In supporting the Government's education and training programs, the Bank Group has followed two approaches: (i) lending for development of important sub-sectors of the education system, to which end it has helped finance two projects under Credit 253-SE (US$2.0 million, 1971) and Credit 530-SE (US$15 million, 1975); and (ii) lending for training components in projects in other sectors, particularly agriculture, highways, railways, telecommunications, and managerial staff for the para-public sector. 36. The First Education Project was designed to improve the quality of technical and agricultural education, and to expand the supply of technicians for industry and commerce. The main component (representing 80% of total project costs) was construction and equipment for a post-secondary technician training institute (Institut Universitaire de Technologie - IUT); the project  - 12 - also included upgrading of an agricultural technician school, additional equipment for two upper secondary technical schools, and a reorganization study for the Merchant Marine School. The project was satisfactorily com- pleted by end-1976, after implementation had encountered some delays caused by differences between the Government and the Association about appropriate design standards. The IUT is a well-managed institution which provides high-quality training programs and is satisfactorily serving the needs of modern sector employers. 37. An Audit Report prepared by the Operations Evaluation Department was issued on October 4, 1978. The report concludes that the project was well aligned with Senegal's education priorities, and that it had been generally successful in its main objective of providing good physical plant as a basis for improving the training of technical manpower. The report acknowledged that it was too early to evaluate the educational impact of the project's contribution to the various schools assisted, although it was suggested that the IUT and the agricultural technician school would benefit from some review of their functioning, especially in light of their high per student recurrent costs. With implementation of the technical education component of the proposed third project, the number of qualified entrants for IUT would increase substantially, and recurrent per student costs can be expected to decline. 38. The ongoing Second Education Project approved in early 1975, is intended to reinforce and expand the scope of the first project in meeting modern sector manpower needs through construction and equipping of science and technology teaching facilities for 11 existing and four new lower secon- dary schools; and rehabilitation or provision of new vocational centers for industrial, marine and hotel/tourism training. The project also supports the experimental first phase of a national program to establish a network of low-cost rural youth training centers (Enseignement Moyen Pratique - EMP), as well as some strengthening of educational planning services, and a pre- investment study of alternatives to primary education. 39. Implementation of the second project was again hampered by delays at the design stage, and by slow contract awards caused by the Government's cumbersome procedures. These delays, together with a 10% decline in the value of the US dollar, resulted in a cost overrun of about US$6 million. The Government therefore decided not to construct 3 of the 11 planned science centers, and 15 of the original 30 rural education centers, leaving a financing gap of about US$2 million. Since Credit funds will be insufficient to finance civil works for the Hotel Training School, the last item to go to bid (with an estimated cost of $2.7 million), the Government is now seeking alternative sources of external financing for the school. Completion of construction work on the science centers and lower secondary schools is expected towards end- 1979, about two years behind schedule. The Vocational Training and Upgrading Center is in operation, and responding satisfactorily to employers' demands; about 1,000 workers have benefited from on-the-job training in factories and industrial plants, and specialized center-based training for skilled workers. The nonformal rural education component is innovative and proving difficult to implement; selection of appropriate sites for the village centers has been  - 13 - slow, preparation of the building designs using local materials took a long time, and insufficient attention has been paid to program development and training of instructors. The Government is now making considerable efforts to establish 15 centers before December 1981. 40. Prior to negotiations of the proposed third project, the Government satisfactorily completed certain actions aimed at expediting implementation of the second project, particularly regarding the pace of construction work, invitation of equipment tenders for the science centers, and preparation and agreement of a detailed implementation schedule for the rural youth training component. With these actions, the pace of disbursements has increased considerably, and project execution is now expected to progress satisfactorily. PART IV - THE PROJECT A. Background 41. In response to the Government's request for continued Bank Group assistance in education, and based on the findings of a Unesco sector mission in late 1976, a project identification mission visited Senegal in July 1977. A follow-up mission in October 1977 reached agreement in principle with the Government on items that could be considered for financing by the Association under a Third Education Project. Educational specifications for the proposed institutions were prepared by consultants recruited by Government in agree- ment with the Association, and were reviewed by a pre-appraisal mission in April 1978. The Government also selected architects for the required design work which is being financed from an advance of up to $400,000 approved by the Association in May 1978 under the Project Preparation Facility (PPF); the PPF is also intended to meet the cost of specialist services for preparation of detailed equipment lists, and for further program development. The proposed project was appraised in June 1978. Negotiations were held in Washington from April 9-12, 1979, with a Senegalese delegation led by Mr. Louis Alexandrenne, Minister for Planning and Cooperation. The Staff Appraisal Report (No. 2270a-SE dated May 1, 1979) is being circulated separately to the Executive Directors. B. Project Description 42. The proposed project, to be implemented over 1979-84, emphasizes institution-building, and improvements in the quality and relevance of educa- tion and training programs. Its specific objectives reflect the Government's own development priorities (paras. 33 and 34). The project comprises the following components: (a) Primary Education and Education Research and Planning (i) equipment and specialist services to develop vocabularies, and to prepare and evaluate experimental programs for testing the use of national languages in the lower primary grades;  - 14 - (ii) construction, equipment, and furniture for a new Primary Teacher Training College in the Casamance region, and specialist services and fellowships to improve pre-service and in-service teacher training programs; (iii) equipment, specialist services, and fellowships for a proposed National Institute of Education responsible for all activities in educational research and evalua- tion; and (iv) specialist services and fellowships for the Ministry of Education to plan for the expansion of primary education in rural areas, and to prepare projects for external financing. (b) Technical Education (i) construction, equipment, furniture, and specialist services for a Technical Teacher Training College; and construction and equipment of additional facilities for practical instruction of student teachers at the existing Institut Universitaire de Technologie; (ii) provision of workshop equipment for two existing upper secondary technical schools to allow improved practical training. (c) Vocational Training Construction, equipment, and furniture for the existing Vocational Training and Upgrading Center and the adjoining Center for Pre-employmeent Vocational Training to allow teaching of a full range of industrial upgrading courses; and technical assistance and fellowships to develop and improve new training programs, and undertake studies leading to establishment of a National Vocational Training Office. (d) Agricultural Education Construction, equipment, furniture, specialist services, and fellowships for a National College of Agriculture to provide university-level training in the various branches of agricultural education.  - 15 - (e) Management Training Construction, equipment, furniture, specialist services, and fellowships for a Management Training Institute to provide Master's Degree level programs, as well as upgrading courses in business administra- tion for managerial staff of modern sector enterprises. (f) Project Administration Specialist services, equipment, and operating costs for the existing Project Unit. (a) Primary Education and Educational Research and Planning 43. Introduction of National Languages. To continue development of new curricula required to introduce experimental classes in three of the national languages, the proposed project will finance studies to prepare vocabularies, and 30 man-years of specialist services over three years to support a team consisting of a language education specialist and nine Senegalese teachers. This team will prepare teaching programs, determine teaching methods, prepare and test teaching aids, establish monitoring and evaluation procedures, and devise training programs to familiarize teachers with the new programs and materials. The project also provides office equipment and furniture, teach- ing materials, and fellowships to organize training seminars for about 360 teachers over the three-year period. 44. Primary Teacher Training. An important aspect of the Government's plans for primary education is to have teachers trained in their own region, and to adapt programs to regional needs. The proposed project will finance (a) construction, furniture, and equipment for a new Primary Teacher Training College of 240 student places at Kolda in the Casamance region; (b) four man- years of services for a specialist in primary education and teacher training who will inter alia, review primary education curricula, and study various options for achieving a significant reduction in recurrent costs; (c) a 12 man-month fellowship to upgrade a local specialist in primary education and teacher training; and (d) equipment, teaching materials, and fellowships for seminars to upgrade 1,200 headmasters and teachers over a four-year period. 45. Educational Research. The proposed project will help establish within the Ministry of Education a National Institute of Education (Institut National d'Etudes et d'Actions pour le Developpement de l'Education - INEADE) by financing (a) three man-years of services by a specialist in educational research and evaluation as Director of the Institute; (b) a 12 man-month fellowship for a local counterpart; and (c) office furniture and equipment. The Government has agreed that the Institute will-be legally established, with internal organization and responsibilities acceptable to the Association, by November 1, 1979 (Sections 3.02(a) and (b) of draft Credit Agreement). Once the Institute is established, its responsibilities will include supervision of two studies for which the project provides 5 man-months of specialist  - 16 - services: (a) an evaluation of the impact on student achievement of science and technology centers financed under the ongoing Second Education Project; and (b) a survey of education in Arabic and in the Koranic schools, to deter- mine what role these schools can be given in the plans to increase access to education. 46. Planning and Project Preparation. To help the Government plan for expanding the coverage of primary education, the project will finance (a) 33 man-months for continuation of the services of planning and school-mapping specialists, including training of local staff; (b) three man-months of specialist services to analyze education cost and financing arrangements, and prepare recommendations on efficient use of available budgetary resources in the light of Government's plans for expansion of primary education at reduced cost which could be assisted by a possible fourth project; (c) 24 man-months of fellowships for training Senegalese staff in educational planning and statistics; and (d) furniture and office equipment for new offices for the existing planning unit. The project also provides US$200,000 equivalent for educational and architectural consulting services to prepare projects suitable for external financing. (b) Technical Education 47. Technical Teacher Training. In support of the Government's plans for expansion and improvement of technical education, the proposed project will finance construction (including limited laboratory and workshop facil- ities) of a Technical Teacher Training College (Ecole Normale Superieure d'Enseignement Technique et Professionnelle - ENSET) enrolling about 340 students. The project will also finance construction, equipment, and furni- ture for extensions to three existing buildings in the nearby IUT to provide additional facilities to ENSET student-s for specialized technical training. ENSET will provide professional training for secondary technical teachers in education, psychology, methodology and applied pedagogy, and also limited skills upgrading; practical work will be emphasized throughout the training period. Basic industrial or commercial skills training will take place at other institutions specially designed and equipped for this purpose, in particular the IUT. A joint pedagogical committee will ensure cooperation between ENSET and IUT (Section 3.02(c) of draft Credit Agreement). Qualified instructors are expected to be provided by French bilateral assistance; qualified Senegalese staff will become available over the long term as ENSET graduates gain experience and receive necessary upgrading. The project will also finance the services over three years of two specialists in technical education and teacher training for program development, including revision of the secondary school technical curricula. The Government has agreed that ENSET will be legally established by November 1, 1979, with a teaching program structure acceptable to the Association (Section 3.02(a) of draft Credit Agreement). 48. Upper Secondary Technical Education. The project will finance workshop equipment for two existing upper secondary technical schools (the Lycee Delafosse in Dakar and the Lycee Peytavin in Saint-Louis) to follow up  - 17 - on assistance provided to these schools under the First Education Project, and assure a flow of secondary school leavers with a grounding in science and technical subjects, for further education and training. (c) Vocational Training 49. Upgrading. The project will finance equipment to allow increased enrollments at the existing Vocational Training and Upgrading Center (Centre de Formation et de Perfectionnement Professionel - CFPP) which started skilled worker training programs in 1977 with support under the Second Education Project and technical assistance from the United Nations Development Program (UNDP). The project will also finance 13 man-years of expert services over 1979-81 to assure effective development of industrial training programs, including related on-the-job training of industry-based staff. 50. Basic Training. The project will finance equipment purchases and workshop improvements for the existing Pre-employment Vocational Training Center (Centre de Qualification Industrielle - CQID) to allow increased student capacity (from 140 to about 200) and improved quality of programs. Cooperation between the CQID and the adjacent CFPP will be strengthened and formalized. To this end, the Government has agreed that, no later than June 30, 1982, the two institutions will be integrated to form an industrial training and upgrading center operating under a single management structure and an independent statute acceptable to the Association (Section 3.03 of draft Credit Agreement). The strengthened CFPP would then become the coun- try's major institution for vocational training, offering both pre-employment programs and specific skills upgrading courses in a variety of technical specialties. 51. National Vocational Training Office. The project will finance 18 man-months of specialist services in the legislation, organization, financing, and labor relations of industrial training, to help the Government establish the proposed Office which would be responsible for coordinating vocational training country-wide. The specialists will be expected to work in close consultation with the vocational training staff of the CFPP. (d) Agricultural Education 52. With Government's increasing investments in agricultural development projects, the demand for trained agricultural technicians is expected to rise significantly. This demand is presently being met at the lower- and middle-levels from Senegalese schools, and at the University level through overseas training. The proposed project will finance construction, furniture, equipment, and 20 man-years of expert technical assistance for a proposed National College of Agriculture (Institut National de Developpement Rural - INDR). The INDR will have a capacity of about 200 student places, and an annual output of about 40 University-level agriculturalists. The planned five-year training program will be practical, and oriented to requirements of the national rural development agencies which would be expected to employ many of the graduates. Students will be offered an initial two-year program to  - 18 - strengthen their science background and provide basic training in agriculture; specializations will be offered from the third year in general agronomy, animal production, and agricultural engineering, with optional courses avail- able in forestry, horticulture and agro-industrial sciences. 53. INDR will be established as an etablissement public according to the existing Senegalese law on public institutions, under the responsibility of the Ministry of Higher Education. Its statutes will provide for close links with the Ministry of Rural Development, the Rural Development Agencies, and the National Agricultural Research Institute, and will ensure their representa- tion on the Board of INDR and its pedagogical council. The Government has prepared draft texts of the proposed legislation, including teaching program structure and arrangements to formally establish a revolving fund for urgent expenditures and to assure sound financial management of the institution; these texts have been reviewed and agreed with the Association, and the Govern- ment has provided assurances that INDR will be established by November 1, 1979 according to the agreed arrangements (Section 3.02 (a) and (d) of draft Credit Agreement). 54. The project will provide five specialists in University-level agri- cultural education to help establish the various departments, and 12 man- months of consulting services for program elaboration. The Government has agreed to appoint by September 1, 1979 qualified expatriate staff to serve as Director (or Deputy Director) until a suitably qualified Senegalese becomes available, and a Program Director to coordinate the development of teaching programs, and project start-up activities; the qualifications, experience, and terms of reference of the candidates should be acceptable to the Associa- tion (Section 3.01 (f) of draft Credit Agreement). The Government would approach bilateral agencies to fill other initial teaching posts and provide continuing technical assistance to INDR; France and Belgium have already expressed an interest. Additionally, the project provides for 18 man-years of fellowships to train qualified Senegalese staff for INDR (including the post of Director). (e) Management Training 55. To help resolve the critical modern sector managerial problems, the proposed project provides for construction, equipment, furniture, and 13 man- years of specialist services to establish a Management Training Institute (Ecole Superieure de Gestion des Entreprises - ESGE), with a capacity of about 180 student places. The ESGE will provide training in modern business manage- ment techniques (including personnel administration and financial analysis) leading to the equivalent of a Master of Business Administration Degree (Diplome Superieur de Gestion d'Entreprises - DSGE) for holders of at least a first-level university degree with a minimum of three years business or management experience. The annual output from this program will be about 40 students. ESGE will also offer upgrading courses and seminars for middle- and high-level managers (about 1,000 annually) employed in parapublic and private enterprises. ESGE will also establish a management consulting depart- ment which would undertake organization and management studies and analysis for private and parapublic sector enterprises in Senegal as well as in neigh- boring countries.  - 19 - 56. The Institute will be established under arrangements similar to those for INDR (para. 53) (Section 3.02 (a) and (e) of draft Credit Agree- ment). The statutes of ESGE will provide for representation of private and parapublic sector employers on the Board and the pedagogical council. Addi- tionally, the Government has provided assurances that, if existing initial plans for a regional management training school for the member countries of the West Africa Economic Community were to materialize, the ESGE would be the nucleus for such a school (Section 3.02(f) of draft Credit Agreement). 57. The project will finance a Director (or Program Director), three department heads, and two man-years of consulting services to start up the Institute and to prepare detailed training programs. Six man-months of these services would be used for a study of specific issues in Senegalese personnel management and administration, and teaching programs would be designed as appropriate to local conditions. The Government is seeking bilateral asist- ance to provide additional teaching staff. The project will also finance part of the salary costs of qualified Senegalese staff during the start-up period, as well as eight man-years of fellowships to train qualified Senegalese for teaching positions at the Institute. The Government has agreed that candidates for the post of Director and Program Director will be appointed by December 31, 1980, with qualifications, experience and terms of reference acceptable to the Association (Section 3.01(g) of draft Credit Agreement). (f) Project Administration 58. The Unit responsible for physical implementation of education projects was established in the Ministry of Public works under the First Education Project, and has been well managed and performed efficiently since then. The project unit consists of a part-time Project Director who is also Director of Public Works, an expatriate building engineer (as full-time deputy director), and supporting technical and administrative staff. For implementation of the proposed third project, the Project Unit will be strengthened by providing 48 man-years of specialist services of the Deputy Project Director, a new expatriate equipment procurement specialist, staff for site supervision, and accounting and secretarial assistance. The project will also finance some additional equipment and furniture for the Project Unit, and its operating expenses (Sections 3.01, 3.04 and Schedule 4 of draft Credit Agreement). C. Project Cost and Financing 59. The total cost of the proposed project (net of taxes and duties from which the project will be exempt) is estimated at US$33.1 million equivalent, including foreign exchange costs of US$20.5 million (about 63%). Estimates for civil works costs are for February 1979, based on recent construction contracts. The average cost for the services of expatriate specialists, based on recent recruitment experiences of international organi- zations and the Government, is estimated at US$7,100 per man-month (including travel and housing allowances), of which about US$3,000 for salaries. Physical contingencies have been applied at 10% of the base cost for civil works, furniture, and equipment. Price contingencies averaging 22% over the project period have been estimated as follows: for civil works and professional fees, 7.5% in 1979 and 7% in 1980-84; for furniture and equipment, 6.5% in 1979 and 6% in 1980-84; for specialist services and fellowships, 8% in 1979-84.  - 20 - 60. The project will be financed from the following sources: (i) the proposed IDA Credit of US$22 million; (ii) a credit of US$4.5 million from the EEC Special Action Fund; (iii) a loan of about FF 19 million (US$4.5 million equivalent) from the Caisse Centrale de Cooperation Economique - CCCE); and (iv) a Government contribution of US$2.1 million equivalent. The total external financing of US$31 million will finance about 93% of project costs net of taxes, a high proportion which is well justified considering Senegal's very difficult public finance situation and the importance of the project to the country's development plans. 61. The EEC funds are intended for quick disbursement over two years, and it is therefore proposed to allocate them for construction, equipment and furniture for the proposed Primary Teacher Training College, and for new equip- ment for the Lycee Peytavin under the technical education component. A con- dition of effectiveness of the proposed Credit will be the fulfillment of con- ditions prior to effectiveness of an agreement between the Government and the EEC Special Action Fund for financing of the above items (Section 6.01(a) of draft Credit Agreement). 62. CCCE has agreed that its contribution be applied to financing of the proposed National College of Agriculture as follows: (i) a joint arrangement with the Association on the civil works component, with CCCE providing 40% of the total cost; (ii) all equipment and furniture; (iii) about 10 man-years of technical assistance (out of a total of 21) including the Director of Studies, Director of Field Training Programs, and 12 man-months of consulting services to prepare teaching programs; and (iv) about 9 man-years of fellowships (out of a total of 18). 63. On the basis of the above arrangements, the proposed financing plan is as follows: (in US$ millions) Total EEC Special Cost IDA Action Fund CCCE Government Primary Education 5.9 2.3 3.2 - 0.4 Technical Education 6.0 5.2 0.3 - 0.5 Vocational Training 2.5 2.5 - - - National College of Agriculture 6.9 3.1 - 3.5 0.3 Management Training Institute 3.0 2.8 - - 0.3 Project Unit 1.1 1.1 - - 25.4 17.0 3.5 3.5 1.4 Contingencies - physical 1.7 1.1 0.3 0.2 0.1 - prices 6.0 3.9 0.7 0.8 0.6 7.7 5.0 1.0 1.0 0.7 TOTAL PROJECT COST (net of taxes) 33.1 22.0 4.5 4.5 2.1 (66%) (14%) (14%) (6%)  - 21 - 64. Recurrent Cost Implications. When the project institutions become fully operational in 1981, annual recurrent expenditures of the Ministry of Higher Education will increase by about US$1.3 million in 1979 prices, and those of the Ministry of National Education by about US$0.9 million; these increases represent about 8% and 1% respectively over the totF' 1978 recurrent budgets of these Ministries. The Association has reviewed with Government the budgetary impact of the proposed project, and has received assurances that adequate budgetary provisions will be made for the operation and main- tenance of all project-assisted institutions; the Government also provided assurances that, during the budget year prior to opening of new institutions to be established under the project (INDR, ESGE, and ENSET), it will review and agree with the Association on adequate budgetary provisions (Sections 3.10 and 4.03(b) of draft Credit Agreement). D. Project Implementation 65. The existing Project Unit will be responsible for administration and supervision of project works. The Ministries of National Education and Higher Education will each designate senior officials to serve as sub- project managers who will advise and assist the Project Director on issues relating to the design of educational programs and building equipment speci- fications, selection of specialists, and the planning of their work (Section 3.01 (e) and Schedule 4 of draft Credit Agreement). All final architectural designs are expected to be completed in agreement with the Association by September 1979, except those for ESGE which were later in starting, and which will not be ready before April 1980. Suitable sites for proposed project institutions have been selected and agreed with the Association, and the Government has provided assurances that all land required for construction of project facilities will be available by September 30, 1979 (Section 3.09 of draft Credit Agreement). Construction of buildings and installation of furniture and equipment will be completed by October 1982. Provision of specialist services (totalling about 150 man-years of which about half expected to be expatriate) and overseas fellowships (totalling 34 man- years) in agreement with the Association will continue until June 1984 (Sections 3.04, 3.07 and Schedule 2 of draft Credit Agreement). 66. Procurement. Civil works valued at US$8.6 million (including joint financing of US$1.5 million by CCCE for the National College of Agriculture), and furniture and equipment valued at US$4 million to be financed by the Association will be procured following international competitive bidding in accordance with Bank Group guidelines. Procurement of civil works (US$2.8 million) and equipment and furniture (US$1.1 million) to be financed from the Special Action Credit will follow international competitive bidding in accordance with Bank Group guidelines, except that bidding will be limited to members and associate members of the EEC. Domestic manufacturers of furniture and equipment will be allowed a preferential margin of 15% of the c.i.f. price of competing imports, or the total applicable customs duties and import taxes, whichever is lower. Items of furniture and equipment which cannot be grouped in packages of at least US$50,000 equivalent, or which are not suitable for international competitive bidding, will be procured by inviting quotations from at least three reliable suppliers, whenever possible, or in accordance with local competitive bidding procedures satisfactory to the Association;  - 22 - the total value of such items would not exceed US$0.5 million. The above arrangements have been discussed and agreed with the Government (Section 2.03 and Schedule 3 of draft Credit Agreement). Procurement of furniture and equipment (US$1.1 million) for INDR with financing from the CCCE, will be li accordance with the guidelines of that institution. 67. Disbursements. Proceeds from the proposed IDA Credit will be dis- bursed as follows: (a) civil works, 85% of total expenditures (except for the INDR where the Credit will finance 50% of total expenditures); (b) professional fees, 100% of total expenditures; (c) furniture, 100% of total expenditures; (d) equipment, teaching materials, and vehicles, 100% of total expenditures; (e) specialist services and fellowships, 100% of total expenditures. Disbursement ratios from the EEC contribution will be similar to those for the IDA Credit. All IDA and EEC disbursements will be fully documented, except for salaries of local staff and expenses of staff attending local training seminars, which will be against certified statements of expenditure; documentation for these will be held by the Project Unit for review by IDA supervision missions. The Project Unit will establish accounts to record all project expenditures; these accounts will be audited annually by independent auditors in agreement with the Association (Sections 4.01 and 4.02 of draft Credit Agreement). No disbursements will be made for civil works for the INDR until all conditions precedent to an initial disbursement from the CCCE loan have been fulfilled (Schedule 1 of draft Credit Agreement). 68. Revolving Fund. A revolving fund of US$200,000 equivalent, financed by the IDA Credit, will be established to pay the salaries of instructional staff, fellowships, educational planning and research personnel, and Project Unit staff on direct contract with the Government, and to purchase small items of equipment and furniture for the project institutions. Provision of this fund is intended to help expedite project implementation by allowing prompt payments and purchases. The Association will replenish the account upon receipt of evidence of disbursements from the fund for allowable expenditures. The Government has agreed to open a special account in a local commercial bank, to be operated under terms and conditions acceptable to the Association; opening of this account will be a condition of effectiveness of the proposed Credit. (Sections 2.02 and 6.01(b) of draft Credit Agreement). In addition to this IDA financed fund, the Government will establish by December 31, 1979 a separate revolving fund of CFAF 50 million (US$230,000 equivalent) to  - 23 - pre-finance operating costs of the Project Unit, and to finance the local contribution to the project. This fund will be replenished quarterly from the Government budget (Section 3.01(b) of draft Credit Agreement). E. Project Benefits and Risks 69. The proposed project is important for overall development of education in Senegal. It is expected to produce significant benefits in institution-building by providing improved capacity for efficient project execution, for educational research and planning through the proposed National Institute of Education, and for coordination of vocational training through creation of a National Training Office. In the important area of primary education, the project will pave the way for greatly increased quality and access at gradually reduced per student costs, especially in the now deprived rural areas; in addition to the proposed new teacher training college, it is planned over the project period to organize seminars for upgrading 1,200 headmasters and teachers, as well as for preparing about 360 teachers to undertake instruction in national languages. The technical education compo- nent will provide increased capacity and improved quality of teacher training through the proposed new college with an expected annual output of 60 technical teachers; it will also allow higher quality of student output from existing upper secondary technical schools with a total enrollment of about 1,500. In vocational training, increased student capacity and training quality at existing centers will allow training and upgrading annually about 500 skilled workers vital for development of the modern industrial sector. Finally, the project will help meet Senegal's critical need for higher qualified technical and managerial manpower through proposed new institutions with an annual output of about 40 university-level agriculturalists and 40 business managers; also, seminars will be organized for upgrading annually about 1,000 middle- and high-level managers employed in parapublic and private enterprises. 70. In light of experience on the two earlier projects, potential risks in physical implementation of this proposed Third Project have been reduced to the minimum by taking project preparation to a more advanced stage before Board presentation. Particularly, final agreed architectural designs are due for completion by September 1979 (except for ESGE, para. 65), Government pro- curement and contract award procedures are being simplified, and it is planned to strengthen the Project Unit and improve arrangements for monitoring pro- gress of project implementation. 71. The major risk for the project will be satisfactory staffing and budgetary support for the proposed institutions. To limit the risk of future staffing problems, the project finances technical assistance and fellowships for staff training, and the Government has been encouraged to seek additional assistance from bilateral and multilateral sources to cover staffing needs during the initial years of operation of the project institutions until local personnel start becoming available. In view of the interest already expressed by bilateral donors and Senegal's previous success in attracting qualified technical assistance, staffing needs are expected to be satisfactorily met.  - 24 - 72. The seriousness of the recurrent financing problem will depend to a large extent on the success of Senegal's ongoing efforts to improve its eco- nomic performance. However, in view of the high priority which the Government attaches to establishment of the project institutions, it is expected that funds needed to cover their operating costs will be made available by re- allocating resources from budgetary items of lesser priority. Also, there is scope for more efficient use of funds allocated for education, and the project- financed study of education costs and financing will make recommendations to identify and reallocate savings from current commitments. PART V - LEGAL INSTRUMENTS AND AUTHORITY 73. The draft Development Credit Agreement between the Republic of Senegal and the Association, the draft Special Action Credit Agreement between the Association as Administrator and the Government, and the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement of the Association, are being distributed to the Executive Directors separately. 74. Features of the Development Credit Agreements and Special Action Credit Agreement of special interest are referred to in Section III of Annex III. Special conditions of effectiveness of the proposed Development Credit are: (i) the fulfillment of conditions prior to effectiveness of the Special Action Credit Agreement (para. 61); and (ii) opening of the Special Account referred to in para. 68 in this report. 75. I am satisfied that the proposed Development Credit would comply with the Articles of Agreement of the Association, and that the proposed Special Action credit would be in conformity with the agreement between the Association, the EEC and its member states dated May 2, 1978. PART VI - RECOMMENDATION 76. I recommend that the Executive Directors approve the proposed Development Credit and the proposed Special Action Credit. Robert S. McNamara President Attachments Washington, D.C. May 1, 1979  ANNEX I - 5-s SENEGAL - SOCIAL INDICATORS DATA SHEET REFERENCE GROUPS (ADJUSTED AVERAGES SENECAL L LAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE) TOTAL 196.2 SAME SAME NEXT RICHER AGRICULTURAL 80.0 MDST RECENT GEOGRAPHIC INCOME INCOME 1960 Lb 1970 lb ESTIMATE /b REGION /c GROUP /d GROUP /e GNP PER CAPITA (US$) 200.0 270.0 420.0 223.6 432.3 867.2 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 121.0 139.0 195.0 86.7 251.7 578.3 POPULATION AND VITAL STATISTICS TOTAL POPULATION, MID-YEAR (MILLIONS) 3.4 4.4 5.3 URBAN POPULATION (PERCENT OF TOTAL) 22.7 29.0 30.2 13.6 24.2 46.2 POPULATION DENS ITY PER SQ. KN. 17.0 22.0 27.0 18.4 42.7 50.8 PER SQ. KM. AGRICULTURAL LAND 43.0 55.0 66.0 53.6 95.0 93.3 POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 42.6 41.2 44.2 44.4 44.9 42.9 15-64 YRS. 53.6 54.9 52.7 52.7 52.8 53.5 65 YRS. AND ABOVE 3.8 3.9 3.1 2.8 3.0 3.5 POPULATION GROWTH RATE (PERCENT) TOTAL 2.1 2.6 2.7 2.6 2.7 2.5 URBAN 3.5 5.0 4.0 5.8 8.8 4.7 CRUDE BIRTH RATE (PER THOUSAND) 48.0 47.6 47.6 46.9 42.2 37.8 CRUDE DEATH RATE (PER THOUSAND) 27.5 24.4 20.0 20.6 12.4 10.8 GROSS REPRODUCTION RATE .. 3.0 3.1 3.1 3.2 2.5 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. .. USERS (PERCENT OF MARRIED WOMEN) .. .. .. 2.5 14.2 20.0 FOOD AND NUTRITION INDEX OF FOOD PRODUCTION PER CAPITA (1970-100) 151.5 100.0 139.4 94.2 104.3 107.3 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREMENTS) 97.0 91.0 97.0 90.1 99.5 105.3 PROTEINS (GRAMS PER DAY) 64.0 64.0 67.1 55.2 56.8 63.0 OF WHICH ANIMAL AND PULSE .. 16.6 /f 20.8 17.1 17.5 21.7 CHILD (AGES 1-4) MORTALITY RATE .. 85.0 .. .. 7.5 8.0 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 35.9 40.0 44.0 43.7 53.3 57.2 INFANT MORTALITY RATE (PER THOUSAND) 193.0 .. 158.0 138.4 82.5 53.9 ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. .. .. 22.4 31.1 56.8 URBAN .. 87.0 *. 66.3 68.5 79.0 RURAL .. .. .. 10.4 18.2 31.8 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. .. 23.9 37.5 30.9 URBAN .. .. .. 70.3 69.5 45.4 RURAL .. .. .. 14.2 25.4 16.1 POPULATION PER PHYSICIAN 35000.0 16640.0 13470.0 21757.5 9359.2 2706.8 POPULATION PER NURSING PERSON 4110.0 /R 2610.0 1350.0 3473.8 2762.5 1462.0 POPULATION PER HOSPITAL BED TOTAL 940.0 810.0 730.0 645.4 786.5 493.9 URBAN .. 390.0 380.0 172.9 278.4 229.6 RURAL *- 1300.0 1156.0 1292.6 1358.4 2947.9 ADMISSIONS PER HOSPITAL BED .. 22.2 26.7 19.2 19.2 22.1 HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. .. .. 4.9 .. 5.2 URBAN .. .. .. 5.0 .. 5.0 RURAL 4.7 5.4 AVERAGE NUMBER OF PERSONS PER ROOM TOTAL .. .. .. .. .. 2.0 URBAN .. .. .. .. 2.3 1.5 RURAL .. .. .. .. .. 2.7 ACCESS TO ELECTRICITY (PERCENT OF DWELLINGS) TOTAL .. .. .. .. 28.3 64.1 URBAN .. .. .. .. .. 67.8 RURAL .. .. .. .. 10.3 34.1  -26- ANNEX I Pass 2 SEZGAL - SOCIAL INDICATORS DATA SRE REZUIICE GLOUPS (ADJUSTED AVE*ES SE1IEAL - MOST RECENT ESTIMATE) SAME SANE NErX aIGHER MOST RECENT GEOGRAPHIC INCOME INCOME 1960 Lb 1970 A ESTIMATE /b REGION. Lc GROUP Ld GROUP Le EDUCATION ADJUSTED ENROLLMENT RATIOS PRIMALY: TOTAL 27.0 43.0 40.0 52.1 75.8 99.8 FEMALE 17.0 33.0 3Z.0 37.6 67.9 93.3 SECONDARY: TOTAL 3.0 11.0 13.0 8.0 17.7 33.8 FEMALE 2.0 6.0 8.0 5.0 12.9 29.8 VOCATIONAL (PERCENT OF SECONDARY) 23.0 9.0 10.0 7.2 7.4 12.8 PUPIL-TEACHER RATIO PRIMARY .. 45.0 49.0 43.2 34.3 34.9 SECONDARY 34.0 29.0 22.0 22.8 23.5 22.2 ADULT LITERACY RATE (PERCENT) 5.6 /h 10.0 10.0 20.3 63.7 71.8 CONSUMPTION PASSENGER CARS PER TNDUSAND POPULATION 6.0 9.0 9.2 3.9 7.2 12.4 RADIO RECEIVERS PER THOUSAND POPULATION 47.0 69.0 66.0 40.1 71.1 104.5 TV RECEIVERS PER THOUSAND POPULATION .. 0.4 8.0 2.2 14.1 28.1 NEWSPAPER ('"DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 6.0 5.0 7.0 3.9 16.3 45.2 CINEMA ANNUAL ATTENDANCE PER CAPITA .. .. 1.2 1.2 1.6 4.6 EMPLOYMENT TOTAL LABOR FORCE (THOUSANDS) 1300.0 1600.0 1650.0 FMALE (PERCENT) 39.7 39.1 38.8 32.6 28.0 25.7 AGRICULTURE (PERCENT) 83.6 73.0 .. 73.3 54.1 46.2 INDUSTRY (PERCENT) 5.4 6.6 PARTICIPATION RATE (PERCENT) TOTAL 46.6 44.3 42.8 42.0 37.8 33.8 HALF 56.7 54.5 53.0 54.8 50.3 48.1 FEMALE 36.8 34.3 32.8 27.3 20.9 17.3 ECONOMIC DEPENDENCY RATIO 1.2 1.2 1.2 1.2 1.3 1.4 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 P