Honduras - Rural Primary Education Management Project

Dou Of The World Bank FOR OMCIAL USE ONLY G/ft , 97 Y- w4 Report No. P-4475-HO t MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN IN AN AMOUNT EQUIVALENT TO uSt 4.4 MILLION TO THE REPUBLIC OF HONDURAS FOR A RURAL PRIMARY EDUCATION MANAGEMENT PROJECT April 7, 1987 t 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.  CURRENCY EQUIVALENTS Currency Unit = Lempira (L) US$1.0 - L2.0 L1.0 - US$0.5 ABBREVIATIONS IDB: Inter-American Development Bank SEP: Ministry of Public Education (Secretaria de Educaci6n Pdblica) PCU: Project Coordinating Unit UCCE: External Assistance Coordinating Unit UNAH The Autonomous National University of Honduras USAID: United States Agency for International Development GOVERNMENT OF HONDURAS FISCAL YEAR January 1 to December 31 ACADEMIC YEAR February 15 to November 30  FOR omCU use ONL HONDURAS RURAL PRIMARY EDUCATION MANAGEMENT PROJECT LOAN S BORROWER: Republic of Honduras EXECUTING AGENCY: Ministry of Public Education (SEP) AMOUNT: US$4.4 million equivalent TERMS: 20 years with five years of grace, at the standard variable rate. FINANCING PLAN: Local Foreian Total -US$ Million------- Bank 3.0 1.4 4.4 Government 2.5 0.0 2.5 Total 5.5 1.4 6.9 ECONOMIC RATE OF RETURN: Not applicable. STAFF APPRAISAL REPORT No.: 6609-HO This docuent has a rsatricted distribution and may be used by recpients only in the performane of their official duties. Its contents may not otherwise be disckosd without World Bank authouization  NEKORiNDU EAND RECOENDATION OF THE PRESIDENT OF THE INTERNATIORAL BANC FOR -zcoiSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO TEE REPUBLIC OF HONDURAS FOR A RURAL PRIMARY EDUCATION MANAGEMENT PROJECT 1. The following report on a proposed US$4.4 million equivalent development loan to Honduras is submitted for approval. The proposed loan would be for a period of 20 years, with 5 years of grace, at the standard variable rate, and would help finance a rural primary education management improvement project. 2. Back2round. Honduras made considerable progress during the past decade in extending edueational services at all levels. Most available indicators show a performance about equal to the average for Central American countries, and the public sector budget for education is reasonably distributed in its support of primary (50 percent), secondary (23 percent), and higher education (17 percent), with approximately 10 percent going to other programs. There is a need, however, to improve the quality and cost-effectiveness of education. Accordingly, recent initiatives have been undertaken to strengthen management at the central level, including creation of a Cabinet for Social Development, focussing on policies for sectoral development, activation of the Ministry of Public Education's (SEP) Executive Council with responsibility for formulation of policy and program proposals for consideration by relevant entities, including the Social Cabinet, and creation of a technical unit in SEP (the External Assistance Coordinating Unit (UCCE) to provide support for the Executive Council on a broad range of topics and to coordinate all external financial assistance. In addition, the Government has recently updated its policy framework, covering all areas under the purview of SEP, with emphasis on primary and secondary levels: (a) initial concentration on grades one through three; (b) extension of coverage in poorly served, mainly rural and urban marginal areas; and (c) introduction of systematic planning. Improvements to be introduced at the primary level would be extended to the secondary level. Regarding higher education, the policy objectives of the National Autonomous University (UNAH) include: improving institutional management and expenditure control, expanding revenues from non-fiscal sources, introducing selective admissions policies based on student achievement, improving the quality of the faculty, curricula, and research programs, and tailoring professional training progrems to national needs. 3. Project Objectives. The proposed project would be part of a phased approach to support the Government's efforts to improve the quality and effectiveness of education. It would seek to alleviate key constraints to SEP's capacity to effectively plan and carry out needed investments and administer the educational system. On this basis, the project would seek to strengthen the structure and management capacity of SEP and to decentralize the management of rural primary education.  -2- 4. Protect DeacriRtIon. The proposed project would enhance the management capacity and performance of SEP through technical assistance aimed att (a) strengthening the capacity of SEP's Executive Council and UCCE in the areas of inter-ministerial coordination, sectoral policy formulation, planning of education development, budget management, and internal administration; (b) developing recomnendations for Improving SEP's organization; and (c) preparing an evaluation of current decentralization policies. The project would assist SEP in developing and testing an effective management and development planning system for rural primary education, designed to economize on recurrent expenditurest improve cost- effectiveness, and establish the basis for raising atudent achievement. This would entails (a) carrying out a micro-planning exercise for the rural primary schools in the project area (six departments in the northern region), including a diagnostic survey of needs, proj ections of growth, and reorganization of the schools into a cohesive network for administrative and supervisory services; (b) preparing, as part of the micro-planning exercise, action plans for construction or repair of physical facilities, teacher training, management and supervision, and a student testing system; (c) testing the results of the micro-planning effort by implementing the action plans for two school districts under a pilot subproject; and (d) preparing a comprehensive operational plan for all schools in the project area by consolidating all micro-plans and action plans, taking into account the results of the pilot subproject. A diagnostic survey would also be carried out to assess the needs of first cycle (grades 7-9) secondary schools located in the project area. The project, to be carried out over 3-112 years, provides funds for technical assistance and training; civil works; equipment, supplies, furniture, vehicles, and spare parts; and incremental operating costs (salaries and travel expense). The total cost of the project is estimated at US$6.9 million equivalent, with foreign exchange component of US$1.4 million (202). A breakdown of costs and the financing plan are showr in Schedule A. Amounts and methods of procurement and of disbursements, and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the status of Bank Group operations in Honduras are given in Schedules C and D, respectively. A map is also attached. The Staff Appraisal Report, No. 6609-HO, dated April 6, 1987, is being distributed separately. 5. Rationale for Bank Involvement. The focus of the proposed project on improving educational management by establishing systems to increase cost-effectiveness of expenditures is consistent with the Bank's strategy to assist the Government in controlling the growth of public expenditures while making better use of available resources. The targetting of project benefits to rural primary education would contribute to poverty alleviation. The project would build on the experience acquired under two earlier operations in support of education in Honduras. Although these operations achieved their principal objectives, completion was delayed as a result of inadequate management capacity and, in the case of the second project, overly ambitious objectives. Nevertheless, the latest operation successfully tested technical concepts to be used in the proposed project and demonstrated the viability of well-planned efforts to decentralize activities. The other major donors in the sector (USAID and IDB) have provided substantial financial assistance in the past and have proposed to continue such support: USAID is working on provision of textbooks and learning materials for primary education, while IDB would support  - 3 - vocational, secondary, and adult education. These donor. have welcomed the proposed project, which would be complementary to their efforts. 6. Areed Actions. The Government has agreed to take the following actions: (1) establishment of a Project Coordinating Unit (PCU) and a Regional Unit (responsible for micro-planning) in SEP, appointment of their respective directors, and employment of a qualified agency to assist SEP in selecting and contracting consultants to be employed under the project, as conditions of effectiveness; (2) satisfactory completion of the micro-plans and action plans for the two pilot districts, selected according to criteria agreed with the Bank, as a condition of disbursement for the pilot subproject; (3) staffing of the PCU and the Regional Unit according to a timetable acceptable to the Bank; (4) presentation of the results of a study on SEP's administrative organization, together with a plan for implementation of the study's recomaendations, by December 31, 1989; and (5) preparation of a comprehensive operational plan for primary education in the project area, together with a timetable for its implementation, by October 31, 1990. The Government's current statement of policies for primary education is considered satisfactory, and the Bank will continue its dialogue with the Government on policy issues affecting the sector. 7. Justification. The proposed project would help the Government: (a) strengthen its management of the educational system, thus enhancing the quality and efficiency of its operations and enabling it to avoid distortions in its programs and deal more effectively with broader sectoral issues; and (b) establish a primary education management and development planning system to improve quality and efficiency in primary education, reduce repetition and dropout rates, and enable more rapid extension of educational opportunities to disadvantaged rural and urban marginal families with available resources. 8. Risks. The main risks relate to possible implementation delays. The technical assistance inputs to the project are designed to strengthen SEP's managerial capacity, thus offsetting such risks. In addition, the Bank would carry out close supervision of the project. 9. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. Barber B. Conable President Attachments Washington, D. C. April 7, 1987  SCHEDULE A Page 1 of 1 ESTIMATED COST Local Foreijn Total -------(US$ Million)----- School Construction/Repair 0.4 0.1 0.5 Equipment, Supplies, Spare Parts, 20 Vehicles 0.1 0.7 0.8 Incremental Staff Salaries 1.6 0.0 1.6 Salaries and Travel of SEP Staff Devoted Full Time to Project 1.9 0.0 1.9 Technical Assistance 0.1 0.4 0.5 Furniture & Supplies 0.2 0.0 0.2 Total Baseline Costs 4.3 1.2 5.5 Physical Contingencies 0.2 0.1 0.3 Price Contingencies 1.0 0.1 1.1 TOTAL PROJECT COST 5.5 1.4 6.9 FINANCING PLAN Local Foreign Total -- (US$ Million)------ Bank 3.0 1.4 4.4 Government 2.5 0.0 2.5 Total 5.5 1.4 6.9  -5- SCHEDULE B Page 1 of 1 PROCUREMENT INFORMATION Procurement Method Total Project Element ICB LCB Other Cost - (us$ million)----------- School Construction and Repair 0.6 0.6 (0.6) (0.6) Equipment, Supplies, Spare Parts and 20 Vehicles 0.5 0.4 0.9 (0.5) (0.4) (0.9) Salaries and Travel 4.6 4.6 (2.2) (2.2) Technical Assistance 0.4 0.2 0.6 (0.4) (0.2) (0.6) Furniture and School Supplies 0.2 0.2 (0.1) (0.1) TOTAL 0.9 1.4 4.6 6.9 (0.9) (1.3) (2.2) (4.4) Note: Figures 1n parentheslu ure the reupectiva mounts financed by the World Bank. DISBURSEMENTS Category Amount % (US$ million) Consultants' Services 0.6 100Z of expenditures Incremental Staff Salaries 2.2 1OOZ of expenditures Equipment, Supplies, Vehicles 0.9 10OZ of foreign ( expenditures/ ( 50Z of local expenditures School ConstructiontRepair 0.6 10OZ of expenditures Furniture and School Supplies 0.1 721 of expenditures ESTIMATED BANK DISBURSEMENTS1 IBRD Fiscal Year 88 89 90 91 92 93 94 -(US$ Million)-- Annual 0.5 1.5 0.9 0.7 0.5 0.2 0.1 Cumulative 0.5 2.0 2.9 3.6 4.1 4.3 4.4 1/ (Based on Average Profile for Bank Technical Assistance Loans)  -6 SCHEDULE C Page 1 of 1 HONDURAS RURAL PRIMARY EDUCATION MANAGEMENT PROJECT Timetable of Key Proiect Processing Events (a) Time taken to prepare: 15 months (b) Prepared by: The Government of Honduras with joint Bank/UNESCO assistance (c) First Bank mission: May 1985 (d) Appraisal mission departure: December 1, 1986 (e) Negotiations: March 23, 1987 (f) Planned Date of Effectiveness: October 31, 1987 (g) List of Relevant PCRs and PPARs: Education Project (PPAR No. 3936)  -7- SCHEDULE D Page 1 of 2 STATUS OF BANK GROUP OPERATIONS IN HONDURAS A. Summary of Statement of Loans (As of September 30, 1986) US$ Million Amount Less Loan No. Year Borrower Purpose Cancellations Undisbursed 23 Loans and 12 Credits fully disbursed 335.7 1673-HO 1979 Honduras Tourism 13.5 2.1 1805-HO 1980 ENEE Power 105.0 0.5 1861-HO 1980 Honduras Petroleum 3.0 0.2 1901-HO 1980 Honduras Highways 28.0 5.1 2075-HO 1981 Honduras Ind. Credit 30.0 4.6 2284-HO 1983 Honduras Agric. Credit 45.0 21.0 2421-HO 1984 Honduras Water Supply 19.6 17.4 2583-HO 1985 Honduras Municipal Dev. 6.9 5.6 2703-HO 1986 Honduras Ind. Credit 37.4 37.4 Total 624.1 Of Which Has Been Repaid (-) 91.4 Total Now Outstanding 532.7 Amount Sold 4.5 Of Which Has Been Repaid (-) 4.5 Total Now Held by Bank 532.7 Total Undisbursed 93.9  -8- SCHEDULE D Page 2 of 2 B. Statement of IFC Investments (As of September 30, 1956) US$ Million Year ObliAor Type of Business Loan Equity Total 1964-66 Empac. de Curtidos Centro-Americana,S.A. (ECCASA) Tannery 0.30 0.08 0.38 1969-70 Cia. Pino Celulosa de Centroamerica (COPINO) Pulp and Paper - 0.08 0.08 1978 Textiles Rio LixLdo, Textiles and S.A. de C. V. Fibers 9.00 1.00 10.00 Total Gross Commitments 9.30 1.16 10.46 Less Cancellations, Terminations, Repayments and Sales 6.90 0.16 7.06 Total Commitments Now Held by IFC 2.40 1.00 3.40  jB E L I Z E ROAIAN | | GUATEMALA , o,= u Ci~~~~~~~Puri. Ciii 41) 4~~~A CEIBA 1Mm If ipO~I* S kIePormollh - -o Chlm La W g .Jr2Mu.sica, o' SAN PEDRO SULA '; - l-teIrnw, 7 . Olanchdil rC Son Larsnoc a out junIOo4uP.ooiM'2 ,r~ ~ ~~ > |F r _- O =. . d a A f,, A5 r-. CI-. Y d' Ccawbav y ~in N'coklo rp-~ S5ANrA i SontaJru;dYor -,C