Malawi - Education Sector Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6428-MAI STAFF APPRAISAL REPORT EDUCATION SECTOR CREDIT REPUBLIC OF MALAWI February 24, 1987 e-attion and Manpower Development Division Eastern and Southern Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its eontents may not otherwise be disclosed without World Bank authorization.  CURRENCY LQUIVALENT MIK I.00 = US$ 0.50 US$ 1.00 = MK 2.00 (Sept. 1986) SDR 1.00 - US$1.27 Republic of Malawi Fiscal Year April 1 - March 31 ABBREVIATIONS AND ACRONYMS AfDB - African Development Bank DEO - District Education Office DPMT - Department of Personnel Management and Training EFTS - Equivalent Full Time Student GDP - Gross Domestic Product IDA - International Development Association JC - Junior Certificate .JCE - Junior Certificate of Examination MCA - Malawi College of Accountancy MCC - Malawi Correspondence College MCE - Malawi Certificate of Education MCE/TB - Malawi Certificate of Education and Testing Board MOEC - Ministry of Education and Culture MIE - Malawi Institute of Education OCC - Opportunity Cost of Capital ODA - Overseas Development Agency (UK) PSLE - Primary School Leaving Certificate SIP - Sector Investment Program pIU - Project Implementation Unit PTTC - Primary Teacher Training College REO - Regional Education Offices SOE - Statement of Expenditure  N FOR OFMICI4L USE ONLY MALAWI EDUCATION SECTOR CREDIT Credit Summary Borrower: Republic of Malawi Beneficiary: Ministry of Education and Culture Amount: SDR 21.4 Million (US$27.0 million equivalent) Terms: Standard IDA terms. Credit The Credit's objectives are to (a) increase access to primary Description: and secondary education through the expansion of facilities, increased allocation of budgetary resources, and implementation of efficiency measures to improve the flow of students entering and completing these levels of education; (b) improve the quality of primary and secondary education through the upgrading of teachers and teaching materials and the provision of adequate textbooks; and (c) improve sector management through strengthening of the Ministry of Education and Culture kMOEC), with technical assistance and training, and through measures to improve educational quality and efficiency. In support of these objectives, the Government would implement its Policy Action Program as described in its Letter of Education Policies. Progress in implementing the reform program would be reviewed jointly between ID.h and the government during a mid-term review which would be held not later than June 30, 1989. Credit proceeds would finance a three year time slice of the education investmert program (1985-1995) which has been reviewed and agreed with IDA. Priority investments have been agreed to be: (a) at the primury level: the construction and equipping of about 1500 classrooms and associated staff housing, provision of about 2 million basic student textbooks, and in-service training for primary school teachers; (b) at the secondary level: the construction and equipping of two boarding schools and I day school, conversion of 3 MCC facilities to secondary schools, as well as improvement of MCC's organization and operations; (c) education management would be improved through the provision of technical assistance and fellowships, the merger of the two national teacher examination systems and the carrying out of studies to monitor and evaluate the efficiency of implementing project Investments, the cost effectiveness of various education inputs and Instruction methods, and a tracer study on the income effects of post primary schooling and (d) establishment of a University student loan scheme. This document has a resticted distibution and may be used by recipients only in the performance of their oMcial duties. Its contents may not otherwise be disclosed without Word Bank authomiuton.  (ii) Benefits Benefits would accrue to students at all levels through and Risks: increased access to quality educational opportunities. The main set of risks relate to financial and human resource constraints which might slow down implementation of the proposed investment plan. First, there is a risk that the Covernment may have difficulty increasing the share of the budget devoted to education. However, this risk would be minimized by increased user charges for boarding and lodging at al. educational levels. Second, not meeting the increased need for qualified teachers to improve access to education and to improve student flows may slow exoansion of primary educatioa and the attainment of reduced pupil:teacher ratios. This risk is mitigated by the provision of a significant amount of training for new teachers and for teacher upgrading. And third, the complexity of reforms to be undertaken would require strong and efficient sector management. Technical assistance and training to the Ministry of Education and Culture for management and administration would support the Government's commitment to implement its reform package. Estimated Cost: Local Foreign Total --- (US$ Million) Expansion of Secondary Education 2e6 2.9 5.5 Improvements of Primary Education 7.9 10.5 13.4 Institutional Development 0.8 3.6 4.4 Improved cost recovery 0.5 0.5 1.0 Total Base Costs 11.8 1732f ].2 Physical Contingencies 1.2 1.7 2.9 Price Contingencies 1.1 0.7 1.8 Total Costs a/ 14.1 19.9 34.0 Financing Plan: Government a/ 4.4 - 4.4 IDA 9.0 18.0 27.0 ODA 0.7 1.9 2.6 Total 14.1 19.-9 R " a/ Including taxes and duties estimated at US$1.0 million. Estimated Disbursement: Bank FY 1988 1989 1990 1991 1992 1993 - --(US$ Million)-- - - - -- Annual 1.6 5.7 7.5 6.5 4.3 1.4 Cumulative 1.6 7.3 14.8 21.3 25.6 27.0 Rate of Return: Not Applicable.  (iii) STAll APPRAISAL REPORT EDUCATION SECTOR CREDIT REPUBLIC OF MALAWI Basic Da,.a Country Data Per Capita GNP (1985) US$ 210 Total Population 7.0 million (est. mid year 1985) Population Growth 3.1% per annum Education 1984/85 Total Gross Female enrollment Level Enrollment Enrollment as I of Total - -ARatio Primaryl/ 899,459 54.4 42.7 Secondary2/ 24,343 3 5.0 30.4 MCC 10,278 ) University 1,964 .01 22.4 Primary T. Training 1,920 n.a. 36.9 Vocational/Tech.trg. 500 n.a. n.a Public Expenditure on Education 1984/85 Education share as (I) of total Government budget 10.2 Bducation share as (X) of GDP 3.5 Education share as (Z) of Government capital budget 14.3 Education share (as X) of Government Recurrent budget 9.6 1/ includes private schools 2/ includes Forms 5 and 6  STAFF APPRAISAL RPORT EDUCATION SECTOR CREDIT REPUBLIC OF MALAWI Table of Contents Page No. CREDIT SIMARY .... . . . . . . . . . . . . . . . . . . . (i-i) BASIC DATA .... . . . . . . . . . . . a * . * . * . . (iii) I. THE ECONOMY AND EDUCATION DEVELOPMENT . . . . .... 1 II. THEEDUCATIONANDTRAINING SECTOR . .. . . . . . . The Education and Training System . . . . .. ... 3 Government Strategy ..............a............... 4 Bank Group Experience and Lending Strategy . . . . . 5 Issues in Education and Training . . . . . . . . . . 7 III. THE SECOND TEN-YER EDUCATION PLAN Objectives #. . . . . . . . . . . .. . . . .o. .o . . 13 Strategies and Program . ... . .o . . .0. . . . . . 14 Financial Resource Requirements . . . . . . . . . . 17 Financial Viability of the Plan: An Assessment . . . 17 Economic Viability . . . . .0. . . . .. . . . . .. 22 A Realisable Investment Plan . . . . . . . . . . . . 25 IV. POLICY ACTION PROGRAM Objectives o. o . . . . . .. .o . . . . . .. . . .. 27 Impact of Policy Changes . . o.. .. . . . . . ... 30 V. THE PROPOSED CREDIT Rationale and Objectives . . . . . .0.0. ... . Id 33 Program Cost and Financiag .. .. . . . . . . . . 38 Financing Plan .......,........................ 41 Disbursements .. .. . . . .. . . . . . . . . . . 42 Procurement ... . . . . o . . . o .. .&. . .. .. .o 43 Implementation ................................ 44 Reporting and Auditing o . . . . . . . . . . . . . . 45 This report is based on the findings of an appraisal mission which visited Malawi in June, 1986. The mission consisted of Mrs. N. Shields (Economist, mission leader), Messrs. A. Stam (Sr. Architect), D. Rouag (Sr. Educator), B. Jimenez (Economist), B. Fuller (Economist), T. Mbise (Mgmt. Spec:lallst, Consultant), N. Fisher (Educator, Consultant) and P. Murphy (Non-formal Education Specialist).  Page No. VI. BENIFTTS AND RISKS Bernefits ...............a............. .... ... 46 Risks .*. . * ... . . *.a ..** *... 47 VII. AGREEHBNTS REACHED AND RACOWMONDATIONS . . 47 ANNXS Annex A - Statement of Educational Policy Annex B - Methodology for Expenditure Projections Annex C - School Development Program (criteria for the identification and appraisal of schools) Annex D - Organization and Management of Education Services in the Ministry of Education and Culture Annex E - Committee for Monitoring and Evaluating Quality of Education Annex F - locus of Mid-term interim Review Annex G - Supply of textbooks and costs based on 1985 enrollment Annex H - Selected documents available in the project file Tables 1 - Distribution of Expenditure 1973/74 - 1984/85 2 - Primary School Curriculum 3 - Secondary School Curriculum 4 - Unit Costs 5 - Social Rates of Return to Schooling 6 - Education Development Expenditure by Sector 7 - Technical Assistance and Fellowship 8 - Program Cost Summary 9 - Summary Account by Component 10 - Program Cost Summary by Category 11 - Implementation Schedule 12 - Schedule of Disbursements 13 - Comparative Education Indicators Charts I - Organization of the Ministry of Education and Culture 2 - Functional Organization of the Ministry of Education and Culture 3 - Structure of the Education System 4 - Primary School Enrollments 1984/85 5 - Post-Primary Enrollments 1984/85. MAP  STAFF APPRAISAL REPORT EDUCATION SECTOR CREDIT REPUBLIC OF MALAWI I. THE EKCOOMY AND EDUCATION DIVER OPEENT 1.01 After three very difficult years in 1980-82, when Gt? per capita declined by 12 percent and when the Government's budgetary deficit reached record levels, the economy of Malawi has begun to recover. The medium-term outlook is for continued adjustment and a modest growth of per capita incomel/. In order to establish the base for a more rapid growth of per capita7income, the government is continuing to implement its Structural Adjustment Program. Despite substantial progress in a number of areas, particularly in liberalization of pricing policy, one key area which remains a problem is the government's ability to meet budgetary targets. In order to prevent government deficits from crowding out the private sector, the government's objective is to generate recurrent budget surpluses, but without increases in the overall level of taxation relative to GDP. 1.02 The government's policy since independence has been to invest its own resources in directly productive rather than social sectors and its investment expenditures have mostly been directed to such income generating activities as small holder agriculture, infrastructure and public utilities which cannot easily attract private investment. Although there has been significant nominal growth in educational recurrent expenditures, from MK1O million in 1973/74 to NK39.1 million in 1984/85 (Annex Table 1), this is a lower rate of increase than that for government as a whole. There was a decline in the share of education in total government expenditures from 16X to 10% - except for the period betweeen 1981/82 and 1982/83 when a slight increase was experienced. Moreover, in real terms, recurrent expenditure on education, as in other social services has recently stagnated. For the period 1977-85, the average annual growth rates of real recurrent expenditures were 3 percent for education and 4 percent for other social services, as compared with 8 percent for all government. Within the last five years (1979/80 - 1984/85) during which the real rate of growth of the Malawian economy slowed down considerably, as compared to the previous six years, the social sectors bore the brunt of the decline. The average annual growth rate of real government expenditures on education was less than 1 percent; for other services, there was a decline of almost 2 percent (Table 1.1). This table indicates that the main reason for this decline is debt service including amortisation which grew in real te m at almost 18 percent per annum during the last five yeart. The expectation2/ is that this recent massive growth in debt service (particularly interest payments) will abate in the near future, thus allowing increasing allocation to the priority sectors of agriculture, education and health. 1/ World Bank, Malawi: Economic Recovery, Resource and Policy Needs, Country Economic Memorandum, 1985. 2/ World Bank, Opcit.  -2- Table 1.1 Real Growth Rated of GDP and Government Recurrent Expenditures: 1973/74 to 1984/85 Annual Growth Rate (Percent) 1973/74-1979/80 1979/80-1984/85 1973/74-1984/85 Sectors Total Government 10.0 5.1 7.8 Education 4.4 0.4 2.5 Other Social Services 9.1 -1.9 4.0 Defense 26.7 -3.6 11.9 Other administration 11.3 -0.5 5.8 Economic services 6.8 4.0 5.5 Debt Service 14.1 18.0 15.9 Miscellaneous 4.2 0.1 2.3 GDP 6.3 17 4.2 Source: Bank Staff calculations On the other hand, there have been real increases in the educational development budget since 1981182 of about 5.1 percent per annum. This increase is due primarily to external assistance through IDA and has been insufficient to meet Malawi's needs. 1.03 Although expenditure on education has increased slightly, there has been continued pressure, because of population growth, to expand the provision of educational services. The combination of high monetary returns to additional schooling and the relatively low private cost implied by government subsidies make education highly attractive. In primary levels, where the government has a policy of open access, this pressure has been reflected in severe overcrowding in many urban and some rural schools, where class sizes of 100-150 are not uncommon, particularly in the lower grades. At secondary and university levels, where the policy is to provide high-quality education to a limited number of successful applicants, there is excess demand for places. At secondary levels, it has been estimated that there are over eight qualified applicants for every available place; at the Univerdity of Malawi, a conservative estimate of the ratio of applicants to entering students is 4 to 1. 1.04 It is socially and economically productive for Malawi to expand the resources being devoted to education. Data from the 1981 Household and Income Expenditure Survey Indicated that the social rate of return on investment in primary education was about 14 percent; in secondary education, 15-20 percent; and in university education, 11 percent (Annex Table 5). These estimates are generally in line with those for Africa as a whole, except that the social rate of return to primary education is somewhat lower than for the average African country. While these rates of return are based mainly on earnings data, there is also considerable  - 3 - evidence that the development of agriculture, which is the mainstay of the economy, is crucially dependent upon a literate labor force to improve its productivity. Education, especially of women has also important effect on levels of fertility. II DR RDhCATION AND TRAINING SCTR The Education and Training System 2.01 The Ministry of Education and Culture (MOEC) is responsible for all formal education and training in Malawi. This includes primary, secondary geaeral and technical and post secondary institutions such as the Primary Teacher Training Colleges, and the Malawi College of Accountancy (MCA). It is also responsible for the non-formal system of secondary education (Malawi Correspondence College (MCC)' . In addition, MOEC has formal responsibility for the University of Malawi, Malawi Institute of Education (MIE), and the Malawi Certificate and Testing Board (MCE/TB) although in practice this responsibility is exercised through its membership in the Management Boards of such bodies (Charts 1 and 2). Primary education in Malawi is eight years in duration with a national normative examination at the end of five years and a final school leaving examination at the end of the eight years. Secondary education is divided into lower and upper cycles each of two years duration leading to the Junior Certificate (JC) and Malawi Certificate of Education (MCE) respectively. Post secondary education courses are of varying duration, with primary teacher training of two years and university education of four to five years (Chart 3). Schooling is not compulsory nor is there an age attendance limit. Private schooling accounting for less than one percent of total enrollment is not well developed . In addition, the MCC enrolls about 10,000 students in its 105 study centers, about 2000 students in its 17 night secondary schools and a further 3,000 study at home, 2.02 In addition to general education, MOEC is also involved in technical and vocational education through the MOEC - operated Technical Colleges and the Polytechnic-based Board of Governors Courses. These courses are jointly administered with the Ministry of LIbor which is primarily responsible for meeting the private sector training needs. At present almost all major ministries have training units. Most operating ministries also provide vocational training for their own skilled workers notably, agricultural assistants, vu_erinarian assistants in the Ministry of Agriculture and Health and nursing assistants in the Ministry of Health, and the public administration courses provided by institutions under the Department of Personnel Management and Training (DPMT). 2.03 The MOEC is responsible for education policy. It is divided into four units under the general supervision of the Principal Secretary assisted by a Deputy Secretary (Chart 2). These are: planning, education inspectorate and examinations, education administration, accounts and  -4 personnel departments. The inspectorate is exclusively responsible for secondary schsAl inspection while the education administration is responsible for inspecting and administering primary schools, primary teacher training, technical schools and correspondence education, Partial decentralization of education administration has resulted from the creation of three regional education offices (REO) and 28 district education offices (DEo). Field supervision of primary schools is carried out by regional and district level staff using guidelines provided by headquarters. Field level supervision, as well as secondary school administration, primary teacher training, technical and correspondence education are centralized at headquarters. The responsibility of the planning section includes identification, preparation, supervision and evaluation of education projects, policy studies and preparation of education statistics. Government Strategy 2.04 Education is regarded In Malawi as the catalyst that activates economic development, as a means of raising the standard of living of the population. Since its independence in 1964, the Government's effort to develop the education system has been an integral part of a wider national policy. The policy has been to ensure that the sector meets the manpower rieds of the economy. Emphasis was placed on the expansion of secondary education from its then very low base of 3,100 students in 1962 and on the establishment of the University of Malawi. Broad goals for the sector established in the Government's First Education Plan (1973-1980), gave priority to improved internal efficiency, more equitable distribution of educational opportunity, sad continued expansion of secondary and higher education to meet the needs of the economy. Specific targets to be achieved during the period were: (a) raising the gross enrollment ratio at the primary level from 33.5 percent to 50 percent, and at the secondary level from 3 percent to about 15 percent; and (b) improving the quality of primary teacher education by gradually phasing out the training at the lower levels. During the First Plan period, which was extended to 1984, there was considerable expansl-= ef education at all levels. However expansion at the secondary level was limited to the perceived need of the economy at that time. Total enrollments grew at an annual rate of 5 percent between 1974 and 1984. In 1984, gross enrollment ratio at the primary level was estimated at 64 percent but the secondary enrollment ratio was only 5 percent. Between 1974 and 1981 enrollment at the University increased about 10 percent per annum andl in the primary teacher training institutions, 38.4 percent per annum, whlile the increase in enrollment in technical education was about 7 percent. 2.05 Female Participation: Over the period, the female share of total enrollment at all levels increased substantially. In 1984 girls accounted for 42 percent of total enrollment at the primary level, 29 percent at the secondary level, 21 percent at the university and 38 percent of enrollment at the primary teacher training institutions compared to 30 percent, 20 percent, 20 percent and 25 percent respectively in 1980.  -5- Bank Group Experience and Lending Strategy 2.06 Past experience and lessons learned: Although other external sources have supported particular elements of the education program (most notably ODA and the African Development Bank (APDB) the World Bank has had the most sustained and most comprehensive involvement in the sector in Malawi. The Bank has been active in the education and training sector since 1963 as reflected in five education projects (two of which are ongoing and one recently completed) and in sector work particularly the study on Financing and Efficiency of Education, (Report No. 4894-MAI) and policy discussions which resulted in the preparation of the Second Education Plan. The Bank lending in the sector has focused on reinforcement of general education at the primary and secondary levels. The three completed projects supported expansion of and quality improvements at the primary and secondary levels including technical education. The First Education Project (Credit 102-MAI, signed in 1967) provided US$6.3 mllion equivalent to expand secondary education to meet manpower needs, to introduce technical subjects in secondary schools, and to establish a new primary teacher training college in Lilongwe. A Project Performance Audit (No. 2914) was completed in March, 1980. The Second Education Project (Credit 590-MAI) signed in 1975) provided US$11.6 million equivalent to establish a new primary teacher training college in Nzuzu, to expand secondary education, principally th ough provision of additional places for girls, and to establish 23 model primary schools which would also serve as rural adult centers. A project completion report dated September 21, 1982 has been distributed. The project was not formally audited. 2.07 Evaluation of these two completed projects indicates, inter alia, good success in assisting in the establishibent of the two new primary teacher training colleges. These two institutions are well managed, and they are adequately meeting their educational goals of training primary school teachers. At the secondary level, implementation of the First and Second Projects has resulted in enrollment increases as planned and the secondary schools are also well managed. The introduction of technica. subjects, especially wood and metal work, into these schools has not been fully satisfactory because of high recurrent costs, lack of specialized teachers, and lack of student interest. Because of these problems the MOEC is no longer introducing technical subjects into general secondary schools and is concentrating on expanding the specialized technical schools. In primary education, the experience of the Second Education Project has shown that it is difficult to utilize primary schools as adult learning centers, and these schools would best be used solely for the primary level. In addition, it was found that a management system and supervision of local building teams were needed before communities could be expected to assist in replicating the model srchools through self-help construction. Overall the Government regularly allocates funds for maintenance of Government institutions, and project schools have been found to be adequately maintained.  -6- 2.08 The Third Education Project (Credit 910-MAI and EEC Credit 12-MAI, signed in 1979 and totalling US$22.0 million) expands and broadens the Bank Group's involvement in educational development. It is designed to improve (a) primary education, through self-help construction of 1000 primary school classrooms and provision of textbooks to primary school children; (b) educational management, through establishment of the Malawi Institute of Education (MIE), provision of vehicles for the school inspectorate, and support for various educational studies and evaluation; and (c) training of essential middle level manpower, through expansion of the MCC and of the Chancellor College secondary teacher training program, as well as through modest expansion of agricultural, commercial, and general secondary education. Management and organization problems, particularly at the local level, slowed down the implementation of the self-help primary school construction program. As a result, the closing date was extended by 18 months. The project closed on December 31st 1985. At the time of appraisal of the Third Education Project, the Government was not committed to secondary school expansion on the grounds that there was a possibility of umemployment of seconday school leavers. By the time of appraisal of the Zourth Education Project, it was clear that secondary school expansion was the highest priority. Accordingly, the Fourth Education Project (Credit 1123-MAI, signed May, 1981 for US$41.0 million equivalent) provides for 3,960 new secondary student places and for further expansion of Chancellor College's secondary teacher training program. The project also includes pre-investment studies for a new IPA and a new primary teacher training college, as well as funds to prepare a National Education Plan. The closing date was extended to December 31st 1986 to enable the government complete the pre-investment studies. 2.09 The Fifth Education Project (Credit 1330-MAI) signed May 5, 1983 and totalling SDR 30.9 million is designed to improve primary education, expand the output of secondary level educational institutions, increase the number of trained accountants and accounting technicians and to strengthen the management of education and auditing systems. Apart from slight delay in providing counterpart funds, overall implementation of the project is satiefactory and it is expected to be completed by the original closing date of September 30, 1988. The Bank is also financing a Human Resource Development Study which will assess the medium term skilled manpower needs for the country. 2.10 Bank Group Strategy - This evolution of Bank lending also reflected key lessons learned from on-going lending, particularly the need to ensure that overall education policies and strategies are clearly delineated and ahdered to, and the need to further develop MOECs institutional capability to manage the education system. The Bank's overall assistance stratogy includes continued support to the sector because of its crucial importance to the country's economic development. A broad range of assistance is expected to continue which would help improve the quality of primary and secondary educatior, to strengthen education management, and to increase the output of technical and professional manpower in accordance with ec6nomic development needs.  -7- Issues in Education and Traininag 2.11 Despite progress in the provision of education services, the Malawi's education system faces serious problems. Of particular concern are those relating to the primary level of education, since the quality of education in the sector as a whole is determined by the effectiveness of first level schooling. In general terms, the principal issues relate at all levels to inequitable access to educational opportunities, internal efficiency, cost effectiveness of the system and educational administration and management. (a) Access to Educational Opportunities 2.12 Primary Level: Although education has expanded raipidly, there are still severe shortages of facilities at both the primary and secondary levels to cope with the demand for education and with the in^rease in school age population due to population growth. The national gross primary enrollment ratio in 1983/84 was 58 percent3/ while tlhe net enrollment is estimated at about 44 percent. Access is constiained as well by inability of poor parents to pay fees. There are disparities in gross enrollment ratios among regions. The Central region approximates the national average, while the North enrols 112 percent of the eligible age group (6-13) and the South enrols only 58 percent. While this disparity may in part reflect differing parental attitudes to education and inability to pay for schooling, it is undoubtedly influenced by the lack of school facilities. For example, a survey of facilities showed that there was a shortfall of about 33 percent of the total class room requirement given the number of students enrolled in the South compared to 22.8 percent in the Central and 20.4 percent in the North. The low net primary school enrollment ratios show that between 700 and 800 thousand school age children who should have been in school are without schooling. The most conspicuous shortfall of actual versus potential enrollment occurs for primary school age girls, fewer than 30 percent of whom attend school. The problem is extremely acute in the rural areas where girls account for only 20 percent of total enrollment. Reported illiteracy rates from the 1977 census provide evidence of the consequences of low enrollment in primary education. Although there has been some improvement in recent years, estimates by UNICEF show that the situation for woaen has only marginally improved. Government's effort to improve literacy has so far focused on increasing access to basic education. Bank support to expand adult education under the Second Education Project failed as the government simply did not take advantage of the centers provided. However there are ongoing discussions with UNICEF to tackle the problem of illiterate young adults. 3/ Includes private schools. The Government estimates this to be 63 percent. The difference is due to the base population estimate. The Government's estimate is based on a lower population growth rate of 2.7 percent whereas IBRD estimates the population to be growing at 3.1 percent per annum.  -8- 2.13 The current low level of net enrollment is a cause of serious concern because it implies that there is a. large proportion of the population who are denied basic literacy and numeracy skills required in the modern eeonomy. As noted above, the development of agriculture requires a literate labor force to enable it to improve its productivity. The diversification of the economy away from primary production requires that new skills be acquired. The objectives of efficient public sector management require that the educational system produce high caliber individuals who will manage the economy. Another reason for expanding basic education is that such an expansion which would raise female participation, would yield long run benefits in the form of reduced fertility. Although no specific studies of this phenomenon have been carried out for Nalawi, studies in other parts of the world show that among policy variables, expanded education for girls tends to reduce fertility significantly. 2.14 The main reason for the low observed level of enrollment is lack of school facilities. Due to financial constraints, the Government has only partially addressed the situation. With assistance from IDA in the Third Education Project (Cr. 910-MAI), 1000 additional classrooms were constructed under a semi-self help scheme. A school location (mapping) plan was prepared in 1979. However, owing to the current method of financing school construction, the plan has not been strictly adhered to and location still depends on the community's ability to provide the necessary supporting services and to finance school construction. 2.15 Secondary education is carried out in (a) twenty six government or government aided boarding schools; (b) thirty one government or government aided day schools (most of which, with or without government help, have developed boarding facilities); (c) sixteen unaided schools; and (d) about 105 MCCs and night secondary schools. At the Secondary level, the gross enrollment ratio is about 5 percent of the age group and there are insufficient secondary places for qualified students. For example, of the nearly 60,000 standard 8 students who passed the Primary School Leaving Examination (PSLE), about 7,000 or 11.5 percent obtained entry to a secondary school (equivalent to 5 percent of the 14 year old population). There is open access to the MCC, but this is regarded by many as an inferior education. Selection techniques for admission to the upper cycle (Forms 3-4) of secondary education present similar problems. Students in Form 2 who successfully complete junior secondary education are often excluded from their own school because of lack of Form 3 places, since a percentage of Form 3 places is reserved for enrollees in MCC who pass the Junior Certificate Examination (JCE). (b) Quality of Education 2.16 Physical Constraint: In 1983/84, the average class size at the primary level was 66. However, this national average does not reflect the actual situation in many schools, especially in urban areas, where an average class size of 150, particularly in the lower grades is the norm.  -9- As stated in para. 2.14, because of financial constraints, the government has only partially addressed the situation. The government estimates that, in order to achieve the desired classroom pupil ratio of 1:50 for the existing primary school population, it would require 4,000 additional classrooms by year 1990. The problems associated with the shortfall in the number of classrooms are magnified by the almost total lack of school furniture and by serious deficits in teaching/learning materials. It is not uncommon to see about 140-160 students including young adults squeezed into a single classroom and seated on the floor. These conditions militate heavily against efficient learning. As many as five students share a single textbook. Stationery is severely limited or unavailable especially in the early years of primary education. Most students receive 1/2 of one exercise book a year. Levy of the MKl.00 per student annually for textbook replacement, and the fee contribution to stationery, are totally inadequate for these needs. 2,17 Human Resource Constraint: Teacher availability at the primary level has not kept pace lith enrolment expansion. In 1984/85, the student :teacher ratio at the primary level had escalated to 60:1, as compared to 50:1 in 1971/72. This however was better than the situation in 1983/84 when it was 66:1. In 1984/85, due to uneven distributioa of teachers the ratio varies, widely, from 49:1 in Mzuzu City to 85:1 in Mangochi. Many schools, especially in urban and semi urban areas have ratios in excess of 100 students per teacher. Moreover, the ratio of student to qualified teacher ratio is 87:1. In this regard, urban schools are decidedly at an advantage. The majority of schools in rural areas lack decent staff houses and therefore have difficulty attracting qualified teachers. Although providing all rural teachers with adequate accommodation would consume a large portion of investment funds, investment in housing is a sine qua non for attracting competent and well qualified teachers to the disadvantaged areas. (c) Internal Efficiency 2.18 Primary Level: The efficiency of the public primary education system is low. Only about 23 percent of the children who enter the system complete the full eight years of primary education. In 1984/85, out of 848,000 enrolled students in primary schools, repeaters accounted for over 140,000 or 16.5 percent of total enrollment. Repetition occurs at every grade of the cycle, though it predominates in standard eight (17 percent in standard 1; 16 percent in standard 2; and 38 percent in standard 8). These levels of repetition account to a large extent for the very large class sizes characteristic of these grades. It takes an average of 16 years of schooling to produce one eighth year graduate; and the co#;t per graduate is therefore twice the theoretical cost if there were no dropout or repetition. Calculated at an average student to classroom or student teacher ratio of 50:1, repeaters currently occupy the equivalent of 3,000 classrooms and teachers. Elimination of repetition would reduce the student per classroom and per teacher ratio to below 50:1. Multiple repetition in standard eight is in part due to the structure of the PSLE  - 10 - examination and to the limited access to secondary education. The PSLE is almost entirely a test of memory rather than cognitive skills. As such, it encourages repetition of the examination until the level of pass is high enough to merit a secondary school place. Moreover, it is weighted against the students of the highest potential who complete the primary cycle without repetition, but who inevitably score lower marks in a memory test which some students may have taken four or five times. The age/gra. a distortion continues in secondary school, where most of the students enter at about 19 yeare of age. Another phenomenon of primary education is the magnitude of drop out. In the cohort entering the system in 1977/78, 33 percent dropped out between standard 1 and standard 2 and 13 percent dropped out between standard 2 and standard 3. Overall, the gross retention rate for this cohort was only 48 percent. 2.19 Supervision of Teachers: On the administrative side, most of the primary school principals are required to carry a full teaching load, and are therefore unable to monitor adequately the progress of the teachers and pupils under their control. The primary inspectorate (with 52 inspectors in 28 districts) is unable to visit all the schools regularly because of (a) lack of funds for subsistence payments, (b) lack of transport which limits visits to schools only in their immediate vicinity, and () preoccupation with other duties such as examinations which limits the time otherwise at their disposal to only six months within the calendar year. As a result many schools have not been visited for four years. 2.20 Curriculum and Teaching Materials: The primary school curriculum (Annex Table 2) appears to be overloaded and needlearly compartmentalized. Because of the overlap system, the lower primary classes receive as little as 15-18 hours of instruction per week (10 or more timetabled subjects would appear excessive since many of them receive perfunctory treatment in the one hour a week allocated to them). A more integrated approach, particularly in the early classes (e.g. geography with history and civics, general science with health and agriculture) would provide the student with a better view of the world around him and the teacher with a more Interesting approach to teaching. There is also the need for a fundamental review of what is taught. Almost all of the textbooks used in primary schools are the product of commercial publishers, often unsatisfactory for Malawi. Curriculum development has almost exclusively been confined to the production of teachers guides based on existinu texts. A detailed examination of the content of approved texts and th3ir adaptation to the realities of life in Malawi is long overdue. 2.21 Secondary Education: The quality of formal secondary education is relatively high as measured by the success rate in the junior and senior secondary examinations. The student:teacher ratio is 21:1. About 90 percent of the teachers are expatriates. However, secondary schools are short of science, mathematics and English teachers. Considerable numbers of locally trained teachers are required to teach subjects for which they hate no academic qualification. The qualification required of secondary school teachers is a University degree or diploma. These programs  - 11 - prepare them essentially to teach one subject and this restricts their use in fields outside their specialisation. Consequently many teachers are under-employed, with an average teaching load of 25-26 periods a week out of 45 timetabled periods. At both the JC and MCE levels, students are required to take eight prescribed core subjects and up to three optional subjects, out of a total of 15 subjects (Annex Table 3). In practice, the number of subjects available in any school is determined by staff and physical resources. The secondary school daily timetable shows significant variations between schools. In the majority of cases, however, school facilities tend to be unused beyond mid-afternoon. The lower enrollment ratio at this level and the need to reduce the number of subjects offered suggest that the schools could be better utilized through double shifting. The content of the syllabi requires updating especially in the mathematics, science, agriculture, and home economics. 2.22 Malawi Correspondence College: The quality of education at the MCC is low. Conceived as correspondence centers offering lower cost alternatives to students who fail to obtain places in the formal secondary schools, MCCs were expected to function as support centers offering radio and other distance learning resources and tutorial guidance, as a back-up to the correspondence- materials provided to enrolled students. In practice, they are poorly managed and operate as small, over crowded pseudo secondary schools, inadequately housed and equipped and staffed by teachers who, lack in training in their role as tutors and attempt to conduct the centers as formal schools. The situation is worsened by long delays in the delivery of correspondence learning materials and in the marking and return of student exercises. Predictably, the examination success rate is low; over the past years, less than 10 percent of the students taking the JC examinations passed at a single sitting. The MCC concept is a worthwhile experiment in cheap alternative secondary opportunities, but is now ready for reformulation. 2.23 Primary Teacher Training: The present curriculum affords the student little understanding of techniques such as, cumulative record keeping and student assessment, remedial teaching and multigrade teaching. New policies regarding multigrade teaching and student assessment will increasingly require an understanding of these concepts. As presently organized, the curriculum is heavily oriented towards academic rather than professional training, perhaps because of the deficiencies that exist in these academic areas. However, sound knowledge of pedagogical techniques and teaching practice should be the first priority of a primary teacher training institution and it would be more economical to demand better academic preparation prior to entry into the training program. 2.24 Technical/Vocational Education and Training: The five Government technical colleges offer crafts and technician courses in construction, engineering and business studies. These have recently been expanded under U.K. sponsored Overseas Development Agency (ODA) technical assistance projects. Commercial wings in existing schools have been assisted under IDA Third Education Project. Boarding accommodation exists for 1,058 technical  - 12 - and 120 commercial students. However total annual enrollments in vocational/technical education (excluding commercial education) have declined since 1979/8n, from 694 to 500 in 1983/84. The anticipated enrollment in 1986/87 school year is about 820, representing an under utilisation of facilities of about 22 percent. Part of the problem of under enrollment stems from the fact that admissions to the colleges are controlled by the Ministry of Labour, in accordance with the perceived or estimated industrial demand. Reduced job opportunities have caused lay-offs and unemployment among technically trained workers. Because of keen competition for a limited number of MCE places, applicants for technical courses often withdraw when offered places either at the university or other third level institution and thereby creating under-enrollment. The planned manpower survey should provide an opportunity to review the future direction of technical/vocational education. 2.25 National Examination Administration: There are five national examinations. The Malawi Certificate Education is administered by the MCE/TB. The Primary school standard five examination, PSLE, the JCE and the Primary Teacher Training Examination are administered by the examination section of MOEC. The existence of the two examination authorities results in scarce specialized expertise needed for effective administration of tests and analysis of results being dissipated and not being brought to bear on the overall system. The examination and testing operations are vast and complex. Coordination is therefore urgently needed in the organisation of examinations, acquisition of equipment, use of facilities and staff. Instead of adhoc use of teachers and inspectors and borrowing of equipment which might have been feasible when numbers were smaller, there is need for a more independent staff and control for equipment for printing, scoring and data analysis. Some issues of geographical dispersion also need to be resolved in the interest of efficiency. 2.26 UniversitY: A recent study on Costs and Efficiency of the University4/ revealed that the University was very inefficient compared wtn otner countries. The study concluded that by increasing staff:student ratios from the present 1:8.4 to 1:10 for science and 1:12 for Arts courses the college could enroll up to 250 more students with the present establishment. A recent study on secondary teacher supply has examined the curriculum of education students at the university as well as the annual intake into the Department of Education and concluded that the current level of intake is insufficient to meet the needs of the secondary system for teachers. The report urged the Department to increase its intake of students so as to reach the annual required output of 130 graduates a year. Hostel facilities are underutilised at the University. In the current academic year there were 40 unoccupied hostel places at Chancellor College, a constituent part of the Univesity. In addition, it urges that 4/ R,M. Mawidh et al of University of Bath: The costs and efficiency of the University and other Post Primary Education in Malawi - 1985.  - 13 - the course content should be realigned so as to introduce education studies in the first year, with more weight given to practical teaching during the course. (d) Financial and Cost Issues 2.27 In nominal terms, the recurrent budget of the MOEC has grown substantially. However, as a percent of government recurrent budget, the share of education has fallen from 16.2 percent in 1973/74 to 9.4 percent in 1984/85. (para 1.02) As a percent of the GDP, the share of education is only 3.5 percent. This compares with 6.3 percent for Botswana, 7.9 percent for Swaziland and 5.9 percent for Tanzania. Malawi has traditionally spent less on education than other countries in Africa. The distribution of education recurrent expenditure by major sub-sectors in 1984/85 is as follows: primary level 40.6 percent, formal secondary 13.9 percent; Primary Teacher Training 3.8 percent; Technical/Vocational 1.4 percent; University 21.5 percent; Administration and general 13 percent. The cost of education is shared between the parents and the government with the parents bearing a relatively small portion of the costs. About 4.9 percent of the recurrent costs of education was recovered at all levels in 1984/85 through fees and other charges for services such as library usage and examinations. Annual unit costs are provided in (Annex Table 4). The overall financial issues for the sector are: (a) ensuring that available resources are efficiently used; and (b) finding additional financial resources to meet the planned expansion of servil-es especially at the primary level. In the primary, the cost of producing graduates is high owing to low internal efficiency - repetition rates are high (para. 2.18) and there is a very high drop out rate. Only 63 percent of the teachers are qualified; and teachers' salaries are low and need to be raised to retain good teachers; untrained teachers need to be trained and student:teacher ratios need to be lowered. III. THE SECOND TEN-TEAK EDUCATION PLAN (1985$I6-1994795) Objectives 3.01 The government's Second Education Plan (1985/86 - 1994/95) and the accompanying operational supplements outline its educational policies and strategies for the decade. This Plan is more comprehensive both in scope and objectives than its predecessor. It seeks to consolidate educational policies so that a proper balance is achieved in the levels of physical and human resources allocated to all levels of the education system. As in the First Education Plan, the development of the system is regarded as an integral part of a wider national policy of eradicating poverty, promoting national identity and Integration, socio-economic development and employment. In addition to the wider national objectives, the stated objectives of the Plan include the commitment to: (a) provide  - 14 - basic and enduring education to the entire school age population; (b) increase access to quality education at all levels; (c) improve education efficiency in terms of improved student flows; and (d) ensure that the system fully satisfies the needs of the economy for skilled manpower. Strategies and Program (a) Access to Educational Opportunities 3.02 Primary Level: At the primary level, the government's objective is to retain the current eight year primary school cycle and to ensure that, by the end of the Plan period, 95 percent of the eligible age cohort (6-10 years) are enrolled in standards 1-5, or 86 percent of the age group (6-13) are enrolled in standards 1-8. In order to achieve this target, the government projects that, by 1995, it would have to add 8,000 new classrooms to its existing pool and upgrade 5,400 existing classrooms, equivalent to the construction of 1,420 classrooms a year. These figures were calculated on the basis of an updated school mapping exercise and a projected number of available teachers from existing teacher training colleges by 1995. Given recent implementation difficulties and the scarcity of funds, the government's target will have to be drastically reduced. 3.03 At the Secondary Level, the Plan envisages an increase of about 50 percent in full-time secondary education (from about 22,000 to 34,000 students) and a tripling of enrollments in correspondence or other post-primary education (from 14,000 to 44,000). Enrollments of this order would represent 5 percent of the 14-17 age group in full-time courses, and a further 8 percent mainly in correspondence education; the transition rate from primary to full time secondary would rise from 9 percent to 11 percent, To achieve these enrollment targets would require: (a) the more intensive use of existing secondary schools, which the government views as feasible by increasing the student:teacher ratio from the present 21:1 to 25:1, and by double shifting where practicable. Such measures are expected to increase enrollments in these schools by about 3,500; (b) the construction of the equivalent of 8,000 new full-time secondary school places, preferably in the form of small secondary schools strategically sited in line with the local secondary school age population and prevailing facilities, as well as the construction of 31 new and seven replacement MCC centers; (c) the provision of about 5,200 new boarding places at full time secondary schools, for a total boarding accommodation of 20,400; equivalent to 60 percent of the proposed full-time secondary enrollments; and (d) the construction of 480 staff houses for secondary schools and 250 at MCC centers. Although the current admission criteria are to be maintained, the government proposes to increase the number of day students in existing boarding schools by gradually implementing a policy of reserving boarding places for students who are not from within the immediate vicinity of the school. 3.04 Technical/Vocational Education: The government proposes to increase the capacity of MOEC-administered technical/vocational training establishments from 820 to 2,200. To achieve this target one new technical  - 15 - college for 140 equivalent full-time students (EFTS) offering mainly craft level and small scale business skills, and a new technical institute (420 EFTS) providing technician education are planned. Overall, technical/ vocational courses are planned to provide 440 technician level pleces, 980 staff training places, 400 commercial and business study places and 380 for assistant craftsman training and specialist skill courses. Evening course enrollments, mainly in short specialist skill training, are expected to increase to 8,400 (1,400 EFTS) by the mid-1990s. 3.05 University: The main development plans for the university provide for a doublng-' enrollments to 4,000 EFTS by 1995, including 500 students in an external studies department, and up to 200 in the proposed faculty of medicine. The Plan for the medical school is being finalized for possible donor funding. The Plan to establish a medical school needs to be carefully considered given its recurrent cost implication. Enrollments during the first half of the Plan will be constrained, and may reach 2,420. (b) Qualitative Improvements: 3.06 Primary Level: To improve the quality of education and subsequent student achievement, the Government's strategies include: (a) increased number of qualified teachers; (b) increased school inputs-instructional materials, and textbooks; (c) curriculum revision and development including preparation of supporting textbooks and instructional materials; (d) expanded inspection system; and (e) revised test measurement system to reflect changes in the curriculum etc. (i) Teachers: At the primary level, the supply of qualified teachers would be increased by expansion of existing facilities and by provision of additional teaclher training colleges. Three new teacher training colleges financed under the Fifth IDA Education Project (Credit 1330-MAI) are under construction. Other programs designed to improve quality of the teaching force include in-service training of teachers, completion of its ongoing review of the curriculum, including new courses in remedial education and multi-grade teaching. More emphasis will be given to teaching method, and to cumulative record and student assessment techniques. The current short courses for headmcsters, inspectors and district education officers are to be extended to primary teachers. The quality improvement of the existing teaching force will be achieved through full-time 'upgrading' courses for all temporary (i.e. untrained) teachers, and by increased emphasis on upgrading courses for qualified teachers. Quantitative and qualitative improvements in school supervision, and in primary teacher education are also planned. Finally, qualified teachers will be equitably distributed between districts and regions, for which purpose an additional accommodation for 10,500 teachers will be needed. (ii) Curriculum Development: At the primary level, the ongoing curriculum revision effort will be intensified with emphasis on basic skills. In addition, changes in lesson sequencing and subject ordering will be designed to facilitate increased use of radio programs for primary  - 16 - schools. The in-service training of primary school teachers and the inspectorate assessment of teacher performance have the objective of improving the overall quality of primary education. Other programs designed to improve quality of education include increasing the level of government subsidy at this level. (iii) Class Size: As indicated previously, the average class size and pupil:teacher ratio in primary school in 1984/85 is 60, with many schools exceeding this average. The ultimate goal is to achieve a class size of 50 by 1994/95. The medium term goal is to achieve a class size of about 55. Qualitative Improvements In primary education would only come about if the planned strategies are accompanied by policies designed to correct existlng distortions in the system. At present, 30 percent of the total primary school places are occupied by overage pupils and underage students. Without them, the pupil:teacher ratio would have fallen to 41:l. On equity grounds, the government cannot exclude the over age from education facilities however it has been agreed that minimum entry age will be 5 years. The Education Plan presents no policy or strategy on multiple repetition. Without repeaters, the pupil:teacher ratio at the primary level in 1983/84 would have fallen to 49.2:1* (c) Cost Effectiveness 3.07 (i) Secondary Education: The student:teacher ratio of 21:1 is to be increased to 25:1, through increased workload for teachers who would be required to teach an average of 33 periods per week with a minimum of 27 contact periods. The government decision to provide full boarding in government secondary schools and then subsidize the running costs of these facilities adds to the high operational costs of secondary schools. There are opportunities for lowering unit costs at the secondary level unlike the primary, because of low student:teacher ratio and a large number of students who are boarders (over 80 percent). The Government has recently increased boardiltg fees to MK 105 but it needs to Increase it further to MK 135 so as to recover fully the recurrent cost of boarding. It also needs to phase out construction of boarding schools altogither. Assurance to phase out construction of new boarding facilitieb after the current program of constructing 10 such schools by 1990/91 was receiv,4 during negotiation. For technical/vocational education, economic class sizes will be established (average 1:20; range 1:12 to 1:40); teachers' workloads will be comparable to those in secondary schools. The current technical teacher training programs, at the polytechnic and abroad will be intensified, and the small technical/vocational teacher training program will be widened by providing lower level courses for holders of the PSLC who are 16 years of age. All courses will be provided free to students not in paid employment. However, in the case of employees seeking specialist technical/vocational courses leeding to higher salaries/promotions, the full cost of the course will be chargeable to participants or their sponsors. (11) University: Over 22 percent of MOEC's budget is spent on an institution - the university - with 1,900 full time students. Although the graduating class of about 500 is insufficient to meet the changing needs of of the economy for science and technical manpowers the requirements are to  - 17 - reduce the high unit costs by increasing the number of students while keeping the overall costs down and to increase the costs recovered through student fees. This can be done by: (a) increasing the student:teacher ratio (para 2.26); (b) reducing the administrative costs from 10.8 percent of the budget to about 9 percent; (c) reducing salaries paid to staff training abroad to the extent that maintenance is provided by fellowships; (d) reducing travel and transport costs and (e) eliminating student allowances. The government's Plan indicates that the academic staff:student ratio would rise to 1:10 in the science departments and 1:12 in the Arts and Humanities. Fees are currently paid by students at the primary, secondary and the university. At the university, fees are set at NK200 a year, but the sum of MK144 is given back to students in the form of allowances. The net fee is MK56. This compares with boarding fees of MK60 and tuition fees of MK36 charged in 1984/85 at government boarding secondary schools. The government needs to increase the user charges at the university and university fee, net of living allowances, of MK200 has been recommended starting 1988; and at the secondary, boarding fees need to be increased to cover the full cost of boarding (parm. 5.04). Financial Resource Requirements 3.08 To carry out the programs outlined in the Education Plan, the Government proposed to invest about MK548.5 million during the ten year period or MK54.9 million (US$ 30.0 million) per annum. This level of investment is more than double the previous annual development budget of MOEC, which in 1984/85 was about MK25 million. As already indicated (para. 2.27), in 1984/85, 9.4 percent of the total recurrent budget is devoted to education. This is very low by African standards where the norm is around 17 percent. The Plan projects an increase in this proportion to between 13.5 percent and 15 percent by the end of the Plan period. The financial viability of the Plan is assessed belew. Financial Viability of the Plan: An Assessment 3.09 The bulk of educational financing in Malawi comes from the public sources and this is dependent on the overall level of domestic resources. The overall government expenditure in Malawi is estimated by Bank Staff to grow in real terms at an average annual rate of 3.5 percent over the Plan period. The critical issue is whether this growth is sufficient to finance quantititative and qualitative improvements outlined in the Education Development Plan. Given the projected growth in the overall public budget, and under present plans to marginally increase cost recovery in secondary and university levels, the important questions are whether the Government will be able to finance the Education Plan's targets and what other resources should be made available to education to carry out these targets. One way to illustrate this is by measuring the impact on the resources required for primary education expansion if the Plan's priority targets - improved access to post-primary levels and improved quality at the primary level - are to be met. The costs of meeting the Plan's targets are shown in Table 3.1. At the post-primary levels, the emphasis  Table 3.1 Pubic 1Ecurrent R Iplitures 1984/85-1994/95 Goms cp5dittre Net (1984/85) Not P&ditures (Plan 1995) NIt ft dt M per student IKper Asotf MR per AsZf mil Gr%.th f SbxOmt 'O MEC Bid. Sbhet M'O0 M13C Bd. htes 1) Primry 24.2 19.2 16s283 41.5 25.6 35,840 46.7 8.2 2) Priumry Ibaciler Trainig 801.5 8D1.5 1,539 3.9 742.1 2,968 3.9 7.1 3) Fbmnal Seconidary 264.4 244.4 5,141 13.1 215.0 8,098 10.6 4.6 4) 1abudi (bO&aiw 53.6 39.3 606 1.5 39.3 1,719 2.2 11.0 5) vocatx7fana/1bx}sIknal 1,086.3 686.3 343 0.9 686.3 1,276 1.8 14.0 Post-S y mand Od wr 6) Polytehodxc Board of Gbt. 2,787.8 2,350.2 891 2.3 2,350.2 3,572 4.7 7) University of bdad 4,405.6 4,065.2 7,985 2D.3 3,502.1 14,045 18.3 8) Addustratim and Otblr - - 6,471 16.5 - 9,128 11.9 Totals: Prn1lry - (1)t(2) 17,822 45.4 38,808 50.6 8.1 boi-Pru.ry - (3)+(8) 21,437 54.6 37,633 49.4 5.8 mm~AL 39,259 100.0 76,641 100.0 6.9 Source: Staff Ca1atd  - 19- is on improved access, as reflected in the relatively high average annual growth rates of enrollment. The efficiency measures of increasing student-teacher ratios in formal secondary schools and the university will lower unit recurrent expenditures slightly. To meet the Plan targets for all levels, annual recurrent expenditures have to rise in real terms by an average annual rate of 6.9 percent. Such a growth rate will impinge on expansion of the whole system, especially since the Plan also calls for qualitative improvements in primary schools (lower student teacher ratios, improved teachar qualifications) that will increase unit public cost at that level. The impact is shown in the following Table 3.2 under alternative assumptions. Table 3.2 The IMpact of Recurrent Budget Growtb on PriLmry Educatia Growtb (Growtb rates over 1984185 - 1994/95) Policy Assumptions All,Education Primary Education Share in Annual Annual Annual _ Gross Govt. Budget Budget Enroll Actual Enroll Education Cost Quantity Budget Gr.Rate Gr.Rate Gr.Rate Enroll. Rate Budget Share Recoverya/ kestrictions X % Z % 9 1994/95 1994,95 1. No Growth Low , Noneb/ 9.4 3.4 -0.2 -3.6 587.671 29.0 2. Moderate Grow Low None 11.0 5.1 3.3 0.9$C 927,787 46.3 3. High Growth Low None 12.8 6.7 7.0 4.1 1,284,367 63.0 4. Moderate Growth High None 11.0 5.1 5.5 3.2 1,121.792 55.3 5. High Growth High 1ane 12.8 6.7 8.3 5.5 1,443,130 70.5 6. Moderate Growth Low Univ, and 11.0 5.1 5.7 3.5 1,142,693 56.6 Polytechnic enroll. 7. High Growth Low constrained to grow 12.8 6.7 8.7 5.8 1,495,934 74.0 at 4% p.a. (Actual 1984/85) (9.4) (847,895) (57.0) Source: Bank Staff Calculations: Row 7 extracted from Annex B Table. a/ Low cost recovery means: at secondary level, boarding fees 1-crease to K105 p . at university level, student allowances eliminated. High cost recovery means, in addition to low cost recovery levels, tuition at secordary quadruples and, at university tuition is raised by MK200 per year. b/ Univ. (72 p.a.) & Polytechnic (14.9% p.a.) grow as plined. 3.10 The most recent proje. tion of real growth in GDP is an average annual rate of 3.5 percent. The growth in the overall government expenditure is expected to be the same rate. This means that, by 1995, overall government revenues will be in the neighborhood of MK588 million, from present levels to MK417 million. iTis rate of hu4g6,tary growth will be sufficient to meet the Plan's targets for quantitative expansion and qualitative improvement, given current measures to lower unit cost and to increase cost recovery, only if the o,hare cf education in the overall budget rises. If educatior expenditure grows only at the same. rate as the overall  / -~~~~~~~20- ~'etueAafit bodget, and thus just maintains its share at 9.4 percent; rdceiting t~e Education Plan's goals regarding improved access at post-primary levels and quality Improvements at the primary level would 14sve ,to be tridif led. Gross enrollment rates would drop to 29 percentage poinits. It is apparent that the present financing arrangements, even with measures to slightly increase cost-recovery in secondary and higher iducation and to lower unit costs at higher levels, are insufficient to ,' eet the government's educational goals over the next decade. The g6vernment. can alter present financing arrangements,, give up on some of the goats, or do some of both. Options can be ranked according to economic critgria rnf efficiency and equity. Three options are considered below: '&~`Increasing education's budget share: The impact of increasing the budgetary share oft education can Be- measured through the expansion In ,,primary education that could be financed if other goals of the Plan viere met. A moderate growth in education's share from 9.4 percent to t 1 percent of the government budget would enable primary enrollment ttk 4ee (at I percent per annum) but gross enrollment ratios would still fall from 57 percent to 46 percent. As already indicated (Para 1'.02), the social sectors in recent years have been severely constrained because of massive Increment in debt service which in 1984/85 atccunted for 31.7 percent of the total recurrent budget.5/ (In 197918b, its share of the budget was 21.1 percent). With the7 virtual pess/ation of external commercial borrowing and the constrained levels of domestic borrowing,, debt payments should grow ~at a much lower rate, freeing up resources for education, health and -'/ ~~agriculture. This indicates that it would be possible to increase the shares of. recurrent budget allocated to Agriculture,, Education,, and Health and generate a recurrent budget surplus, while allowing for some overall real growth of outlays for other sectors. Achieving such a result will however,, require strict expenditure control by Government. That the Malawian government is committed to increasing expenditures on education Is evident by the increasing share of *educatiern in t-he Development budget. During the last 5 years,, inwestment in education grew in real terms at 5,1 percent per annum. The recurrent cost implication of the investment is now being felt in that the share of education of the recurrent budget In 1985/86 was 10.4 prerent, It should therefore be possible for Education's share of-the budget to increase substantially. A high growth in the budgetary share of education from 9.4 percent to 12.8 percent would allosw primary school enrollment to expand at 4.1 percentt per annum, a rate that is close to the historical growth rate and that will allow gross enr6llment ratios to reach 63 percent. This will mean an increase in the gross enrollment rate of six percentage points over a 10-year period, which Is below Plan estimates. (b) Greater cost recovery: At present, the proposed increases $n cost recover7y, already -reflected In Table 3.2 calculations,, are minimal. At the secondary level, the current fees Include MK60 for boarding and NK30 tuition per annum. The fee increase proposed in the Plan - would raiLse boarding fees to MIK1O5 per annum,, while keeping tuition charges unchanged. These fee increase would imply an increase in 'a~is appears unusually high because amortization payments dare included in the.recurrent budget instead of in the capital *budget.-0  - 21 - average collected revenue from MKl9.50 to MK23.1 per secondary level student, or about 8.8 percent of recurrent expenditures.6/ At the university level, an average of MK200 from tuition and boarding fees is collected from each student. However, the net payments of the average student are negligiblc because of student allowances. These allowances consist of personal allowances of MKl44 per student, plus other allowances for settling in, books and stationery, and travel. Over all allowances per student amount on the average to MK230. If student allowances are eliminated as proposed, 1.ayments of students would amount to MK200 per annum per student. To ensure that no one is denied entry into the University because of inability to pay fees, the Government intends to establish a loan scheme for such students. A Plan for implementation of a student loan scheme which will be administered by the University will be prepared and presented to the Association by December 1, 1987. The Plan will spe'll out in detail, the administrative procedures including repayment period and interest rate and contain details of the student loan agreement. The submission of the Plan will be a condition of disbursement of the revolving loan scheme to be established under the Credit. During negotiation, agreement was reached with the Government that starting in 1988 university fee net of living allowances will be MK200 and to make subsequent adjustments to maintain the real value of this fee. Further resource mobilization through user fees at secondary and university levelL iuld assist the government to meet Plan targets, particularly if ec -'>on share in the overall budget did not grow to 12.8 percent.7/ A- illustration of the fiscal implications of cost recovery, suppose that the education share in the overall budget grows only moderately to 11 percent by the end of the Plan period; if per student fee levels were to increase to MK128 in secondary and MK633 in university -- amounts which would still result in excess demand (see Annex B2 for justification) - primary student expenditures could grow at 5.5 percent per annum. As shown in row 4 of Table 3.2 this would enable present gross enrollment rates to be maintained at primary levels, while meeting all of the qualitative improvement and increased accessibility goals of the Development Plan. If this "high' rate of resource mobilization is combined with a growth in the education budgetary share to 12.8 percent, the expansion in primary enrollment will approach the Plan estimates. Primary school enrollment will then grow at an average annual growtb rate of 5.5 percent per year and will lead to a gross enrollment rate of 71 percent by 1995. 6/ Over the whole system, current fees charged per student do not equal collections per student. One reason is that only 8 percent of all secondary students boarded at government dormitories. Another is teat tuition collection rates were about 49 percent. In FY85, tuition revenues from secondary schools were MK14.7 per student or about 49 percent of the MK30 stated tuition. 7/ According to Annex X, a fee level of up to MK219 (computed to the present fee revenue per student of MK19) can be sustained at secondary level without adversely affecting enrollment at that level, because of excess demand. At the university level, it is also estimated larger fee levels can be sustained, given excess demand (5 applicants for every entry level position).  - 22 - (c) Restricting post-secondary enrollment: To meet the Plan's goal of a gross primary enrollment rate over 80 percent, an alternative to increasing resource mobilization is to restrict enrollment growth rates at post-secondary level. Given the government's policy to increase access to the secondary levels, and given that the rates of return to tertiary education are the lowest among all levels, options to rsstrict enrollment at the university and the Polytechnic Board of Governors are considered. Suppose that enrollment expansion at university end the Polytechnl^ were restricted to grow at 4 percent per year, as opposed to 5.5 percent and 15 percent, respectively, as planned. Such a measure combined with a growth in education budgetary share to 12.8 percent, would allow primary school enrollment to grow at an average annual growth rate of 5.8 percent. By the end of the Plan Period, gross enrollment rates would increase to 73 percent of the school-age population in primary. Thus, this option would also allow the Plan targets regarding primary education to be met, at the cost of tertiary level enrollment. 3.11 Given the political sensitivity to increasing fees at the post-primary level beyond the current proposal, and the need to substantially increase access to primary education, the preferred alternative is to restrict for the moment enrollment growth at university to four percent per annum and to permit primary school enrollment to growth at the rate of 5.8 percent per annum. For this to happen, the education share of the government budget would have to rise to 11.3 percent by 1990/91 and 12.8 percent by the end of the Flan Period. This would imply that education budget would have to grow in real terms at an average annual rate of 6.7 percent. During negotiation, agreement was reached that education share of budget will rise to about 11 percent by 1991 (Annex A attachment 1). Economic Viability 3.12 Another issue is whether the investment Package proposed in the Plan is economically efficient. This can be assessed by comparing unit economic costs of alternative designs within any level of education. These costs can also be compared to a rough approximation of educational benefits based on salary differentials to enable calculation of rates of return. Table 3.3 presents the unit economic costs of alternative design configurations of investments in various le.'els of education. The Plan has two main effects on unit costs: (a) The Plan will make new investments in expanding primary and secondary education. These investments propose new designs in building and equipping schools and thus affect capital costs. (b) The Plan also mandates changes in the way that schools, colleges and the university operate. In primanry education, the objective is to improve quality. In secondary and higher education, the objective is mainly to improve the efficiency of delivery (i.e., lower cost without affecting output). These changes have effects on recurrent costs. The implications of these changes on unit economic costs are those rows in Table 3.3 labelled 'Plan". The unit costs of specific Plan investments are compared with those of the status quo -- the most recently undertaken by IDA and AfDB financed project in Malawi. The status quo costs are labelled 'Base".  - 23 - Table 3.3 Unit Economic Cost of Various Levels of Education, 1984/85 Kwacha per Student Recurrent Annualized Non-Fee Economic Expenditures Capital Cost Private Cost Cost Primary Base (AfDB Project) 19.20 93.26 301.29 414.96 Plan 25.60 42.08 301.29 368.98 Formal Secondary Base (IDA-V) 264.00 1,083.24 731.53 2,078.77 Plan 236.00 734.77 731.53 1,702.30 Mal.Cor.Coll.(MCC) 53.60 227.50 731.53 1,012.63 Prim.Teach.Trug(PTTC) Base (IDA-V) 801.50 2,137.88 1,225.60 4,164.98 Plan 742.10 2,137.88 1,225.60 4,105.58 University of Malawi Base (IDA-V) 4,405.60 3,404.75 1,225.60 9,035.95 Plan 4,071.40 3,404.75 1,225.60 8,701.75 Source: Bank Staff calculations. 3.13 Within primary and secondary education, the proposed designs of school facilities would lead to unit costs lower than the status quo. In primary education, there would be an increase in unit recurrent cost because of qualitative improvements (mainly due to the lowering of student/teacher ratios). However, this is offset by a lower unit capital cost, as compared with the last investment financed by the AfDB. The lower capital cost is due to a modified self help program. Rather than rely entirely on communities for labor and materials as in Credit 910-MAI, communities would in this case provide only bricks. Other building materials will be bulk purchased and small experienced local contractors would carry out the actual construction. As a result, the Plan would lower unit cost by 17 percent, as compared to unit costs of classrooms built under Credit 910-MAI or AfDB Loan. In formal secondary education, the Plan would lower unit capital cost and recurrent cost are expected to be  - 24 - slightly lowered, because of design changes and lower student teacher ratios. For other types and levels of education, there are not expected to be any implications for unit capital cost, because the Plan will not finance any new expansion. However, there are savings on recurrent costs because of proposed efficiency measures. 3.14 When compared to primary education, capital costs per student for various forms of seoondary education (formal secondary or PTTC) arF high. For primary education, annualized capital costs are 18 percent of all economic costs; for formal secondary, they make up 61 percent of all economic costs; and for PTTC, 63 percent. To put these ratios into perspective, the share of capital in all economic costs for secondary schools in Tanzania is 6 percent and for Colombia is 4 percent. The annualized capital costs of secondary education in Malawi are high primarily because of the role of boarding and staff housing. This is shown in the table below (Table 3.4) of the percentage of capital costs (civil works, furnishings and equipment) that are devoted to various uses. Secondary school designs from the previous expansion of the system (IDA-V) indicate that the percentage of all capital costs devoted to boarding and staff housing amounted to 61 percent for formal secondary and primary teacher training. Building only day-secondary schools, rather than boarding schools, would lower this percentage to 23 percent. Table 3.4 Percent of Boarding and Staff Housing in Capital Costs Staff Communal/ Boarding Housing Academic Primary 0 36 64 Secondary Day Formal 1/ 0 33 67 Secondary Boarding Formal (IDA V) 32 29 39 MCC (IDA V) 0 24 76 PTTC (IDA V) 32 30 38 Source: Bank staff reports 1/ Including site development  - 25 - 3.15 The appropriateness of per student boarding cost can be assessed by comparing it to how much households spend on housing on the average.8/ Boarding costs per student are high: they are at least half of median housing expendltures per household; or about two to three times median housing expenditures per adult-equivalent, even under the conservative assumption that there are 3 adult-equivalents per household. The latter number would rise if household sizes exceed 3 adult-equivalents, as is likely. Costs of providing secondary schools would be greatly reduced if boarding element is eliminated. 3.16 Rates of return: The ratios of unit costs between different levels of post-primary education and primary education indicate that the unit economic cost of educating a student in the formal secondary system is seven times that of educating a student in the primary system. However, for the MCC, the difference is only three times; for PTTC, sixteen times; for the University of Malawi, thirty-five times. These cost differentials between levels of schooling can be justified if they are offset by differences in benefits. One way to measure these benefits is by wage differentials. The comparison can be made using the so-called "short-form" of the rate of return analysis.9/ Social rates of return to different levels of education in Malawi are Thown in Annex Table 5. According to this table, it is economical to invest in all types of education in Malaiwi. A Realisable Investment Plan 3.17 In view of the foregoing analysis, the capital cost requirement of the Education Plan has been recalculated to bring it in line with the expectations regarding recurrent resource availability. The underlying assumption is that the Plan targets in all post primary institutions except the University would be met. On the assumption that education's share of the Government's recurrent resources increases to 12.8 percent by the end of the Plan period, primary school enrollment is expected to grow at the rate of 5.8 percent per annum. Enrollment growth at the University is to be constrained to 4 percent per annum. If because of limited resources, a revision of the investment plan becomes necessary, these cuts should be 8/ A rough rule of thumb would be that households spend 15-20% of monthly income on housing (or about MK42-56 in 1984/85 Kwacha). Median household Income in 1981 was MK200: 1983/85 MK Median monthly housing expenditure (1) Per household (HH) 42-56 (2) Per adult equivalent (3 per HH) 14-19 Monthly boarding costs (per student): (3) Recurrent (RC) 14.50 (4) RC + Annualized Capital 43.49 Boarding costs as multiple of housing expenditure (5) Per household .76 - 1.03 (6) Per adult equivalent 2.31 - 3.09 Annualized boarding costs per month are computed as .32 share of boarding in capital cost times MK1,083 per year annualized original cost divided by 12 -MK28.99 - total boarding costs are 14.50 + 28.80 - 43.39 9/ See G. Psacharopoulos, 1980: Returns of Education on updated international comparison - Education and Income by Timothy King - Editor - World Bank Staff Working Paper No. 402 - July 1980.  - 26 - directed at levels of education other than the primary level particularly at the university and vocational and technical training (subsectors traditionally impacted by economic trends) in order to ensure that the 5.8 percent rate of growth of primary is maintained throughout the Plan period. The revised Investment Plan is presented in Annex, Table 6 and has in principle been approved by the Government. It is estimated that the total investment package for the ten year period will be about MR349.2 million in current prices. The revised estimate is about 63.3 percent of the proposals in the Education Plan (para. 3.08). The proposed expenditure for the first five years of the Plan period (1985-1990) is presented in Table 3.5 below: Table 3.5 Education Development Expenditure by Sector 1985-1990 in Current Prices (MK Million) Sector 1985/86 1986/87 1987/90 Total Actual Revised Estimate Estimate 1*. Primary Level Primary Schools 0.99 0.1 57.38 58.47 Primary T. Training 5.05 5.29 14.3 23.64 Instructional Materials - - 5.12 5.12 2. Secondary Level Formal Sec. Schools 5.57 5.01 44.44 55.02 Malawi Corr. College 2.00 3.01 6.80 11.81 Technical Voc. 1.00 1.27 .38 2.65 3. Tertiary Level University 2.06 2.44 2.21 4.71 Polytechnic incl. Mal. College of Accountancy 4.05 4.14 2.56 10.75 4. Institutional Development Management Improvement including inspectorate and Research 0.50 0.50 10.78 11.78 Examinations - - 2.07 2.07 Total 22.22 21.75 146.04 190.01 Source: Calculated from Government documents. The estimated expenditure of MK 146 million for the remaining three years of this phase is distributed as follows: 52.6 percent on expanding access and improving quality of primary education, 35.3 percent on expanding access to secondary education, 8.8 percent on instltutional development, 3.3 vercent on tertiary education. The distribution of expenditure is in  - 27 - line with Government priorities which emphasizes improving the quality of and access to primary education and expanding access to secondary education. Commitments (including the proposed IDA Sector Credit) have been secured for about 93.7 percent of the proposed investment during this phase. The Government expects to fund through community self-help programs the remaining primary schools estimated at MK12 million. During negotiation, it was agreed that any changes in the investment program would be with IDA's concurrence. IV. POLICY ACTION PROGRAM Objectives 4.01 To address the issues described in Chapter II and to meet the objectives of the revised Ten Year Education Plan as described in Chapter III, the Government has prepared a series of policy actions (Attachment 1 of Annex A). During negotiations the Government gave assurances that it will carry out these actions according to the agreed schedule.The proposed credit would support the implementation of the first stage of this program. The objectives of the policy package are to address these issues and to make education more cost effective, more equitable and more consistent with the country's medium term development goals. The Policy package and the proposed Credit would assist in this process by: (a) improving equity of education by increasing the share of education resources devoted to primary education; (b) improving education efficiency in terms of improved student flows especially at the primary level with a major increase in the number of students entering and completing primary education; (c) containing the growth of public expenditures on education through reduction in unit costs at post primary levels and increased cost recovery measures especially at the secondary and university levels; (d) improving access to secondary education through introduction of a shift system and by increasing the number of day schools. 4.02 The proposed policy action program constitutes a serious attempt by the government to tackle the qualitative issues at the primary level, to provide more resources to primary education and to improve the overall management of education. Many students who enter primary school repeat each grade two or three times. The new strategy will (a) limit the number of repeaters in each grade and the number of times each grade, especially grade eight is repeated; (b) through development of new teaching techniques, reduce the number of dropouts and substantially increase school inputs at this level; and (c) starting the 1987/88 academic year set the minimum entry age to primary education at 5 years or over. The government  - 28 - has deliberately sought to build consensus for the Policy program by using the forum of the National Advisory Council on Education with membership drawn from parents, teachers and politicians to discuss the most controversial policies in the program such as repetition policy, cost recovery issues, and merger of examinations systems. The government has also set up a monitoring and evaluation ,ommittee to ensure that the goals of the action program are closely adhered to. To date, several significant measures have been carried out (Annex A attachment 1). 4.03 Policy Action Program: Specific policy actions to be undertaken during the plan period are presented in the Statement of Education Policy (Annex A) and its attachments. Progressive attainment of the quantitative goals of the plan would result from a combination of actions to be taken during this first phase as well as those that would follow at a later phase. The actions already taken and those to be taken to achieve the Plan objectives are shown in Attachment I of Annex A and summarized below in para. 4.04. At the same time, the government would develop a number of new pedagogical programs such as new guidelines for assessment of primary students and a revised and consolidated primary curriculum under the Plan to achieve the specific quality objectives while reducing unit costs of education especially at the post primary institutions. The policies proposed, such as increased user charges, would increase the proportion of expenditure recovered from 4.6 percent to almost 7.6 percent over the system as a whole. These are to be complemented by other measures designed to control unit costs, such as increase in teacher load at the secondary level, improved student staff ratio at the University; intensive use of existing physical facilities at the secondary and higher education levels and improved education planning process. 4.04 The Policy Action Program is summarized as follows: 1. Quality Improvement (a) Primar Level: Curriculum reform, Increased supply of teaching materials, improved physical facilities and improved student/teacher, and student/classroom ratios, c4tablishment of new guidelines for student assessment and cumulative record keeping and remedial teaching and limitation on multiple repetition. To bo 'ter the policy of limiting repetition especially at standard 8, a review of the PSLE will be completed by March 1988 and an improved terminal examination would be introduced at the end of 1988. (b) Primary Teacher Education: Revision of curriculum to emphasize teaching methods, remedial educatio`n and student assessment techniques. Provide in-service training courses for untrained teachers beginning first quarter of 1987. (c) Secondary Level: Qualitative improvements proposed at this level include the revision of curricula, and qualitative and quantitative Improvements In teaching staff. With regard to curriculum revision, the established curriculum subject panels will be enlarged to include MCC and University representation. Their task will be two-fold: (i) to provide in depth analyses of examination results, to review present curricula with a view to reducing the number of subjects offered (currently 21) in secondary school programs and by January 1987 to determine the range of subjects to be included; and (11) to revise as appropriate, by December 1988, curricula  - 29 - for the core subjects in particular for mathematics, science and agriculture. As for Improvements in teaching staff, the problems of shortfalls in the number of secondary school teachers, and the mismatch between supply and demand for specific subject specialists will be addressed by (i) preparing a 5-year projection of teacher requirements by subject for use by the university in determining enrollment targets; (ii) reviewing annually, teacher projections through the established tripartite review process (University, MOEC and MIE); (iii) ensuring that the level of secondary teachers from the University set during these reviews is maintained; and (iv) In the short run, existing vacancies, in particular,in English, Mathematics and Science, will be filled through external recruitment. As regards teachers for the MCC centers, all tutors in theie centers whose educational background and professional training are Inappropriate to their role would be replaced by suitably qualified and trained teachers. (d) Technical/Vocational Education: A review of admission procedures will be completed by December 1987, and the proposed construction of additional technical vocational establishments re-examined in the light of prevailing industrial manpower requirements. Meanwhile the more economic use of existing capacity is planned by the introduction of foundation courses for PSLE graduates, by an expansion of evening classes, and by establishing economic classes (average 1:20) and teacher workloads commensurate with those in secondary schools. 2. Expanded Access to the System (a) Primary: Implementation of an expanded self help primary school construction program to achieve the planned enrollment growth targets of 5.8 percent annum. (b) Secondary: Substantial investment in new secondary schools especially day schools and intensive use of existing facilities through shift syitem (for which a feasibility study and a school mapping plan to determine the viability of day secondary schools are to be undertaken) and of staff to achieve an enrollment ratio of 8 percent by 1994/95. (c) Vocational/Technical Education: Full utilization of existing physical facilities -- presently 78 percent use factor. (para. 2.24) 3. Institutional Development Required actions include: preparation of a comprehensive staff development program, completion of a comprehensive study of management of MOEC, strengthening of the Inspectorate, the planning, research and evaluation capacity of MOEC, and the management of MCC, setting up of a monitoring and evaluation committee, and restructuring the Examination system. 4. Cost effectiveness: Improving the cost effectiveness of education at post primary levels, full utilization of physical capacity at the University and increased parental contribution to the cost of education at post primary levels (para 3.10(c)). The Government intends to establish a loan scheme for students. The initial capital will be put in an interest bearing account. The loans will be financed out of the interest from the capital.  - 30 * Impact of Policy Changes 4.05 In addition to Improving several dimensions of education quality, the proposed policy measures are expected to have a significant quantitative impact on enrollment at both the primary and secondary levels, on promotion rates, and indices of education resource use. As shown in Table 4.1, Primary enrollment in public schools is expected to increase by 5.8 percent per annum over the Plan Period compared to 1.7 percent if the current system persists. The main difference is in the number of new intakes into standard 1 and in the number of students who remain in school. New intakes into standard 1 are expected to increase at the rate of 5.1 percent per annum as against the historical rate of 3 percent. Dropout rates. and repetition rates are expected to drop considerably from the base year levels of 34.2 percent and 18.3 percent respectively. Table 4.1 Summary indicators of estimated enrollment impact of Proposed Policy chaas at the primary level 1984185 - 1994/95 (Public Schools only) Population and enrollment in thousands A - based on current trends and policies B - with Policy changes Enrollment Base year 1990/91 1994/95 1984/85 A"~TB A B Standard 1 217.2 253.5 253.5 294.5 294.5 (of which new intake) (177.5) (214.7) (243.3) (240.6) (291.6) Standard 2 145.0 139.6 193.7 166.7 250.0 Standard 3 118.0 109.2 161.1 123.6 227.5 Standard 4 88.9 85.2 131.1 95.0 187.8 Standard 5 69.9 70.2 107.3 77.1 157.4 Standard 6 68.5 74.1 96.5 79.3 144.7 Standard 7 54.7 74.2 82;2 74.0 121.6 Standard 8 85.8 107.5 83.9 99.3 112.5 Total 848.0 913.6 1109.3 1003.6 1496.0 Average annual growth rate (1985-1995) 1.7 5.8 6 - 13 population 1564.1 1843.0 1843.0 2079.1 2079.1 Average annual growth rate (5-19) (1985-1995) 3.1 3.1 Enrollment ratio (gross)a/ 54.2 50.3 62.1 49.7 74.1 Average annual growth rate (1985-1995) -0.9 3.2 Average growth rate of intake Into Standard 1 3.0 5.6 a/ Public Schools only Source - Bank staff calculations. Detailed projection are given in the Working Paper.  - 31 - Significant improvements in student flows at all standards at the primary levels are also expected. The repeater rates for Standards 6 and 7 are to be reduced substantially from 11.2 and 13.5 percent to 5 percent for both by 1990/91. The most significant improvement is expected to be made at Standard 8 where the repeater level is expected to be reduced to 5 percent of the cohort by 1994/95 compared to the historical level of 38.5 percent because of development of a better system of measuring achievement, improved transition rate to the secondary level of education brought about by expanded access at this level. Enrollment in formal secondary school is expected to grow at the rate of 6 percent per annum, while enrollment at MCC is expected to grow at 11 percent per annum. Growth of enrollment at the University is to be constrained during the Plan period to 4 percent per annum. 4.06. The feasibility of the enrollment targets has been established in the context of the physical and human resources now available end likely to be available throughout the implementation of the Plan. Although enrollment targets especially at the primary level are expected to be met in the short run, improvements in classroom/pupil ratio would require major efforts on the part of the government in mobilizing self help efforts to construct classrooms, especially in areas with minimal classroom space and in rural areas with sparse enrollment. Improvement in teacher/pupil ratio will come about through an expanded teacher training program and better utilization and mobilization of teachers. Once these policy measures which have been agreed with government are in place, it will De important to reassess the experience with them periodically. This reassessment has been built into the Program by the establishment of a monitoring and evaluation committee under the Planning Section of MOEC. Phase 1 of the Policy Action Program covers the period ending 1990/91. During this first phase to be supported by the proposed Credit, the major policy action programs would be in place: the reorientation of the education system would be established and supported by the reallocated shares of education resources; a series of measures would be put into place to improve the efficiency of resource use including teachers at each level. Education programs would be developed during this first phase for new pedagogical efforts (remedial reading, upgrading of unqualified teachers, multigrade teaching) and for further cost efficiency measures which would be continued in the Second Phase. Thus, the main impact of the policy action program during the first phase would be on enrollments and costs and student flows and better assessment of student quality. During the second phase of the Education Plan, the new pedagogical activities would be introduced and further improvements in education flow and use of resources would be made. 4*07 Costs of education under current trends and with policy changes have been estimated through detailed projections of costs of educational inputs necessary to accommodate projected enrollment at each level. These costs are presented in Table 4.2 for illustrative purposes only. Total government recurrent expenditures are expected to increase in real terms at the rate of 3.5 percent (para 3.09). MOEC recurrent expenditure would grow at the average annual rate of 6.9 percent (Table 3.2). Projected recurrent  - 32 - expenditures on primary education in 1994/95 are more than twice as high under the Program than without it. In the absence of policy change, the share of the University in the recurrent budget would by 1994/95 be 22.4 percent compared to 13.5 percent with the proposed policy changes. In the absence of any policy changes, recurrent expenditures of the University would amount to 68 percent of recurrent expenditures on primary education. Bank staff have examined these proposals and are satisfied that the proposed composition and evolution of these expenditures under the Policy Program are appropriate to the country's needs and constraints. The program would lead to a marked reallocation of recurrent education expenditures away from the University towards basic education. Tble 4.2 P e -~a : !!!fd _hO ad Odto Aitixt picy dPt, Duwith p-icy 4 am lewel 1986/85 1990/91 1994/95 1990/91 1994/95 ~~wl Aunt Sr~~~~~pawt !iXt Strwn AMC" Srmt miet Ftroso frlrsq bm 16,283.3 41.5 17,809.1 35.5 19,269.0 32.6 2SX0.2 47.5 37,436.6 49.7 pginy E anhz 1,38.8 3.9 3,342.1 6.7 3,342.1' 5.7 3,037.6 5.6 6,040. . MFw. Smantu7 atim 5,141.3 13.1 7293.0 14.5 9,07.4 15.6 6,353.8 11.7 8,097.7 1 ISIa *n"Ponwene _1 606.6 1.5 1,123.0 2.3 1,719.4 2.9 1,02D.4 1.9 1,719.4 2.3 lmdm1cah/ imt1a1 343.2 0.9 687.2 1.2 1,376.2 2.3 687.2 1.3 1,376.2 1.8 Myoitaldmc aadb1 ant. 890.7 2.3 2,049.6 4.1 3,512.3 5.9 1,020.4 2.0 1,318.5 1.8 Udiveut9 7,985.2 18.5 9,945.2 19.8 13,231.7 22.4 8,700.6 16.0 10,181.2 13.5 Other tIL AM_uottat1o 6,471.0 16.5 5,929.7 2.3 7,476.1 12.6 785.5 14.1 9,128.0 12.0 wotim a port of tot ant. I=r 4 _ meadlture 9.4 9.4 10.0 11.0 12.8 *te: Snullmt p,jectloan used for dte alcW*lg for levels othr then pW=y prJected to gm at fte rate for asomimY MCC and V/Tedetial for A aed B. Far Udvtidty and Fblytedmdc azolnmut for 8 atw to giw at 4% per mm, A plan entolbt tazt will be tet. A autt that amutwt ans at Oet level vul be oxwtant thma.  - 33 V* s R-POM.CRDIT Rationale and Objectives 5.01 Education policy discussions with the government have been based upon the 1984 Financing and 1fficieucy of Education (Report No. 4894-MAI) and have included MOEC as well as ot'her related Ministries. As part of this effort, the Bank Group has also assisted in financing the preparation of the Second Ten Year Education Plan, 1985-1995 (Credit 1123-MAl). This Plan, and the Policy Action Program which mserged from this process embody recommendations made by the Bank. As a next step, the proposed Credit would support the government in carrying out. the Policy Action Program during the first phase (1985-1990) of its Ten-Year Plan. The principal objectives of the Policy Action Plan and the investment Plan are to provide more equitable acess to education, to make the sector more cost effective and responsive to Malawi's medium term development needs (para. 4.01). The Policy Action Program, including a time table of measures taken recently and those scheduled over the next year is detailed in Annex A. 5.02 The 1985-90 investment Plan is in line with the above-mentioned objectives and has been fully reviewed and agreed with the Bank. The Government has demonstrated adequ~ate capability to appraise individual investments and carry them out. With fDink assistance and after five projects, MOEC has satisfactory capacity to do this, including adherence to Bank procurement and disbursement procedures. Although MOBC does not have in-house architectural capacity, it draws upon groups of Malawian architectural consulting firms, with good results in the past. Based on agreed criteria (Annex C), MOEC has prepared adequate appraisal reports of the major sub-investment items in the 1985-1990 Plan (5.24). First Phase of the Ten Year Education Plan (1985-1990) 5.03 The total investment requirement of the Government for the Ten Year Education Plan period is about MK 349.2 mi3lion (US$174.6 mlllion in current prices) (para. 3.17). For the first five year phase of this period (1985-1990), the pian is for an investment of about MK 190.0 million (US$95 million) of which MK 146 million (US$73.0 million) investments pertain to the last three years of this phase (1987-1990), the time slice covered by the proposed Credit. Table 5.1 shvws the related financing plan.  -34 - Table 5.1 Financing Plan Education Investment Plan, 1985-1990 (Current Prices MK Million) 1986/87 1985/86 Revised 1987/1990 Donor Actual Estimate Estimate Total Third IDA Project 0.71 0.08 - 0.79 Fourth IDA Project 6.13 1.97 13.5 21.6 Fifth IDA Project 8.05 11.34 16.7 35.56 ODA ongoing 1.06 2.25 0.38 3.68 USAID 1.42 2.05 0.56 4.03 AfDB 1st Project 0.49 0.05 - 0.54 AfDB 2nd Project - - 28.00 ?8.00 Government 4.36 4.01 16.43 24.8 Financing Gap - - 71.00 71.00 of which: (IDA Credit Proposed) - - (54.00) (54.00) (ODA Gran. Proposed) - - ( 5.00) ( 5.00) (Govt. through aelf-help) - - (12.00) (12.00) I: Total 22.22 21.75 146.04 190.01 Financing commitments for 1985-90 total MK 119.01 million (US$59.5 milJion), 6i 62.6 percent. To complete the program, additional MK71 -illion (US$35.5 million) is required. To close this gap, an IDA credit of about SDR 21.4.-million (US$27 million) is proposed. ODA will contribute an additioral US$2.7 million, and the Government would provide about US$ 6 million through community self-help labor and national budgetary resources. The 1987-90 Inveftments To Be financed under the Credit 5.4s The criterion used to select items to be financed under the IDA Cre4Lt is the extpt to which they support the priorities and strategies of the.'overnment: viz (1) expansion of access to secondary level; (2) expansion of access to and quality improvement at the primary level; and (3) imp;coved educati