Morocco - Vocational Training Project

Document of The World Bank FOR OFFICIAL USE ONLY Repwt No. 5141-MOR STAFF APPRAISAL REPORT KINGDOM OF MOROCCO VOCATIONAL TRAINING PROJECT October 29, 1984 Education and Manpower Development Division Europe, Middle East and North Africa Region This docmat hu a resticted dis ib d may be used by recii. way m te perform: of tbdr oEibat dubeL Us contef may no offiwwe be dodosd wndwM World Bankanthorizafion.  KINGDOM OF MOROCCO VOCATIONAL TRAINING PROJECT Principal Abbreviations and Acronymns Used EDI - Economic Development Institute ITA - Institute of Applied Technology (Institut de Technologie Appliqu6e) MOF - Ministry of Finance MOL - Ministry of Labor MOP - Ministry of Planning MPW - Ministry of Public Works, Vocational Training and Staff Training Office - Office of Vocational Training and Employment Promotion (Office de la Formation Professionnelle et de la Promotion du Travail) TA - Technical Assistance UNDP - United Nations Development Program VTC - Vocational Training Center (Centre de Qualification Professionnelle) Currency Equivalents USil.00 = Moroccan Dirhams (DR) 9.06 DH 1.00 = US$o.llo Fiscal Year January 1 - December 31  FOR OFFICIAL USE ONLY KINGDOM OF MOROCCO VOCATIONAL TRAINING PROJECT Basic Data Country Data (1982) Per-Capita GNP: US$820 Total population: 21.6 million Population growth rate: 3.0% Education (1982/83) Female Enrollments Enrollment as % as % of Total Level Enrollment 1/ of Age Group Enrollment ('000) Primary (grades 1-5) 2,378 78% 38% Lower secondary (grades 6-9) 625 30% 29% Upper secondary (grades 10-12) 277 20% 37% University 83 5% N/A Public Expenditure on Education (1983) Central government education budget as a X of total government budget: 19.8% Central government education budget as a % of GDP: 6.7% Central government capital budget for education as a % of government capital budget: 17.8% Central government recurrent budget for education as a % of government recurrent budget: 23.4% Office recurrent budget for vocational training as a % of government recurrent budget 0.3% .' Gross enrollments, including over-age students and repeaters. his document has a rstricted 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.  KINGDOM OF MOROCCO VOCATIONAL TRAINING PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. GLOSSARY BASIC DATA I. MANPOWER DEMAND AND VOCATIONAL TRAINING ................ 1 Manpower Demand ........................................ 1 Vocational Training Issues . . 4 Government Education/Training Priorities and Bank Lending Strategy ............................. 7 II. THE PROJECT . .................................... 10 Objectives and Scope ................................... 10 Project Description . ................................... 11 III. PROJECT COSTS, FINANCING, IKPLEMENTATION AND DISBURSEMENTS.... 18 Project Costs .......................................... 18 Recurrent Expenditures ................................. 22 Project Implementation ................................. 23 Disbursements ........................................ 27 IV. BENEFITS AND RISKS ............................... .. .... 28 Benefits ....................................... . 28 Risks ....................................... 28 V. AGREEMENTS REACHED AND RECOMMENDATION .................. 30 This report is based on the findings of an appraisal mission which visited Morocco in March 1984. The mission comprised Messrs. Michael Mertaugh (economist, mission leader), Stavros Syrimis (vocational educator, consultant), Jacques Dube (technical educator, consultant), and Ead Dib (architect, consultant).  Table of Contents (Continued) ANMEXES l - Office Training Facilities, Enrollments, and Outputs 2 - Project Vocational Training Center (VTC) Specializations (22 VTCs) 3 - Office Administrative Structure 4 - Summary Account by Project Component 5 - Estimated Unit Area and Unit Capital Costs of Project Institutions (1984 Prices) 6 - Implementation Schedule 7 - Estimated Schedule of Expenditures and Disbursements 8 - Estimated Benefit/Cost Ratio for Proposed VTC Component According to Alternative Parameters for Discount Rate and Skilled Wage Differential 9 - Comparative Education Indicators 10 - Selected Documents MAP  KINGDOM OF MOROCCO VOCATIONAL TRAINING PROJECT STAFF APPRAISAL REPORT I. MANPOWER DEMAND AND VOCATIONAL TRAINING Manpower Demand 1.01 Morocco's labor force is growing at a rate faster than at any time in Morocco's history. Total labor force increased from 3.8 million in 1971 to 6.0 million in 1982, an annual rate of growth of 4.0%. This increase, which is considerably above the 3.0% annual rate of population growth, reflects both the return of Moroccan migrant labor from Europe and higher labor-force parti- cipation, particularly for females. Rapid labor-force growth is certain to continue for the foreseeable future. The Government is appropriately concerned with the need to provide relevant training opportunities to ensure that new entrants to the labor force can make a productive contribution to Morocco's development. 1.02 Data from the 1982 census record the continuing evolution in labor- force structure toward activities requiring higher skill levels. The share of agricultural employment declined markedly-from 53.7Z in .1971 to 39.2% in 1982. Employment in the industry and construction sectors increased most rapidly-at 7.3% and 7.9% per year, respectively. Employment in those sectors increased, respectively, from 403,000 to 931,000 and from 184,000 to 437,000. Civil-service employment almost doubled between 1971 and 1982, increasing from 281,000 to over 530,000. With the exception of civil-service employment, which is nearing saturation, these observed trends in labor-force growth in relatively skill-intensive sectors are likely to continue in the medium to long-term. This is particularly true of the industrial sector, where short- ages of skilled manpower have constrained output growth in the past and where future output growth will create significant additional demands for ski'lled manpower. The 1981-85 Development Plan clearly states the priority which the Government attaches to industrial growth, a priority which is likely to be maintained during the next development plan. Among the incentives for such growth are the reform measures being adopted under the recently approved Industrial and Trade Policy Adjustment Loan, whose principal aim is to intro- duce structural changes in the system of incentives in order to eliminate the bias against export production, to lower manufacturing costs, and hence to restore dynamism to the process of industrial growth. One of the likely consequences of these measures is faster growth of industrial employment. Prospects for growth of industrial employment would be further improved if small business managers had better access to management information that would assist them to expand their businesses efficiently. The Office of Industrial Development (l'Office pour le D6veloppement Industriel) currently provides  -2- such assistance to industrial enterprises, but there are very substantial unmet needs for training small business managers in areas such as inventory control, plant layout, personnel management, financial planning, and equipment selection. 1.03 The country's capacity for vocational training is seriously short of prospective needs. As shown in Table 1.1, the demand for skilled manpower is projected to grow by over 100,000 per year between 1985 and 1995, with the largest share of the increase occurring in the industrial sector: Table 1.1; PROJECTED SUPPLY AND DEMAND OF SKILLED MANPOWER BY SECTOR (1985-95) Projected Projected Projected Average Estimated Annual Annual Output Annual Annual Demand for Output of Existing from Proposed Deficit of Skilled Manpower Skill Training Programs Vocational Skilled Sector (1985-95) 1/ All Sources Office Training Project Workers 2/ Agriculture 4,710 250 - - 4,460 Industry, Mining, Utilities 40,490 5,360 5,140 1,540 33,590 Construction 23,080. 9,000 8,000 594 13,486 Services 37,580 9,500 500 66 28,014 Total 105,860 24,110 13,640 2,200 79,550 1/ Staff estimate (project working paper C.3). 2/ Column 1 - Column 2 - Column 4. The most conspicuous shortage of skilled marLpower is projected to occur in the industry/mining/utilities sector, where projected annual demand exceeds supply by over 33,000. As the first stage in a major planned expansion of vocational training, the proposed project would make an important start in meeting the projected demand for skilled manpower. Beginning in 1989, when the new training centers would produce their first graduates, the proposed project  -3- would provide 2,200 skilled workers per year, 70% of whom would be trained in one of 14 industrial specializations, 26% of whom would be trained in one of four construction specializations, and the balance (4%) trained in commercial skills. 1.04 Vocational Training Structure. In the mid 1960's, the Ministry of Education's (MOE's) colleges of vocational training, until then the major - source for skilled worker training, were dissolved and each operating ministry was charged with the task of training skilled labor for its own needs. Apart from a vestigial program in lower secondary vocational education, the MOE's involvement in vocational and technical education is now concentrated entirely upon a technical baccalaureat program at the upper secondary level, and tech- nical teacher training and engineering studies at the post-secondary level. Most operating ministries also provide technician training for their own needs. A number of these also provide vocational training for their skilled- worker needs, notably the paramedical training provided by the Ministry of Health, and the training in construction specializations provided by the Ministry of Public Works. 1.05 Significant programs of pre-service skill training within the private sector are extremely limited, and are confined largely to commercial speciali- zations. The single institution which provides vocational training specifi- cally oriented to the needs of the private sector is the Office of Vocational Training and Employment Promotion (1'Office de la Formation Professionnelle et de la Promotion du Travail), hereafter referred to as the Office. The Office was founded in 1975 as a financially autonomous agency under the Ministry of Labor (MOL). It was created principally to train manpower for the private sector, to adapt vocational training to the needs of the labor market, and to upgrade worker skills. In 1981, the Office was transferred to the Ministry of Planning (MOP). In July 1984, the Office was transferred further to the Ministry of Public Works (MPW) or Ministare de l'Equipement, now designated the Ministry of Public Works, Vocational Training, and Staff Training (Ministare de l'Equipment, de la Formation Professionnelle, et de la Formation des Cadres). This recent transfer was made in light of the MNPW's extensive construction experience and regional administrative network in order to facilitate the significant planned expansion of Office-supervised vocational training. The structure, programs, and financial autonomy of the Office are not affected by this recent transfer. Like the other three public enterprises under the authority (tutelle) of the MNPW, the Office retains full financial and administrative autonomy over its staff, programs and finances. The Office's recurrent costs are entirely met through receipts from a 1% salary tax on all private-sector employers. The Office remains the most important government institution for skill training, and enjoys the maximum confidence of the Government to meet the most urgent needs for skilled manpower during the coming decade. 1.06 The Office offers pre-employment programs for skilled workers and technicians covering several specializations in the industrial, construction and commercial sectors. The Office's training facilities include vocational training centers (VTCs) for skilled worker training, Institutes of Applied Technology (ITAs) for post-secondary technician training, and mobile units for  -4- variable-format training in areas of the country not served by other training facilities. The Office's VTCs and institutes of applied technology are used principally to provide pre-service training. But these facilities are also used for the Office's in-service or "work promotion" programs, comprising apprenticeship training, correspondence courses, functional training, techni- cal upgrading, and evening courses. The Office also develops programs and provides training under contract in response to specific requests from private firms. This training is provided either in Office training facilities or on site, depending upon the nature of the training needs. 1.07 The Office's training activities by enrollments and type of training are presented in Annex Table 1. The most important of these activities quantitatively are the two-year pre-service skill training in industrial, construction and commercial specializations offered in the Office's VTCs to graduates of lower secondary schooling (grade 9). Like other Office training activities, these programs are of high quality and are vigorously and effi- ciently managed. They also are virtually the only source of private-sector training at this level, and need to be expanded significantly to supply the estimated demand for this level of skilled manpower (Table 1.1). 1.08 The Office's administrative structure and its methods of program preparation contribute to close links with employers. The Office is admini- stered by a tripartite Administrative Council presided over by the Minister of Public Works, Vocational Training and Staff Training, and composed of 28 members; 14 high-ranking officials of several ministries representing the Government, 7 representing employers, and 7 representing trade union members. The seven employers on the Council are represented by members of the General Economic Confederation (Confederation Generale Economigue Marocaine), the Chamber of Industry and Commerce, and the principal professional associa- tions. The Management Committee, composed of about one third of the Council members, is charged with overseeing execution of the policies adopted by the Office Administrative Council. At the central level, there is also a Techni- cal Committee which deals with technical questions such as the preparation of training programs, organization of seminars and evening courses, and hiring of part-time instructors. An important element of Office administration which provides continuous feedback from employers to training programs is the net- work of Regional Training Councils. For each VTC or for each city (if there are more than one training center in the same city), there is a Regional Training Council which deals with specific questions concerning the training center such as practical tests, labor market requirements, training within industry, adaptation of training programs, and placement of graduates. The chairman of the Council is a local employer; the vice chairman and secretary is the director of the VTC. Since their creation six years ago, the Regional Training Councils have progressively assumed a dynamic role in the development of training programs and related activities for each of the Office's VTCs. 1.09 The Office's training programs are prepared in close consultation with users. The Office has developed curricula for each training specializa- tion offered by the VTCs based on a detailed analysis of the task, performed by skilled workers in a representative sample of major private-sector  -5- enterprises. These revised curricula have recently been introducpd in the Office's existing centers, with very satisfactory results. An important func- tion of the Regional Training Councils is to provide continuous feedback to the VTCs in order to ensure that their programs remain relevant and effec- tive. They perform this function well. The programs for training provided through the Office's mobile training uaits are developed through field surveys of regional training needs following specific training requests from province- level officials, trade unions, or firms with particular training needs. Vocational Training Issues 1.10 The main issues in vocational training are recognized by the Govern- ment, and are the basis of a constructive dialogue with the Bank. They are: (a) how to achieve a rapid expansion in vocational training capacity in speci- fic areas in the medium term to meet priority manpower needs; (b) how to improve the coordination of vocational training and related technical training among the various agencies involved in such training; and (c) how to mobilize additional resources for and reduce unit costs of vocational training so as to assure the long-term financial viability of an expanded vocational training system. 1.11 Expansion of Vocational Training Capacity. A point which has been stressed in discussions with the Government on the findings and recommend-1 tions of the 1983 Education and Training Sector Survey is that past government investments have neglected skill training for the private sector. The Govern- ment acknowledges that the rapid expansion of higher education which has occurred since 1973, although appropriate when the expanding administration was able to absorb most of its graduates, is no longer appropriate when public sector employment has stabilized and when government efforts instead are focussed on promoting the growth of private-sector industries. The- Government has therefore agreed to slow the growth of higher education and to expand instead the capacity for skill training for early school leavers to meet private-sector manpower needs. The Government's commitment to reinforce vocational training has been recently confirmed at the highest level of the Government. 1.12 Improved Coordination of Vocational Training. This expansion of vocational training should be carried out in the context of improved coordina- tion of training efforts among the various public and private agencies involved in training. Improved coordination is necessary to assure coherence of vocational training, to eliminate possible redundancy, to fill lacunae, and perhaps most importantly, to implement a trade testing and certification service in order to help employers judge the competence of job candidates. The Government in 1978 established a Permanent Commission of Vocational Training which was to coordinate vocational training efforts. In the absence of a clear administrative mandate, the Commission has made little tangible progress toward this goal. The inventory of existing public and private training programs which is being carried out in the context of the MOP's ongoing manpower study, the first phase of which was supported by the Third Education Project, should supply the basic data necessary to begin the task of  - 6 - coordination. The Government has agreed to conduct a study on how to imple- ment an effective program of vocational training coordination (paras. 2.02d, 2.16a(iii), and 5.02a(iii)). As the ministry now responsible for training coordination, the MPW is to conduct this study. Assurances were obtained at negotiations that the Government would by December 31, 1985 provide to the Bank for its review and comment the findings of the study, and subsequently would discuss with the Bank the proposed measures for improved coordination of vocational training and how they should be implemented (para. 5.02a(iii) and 5.02c). 1.13 Financial Viability of Vocational Training. An important issue affecting the long-run financial viability of vocational training is how to assure adequate investment and recurrent budgetary resources to support the major planned expansion of vocational training beyond the current project. The recurrent expenses of the Office's vocational training program are now entirely met through the 1% salary tax collected from all private-sector employers by the Social Security Administration (Caisse de Sdcuritd Sociale). The investment requirements for the Office's training program are met through transfers from the government investment budget. Although these financial resources are expected to meet the investment and recurrent budgetary needs of the proposed project, they are not likely to be adequate to support the major expansion of training capacity foreseen beyond the current project. A related question concerns the efficiency of resource allocation from public and private sources for Office training programs. The private sector is the main beneficiary and source of financing (through the vocational training levy) for Office training programs. However, the public sector also contributes to these programs through budgetary transfers for Office investments, and benefits from them through training provided by Office training programs to staff of some public enterprises. To maximize the efficiency of resource allocation for vocational training, contributions to training costs by the public and private sectors should be commensurate with the benefits which accrue to each. 1.14 The Government has therefore agreed to examine the prospects for assuring adequate financing of vocational training in the future through such measures as: (a) raising the salary tax rate; (b) extending the salary tax to public enterprises which benefit from Office-provided training; (c) providing incentives for private-sector employers to participate more fully in training; (d) introducing of trainee fees, accompanied by a trainee loan scheme; or (e) reducing the Office's recurrent budgetary requirements by meeting the annual recurrent costs (about DH 50 million) of the Institutes of Applied Technology (which benefit private-sector enterprises less directly than other Office training activities) in part through student fees rather than through receipts from the vocational training levy. As the ministry now responsible for implementing the Government's plan for expanded vocational training, the MPW is to conduct this study. Assurances were obtained during negotiations thac the Government would take appropriate measures to maintain self-financing of Office recurrent costs (paras. 2.17d and 5.02d). In particular, the Government gave assurances that the recommendations of the study (para.  2.16a(iv)) would be implemented after consultation with the Bank, as and when necessary to ensure this financial autonomy, and to bring about improved cost-sharing among the various beneficiaries of Office training programs. 1.15 In the long term, the financial viability of vocational training commensurate with needs will also require the introduction of new, shorter and more flexible training programs to complement the conventional, pre-service programs through which most vocational training is now provided. One promis- ing format for training is apprenticeship training. Apprenticeship training could make a much greater contribution to cost-effective skill formation than it is doing now. Apprenticeship training is currently limited to the pilot program being conducted in the Casablanca area by the Office. The main reasons why apprenticeship training has failed to develop are the lack of trade certification which would help employers judge the level of skills acquired under apprenticeship training and, particularly, the lack of a legal code establishing the mutual rights and obligations of apprentices and employers. The Government has agreed to carry out a study on a strategy for the development of apprenticeship training. The study is to focus on the appropriate legal context and employer incentives for encouraging the growth of apprenticeship training and the necessary steps to develop an adequate national system of trade certification (paras. 2.16a(i), 5.02a(i)). Assurances were obtained at negotiations that the Government would, by December 31, 1985, provide to the Bank for its review and comment the findings of the study (para. 5.02a(i). Government Education/Training Priorities and Bank Lending Strategy 1.16 Government Priorities. The evolution of Bank education/training lending and sector work in Morocco has reflected and influenced the develop- ment of the Government's education/training strategy. In most of the years since Independence, government education policy has focussed on the goals of expanded general primary, secondary and higher education, and replacement of foreign teaching staff with Moroccan teachers. Recent increases in unemploy- ment and the conspicuous shortages of skilled manpower which arose during the Moroccanization program of the 1970's have led the Government to address manpower and training issues in the current Five-Year Development Plan (1981-85) more specifically than ever before. The priorities expressed- in the Plan are to achieve universal enrollment of primary-age children by ,992, to raise the proportion-now less than 10%--of upper-cycle secondary students enrolled in technical streams, to continue the very rapid expansion of university enrollments, and to double vocational training capacity by 1986. Several recent developments have led the Government to reconsider the desira- bility and feasibility of continued rapid expansion of university enrollments, and to assign an even greater priority to expanded vocational training. These developments include the stabilization of civil-service employment, the emergence of significant unemployment among university graduates in liberal arts specializations, evidence of declining quality in university programs, a new government awareness of the financial untenability of continuing to offer higher education unselectively to the graduates of secondary schooling in a rapidly expanding system, and evidence of skilled manpower constraints upon  -8- the desired increase in industrial output. Accordingly, the Government intends to expand vocational training capacity in existing programs, to develop new flexible vocational training programs which can be implemented on a large scale, and to improve the links between formal schooling, vocational training, and the job market. The Government also intends to improve the efficiency of public investments in all sectors by providing training for officials in all ministries in project selection and preparation, the absence of which has hampered public investment planning and implementation in the past. 1.17 Bank Lending Strategy. The Bank has been active in the education/ training sector since 1963, supporting five education/training projects. Consistent with government priorities, Bank strategy in the sector has evolved from an initial focus on reinforcement of general education at the primary and secondary levels to its current emphasis on reinforcing employment-oriented skill training and on introducing structural reforms to improve the effi- ciency, financial viability, and employment orientation of education at all levels. With the exception of direct support through smnll project components for manpower training in the sectors of forestry (second education project), and health, tourism, and rural development (third education project), the bulk of Bank lending has been in support of the formal education system, particu- larly of technical and engineering specializations, and has attempted to improve both internal and external efficiency of education through curriculum reform, upgrading teacher skills, and improving teaching equipment. The proposed vocational training project (US$44.0 million) would constitute a logical evolution of this strategy in an area of training vital to the health of the Moroccan economy in the 1990's. Consistent with current government priorities, it would support skill training for school leavers to meet private-sector manpower needs-particularly in the industrial sector. It would also support the development of a national training program in project preparation-an area in which current deficiencies have hampered investment pian-ning and implementation in all sectors. At the same time, the proposed project would prepare the ground for a more comprehensive future project in skill training, for implementation within the next Development Plan. 1.18 The first three education projects included vocational training components. Although several of these were subsequently deleted from the projects due to changes in government policy affecting some of the training institutions and government decisions to implement others using the Govern- ment's own resources, the remaining vocational training components were successfully implemented. The First Education Project (Credit 79-MOR) was to have included 21 "multilateral" secondary schools with vocational specializa- tions. Three of these schools were deleted from the project- in 1968 and the rest were converted to general education facilities as a result of the Govern- ment's decision to suspend all employment-oriented vocational education in MOE secondary schools. The OED project performance audit report (PPAR-1637;- June 17, 1977) endorsed these changes, noting that "in view of the rapidly growing need for high-level manpower, the project was still justified (as a scurce of inputs for post-secondary education) even after the elimination of the short, vocationally oriented terminal courses." The Second Education Project (Credit 266-MOR) was to have provided for the construction and  -9- equipping of a number of general education MOE institutions, and four vocational institutions: two MOL vocational training centers, a new Department of Veterinary Medicine for the existing Hassan II Institute of Agronomy, and a new Royal School of Forestry in Sale. Shortly after effectiveness, IDA decided to delete from the project the first three of these institutions because construction of the vocational training centers had begun in advance of IDA contract approval, and because the Ministry of Agriculture (MOA) was unwilling to modify designs of the Department of Veterinary Medicine as IDA requested. The Royal School of Forestry was completed satisfactorily (PPAR-4545, June 14, 1983). In addition to a number of general education institutions to be implemented by the MOE, the Third Education Project (Loan 1220-T-MOR) included several vocationally oriented components: a Rural Development and Extension Training Center to be implemented by the MOA, a Hotel Training School and four Hotel Training Centers to be implemented by the Ministry of Tourism, and a College of Public Health and three paramedical training centers to be implemented by the Ministry of Health. The project closed on September 1, 1983, and a project completion report is being prepared. Implementation of the non-MOE components of the project was seriously delayed by inadequate supervision by the Ministries concerned. As a result of these delays, three hotel training centers and the three paramedical training centers were deleted from the project with Bank and Government approval. With the exception of one tourism training center, all of the training facilities deleted from the project are being implemented by the Government with its own resources. 1.19 The project completion reports and related PPARs for the completed education projects with vocational components reflect Bank experience which indicates the desirability of: (a) ensuring as adequate and complete a preparation of project components as possible prior to Board presentation; (b) concentrating project components in a single ministry with good- implemen- tation capacity; and (c) close and continuous monitoring of technical assis- tance implementation. The design of the proposed vocational training project is consistent with these lessons of past project implementation. An important feature of the proposed project is the streamlined administrative procedures of the agency which would execute the project (paras. 3.14 and 3.15). These procedures have led to a record of very efficient implementation of past investment, and are expected to lead to a similar efficient performance in implementing the proposed project.  - 10 - II. THE PROJECT Obiectives and Scope 2.01 The proposed vocational training project would address the key vocational training issues described above (paras. 1.10-1.15). In addition, it would address the need to improve project preparation in all sectors (para. 1.17). Accordingly, the project would assist the Government to: (a) expand vocational training capacity consistent with the country's future needs for skilled manpower by supporting (i) the expansion of existing Office skill training programs, (ii) by supporting the planning of future training activities in the areas of apprenticeship traini-g/certification and small business management training, and (iii) by supporting preinvestment design of specific vocational training components for possible future projects; (b) improve vocational training coordination by assisting the Government in developing a strategy for coordination of vocational training among the various public and private agencies involved in such training; Cc) contribute to the financial viability of vocational training by supporting a study on the policy options for assuring the adequate financing of vocational training in the future; and Cd) improve project selection and project preparation in all sectors by supporting the development of a national training program in project preparation. 2.02 To achieve these objectives, the project would provide: (a) construction, furnishing and equipping of 22 new industrial VTCs (4,775 training places) throughout the country for the Office skill training network; (b) instructional equipment and furniture for the new Office Instructor Training Center which is nearing completion in Casablanca under government financing; (c) five new mobile training units to supplement the three Office mobile training units now in operation; (d) technical assistance for conducting studies and developing future training activities in the areas of apprenticeship training and certification, training coordination, small business management training, financing of vocational training, and future project preparation;  - 11 - (e) technical assistance in support of the Office's new Instructor Training Center for Office staff training in the areas of vocational training organization and management, and audio-visual training methods; and (f) technical assistance for development of a national program in project selection and preparation, consisting of local training seminars and instructional materials for the local training seminars. Project Description 2.03 Twenty-Two Vocational Training Centers (VTCs). This component would finance the construction, equipping, and furnishing of 22 additional indus- trial VTCs for the Office to supplement the 41 such centers now in operation (Annex 1). The 1981-85 Development Plan had called for the construction of 53 additional VTCs for the Office. Implementation of this plan has been delayed by the Government's recent weak budgetary situation. The proposed 22 project VTCs would constitute a partial fulfillment of the original plan to construct 53 centers. The locations of the 22 VTCs were selected by the Office, in consultation with local officials and representatives of the Regional Training Councils, as the areas of the country with the most conspicuous training needs. As shown in the map of proposed VTCs (Annex), they are widely distri- buted regionally. 2.04 The 4,775 training places to be created in the project VTCs would expand by 68% the number of training places now in operation in existing Office industrial VTCs (Annex 1); annual intakes of 2,450 would be small in relation to the projected annual number of grade 9 school leavers (157,000) when the project VTCs are operational. Projected output of the project VTCs is 2,200 per year; the training dropout rate for the proposed VTCs is expected to be less than 10%, consistent with the experience of existing VTCs. Specializations to be offered in each of the project VTCs have been selected on the basis of existing training needs, existing training capacity, and specific planned industrial developments in each of the regions where the centers are to be located. Each of the 22 project VTCs is to house an average of 8 training sections of about 25 student places, each for a different specialization. A total of 20 specializations are to be provided in the project VTCs (Annex 2). The bulk of the enrollments in the proposed VTCs is to be in specializations designed to support the planned expansion of indus- trial output: 70% of enrollments are to be in industrial specializations, 27% are to be in construction specializations, and 3% are to be in commercial specializations. 2.05 Training programs for the 22 project VTCs, averaging 18 months in duration, would be the same modular programs as are now successfully in operation in the existing Office industrial VTCs (para. 1.09). As is true of the existing VTCs, entrants to the project VTCs will be required to have completed the fourth secondary grade (grade 9), and to have passed a test in general knowledge (mathematics, Arabic, and French) organized at the national level.- Upon successful completion of the VTC training program, students receive a skilled worker certificate in their respective areas of  - 12 - specialization. The popularity of the VTC training programs is evident in the fact that there are five times as many applicants as new places in existing Office industrial VTCs, and that 40% of the entrants have completed formal schooling above the required entry level. The current percentage of females in Office industrial and construction courses is 6.4% and rising; the expected percentage of female students in the project VTCs is 15%. 2.06 As in the existing Office VTCs, the estimated overall utilization rates for the project VTCs are very high--averaging between 80% and 95%. The project VTCs would offer training on two shifts. A main, daytime shift would provide pre-service skilled worker training for 4,775 trainees; an evening shift would provide in-service, upgrading training for a total of 2,300 workers in the vicinity of the respective training centers. In conformity with national practice, each VTC would be provided with simple housing for the director and a custodian. In addition, student boarding facilities would be provided for 80% of the students in the eight project VTCs whose locations are in areas of highly dispersed population with very limited potential either for commuting by students or boarding by students in nearby private housing. The other 14 VTCs are in higher density areas where boarding is not essential; trainees attending these centers would be accommodated at home or with relatives. 2.07 The 22 project VTCs would require a total of 225 professional/ technical staff and 161 service staff. Each center would require 8 vocational training instructors--a total of 176 instructors. The Office will recruit most of these instructors, as it has done for the existing VTCs, from the graduates of the post-secondary technician programs in its Institutes for Applied Technology (ITAs). An ample supply of adequately prepared vocational instructors is available from this source. To train vocational training instructors for its VTCs, the Office selects the leading graduates of the two-year post-secondary ITA courses in the relevant specializations and provides a subsequent year of pedagogical training, including supervised student instructor work in its VTCs. This pedagogical training has been provided in the ITAs in the past, but will be provided in the new Casablanca Instructor Training Center (para. 2.11) when this facility is completed in July 1986. 2.08 Like the existing Office VTCs (para. 1.08), each project VTC will be closely linked with a Regional Training Council which will provide advice and feedback on training programs, help place graduates, and coordinate local in-service training. The director of each Office training institution, in close collaboration with the respective Regional Training Council, is actively engaged in placement activities. This action includes ad hoc labor market surveys in the area covered by the institution, letters to potential employers and contacts with employers by the instructor in charge of the in-service training. Available information indicates that job placement of graduates of Office VTC and ITA training programs is satisfactory.  - 13 - 2.09 Based on prevailing wage differentials by skill level, the present value of benefits of the proposed 22 VTCs in terms of projected earnings of pre-service training graduates alone is estimated at almost three times the present value of capital and recurrent costs of the centers. Although this estimate is sensitive to changes in the parameters of the benefit/cost calcu- lation (see Annex 8), it does indicate a very significant internal rate of return for this component (21%) at the prevailing skilled wage differential. Moreover, this calculation does not take into account two important but not readily quantifiable categories of benefits: (a) the improvements in produc- tivity and earnings of workers who receive in-service training; and (b) the improved returns to capital investment through enhanced worker productivity, particularly in the industrial sector. 2.10 Equipment for the Instructor Training Center. This component would -provide furniture, audio-visual equipment and library books for the Office's new Instructor Training Center. The Center is nearing completion as an extension to the Office's Casablanca ITA specialized in building and construc- tion specializations (Institut de Metiers de Bitiment). The Center, which is being built with - government budget funds, includes classrooms, boarding facilities for 50 student instructors, a library, and an audio-visual section. Because this is to be the first such center in the country, the project includes TA for fellowships and consultant services to assist the Office in organizing the Center and introducing audio-visual instruction programs (paras. 2.02e and 2.16b). 2.11 The Center is to train new instructors for the 22 project VTCs through a one-year program in training methods provided to selected graduates of the Office's ITAs. The Center will accommodate 60 full-time trainees, with an equivalent annual output. Student instructors who are selected for the program are to receive a reasonable fellowship (DH 350 per month plus board and lodging), and will be obliged to sign a contract to serve the Office for eight years upon completion of the program. (The Office is an attractive employer; even apart from this contractual obligation, the Office is expected to continue to retain a high percentage of its training staff.) In addition to this pre-service program to train new instructors for the VTCs, the Center is to offer in-service upgrading and refresher courses of varying duration during weekends, evenings, and vacation periods for instructors in all the Office training facilities. The Office currently provides both types of programs (pre-service and in-service)Fin existing ITA premises. The new Center which is to be equipped under the project will allow the Office to improve the quality of both types of instructor training programs by providing purpose-built facilities, by allowing the introduction of audio-visual instructor training methods, and by providing adequate library facilities for training. It will also contribute to improved teaching quality in the ITAs where such training is currently provided by reducing classroom congestion. The workshop facilities in the ITA and VTC which are adjacent to the new Center will, however, continue to be used for training demonstrations in conjunction with the new Center's instructor training programs.  - 14 - 2.12 Five Mobile Training Units. The 1981-85 Development Plan called for the acquisition by the Office of 20 new mobile training units to expand the very limited training capacity of the Office's existing outreach training program. Only one of the 20 planned mobile units has been acquired by the Office and put into operation during the current Plan period, supplementing the two mobile training units operated by the Office since 1977. This proposed component would provide five additional mobile units for the Office. Like the existing three mobile units, three of the new units would be operated from and stocked from the Office central facilities in Casablanca; two would be regionally based and operated, respectively, from the VTCs in Fes and Agadir. The regionally-based feature of the latter two proposed mobile units is being considered by the Office for possible future expansion. Government agreement was obtained at negotiations that the Office would conduct an evaluation of the experiences of the two regionally-based mobile training units within two years after the units are first put into use and would communicate the results of this evaluation to the Bank promptly for review and comment (paras. 2.17b and 5.02b). Existing Office staff resources are adequate to conduct this evaluation. 2.13 The main objective of training through mobile units is to provide needed training in remote areas not otherwise served by training facilities. To date, the Office mobile units have trained over 1,700 people in agricul- tural mechanics and auto mechanics in the most remote areas of the country. This training approach has been very successful; by providing on-site training in response to specific training requests, it has been able to assure the relevance and applicability of training to prevailing local conditions. 2.14 The three centrally based mobile units to be provided under the proposed project will h?ve 20 training places each and will specialize, one each, in radio and TV repair, electricity, and carpentry/cabinet making. The regionally based units will have a capacity of 40 places each and will be of a polyvalent character (offering several specializations each) by changing their equipment according to evolving training needs. Equipment not in use will be stored in the base VTCs. The specializations would be: agricultural and auto mechanics (40 places), welding and sheet metal (20 places), electricity (20 places), carpentry/cabinet making (20 places), and plumbing (20 places). For specializations other than agricultural and auto mechanics, a single mobile unit could offer two specializations simultaneously. 2.15 Mobile-unit training programs are tailored by the Office to the particular training needs of each mobile-unit "session." Mobile-unit training sessions are planned following a training request from local officials. A team from the Office then visits the training site to survey the nature of training needs before a mobile-unit training session is scheduled. The Office's three existing mobile training units are in virtually continuous use, and have been fully scheduled for the next two years based upon training requests from all parts of the country. Like the three mobile units now in operation, the five new mobile units will offer three types of programs as follows: (a) an introductory training program of six to ten weeks addressed to all persons who can read and write. The objective of this program is to  - 15 - train for simple specific operations and equipment maintenance and repair; (b) a training program addressed to primary school graduates lasting four to six months. This program leads to a certificate of skill training and aims at imparting basic technical knowledge in the disciplines concerned; and (c) complementary or upgrading training. This program is addressed to employed persons, and aims at improving or complementing their knowledge in a particular area. The duration of these courses varies with the type and level of knowledge of the trainees. 2.16 Technical Assistance (TA). To support the project objectives, the proposed project would provide TA to the Office (36 manmonths of consultant services), to the MPW (36 manmonths of consultant services), and to the Ministry of Planning (9 manmonths of consultant services), which have adequate staff resources and experience to implement the TA successfully. The TA is to be provided to assist these agencies to carry out the following three sets of activities: (a) Development of Future Training Activities. In order to aid the development of new types of training programs appropriate to the Country's long-term training needs and constraints (paras. 1.12 through 1.15), the proposed project would provide consultant services for the following specific actions: Ci) to assist the Office to formulate a strategy for the development of apprenticeship training (paras. 1.15 and 5.02a(i)), an expert would be recruited for 6 months to assist the Office in conducting a study on apprenticeship training. The study is to focus on the appropriate legal context and employer incentives for encouraging the growth of apprenticeship training and the necessary steps to develop an adequate national system of trade certification; vii) to assist the Office to develop a program on small business management training (para. 1.02), to be introduced in existing Office training facilities. The Office has had numerous recent requests for such training, which would aim to improve the efficiency of small business management. The TA for this activity would provide an expert for 12 months to help develop such a program, including training for small business managers on such topics as inventory control, plant layout, personnel management, financial planning, and equipment selection; C(iii) to assist the MN to formulate a strategy for coordinating training efforts among the various public and private agencies involved in training (paras. 1.12, 2.02d, and 5.02a(iii)). An expert would be recruited for six months to assist the MPW to conduct a study on vocational training coordination. The study, which would incorporate findings of the ongoing MOP study on manpower supply and demand (para. 1.12), is to recommend actions to improve the coordination of vocational training among the various public and private agencies involved in such training;  - 16 - (iv) to assist the MPW to conduct a study on policy options for assuring the adequate financing of future vocational training activities, including the continued self-financing of Office recurrent expenditures (paras. 1.14, 2.02d, 3.12 and 5.02a(iv)). An expert would be recruited for 6 months to assist the Office in conducting this study; and (v) to assist the MPW to conduct pre-investment studies for possible future vocational training project comnonents. Twenty-four manmonths of consultant services would be provided to finance short-term services of appropriate experts as required. (b) Support for Instructor Training. The project would provide TA for the Office's new Instructor Training Center (paras. 2.02e, 2.10, and 2.11) for two vital activities: (i) to develop an effective organi- zation and management structure for the new center (an expert for 6 months); and (ii) to introduce audio-visual methods in the training program of the new Center (an expert for 12 months). (c). Program in Project Preparation. In the context of the recent invest- ment program review, the Government has expressed a commitment to more rational project selection in all sectors, to be based on economic analysis of investment options. In support of this objec- tive (paras. 1.16, 2.02f and 4.03), the proposed project would provide financing for national training seminars (including participant costs and consultant services), and instructional materials to assist the MOP to develop a program for training middle-level officials in all ministries in project identification, preparation and appraisal. This activity, which would be carried out by the MOP with UNDP cofinancing (as part of the UNDP technical assistance project (para. 3.10)) and with collaboration of the Bank"s Economic Development Institute (EDI), would comprise two phases. During the first phase, training resources and needs in all ministries would be assessed, a training plan would be developed, and trainers would be trained. A preliminary phase has recently been completed, which involved the visit to Washington of a three-person program team to work with EDI staff and was funded by UNDP. The second phase would consist of a series of local training seminars on methods of project identification, preparation, and appraisal for selected officials of government ministries. Following the phase-two seminars, the experience of the training program would be assessed to determine appropriate future activities to assure the continuation of the training and to monitor its impact on project selection and implementation. The entire program is to be carried out under the responsibility of the Ministry of Planning, and under the guidance of an Interministerial Steering Coumittee consisting of representatives of the Ministries of Planning, Finance, and Economic Affairs, as well as UNDP (para. 3.14). Day-to-day coordination of the program is to be carried out by the program team. Because of the importance of  - 17 - this team to the successful implementation of the program in project preparation, assurances were sought and obtained at negotiations that, prior to any disbursements of the loan against this component, the Government would enter into an agreement with an organization acceptabla to the Bank to maintain an appropriately constituted program team (paras. 2.17f, 3.14 and 5.02f). EDI inputs in support of the program in project preparation would be provided from EDI's own budget, at no cost to the project. 2.17 Assurances were obtained from the Government and the Office at negotiations that: (a) the following actions would be implemented according to terms of reference and a time schedule acceptable to the Bank, and that the results of these actions would be provided to the Bank for comment by the respective dates indicated for each: (i) by December 31, 1985, formulation of a strategy for the development of apprenticeship training (paras. 2.16a(i) and 5.02a), (ii) by July 1, 1986, develop- ment of a. program on small business management training (paras. 2.16a(ii) and 5.02a), (iii) by December 31, 1985, formulation of a strategy for vocational training coordination (paras. 2.16a(iii) and 5.02a), (iv) by December 31, 1985, carrying out of a study on finan- cing of vocational training (paras. 2.16a(iv) and 5.02a), (v) by December 31, 1985, development of an effective organization and management structure for the new Instructor Training Center (paras. 2.16b(i) and 5.02a), (vi) by December 31, 1986, introduction of audio-visual training methods in the program of the Instructor Training Center (paras. 2.16b(ii) and 5.02a), and (vii) by July 1, 1988, carrying out of the program in project preparation (paras. 2.16c and 5.02a); (b) the Office would conduct an evaluation of the experiences of the two regionally-based mobile training units within two years after the units are first put into use and would communicate the results of this evaluation to the Bank promptly for review and comment (paras. 2.12 and 5.02b); (c) the Government would examine the recommendations of the study on coordination of vocational training and discuss with the Bank the proposed measures for improved coordination of vocational training and how they should be implemented (paras. 2.16a(iii), 5.02a(iii), and 5.02c); (d) the Government would take appropriate measures to maintain the self financing of Office recurrent costs, and in particular that the recommendations of the study on financing vocational training (para. 2.16a(iv)) would be implemented, after consultation with the Bank, as and when necessary to ensure this financial autonomy and to bring about improved cost-sharing among the various beneficiaries of Office training programs (para. 5.02d);  - 18 - (e) project accounts would be audited annually in accordance with appro- priate auditing principles by independent auditors; and the Govern- ment would furnish to the Bank within six months of the end of each fiscal year certified copies of the project audit reports (paras. 3.25 and 5.02e); and (f) that, prior to any disbursements of the loan against the program in project preparation, the Government would enter into an agreement with an organization acceptable to the Bank to maintain an appro- priately constituted program team for the program in project prepara- tion (para. 5.02f).  - 19 - III. PROJECT COSTS, FINANCING, IMPLEMENTATION AND DISBURSENENTS Project Costs 3.01 Suimary of Project Costs. The total cost of the project is estimated at DH 398.8 million, or US$44.0 million equivalent. A capitalized front-end fee of US$67,581 would be applied. The estimated total cost and foreign exchange components by main project items are summarized in Table 3.1; Table 3.1: PROJECT COST BY ITEM Z Total (DH Million) (US$Thousand) Base Local Foreign Total Local Foreign Total Costs Vocational training centers (22) 105.7 158.3 264.0 11,675 17,470 29,145 91 Instructor training center 0.2 0.7 0.9 22 71 93 0 Mobile training units 1.3 11.7 13.0 144 1,295 1,439 4 Technical assistance: Development of future training activities 1.1 4.3 5.4 119 475 594 2 Support for Instructor Training Center 0.4 1.4 1.8 40 158 198 1 Program in project preparation 2.4 3.5 5.9 260 389 649 2 TOTAL BASE COST 111.1 179.9 291.0 12,260 19,858 32,118 100 (August 1984 prices) Physical contingencies 11.1 18.0 29.1 1,226 1,986 3,212 10 Price contingencies 31.3 47.4 78.7 3,459 5,232 8,691 27 TOTAL PROJECT COSTS 153.5 245.3 398.8 16,945 27,076 44,021 137 Front-End Fee - 0.6 0.6 -- 68 68 0 TOTAL FINAINCING REQUIRED 153.5 245.9 399.4 16,945 27,144 44,089 137  - 20 - 3.02 A breakdown of estimated project costs into local and foreign cost elements by category of expenditure is suwmarized in Table 3.2: Table 3.2: PROJECT COST BY CATEGORY OF EXPENDITURE Z Total (DR Million) (US$ Thousand) Base Category Local Foreign Total Local Foreign Total Costs Construction Training facilities 52.0 42.5 94.5 5,737 4,694 10,431 32 Student boarding 14.7 12.0 26.7 1,618 1,324 2,942 9 Staff housing 7.2 5.9 13.1 799 654 1,453 5 Site development 7.4 6.0 13.4 816 667 1,483 5 Subtotal 81.3 66.4 147.7 8X970 7,339 16,309 51 Architectural services 12.3 2.5 14.8 1,354 277 1,631 5 Furniture and equipment Furniture 3.1 5.8 8.9 342 636 978 3 Equipment 10.6 95.9 106.5 1,176 10,583 11,759 37 Subtotal 13.7 101.7 115.4 1,518 11,219 12,737 40 Technical assistance Consultant services 1.6 6.5 8.1 178 713 891 3 Seminars 2.2 2.3 4.5 240 260 500 1 Instructional materials - 0.5 0.5 - 50 50 0 Subtotal 3.8 9.3 13.1 418 1,023 1_441 4 Total Base Cost (mid 1984 prices) 111.1 179.9 291.0 12,260 19,858 32,118 100 Physical contingencies 11.1 18.0 29.1 1,226 1,986 3,212 10 Price contingencies 31.3 47.4 78.7 3,459 5,232 8.691 27 TOTAL PROJECT COST 153.5 245.3 398.8 16,945 27,076 44,021 137 Front-End Fee - 0.6 0.6 -- 68 68 -- TOTAL FINANCING REQUIREMENTS 153.5 245.9 399.4 16,945 27,144 44,089 137  - 21 - A summary presentation of estimated project costs both by component item and by category of expenditure appears in Annex 4. 3.03 Bases of Cost Estimates. Construction cost estimates are the prod- ucts of: (a) sketch plans for project training facilities, and (b) current unit building costs based on recent contracts for similar standards of construction in corresponding facilities, with adjustments for regional cost differences. The latter costs per square meter of gross construction area, which average US$260 equivalent, are reasonable for the functional standards of construction allowed for, and are below the median cost for comparable Bank-assisted vocational training center construction (i.e., US$297 equivalent in mid-1983 prices). Costs for professional architectural services (design and supervision) reflect the current scale of fees established by the Govern- ment for services provided by local firms. 3.04 Estimated equipment costs are products of: (a) lists reviewed during appraisal, and (b) current CIF unit prices adjusted to include local transpor- tation costs and, where appropriate, installation costs. Furniture cost estimates are based on the relationship between furniture costs and construc- tion costs observed for other Office VTCs. 3.05 Estimated TA costs for consultant services are based on recent experience in the country and the region and include salary, fees, overhead, international travel and subsistence. Estimated costs of local training seminars for the program in project preparation comprise 9 manmonths of consultant services inclusive of hotel, local transportation, and related seminar expenses costed at prevailing rates. Estimated costs of instructional materials for the local training seminars are based on lists reviewed at appraisal. 3.06 Customs Duties and Taxes. Project cost estimates do not include any identifiable customs duties or taxes, although local costs of civil works do include indirect taxes amounting to about 15% of total civil works costs. All materials and equipment imported for the project are exempt from customs duties under the provisions of the UNESCO accord, agreed by the Government, concerning educational imports. 3.07 Unit Areas and Unit Costs. As indicated by the Table in Annex 5, the construction areas per training place for training and boarding facilities for project construction are reasonable and are in line with those for equivalent facilities in other Bank-assisted education and training projects. 3.08 Contingency Allowances. Project cost estimates include contingency allowances for: (a) physical factors, equivalent to 10% of the estimated base cost of all project components to allow for unforeseen events, and (b) price escalation covering the period from negotiations to points of forecast expenditure in accordance with the appraisal implementation schedule (Annex 6) and the following projected annual rates of price escalation:  - 22 - Table 3.3: PROJECTED ANNUAL PRICE ESCAIA ION RATES 1985 1986 1987 1988 1989 Foreign costs 8.0% 9.0Z 9.0% 9.0% 7.5Z Local costs 10.0% 10.0% 9.0X 9.0Z 7.5Z At these rates, prices are projected to increase during the project implemen- tation period by a total of 26Z for civil works, 27% for architectural ser- vices, 30% for furniture and equipment, and 15Z for technical assistance. Accordingly, aggregated price increases are estimated at 25Z of base costs plus physical contingencies. Together, physical plus price contingencies are equivalent to 37Z of base costs. 3.09 Foreign Exchange Component. The estimated foreign exchange compo- nent, including the capitalized front-end fee, is US$27.1 million, or about 62% of total estimated project cost. The estimation of the foreign exchange component is based in turn on the estimate that the indirect foreign exchange components of civil works, architectural services, and locally manufactured furniture are 45%, 17% and 65% respectively, and on the expectations that: Ca) all labor and material for civil works will be available locally and that all construction contracts will be awarded to local or locally based contrac- tors; Cb) architectural services will be provided by local or locally estab- lished mixed Moroccan/foreign firms; (c) all mobile units and equipment will be imported; (d) all furniture contracts will be awarded to local manufac- turers, since manufacturing capabilities are good in the country; (e) 80% of consultant services will be provided from foreign sources; and (f) all instructional materials for the program in project preparation will be imported. The resulting foreign exchange content of each category of base costs is as follows: (a) construction, 45Z, (b) architectural services, 17%, (c) furniture, 65%, (d) equipment, 90Z, (e) consultant services, 80Z, (f) local training seminars, 52%, and (g) instructional materials, 100%. 3.10 Financial Plan. The proposed Bank loan of US$27.1 million would finance all the foreign exchange costs of all project components. It would finance 62Z of total project costs including front-end fee. Funds for implementation of the Office-implemented components (para. 3.14) would be provided on a grant basis by the Government. UNDP is expected to provide  - 23 - US$170,000 of the cost of the program in project preparation. The Government would finance the remaining US$16.8 million estimated local cost of the Droject. The proposed financial plan for the project is summarized below: Table 3.3: PROPOSED FINANCIAL PLAN (US$ thousand equivalent) Bank Share Category Government UNDP Bank Total of Total Construction 8,970 - 7,339 16,309 45X Architectural services 1,354 - 277 1,631 17X Furniture 342 - 636 978 65% Equipment 1,176 - 10,583 11,759 90% Technical assistance; Development of Future Training Activities 118 - 476 594 80% Support for Instructor Training Center 40 - '58 198 80X Program in project preparation 90 170 389 649 60% Total Base Cost 122690 170 19,858 32,118 62% Physical and Price Contingencies 4,685 - 7,218 11,903 62% Total Project Cost 16?775 170 27,076 44,021 62% Front-End Fee - - 68 68 100% Total Financing 16775 170 27,144 44,089 62% Recurrent Expenditures 3.11 When fully operational in 1989, the training facilities to be provided under the project are estimated to generate about DR 30 million annually in recurrent costs, including staff salaries, maintenance, operation of boarding facilities, and the cost of expendable materials for the VTC workshops. This amount would constitute 20% of the projected 1989 recurrent  - 24 - cost of all Office activities. In view of the high priority which the Government attaches to the expansion of vocational training and in view of the Office's receipt of earmarked revenues from the vocational training levy (para. 1.13), the availability of funding to meet this incremental recurrent cost requirement is not expected to be problematic. 3.12 The DE 76.3 million recurrent budget of the Office was fully met by the DH 80.0 million receipts from the vocational training levy in 1983 (para. 1.13). Moreover, the recent 14% annual growth of revenues from this source has exceeded the 11% annual growth of Office recurrent expenditures. Although it may be reasonably expected that the recurrent costs of the proposed vocational training expansion would be covered by continued growth of receipts from the vocational training levy, it is not certain that revenues from the levy, which are related to the level of private-sector output and employment, will be sufficient to support the recurrent expenditure needs of the significant longer-term growth of vocational training foreseen by the Office. The project includes financing to assist the Government in carrying out a study of measures to assure the adequate financing of future vocational training activities (paras. 1.13, 2.02d, 2.16a(iv) and 5.02a(iv)). Assurances were obtained during negotiations that the Government would take appropriate measures to maintain continued self-financing of Office recurrent costs (para. 5.02d). Project Implementation 3.13 Implementation Period. Phase I of the project construction, compris- ing eight vocational training centers (VTCs), started in October 1984 and is scheduled to be completed by March 1988. Phase II of the construction, comprising the 14 remaining VTCs, is anticipated to commence in July 1986 and be completed by July 1989. (A list of vocational training centers by imple- mentation phase is presented in the project map (Annex )). A one-year guaran- tee is applicable as of the final reception of buildings for both phases. The construction, furnishing and equipping of all institutions and the TA compon- ent are scheduled to be completed by December 31, 1989, as shown in the implementation schedule in Annex 6. In order to allow sufficient time for submission of the final withdrawal applications, the Closing Date would be December 31, 1990. 3.14 Project Management. The MOP Directorate of Planniu:-, under the responsibility of the Director of Planning, is to implement tlie program in project preparation (para. 2.16c). The staff and experience of the Direc- torate of Planning are adequate to successfully implement this TA. Day-to-day coordination of the program in project preparation is to be provided by a program team. Because of the importance of this team to the successful implementation of the program in project preparation, assurances were obtained at negotiations that, prior to any disbursements of the loan against this component, the Government would enter into an agreement with an organization acceptable to the Bank to maintain an appropriately constituted program team for the program in project preparation (paras. 2.16c, 2.17f and 5.02f). The MOP may authorize UNDP to make payments on its behalf for the program in project preparation. Implementation of the vocational training coordination,  - 25 - financing, and preinvestment studies (paras. 2.16a(iii), 2.16a(iv), and 2.16a(v) is to be carried out by the MPW, under the responsibility of the Director of Vocational Training Planning. The staff and experience of the Vocational Training Planning Directorate are adequate to successfully imple- ment these project components. Implementation of all other proposed project components is to be carried out by the Office's Implementation Service (Service des RMalisations), under the responsibility of the Director of the Implementation Service. The staff and experience of this Service are adequate to successfully implement the civil works, furniture and equipment, and TA components for which it will be responsible. (See Annex 3 chart of Office administrative structure.) This Service is responsible for implementation of all the Office's ongoing projects. The Service's own technical staff com- prises a director of administration and finance, an office chief, an archi- tect, a technician, and two administrative assistants. These staff are supplemented by technical staff from other services of the Office as appro- priate. Well staffed and well equipped as an implementation unit, the Imple- mentation Service has recently successfully overseen the implementation of four post-secondary Institutes of Applied Technology. Construction for the most recent of these. was completed in just over twelve months. 3. 15 The Office's efficient implementation performance reflects not only its adequate staffing, but also the streamlined administrative procedures which, as a semi-autonomous agency, it is able to apply. Most significant of these is its straightforward procedure for approving contracts and making payments to contractors and suppliers. The Office regularly receives advance transfers (delegations de credit) from the Ministry of Finance to cover anticipated commitments and payment obligations. On the basis of these transfers, the Office is able to approve contracts and to make payments to contractors and suppliers without the delays which have arisen with the Ministry of Finance approval procedure applicable to the operating minis- tries. The Office would also prepare withdrawal applications for Bank reim- bursement of project expenses. For these reasons, project payments and loan disbursements are expected to be made in a timely fashion, thereby obviating a revolving fund account for the Office-implemented project components. 3.16 Adequate maintenance of existing Office facilities is assured by the Office's maintenance facility in Casablanca. The Office's maintenance pro- gram, which will provide for the facilities to be provided under the proposed project, includes a regular preventive maintenance program for workshop equip- ment in all Office training facilities. Replacement parts are fabricated and stocked in the Office's Casablanca training_facility, resulting in minimal down-time for equipment undergoing repair. 3.17 Civil Works. For the eight VTCs constituting the first phase of project construction, sites are acquired, designs and engineering studies are completed, and bids for major construction work (gros oeuvres) have been received and evaluated by the Office. Designs for the eight Phase I VTCs were reviewed by the appraisal mission and found satisfactory, with the stipulation that minor modifications would be carried out in accordance with the mission's recommendations. Bidding and bid evaluation documents for the gros oeuvres  - 26 - bids were also reviewed by the appraisal mission and found satisfactory. Contracts for this work were signed and construction began in October 1984. Reimbursement against these expenses would be provided under retroactive financing up to US$2.3 million (para. 3.27), although disbursements against these expenses, as for other project expenses, are not expected to occur until slightly later (Annex 7), in view of the 6-9 month interval between civil works expenditures and disbursements observed in other projects. Bids for the remaining construction work for the Phase I VTCs, covering carpentry and electrical/mechanical work, were invited in October 1984. 3.18 For the 14 VTCs constituting Phase II of the proposed project, satisfactory sites are acquired and title deeds are in the name of the Government. Consultant engineers and architects for ten of theqe centers were appointed in October 1984; consultant engineers and architects for the remaining four centers are scheduled to be appointed, after Bank review, in November 1984. Designs and bidding documents are scheduled to be completed and reviewed by the Bank in time to permit the invitation of consolidated bids for all construction work (lots uniques) in February 1985. 3.19 Furniture and Equipment. Detailed furniture and equipment lists for the Phase I VTCs and preliminary lists of furniture and equipment for the Instructor Training Center were reviewed by the appraisal mission and found satisfactory. Equipment and furniture lists for the Phase II VTCs, which will closely resemble those for the Phase I VTCs, are under preparation together with bidding documents for all project equipment packages. Together with the furniture and equipment lists for the Instructor Training Center, these are scheduled to be finalized for Bank review by the end of December 1984. Bids for all equipment and furniture to be procured under the project are to be invited in January 1985. Equipment would be delivered and installed by suppliers upon completion of the training facilities for which they are destined. Interim storage would be provided, particularly for Phase II VTC equipment, as appropriate. The Office has adequate secure storage facilities for this purpose. 3.20 Technical Assistance. Draft terms of reference for all consultant services and a schedule for specialists' services have been prepared and were finalized during negotiations (para. 5.01). The proposed schedule for implementation of project TA is presented in Annex 6.  - 27 - 3.21 Procurement. Procurement procedures proposed for the components of the proposed project are slummarized in Table 3.4: Table 3.4: PROPOSED PROCUREMENT PROCEDURES (Total Costs of Proposed Project Components including Contingencies, Expressed in US$Millions) Procurement Procedure Project Component ICB LCB Other Total Cost Construction (22 VTCs) - 22.2 - 22.2 (9.2) (9.2) Architects' fees - - 2.2 2.2 (0.4) (0.4) Furniture and equipment 16.3 1.5 17.8 (15.2) (1.0) (16.2) Technical assistance - 1.8 1.8 -(1.3) (1.3) Total 16.3 22.2 5.5 44.0 (15.2) (9.2) (2.7) (27.1) NOTE: Figures in parentheses are the respective amounts to be financed by the Bank. 3.22 Contracts for construction of the project institutions to be financed under the loan would be awarded on the basis of local competitive bidding (LCB) open to foreign firms and acceptable to the Bank in view of (a) the wide geographic dispersion of the institutions; (b) the small contract value of each center (estimated average total base cost under US$800,000) and subse- quently (c) the anticipated lack of interest by foreign firms, as experienced in the ongoing Bank-financed Fourth and Fifth Education Projects. In these projects, ICB led to award of construction contracts to Moroccan firms for all sixty institutions financed under the projects, many of which were substan- tially larger in size than the VTCs to be constructed under the proposed vocational training project. Prior Bank review of procurement documentation and contract award recommendations would be required for all civil works contracts estimated to cost the equivalent of US$250,000 or more for institutions to be financed under the loan.  - 28 - 3.23 Equipment and furniture would be grouped to the extent possible in large packages for bulk procurement. All equipment and furniture to be financed under the proposed loan would be procured under the following proce- dure: Contracts for bid packages exceeding US$100,000 equivalent estimated value would be awarded on the basis of ICB. Items which cannot practically be grouped in bid packages of more than US$100,000 equivalent estimated value would be procured on the basis of quotations from at least three qualified manufacturers or suppliers. Such procurement of equipment and furniture items by means other than ICB would be subject to an aggregate value limit of US$1.5 million equivalent (corresponding to about 10% of the total estimated value of equipment and furniture requirements, including contingency allowances). In the comparison of bids obtained on the basis of ICB, local manufacturers would be allowed a margin of preference equal to the existing rate of customs duties applicable to competing imports or 15% of the CIF price, whichever is lower. Prior Bank review of procurement documentation and contract award recommenda- tions would be required -for all equipment and furniture contracts to be awarded on the basis of ICB. 3.24 Consultant services to be provided under project TA would be procured in accordance with the current Bank "Guidelines for the Use of Consultants." Purchases of instructional materials to be financed under the loan would be made on the basis of quotations f_om at least three qualified manufacturers or suppliers. 3.25 Accounts and Audits. A separate project account would be established by the Office for the project components to be implemented by that agency (para. 3.14); the MOP component and the MPW component would be identified by separate lines in the Goverruent budget. During negotiations, -the Government provided assurances that: (a) accounts for the proposed project would be audited annually in accordance -with appropriate auditing principles by independent auditors; and (b) that the Government would furnish to the Bank within six months of the end of each fiscal year certified copies of the project audit reports (para. 5.02e). Disbursements 3.26 The proposed loan would be disbursed over a period of six and a half years, as shown in Annex 7. Disbursements would be made on the basis of: (a) Civil Works: 45% of total expenditures; (b) Architectural and Engineering Services: 17Z of total expenditures; (c) Furniture and Equipment: 100% of foreign expenditures and 65% of local expenditures; and {d) Technical Assistance:  - 29 - (i) Development of Future Training Activities and Support for Instructor Training; 80% of total expenditures for consultant services; and (ii) Program in Project Preparation: 60% of total expenditures on goods and services. 3.27 In order to expedite startup of the project, up to US$2.3 million of retroactive financing is recommended to cover Phase I construction expenditures made after March 31, 1984 (para. 3.17). 3.28 Implementation Schedule. As shown in Annex 7, the estimated disbursement period for the project is six and a half years. This is shorter than the region-wide average for IBRD projects of eight years because the very advanced state of project preparation (paras. 3.17 and 3.19) would permit start of project construction before loan signature, and, particularly, because the Office's streamlined administrative procedures have led to a record of efficient project implementation in the past (paras. 3.14 and 3.15) and are expected to expedite implementation of all phases of the proposed project.  - 30 - IV. BENEFITS AND RISKS Benefits 4.01 The proposed project is the first of a series of projects foreseen in the area of vocational training, designed to meet the skilled manpower requirements of the Moroccan economy in the 1990s. With the exception of the program in project preparation, all of the proposed project components are for skill training for the private sector. Training of this type remains very limited in relation to national needs. The proposed project in vocational training constitutes the first phase of a large-scale expansion of inter- mediate level skill training capacity which is planned by the Government to remedy these deficiences. The vocational training expansion to be financed under the proposed project would begin to meet the country's most conspicuous training needs at this level. It would also constitute a key element of the Government's new strategy to strengthen the links between the formal education system and the job market. The proposed training investment would allow the nation's skill training network to provide practical, job-oriented training to a larger share of the students who leave the formal school system before completing secondary studies. Together with other initiatives being taken by the Government (para. 1.02), it is also expected to support the planned expansion of industrial-sector output. 4.02 The proposed training investment would provide important benefits to employers in the form of improved worker productivity. It would also generate very significant benefits to training graduates. Based on prevailing wage differentials by skill level, the present value of benefits of the major project component (22 VTCs) in terms of graduate earnings alone is estimated at almost three times the present value of capital and recurrent costs of the proposed component (para. 2.09). 4.03 Together with other planned Bank initiatives designed to improve investment planning, the program in project preparation to be financed under the proposed project (para. 2.16c) is expected to lead to widespread benefits in terms of improved project identification, preparation and appraisal. By improving information on the socio-economic justification of proposed proj- ects, it is expected to lead to more rational project selection in the plan- ning and financial authorization processes. By improving the planning of project inputs, it is expected to lead to more timely implementation of projects in all sectors. Risks 4.04 The single risk anticipated with the proposed project is that project implementation could be slowed by budgetary shortages in the context of the Government's current fiscal austerity program. During the current Development Plan (1981-85), the Government has embarked on an investment program whose total cost significantly exceeds available resources. Project implementation in all sectors has suffered as a result. Ongoing Bank-financed education projects, for example, have experienced implementation delays from this source  - 31 - averaging about 12 months. With Bank assistance, the Government is currently revising the budget to bring programmed investments more into line with available budget resources. Although this exercise will involve the cancel- lation or deferment of non-essential investments, it is expected to lead to more timely implementation of the highest priority investments. The proposed project, which constitutes a partial fulfillment of the Government's initial plan for vocational training investment, is among the Government's core program of highest priority investments for immediate implementation. The investment costs of the proposed project during its first two years of implementation represent one half of one percent of projected government investment expenditures in 1985 and 1986. The project is expected to be self-financing with respect to recurrent costs (paras. 1.13 and 5.02d). 4.05 The question of timely availability of counterpart funds to execute the proposed project was discussed during appraisal with high-level officials of the Ministries of Finance, Planning and Economic Affairs. The necessary funds to implement the project are programmed in the latest version of the Loi de Finances for 1984, 1985, and subsequent years. Moreover, officals of all three ministries have recently confirmed the priority commitment of the Government to the proposed vocational training project. This commitment has recently been confirmed at the highest level of Government. In view of this commitn-nt, it is foreseen that the project will be funded adequately to ensure timely implementation.  - 32 - V. AGREEMENTS REACHED AND RECOMMENDATION 5.01 During negotiations, the Government and the Bank reviewed and finalized terms of reference for project TA (para. 3.20). 5.02 During negotiations, the Government and the Office provided assurances that: (a) the following actions would be implemented according to terms of reference and a time schedule acceptable to the Bank, and that the results of these actions would be provided to the Bank for comment by the respective dates indicated for each: (i) by December 31, 1985, formulation of a strategy for the development of apprenticeship training (paras. 2.16a(i) and 2.17a), (ii) by July 1, 1986, develop- ment of a program on small business management training (paras. 2.16a(ii) and 2.17a), (iii) by December 31, 1985, formulation of a strategy for vocational training coordination (paras. 2.16a(iii) and 2.17a), (iv) by December 31, 1985, carrying out of a study on financing of vocational training (paras. 2.16a(iv) and 2.17a), (v) by December 31, 1985, development of an effective organization and management structure for the new Instructor Training Center (paras. 2.16b(i) and 2.17a), (vi) by December 31, 1986, introduction of audio-visual training methods in the program of the Instructor Training Center (paras. 2.16b(ii) and 2.17a), and (vii) by July 1, 1988, carrying out of the program in project preparation (paras. 2.16c and 2.17a); (b) the Office would conduct an evaluation of the experiences of the two regionally-based mobile training units within two years- after the units are first put into use and would communicate the results of this evaluation to the Bank promptly for review and comment (paras. 2.12 and 2.17b); (c) the Government would examine the recommendations of the study on coordination of vocational training (paras. 2.16a(iii), 2.17c and 5.02a(iii)) and discuss with the Bank the proposed measures for improved coordination of vocational training and how they should be implemented; (d) the Government would take appropriate measures to maintain the self-financing of Office recurrent costs, and in particular that the recommendations of the study on financing vocational training (para. 2.16aCiv)) would be implemented after consultation with the Bank, as and when necessary to ensure this financial autonomy and to bring about improved cost-sharing among the various beneficiaries of Office training programs (paras. 1.14 and 2.17d); (e) project accounts would be audited annually in accordance with appro- priate auditing principles by independent auditors; and the Governr- ment would furnish to the Bank within six months of the end of each fiscal year certified copies of the project audit reports (paras. 2.17e and 3.25); and  - 33 - (f) prior to any disbursements of the loan against the program in project preparation, the Government would enter into an agreement with an organization acceptable to the Bank to maintain an appropriately constituted program team for the program in project preparation (paras. 2.16c, 2.17f and 3.14). 5.03 Subject to the above conditions, the project would provide a suitable basis for a Bank loan of US$27.1 million equivalent to the Kingdom of Morocco.  - 34 - Annex 1 KINGDOM OF MOROCCO VOCATIONAL TRAINING PROJECT Office Training Facilities, Enrollments and Outputs (1983/84) Annual Facilities Enrollments Outputs Institutes of Applied Technology 1/ 14 3,886 1,850 Vocational Training Centers: Industrial 2/ 41 7,057 4,275 Commercial 2/ 6 1,098 500 Tailoring 2/ 9 1,429 865 Construction 3/ 48 5,130 8,000 Subtotal 104 14,714 13,640 Mobile Training Units 4/ 3 80 200 SWRCE: Office. 1/ Two-year post-secondary program 2/ Variable program duration averaging 18 months for entrants having completed 9 years of formal schooling. 3/ Six-month program for entrants having completed primary schooling (grade 5). 4/ Variable programs from 2 to 6 months in duration.  Annex 2 - 35 - KINGDOM OF MOROCCO VOCATIONAL TRAINING PROJECT Project Vocational Training Center (VTC) Specializations (22 VTCs) Specialization Section Places Maintenance mechanics 5 125 Auto mechanics 21 525 Auto body repair 3 75 Agricultural mechanics 4 100 Sheet metal 4 100 Welding 15 375 Industrial drawing 4 80 Architectural drawing 2 45 Electronics 18 450 Electricity 22 470 Automation 2 50 Refrigeration/air-conditioning 4 100 Finish carpentry 2 50 Carpentry 18 565 Plumbing 18 565 Masonry 4 120 Typing 4 100 Secretarial 1 25 Garment Manufacturing 13 805 Carpet-making 2 50 Total 166 4,775  Annex 3 - 36 - KTNGDOM OF MOROCCO VOCATIONAL TRAINING PROJECT Office Administrative Structure Governing Board Director General I~~~~~~~~~~~~~~ International .I . Assistant to | Building Cooperation Inspection | the Director Project I Technical j ~ Administration I Division and Finance Division . Division School Manage|-- -- Applied Personnel -- Implementation| ment Service Technology | Service Service I Enterprises | | Programs | . Accounting Data Process- Service Service Service ing Service I Research and| Printing Equipment Social Development 1 Service | Service Service Maintenance _ and Repairs  Unnu OrF MRS=C - 37 - Anex 4 CATIONAL TRAMNS PR9E:' =a' Azcat. bs P...ec't Capuowt CD!PF* 000) OATIUAL DE iEJ!EN fCF PR90GM TIX SUPPORT FOR "s.ical TRAININS IS61 ECM NBILE FUTIPJE PREM INSRCTR Contingmits CENRS :22 TRAIENI TRAIN TMIDE LECT.IN AND TRINDE CENTER IlTS ACMTI'JTTES PREPARATION CENTER Total Z owwt TRPLS. FAIITIES 941 - - - 94512 10.0 9 S'UI EC: ROLI 2, - - - - - 26651 10.0 2,665 CT.Fr WUCI!AS 4, - - - - - 'Z:1'5 10.0 1Z317 S_TEO."E S 13'Z43Z - - - - - 13r433 10.0 lr343 S-r-T CI'.IL UOS 147.7 - - _ _ - 117.72 1'0.0 140,7-6